escorts ltd Management discussions


Global Economy1 Review

The global economy experienced a broad-based slowdown in 2022, with inflation surging to levels not witnessed in several decades. This is due in part to ongoing geopolitical conflicts and disruptions to supply chains, as well as the lingering effects of the COVID-19 pandemic. Furthermore, concerns about flagging demand increased due to recession fears and banking vulnerabilities, while uncertainty over the effects of Western sanctions on Russian crude oil exports also affected global market balances.

Against this backdrop, the IMF estimated that global GDP growth slowed from 6.0% in 2021 to an estimated 3.2% in 2022. The Advanced Economies (AE) were estimated to grow by 2.7% in 2022 while Emerging Market and Developing Economies (EMDE) witnessed a growth of 4.0%.

Despite these challenges, there were some positive signs of recovery. Disruptions to supply chains and energy and food markets caused by the war are fading, and the monetary policies implemented by central banks worldwide are expected to yield positive results.


In early 2023, it was expected that the global economy could achieve a soft landing, with inflation coming down and growth remaining steady. However, the outlook remains challenging due to stubbornly high inflation and recent financial sector turmoil. Although inflation has declined as central banks have raised interest rates and food and energy prices have come down, underlying price pressures are proving sticky, with labour markets tight in a number of economies. Side effects from the fast rise in policy rates are becoming apparent, as banking sector vulnerabilities have come into focus and fears of contagion have risen across the broader financial sector, including non-bank financial institutions.

Despite these challenges, there are positive signs of improvement in economic activity. One of the key factors contributing to the expected improvement is the recent decline in energy and food prices, which has led to a boost in purchasing power for most firms and households. This decline in prices is helping to lower headline inflation, which is expected to decrease from 8.7% in 2022 to 7.0% in 2023. In the current environment, a gradual resolution of supply-demand imbalances is anticipated, along with a modest pickup in labour supply. This is likely to alleviate price inflation, contributing to a more stable economic environment.

Indian Economy2

Indian economy has shown resilience in the face of global economic headwinds and is expected to continue growing in the coming years. According to the Asian Development Outlook (ADO) report, Indias GDP is estimated to moderate to 6.4% in fiscal year FY2023. Growth was driven by strong investment activity on the back of government policies and capex push to improve transport infrastructure, logistics, and the business ecosystem which spurred demand and private consumption.

Inflation remained elevated during the year due to an uncertain global environment. However, with easing global commodity prices coupled with the RBIs interest hikes, inflation is expected to decline from 5% in FY2023 to 4.5% in FY2024. The financial sector remained strong with improvements in asset quality and strong private sector credit growth.


Indias economic prospects remain bright, with a projected GDP growth rate of 6.7% in FY2024. This growth will be driven by several factors, including its growing population, digital transformation, supportive government policies, and sound macro-economic fundamentals. In addition, with improving labour market conditions and consumer confidence contributing to private consumption growth.

Furthermore, recent announcements to boost agricultural productivity, such as setting up digital services for crop planning and supporting agriculture startups, will play a crucial role in sustaining agriculture growth in the medium term. The governments infrastructure push under the Gati Shakti initiative, logistics development, and industrial corridor development will boost industrial competitiveness and future growth. The

services sector is also expected to grow strongly in FY2024, helped by the recovery in tourism and other contact services as the impact of COVID-19 wanes.

However, geopolitical tensions and weather-related shocks pose risks to Indias economic outlook. Nonetheless, Indias growth rate is stronger than many peer economies, reflecting robust domestic consumption and lesser dependence on global demand.


Global Tractor Industry

The global tractor industry is expected to witness significant growth in the coming years. This growth can be attributed to various factors, including increasing labour costs, rising consumption of plant-based food products, seasonal labour shortages, government incentives and rising rural incomes. In addition, the introduction of precision farming and farm mechanisation to enhance productivity is also driving demand for tractors.

Key Growth Drivers

• Rising consumption of plant- based food products

• Seasonal labour shortages

• Government incentives

• Rising rural incomes

• Introduction of precision farming

• Farm mechanisation

• Emergence of advanced tractors with pre-installed GPS

• Automated commercial vehicle

Indian Tractor Industry

Indias tractor market has come a long way and witnessed significant growth and transformation since its establishment of domestic production in 1961. With the improvement of credit facilities for farmers, the tractor market began to rapidly expand, and as of FY 2022-23, the tractor market has grown even further, with more than 10 lakhs units produced during the year.3

Indias success in the tractor market can be attributed to various policies implemented by the government to meet the increasing demand. Today, more than 90% (directly and indirectly) of tractor sales are made on credit, which is extended by commercial banks, state land development banks, and regional rural banks. Despite stiff competition from countries with a long history of

tractor manufacturing, Indias growth in the tractor market remains unmatched.

Agriculture and allied activities have played a crucial role in Indias growth and development by ensuring food security and contributing to the countrys overall progress. The sector has been growing at an average annual rate of 4.6% during the last six years and emerged as a net exporter of agricultural products. In 2021-22, agricultural exports reached a record high of US$ 50.2 billion, with the governments measures such as promoting farmer-producer organisations, crop diversification, and support for mechanisation and infrastructure fund, contributing to this buoyant performance.

Domestic industry performance

The tractor sales in India have achieved a new high record of selling more than 9.45 lakhs units in 2022-23, which is a

12.2% increase from the previous years sales. The increase in minimum support prices (MSP) that led to an increase in farm income and another year of aboveaverage monsoon are considered the major reasons for achieving this great sales target. Technological advancements in high HP tractor ranges have also contributed to the increase in demand for tractors in the market.

Export industry performance

The industry has been seeing consistent growth in exports for the past three years, primarily due to the competitive pricing of locally manufactured farm machines that provide better technology and features at a lower cost than foreign counterparts.

However, the industry exported 1.24 lakhs tractors in FY2023 down by 3.2% from 1.28 lakhs in previous year, mainly due to prevailing recessionary conditions in Europe market.

Domestic tractor industry segment-wise performance

(in lakh units) FY 2017-18 FY 2018-19 FY 2019-20 FY 2020-21 FY 2020-22 FY 2022-23 Y-o-Y growth 5-year CAGR
<30 HP 0.8 0.8 0.7 0.8 0.9 1.0 16.3% 4.6%
31-40 HP 2.6 2.8 2.4 2.5 2.4 2.7 12.1% 0.5%
41-50 HP 3.4 3.7 3.5 4.8 4.5 5.2 14.2% 8.7%
>50 HP 0.6 0.6 0.6 0.8 0.7 0.6 -5.9% 0.9%

Indian Tractor industry outlook

The India Agricultural Tractor Market is experiencing significant growth due to increasing trends of mechanisation in the agriculture sector. With substantial support from the government, the adoption of tractors for agricultural practices is increasing over the years. The farm mechanisation goals of the Indian government are acting as the prime driver and are expected to boost the growth of the market in the coming years.

For the financial year FY24, domestic industry is expected to grow in midsingle digit. Monsoon is being forecast normal during the upcoming season by the government agencies. The impact of various factors like rainfall, crop prices, percentage of sown area, the central governments stand towards the land bill and the associated farmers compensation for the acquired land would shape the chances of improving the industry sentiments in subsequent time frames.

Growing farm consolidation with increasing need for farm power per hectare and increasing substitution of manual and animal labour for various farming operations continue to drive the 14 Escorts Limited structural growth for higher HP tractor sales. Increasing finance penetration with more affordable finance rates have enabled a larger number of farmers to own tractors.

Concurrently, the economics of tractor operation improved owing to increasing custom hiring for agricultural and other purposes, including transit of farm produce, and transport of people and materials for road construction and other infrastructure projects. For the agri

industry having high peaks, low valleys and seasonality concerns, the best combination of the above factors will augment steady growth in the tractor industry volume and in turn build Indias self-reliance for the growing food needs of the rising population demand.

Increasing Trend of Mechanisation in Agriculture Sector

Farm mechanisation practices in India have come a long way in recent years, and tractors have become an essential part of the process. The extensive use of tractors and other farm equipment is helping to address issues concerning farm productivity in the country.

Easy Credit Availability

Many financial institutions are providing easy credit availability to farmers, and favourable government policies and subsidy programmes are also helping. Various loan schemes, easy breakdown of instalments according to crop cycles, and low-interest rate plans generate funding for mechanisation. Any farmer with 8 acres of land can

take a tractor loan to be paid over nine years with 12.5% interest over the principal amount as per Indias National Bank for Agriculture and Rural Development (NABARD) norms. Various concessions from the Indian government have helped small farmers purchase the machine.

Government Support

The Indian government provides subsidies for purchasing tractors below 18 HP under central sector extension programmes. This subsidy is being provided to farmers individually or in groups with irrigated land between 2.4-3.2 ha. The farm power availability has increased to 2.76 kW/ha in 2021, and the government has set a target to achieve 4 kW/ha by 2030, which is anticipated to boost the sale of agricultural machinery in India.

Manufacturing Assets

Escorts Kubota is one of Indias foremost tractor manufacturers. We offer more than 200 variants in the 12HP to 75 HP segments in the domestic market under brands Farmtrac, Powertrac, Digitrac, E-Kubota and Steeltrac. We have a growing network of over 1,200 dealers and ensure the satisfaction of our customer base of more than 2 million. Additionally we offers engines, spare parts and lubricants, SHIP (Sprayers, Harvesters, Implements and Planters) and gensets to our portfolio.


During the financial year FY 2022-23, EKL domestic tractor volume went up by 9.5% to 95,266 tractors as against 87,043 tractors in the previous fiscal. EKL growth was lower than industry growth, this loss has mainly come from our strong markets, and that too from a particular HP segment, where industry shift has happened. The Company maintains lean inventory both at its own depots and at its dealerships. On Dealer development side, the Company continued its efforts around channel expansion, the total dealer count in India is now more than 1,200.

On Export side, EKL volumes went up by 11.7% to an all-time highest 8,024 tractors as against 7,185 tractors in the previous fiscal, driven by continued focus on new product development and on expanding distribution network through new channel partners. Sales through Kubotas global network are also gradually increasing and during the year contributed more than 30% of total export volume.

EKL Agri Machinery Business Division Domestic Market Share Performance

(in %)

FY 2017-18 FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22 FY 2022-23
< 30 HP 3.5 4.7 6.3 6.7 5.9 6.1
31-40 HP 14.5 16.5 15.2 13.3 11.9 11.1
41-50 HP 10.4 10.8 11.0 11.8 10.8 10.6
> 50 HP 7.9 5.9 6.7 7.1 7.2 7.7

Tractor market share improved from 10.1% to 11.8% between FY 2015-16 and FY 2018-19. For the next two years it had a marginal decline to 11.3% in FY21, owing to various supply chain issues in the peak COVID-era inhibiting our ability to meet the demand. In FY 2021-22 we declined further by 1%, your Companys domestic market share came to 10.1% for FY23. Your Company has taken corrective actions accordingly and in the last 9 months of fiscal i.e. from July 2022 to March 2023, our Domestic market share improved to 10.4% as against 10.2% same period in FY22 fiscal.


We launched new tractor variants under Powertrac series that offer high performance and fuel efficiency designed for Indian markets.


• One of the oldest and one of the most reputed players in the market with a significant market share and brand value

• Constantly developing to provide supply for increase in demand

• Ever-expanding and market specific product portfolio resulting in increased market penetration

• Institutionalising a robust framework for risk governance to incorporate sustainability

• Entering new markets and strengthening distribution network through the help of partnerships and alliances

• Combating climate change through initiatives which drastically reduce our carbon footprint


• Access to Kubota Global Network

• Huge incentives by the government to improve the agriculture and allied sector in the country

• Constant focus by the government to increase demand by increasing the purchasing power capacity of people

• Increase in the literacy rate of the populace, leading to better economic growth and more demand

• Forecasted economic growth to lead to increased urbanisation and higher demand


• New entries and older players may flourish as the market industry continues to grow, leading to pressure on pricing

• The agricultural sector is highly reliant on the climate and the weather. Bad climatic conditions can lead to poor yield leading to an unsteady supply

• Geopolitical decisions can drastically impact the demand and supply of commodities


• Government intervention and sudden policy changes can stunt short-term growth of the business

• Supply chain issues impacting production

Agri Machinery Outlook

The agriculture sector in India is expected to generate better momentum in the next few years due to increased investment in agricultural infrastructure such as irrigation facilities, Warehousing, and cold storage. Furthermore, the growing use of genetically modified crops will likely improve the yield for Indian farmers. India is expected to be self-sufficient in pulses in the coming few years due to the concerted effort of scientists to get early maturing varieties of pulses and the increase in minimum support price.

In the next five years, the central government will aim US$ 9 billion in investments in the fisheries sector under PM Matsya Sampada Yojana. The government is targeting to raise fish production to 220 lakhs tonnes by 2024-25.

Through the Ministry of Food Processing Industries (MoFPI), the Government of India is taking all necessary steps to boost investments in the food processing industry in India. The Government of India has continued the umbrella PMKSY scheme with an allocation of H4,600 crores (US$ 559.4 million) till March 2026.

New Emission Norms

Trem IV for greater than 50 HP industry from 1st January, 2023

India domestic tractor market remains a medium to high HP market, with more than 90% of the sales coming from up to 50HP tractors, from 1st January, 2023 has moved to Trem IV emission norms. However, this transition to new emission norms in the tractor industry has not created a major disruptor as it would apply only to vehicles with engine capacity higher than 50 HP, impacting around 10% of the overall industry volumes.


Indian construction equipment (CE) industry is experiencing a surge in Y-o-Y sales growth of 26% in FY20231. This impressive performance is attributed to

increased sales across all equipment segments, including earthmoving, material handling, material processing, except the road construction equipment which recorded a slight de-growth. Earth moving equipment (backhoe loaders), material handling (cranes) and road building (compactors) account for 63% of the industry. With the addition of the

excavators to the mix, the concentration goes to 87% of the total market for construction equipment. The sharp rise in road and infrastructure construction activity across the country, driven by significant governmental spending and private sector programmes, is the main reason for this growth.

Served Industry Volume Growth

(in 000 units) FY 2017-18 FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22 FY 2022-23 Y-o-Y growth 5-year CAGR
Backhoe loaders 38.6 47.2 39.7 45.6 32.7 41.9 28.2% 1.7%
Cranes 8.1 10.2 7.8 7.4 7.6 9.4 24.1% 3.1%
Compactors 4.2 5.0 4.4 4.8 4.2 4.0 -3.7% -0.7%

Construction equipment industry outlook

The Government of Indias continued emphasis on infrastructure development, buttressed by increased capital expenditure announced in the Union Budget 2023, will contribute to the growth in FY 2023-24, and there could be an increase in the market size by 1520% during the year. However, with the general election around the corner in mid- 2024, the CE industrys growth cycle may

slow down in FY 2024-25 and the growth could be flat or decrease by 5-10%, which is a historically observed norm for the fiscal year following elections. Overall, the industry is quite upbeat about its achievement during the FY 2022-23 and quite optimistic about its growth in the near term.

To this end, the government has opened national highway projects worth US$1.7 billion and signed a contract with Dubai to build infrastructure in Jammu and Kashmir. Additionally, the government has provided policy support by offering a 50-year interest-free loan to state governments and establishing the National Infrastructure Pipeline, which has projects worth US$1.3 trillion at different stages of implementation. The government has also increased its capital investment outlay for infrastructure by 33% to US$122 billion and established an Infrastructure Finance Secretariat to promote private investment in infrastructure. Finally, the National Investment and Infrastructure Fund has been set up to facilitate investment across multiple sectors in India. These efforts are expected to improve Indias infrastructure and foster economic growth.

Manufacturing Assets

Escorts is a dominant player in material handling, earth moving and road building segments of construction equipment. The Company is one of the worlds largest manufacturers of pick-and- carry hydraulic mobile cranes.

EKL Construction Equipment volumes went up by 12.2% to 4,620 machines as against 4,117 machines in the previous fiscal Segment revenue went up by 19.5% at H1,179.0 crores as against H986.8 crores in previous fiscal. EBIT margin up by 48 bps to 2.9% as against 2.4% in the previous fiscal.

EKL Construction Equipment Business Division Volumes

(in units) FY 2017-18 FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22 FY 2022-23 Y-o-Y growth 5-year CAGR
Volume 4,486 5,544 4,042 3,913 4,117 4,620 12.2% 0.6%

External Challenges

Low-cost manufacturing countries are expanding their distribution centres and after sales network in India, this is a challenge for high-end construction equipment. These foreign players pose as competitors for Indian construction equipment exports not only in Indian markets but also the developed markets.

CE outlook

There is a sustained demand for construction equipment industry, supported by the Governments continued thrust across all the infrastructure. We expect demand momentum to continue going forward for the current quarter and further accelerate in FY 2023-24 and margins for the segment to improve gradually owing to our various cost reduction initiatives and improvement in other operating metrics.


India has the 4th largest railway system in the world, behind only the US, Russia and China

Indian Railways consists of a total track length of 126,366 km over 67,956 km of the route along with 7,335 stations. 5,243 kms of track length was achieved during 2022-23 as compared to 2,909 kms during 2021-22. The railways operate 13,523 passenger trains and 9,146 freight trains daily. Indian Railways achieves record Freight loading of 1512 MT in FY 2022-23. Indian Railways is the single largest employer in India and the eighth largest in the world, employing approximately 1.3 million people.

• Vision 2024 has been envisaged to achieve targets of 2024 MT freight loading by 2024.

• Mumbai-Ahmedabad high-speed rail project sanctioned at a total cost of $14.27 billion.

• The railway sector of India aims to electrify the entire network by 2023 which will lead to annual energy savings of $1.55 billion.

• As of February 2023, 85% of the total Broad-Gauge network has been electrified. With this, Indian Railways has completely electrified 6 zonal railways and is rapidly progressing towards its target of 100% electrification and becoming the largest green railway network in the world.

• 6,542 RKms has been achieved during 2022-23

• 74,000+ Freight Wagons in next 3 years

• 400+ new generation Vande Bharat Trains to be manufactured during the next three years.

• 100 PM Gati Shakti Cargo terminals for multimodal logistics to be developed during the next three years.

In recent years, the Government of India has undertaken multiple policy changes, making the sector more investor friendly, and is looking at increased interest in the form of foreign direct investment and public-private-partnerships. All these factors is expected to put the industry on good growth trajectory.

The Indian rail components market also is expected to grow at a steady pace in the coming years. It is driven by the governments investment in railway infrastructure, new range of rolling stocks for passenger and freight wagons with adoption of new technologies. The key players in this market needs to have significant expertise in manufacturing and supplying of railway components, It is an highly fragmented market.

Escorts Kubota - Railway Equipment Business Division

EKL is the trusted supplier of Indian Railways, Private Wagon Builders, Metros organisations and other range of rolling stock manufacturers. Your Company offer a diverse range of products including brake systems, couplers, suspension systems, friction products etc.

Railway Equipment Business Division performance

Revenue for the year ended March 2023 went up by 32.3% to our ever- highest yearly revenue of H841.9 crores as against H636.2 crores in the previous fiscal. Sales from New products & Metro contribute 65% to total division sales. EBIT margin for the year ended March 2023 stood at 13.8% as against 14.8% in the previous year.

Order book for the division, at the end of March 2023, stood at a healthy and ever highest level of more than H1,050 crores. We have been growing with an CAGR of 24% in last 5 years. Our growth trend is expected to continue considering global strategic partnerships, Rigorous product development with focus on quality and service excellence.

(In K crores) FY 2017-18 FY 2018-19 FY 2019-20 FY 2020-21 FY 2021-22 FY 2022-23 Y-o-Y growth 5-year CAGR
Revenue 286.6 394.1 477.2 479 636.2 841.86 32.3% 24.0%

Railway Components Industry Outlook

We expect that efforts to augment more coaches and wagons will continue. Growth drivers over the medium to long term include increase in ordering of rolling stock of freight wagons, additional metro projects, introduction of Semi-Hi Speed trains with overall continuous emphasis on the safety and modernisation of Railways.

With the rapid pace of urbanisation and modernisation in India, the future seems bright for Railway Equipment business Division as Indian Railway network is growing at a healthy rate. In the next five years, Indian railway market is expected to be the third largest, accounting for 10% of the global market.


Global technology collaboration with in house world class manufacturing and advanced testing facilities will enable us to attain a lean manufacturing culture and set its benchmark with its product innovation. The division will continue to expand its range of products with Indian rolling stock manufacturers and explore various opportunities overseas also. Augmentation of localising import content of its new and existing products will continue for increasing margins with time. This will help maintain healthy profitability levels. Focus will be on conforming to more international standards and widening our global reach to customers.

We are witnessing good traction in tendering process and with continuous focus on product diversification through new products, Exports, in FY24, we expect the railway equipment business segment will continue its growth at a similar pace.

With our top priority being faster product development for new range of rolling stocks and timely execution of existing order pad as per given schedule. We expect double-digit growth to continue in FY24.

Rational Cost Structure

Your Company continues with its rigorous cost restructuring exercises and efficiency improvements which have resulted in significant savings through continued focus on cost controls, process efficiencies and product innovations that exceed customer expectations in all areas thereby enabling the Company to maintain profitable growth in the current economic scenario.

As new products play a greater role in driving revenue, there is greater emphasis on lowering margins, improving personnel costs, maximising productivity, monitoring quality and indigenising design. Escorts focused divestment of non-core operations has freed up capital that was tied up in non-current investments. Various projects are helping the Company to further rationalise costs, including legacy bottlenecks, materials, manufacturing, and overheads, while strengthening our initiatives with prudent resource allocation and outcome mapping.

Human Resources

Escorts Kubota has a dedicated workforce of over 13,600 employees, including temporary, casual, and contractual workers, who are instrumental in driving the Companys growth across various business functions. The Company has undertaken various initiatives to transform its human capital, which are elaborated on in detail on Page 78 of this report. By investing in the development of its workforce, Escorts Kubota aims to create a culture of excellence, innovation, and inclusivity that fosters employee growth and engagement, leading to sustainable business success.

Community Empowerment

Escorts Kubotas commitment to corporate citizenship extends beyond simply meeting the 2% CSR mandate. Our

efforts encompass a wide range of areas such as health and wellness, education, and environmental safety, among others. Our approach towards community development and environment is geared towards promoting holistic and sustainable growth.

During the year, we undertook several initiatives as part of our commitment to corporate social responsibility. For detailed information on our CSR initiatives, refer to page 70.

Investor Relations

We constantly endeavour to improve our investor services and benchmark our performance against best practices. We have a dedicated investor relations desk at EKL and also at KBT Japan, which services the interest of the investing community, through regular contact and timely communication - engaging global investors and shareholders in ongoing management meetings. We conducted periodic meetings to communicate details of performance and important developments, and to exchange information.

The Chairman and Managing Director, Deputy Managing Director, Whole time Director and Group Chief Financial Officer, and investor relations team manage and represent Company in interactions with investors, the media, and various other platforms. We ensure that all critical information about our Company is available to all investors by uploading such information on stock exchanges and website (www.escortsgroup. com). It contains a dedicated ‘Investor Information section where relevant information meant for shareholders is available, including information on the Directors, shareholding pattern, quarterly reports, financial results, annual reports, press releases, details of unpaid/unclaimed dividends and various policies. The quarterly earnings release is accompanied by an earning call, with the transcript and audio of the same available on website. Material developments during the quarter that might impact revenue or earnings are intimated to the stock exchanges and through the website. Quarterly results, regulatory filings, transcripts of earnings call, Investor Relations presentations and schedules of analyst and investor interactions are available at https://www.escortsgroup. com/investors/overview.html.

Your Company detailed handbook covering FAQs for the Shareholders under governance section on Investor Relations page of the Companys website on various topics related to transfers and transmissions of shares, dematerialisation, nomination, change of address, loss of share certificates, dividend and sub-division of share certificates.

Periodic reminders for unpaid dividends are sent to the shareholders, as per our records; they are also accessible on the website. For any queries/suggestions, one can write to investor.relation@ and we will revert within three working days.

The ‘forward-looking statements part of the Management Discussion and Analysis on economic indicators is based on our best estimate of the current environment. This may be subject to change, based on external macro-economic factors out of control, including, but not limited to raw material availability and prices, cyclical demand and pricing in our principal markets, and changes in Government regulations, tax, and economic policies.

Information Technology (IT)

Escorts Kubota is transforming, and IT is playing a critical role in enhancing revenue and improving efficiencies that reduce costs. IT-enabled business processes leverage new technologies to deliver on digitalisation as well as digitisation. Digitised processes to improve productivity and controls and digital projects to increase customer outreach have been implemented. We upgraded your Company enterprise applications infrastructure to cater to the needs of increased business transactions. We integrated dealer sales executives on a digital mobile learning platform to learn the latest features of products, helping increase business and customer experience.

Your Company has a dedicated team of IT digital assets that serve to revolutionise the sales process, elevate consumer experience and convenience, optimise business performance, facilitate trial and evaluation, and bolster purchase intent among consumers. To meet the goal, we have constructed regional websites that offer a seamless and tailored experience

for customers in each respective state. Through your Companys efforts, we have already achieved a significant milestone: generating digital leads during the pilot process.

Moving forward, your Companys complete focus will be on fostering adoption of these digital assets to meet the Companys MTPB objectives. We are committed to continuing the journey of digital transformation and expect going forward will be an exciting journey as transformational initiatives were planned and conceptualised and we are confident that your Companys efforts will yield significant dividends for all our stakeholders.

Internal Controls

A strong risk management and internal control system formed the backbone of robust corporate governance practices. Ernst & Young (EY) as your Companys internal auditors conduct periodic audit as per discussion with audit committee, to deliver a reasonable assurance of recording the transactions of operations in all material respects and providing protection against significant misuse or loss of assets, among others. We have a defined risk management policy at the Board level, based on the pre-identified types of risks, the risk events or factors that require regular assessment and the probability-based responses.

Risks and Mitigation

We recognise that proactive risk management is both an essential element of sound corporate governance and a crucial enabler to realise opportunities.

A detailed review of our risk management framework is available on Page 54 of the Integrated Annual Report.

Financial Performance

Your Companys consolidated revenue from operations stood at H8,428.7 crores in FY 2022-23, up by 15.7% as against H7,282.7 crores in FY 2021-22. Consolidated Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) stood at H777.6 crores in FY 2022-23 as against H995.4 crores in FY 2021-22. Consolidated Profit After Tax (PAT) stood at H636.6 crores in FY 2022-23 as against H735.6 crores in FY 2021-22.

In accordance with the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018, we are required to give details of significant changes (change of 25% or more as compared to the immediately previous financial year) in key sector-specific financial ratios. We have identified and listed the same below along with some key figures:


Particulars Consolidated Standalone
FY23 FY22 FY23 FY22
Revenue from Operations 8,428.69 7,282.65 8,344.95 7,196.90
Material Costs 6,122.88 4,978.51 6,066.94 4,932.80
RMC 5,776.18 4,534.63 5,721.89 4,492.43
Traded Goods 510.35 510.82 509.03 508.74
Change in Inv -163.65 -66.94 -163.98 -68.37
PAT 636.65 735.61 606.98 765.61
Revenue Growth 15.74% 3.82% 14.59% 3.86%
EBITDA 777.52 995.41 780.42 995.53
Operating Profit Margin 9.22% 13.67% 9.35% 13.83%
Net Profit Margin 7.55% 10.10% 7.27% 10.64%
Basic EPS 58.85 74.06 46.74 58.91
Trade Receivables 1,179.65 792.62 1,207.56 827.56
Trade Receivable Days 51 40 53 42
Inventory 1,217.68 846.56 1,159.04 803.57
Inventory Turnover 73 62 70 59
EBIT 908.39 1,037.15 912.55 1,034.58
Interest Expense 13.27 14.97 10.26 12.70
Interest Coverage Ratio 68.45 69.28 88.94 81.46
Equity 8,182.83 7,596.15 8,434.81 7,878.18
Net worth 8,182.83 7,596.15 8,434.81 7,878.18
Return on net worth/Equity 7.78% 9.68% 7.20% 9.72%
No. of Shares O/S 10,83,23,031* 10,81,18,406 12,97,65,374 12,95,60,749
Share Price- NSE 1,891.90 1,690.85 1,891.90 1,690.85
Share Price- BSE 1,891.05 1,691.40 1,891.05 1,691.40
M Cap (As per BSE) 20,484.43 18,287.15 24,539.28 21,913.91
Revenue Multiple 2.43 2.51 2.94 3.04
PE Multiple 32.13 22.84 40.46 28.71

* Excluding 2,04,625 shares exercise in FY 2022-23 For more ratios kindly refer:- ~Note no. 48 of Consolidated financial at page 391 -Note no 48 of Standalone financial at page 296

Your Company Agri Machinery Business Division revenue increased by 13.5%, from H5,563.7 crores in FY 2021-22 to H6,316.1 crores in FY 2022-23. Tractor sales stood at 1,03,290 units in FY 2022-23 vis-a-vis 94,228 in FY 2021-22, representing 9.6% growth. The Earnings Before Interest and Tax (EBIT) for the division stood at H587.4 crores in FY 2022-23 vis-a-vis H856 crores in FY 2021-22.

Construction Equipment Business Division revenue grew by 19.5%, from H986.8 crores in FY 2021-22 to H1,179.0 crores in FY 2022-23. Construction equipment volumes rose by 12.2%, from 4,117 units in FY 2021-22 to 4,620 units in FY 2022-23. The EBIT stood at H34.1 crores in FY 2022-23, compared to H23.9 crores in FY 2021-22.

Railway Equipment Business Division Revenue grew by 32.3% to our ever-highest yearly revenue of H841.9 crores in FY 2022-23 from H636.2 crores in FY 2021-22. The EBIT stood at H115.9 crores in FY 2022-23, compared to H94.3 crores in FY 2021-22.

Note: The ‘forward-looking statements that are part of the Management Discussion and Analysis on economic indicators is based on our best estimate of the current environment. This may be subject to change based on external macro-economic factors that are beyond our control, including but not limited to raw material availability and prices, cyclical demand and pricing in the Companys principal markets, changes in government regulations, tax, and economic policies, among others.

For and on behalf of the Board of Directors
Place: Faridabad NIKHIL NANDA
Date: May 10, 2023 Chairman & Managing Director