DOMESTIC BUSINESS
GENERATOR
• After resumption of economic activity subsequent to Covid-19 pandemic, demand of
generators from small commercial establishments picked up to cater to back-up demand.
• However, the demand arising out of natural disasters was less during Financial
Year 2022-23 thereby having a small proportion of this component in overall sales.
Institutional demand was up in the fourth quarter of the Financial Year 2022-23 due to
enhanced spending on infrastructure.
Opportunities
• Revival of economic activities and operations in the Country, especially in
small and medium size businesses, together with expected portable power back up demand is
on growth path.
• New sectors like mobile pet clinics, perishable medicine/ food delivery vans are
opening up and the Company expects to grow in these sectors.
• The Companys promotions focus mainly on urban, semi-urban and rural markets to
leverage pent up lifestyle requirements from consumers, are expected to help the Company
penetrate in fuel efficient and reliable offerings.
Concerns
• Peak power deficit continues to be within acceptable limits, primarily due to
growing power generation. Interim demand of our products in urban areas, driven by
long-haul power cuts, has thus been reduced considerably.
Outlook
• Portable generator demand is expected to grow at a normal pace especially due to
the emerging start-up sector and opening up of new avenues.
GENERAL PURPOSE ENGINES AND WATER PUMPING SETS
• Unseasonal and longer stretches of monsoon led to a decline in Water Pump sales
in the Financial Year 2022-23, especially in Eastern, Central, and Southern markets. State
and Central Governments overall support mechanism towards farming and fisheries sectors
were not up to the expectations of the consumers and businesses.
• The Companys macro strategy to expand sales, based on "application and
solutions", gave it inroads into mechanization needs of the construction segment.
• Two new Water Pump models, which were launched last year, helped the Company to
strengthen its market leadership position with existing line up of a large range of models
catering to different demands.
• The Companys targeted outreach in coastal areas and waterways by setting up
support for the travel and fishing segment, has started yielding good results and is
creating shift of the consumer from manual labour to mechanization.
• The Governments planned investment in irrigation projects is expected to help
fuel-based engine demand. Continued supply chain requirements, towards agriculture
produce/products, ensured demand and need for farm operation products and services.
Companys demonstration activities, supported through vans and manpower deployment, are
well received and is helping the Company in creating new markets.
Opportunities
• Increasing investments in agricultural infrastructure was one of the key factors
bolstering the growth of the market in India. Additionally, the Government of India is
adopting schemes, reforms, policies, and programs to increase the income of farmers in the
country. Growing reliance on ground water for agricultural purposes is driving the market.
• Due to shortage of labour in urban areas after Covid-19 era, mechanization in
small construction segments is growing and expected to ramp up the demand for our Engines.
• Growing awareness to address environmental concerns is creating demand for more
fuel-efficient 4 Stroke Engines and Water Pumps.
Concerns
• Complexities in subsidy policy and its disbursement by the State and Union
Governments, is leading to delay in purchase by the end customers. The Company endeavours
to closely follow up with field team to have a deeper understanding of the process.
Outlook
• Government of Indias ambitious goal of doubling farmers income has started
showing good results. The agriculture sector in India is expected to generate better
momentum in the next few years due to increased investment and support in agricultural
infrastructure such as irrigation facilities, warehousing, and cold storage.
• In line with the aforementioned the Company is pursuing to develop multi-channel
structure in the country across various segments for application related products and
equipments. The Companys thrust in tying up with small, medium and specialized partners
is expected to build much-needed ecosystem of cost competitiveness and application
specific product sales and services.
BRUSH CUTTERS
• Hondas range of fuel efficient and reliable Brush Cutters are specifically
suited for mechanized solutions for farm activities like de-weeding and harvesting.
• The Company is maintaining its leadership position in 4 Stroke Brush cutter
segment with major stronghold in North and South Indian markets.
• Our complete portfolio of fixed shaft, flexible shaft and high- powered variants
provide matched solutions to the needs of frequent and professional users respectively.
TILLERS
• The Companys focus towards agriculture mechanization was strongly led by its
complete range of Tillers.
• The new Tiller, launched in previous year, gained momentum in the overall cash
market and helped to penetrate further into the end customer requirements, currently being
fulfilled by the local players.
• The Financial Year 2022-23 was very challenging due to the complex processes and
inaccessibility of various subsidy schemes of Center and State Governments. This resulted
in withholding of purchases by the end customers, in anticipation of the release of
subsidy schemes by the government, which, however did not come up at the end.
• Horticulture - segment is highly labour intensive and dependent on various
schemes. Honda Tillers are creating a place for themselves amongst such Horticulture
farmers, growing vegetables and cash crops. The Company is expecting continued support of
Centre and State Governments to make Tillers more accessible through its various schemes.
EXPORT BUSINESS
Opportunities
• 7kVA genset business is growing with prominence with good demand from across the
globe. Major established markets are
North America, Europe and Australia while Middle East and Southeast Asia are showing
emerging trends.
• Engine business from the North Americas - OEM applications continues to be the
highest among all product categories till now.
• Tillers and Gasoline Water Pumps are two future product categories with immense
potential to grow in mainly Asian markets. Other than Nepal, Sri Lanka, South Korea and
Taiwan, where our small tiller has earned good customer acceptability, the new market
developmental activities are yielding good results in expansion of business of
Agricultural products to Asian markets such as Bangladesh and Philippines.
Concerns
• Uncertainty of Engine business with North Americas OEM is expected to have
adverse impact on future export sales projections and thereby affecting utilization of
full production capacity in 2023-24 onwards.
Outlook
• Expansion of business in new markets through distributor network of both
Asia-Oceania and other regions, by introducing new GX80 engine and GX80 engine-based
products, besides 1 and 7 kVA gensets.
FINANCIAL PERFORMANCE
Profit before Tax and Exceptional Items for the year was 13,290 Lakh as against
10,006 Lakh in 2022-23.
Key Financial Ratios of the Company which has significant change (i.e. more than 25%
change) compared to last year are as follows:
|
FY 2022-23 |
FY 2021-22 |
| Operating Profit Margin (%) |
9.13 |
7.20 |
The return on net worth during the Financial Year 2022-23 was 12.10% as compared to
11.69% in the Financial Year 2021-22.
For a detailed explanation of change please refer to Note 34 of Notes to Financial
Statement.
HUMAN RESOURCES
Your Company has been helping peoples dreams come true for over 37 years now. We are
expanding and deepening our focus to create higher positive impact - by providing the
right opportunities, sharing wealth equitably, manufacturing responsibly and approaching
business conscientiously. In essence, we are focusing on Environmental, Social and
Governance (ESG) factors through sustained, focused programs.
The world has entered a new era where the business landscape has changed completely.
Organizations have become more agile and responsive to change - be it climatic, political
or economic. Customer behaviours too have changed. Recent volatility has adversely
impacted world economies and global communities alike. For the world to prosper in the
years to come, everyone must work towards the common cause of sustainable upliftment for
all.
Our employees are our brand ambassadors who are contributing to making it happen. They
bring vigour, dynamism, energy and ideas every day to not only deliver product and service
excellence, but also play a significant role in helping us fulfil our aspirations in this
new era. In turn, we engage with our employees, invest in their professional development,
provide them with a meaningful purpose, focus on their health and safety, celebrate
innovation and out-of-the-box thinking, support well- reasoned risk-taking and reward our
employees for their performance.
Your Company is powered by people. We constantly strive with our human capital to
stimulate and harness a critical competitive edge. We consistently invest to unlock the
leadership potential of our people and help them drive excellence at the Company.
We have a robust performance management system built to uphold a culture of
meritocracy. The overall objective of the performance management system is to ensure that
there is alignment between an individuals goals and the organizations goals and
priorities. A key highlight of the new performance system includes the overall appraisal
process on an online platform through SAP and is simple, enhances leadership and manager
accountability, rewards and encourages outperformance and aims at creating a strong
merit-based culture. Feedback/development conversations between people managers and direct
reports being key at every stage.
With the objective of capability building, developing a future ready workforce and
fostering togetherness at the workplace, your Company implements multiple training and
engagement programs on an ongoing basis. These include various behavioural and functional
programs such as safety and environment, quality tools, TPM, continuous improvement,
result orientation, relationship management, decision making and programs on skill
building.
Your Company is an equal opportunity provider with a strong focus on fostering
Diversity and Inclusion (Dandl) in the workplace. There is no unfair treatment concerning
employment, promotion or other related issues, or termination of the employment, for
reasons of gender or disability. Structured hiring programs that attract and recruit
diverse talent through mindful and positive communication, specialized hiring consultants
and deeper engagement channels. Improved gender diversity in areas of business operations
is also going to be a thrust area for the Company. Your Companys focus continues to
propagate proactive and employee-centric practices.
The transformational work culture initiative that aims to create an engaged workforce
with an innovative, productive and competitive ecosystem continues to grow in strength.
Proactive and employeecentric practices, a focus on transparent communication of business
goals, an effective concern resolution mechanism and a firm belief that employees are the
most valuable assets of the Company, are the cornerstone of your Companys employee
relations approach. An ‘Open Door Policy with constant dialogue to create win-win
situations has helped your Company build trust and harmony.
The industrial relations scenario continued to be largely positive across the
Organization. The sustained efforts towards building a transformational work culture
resulted in zero production loss in the Financial Year 2022-23 and helped create a
collaborative, healthy and productive work environment.
Our CSR approach is to invest in impactful social programs and work with stakeholders
to drive positive, sustainable and inclusive change in society. Through our various
long-term social initiatives, we have positively impacted child education and environment
rejuvenation. The Company as on March 31,2023, had 754 associates.
INFORMATION TECHNOLOGY
Your Company is comprehensively embracing information technology to leverage its
potential and sail through the changes. Business operations continuity being the utmost
priority is focused through synergetic initiatives towards internal as well as external
multi-level security of data and data encryption.
CAUTIONARY STATEMENT
Statements in this Management Discussion and Analysis Report describing the Companys
objectives, projections, estimates and expectations may be ‘forward looking
statements within the meaning of applicable laws and regulations. Actual results might
differ substantially or materially from those expressed or implied. Important developments
that could affect the Companys operations include significant changes in political and
economic environment in India and key markets abroad, tax laws, litigation, labor
relations and interest costs.
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