escorts ltd Management discussions



In 2021, owing to the successful rollout of vaccines across major economies, there was gradual recovery in the global economic scenario. However, the pace of recovery slowed due to successive waves brought along by newer variants and subsequent supply chain disruptions, which caused a surge in the prices of crude oil and other commodities around the world. The global economy made a sharp, V-shaped recovery following the Delta wave with resumption of economic activities and accelerated consumer demand, supported by favourable fiscal and monetary policies globally. The spurt in demand led to further rise in commodity and energy prices, leading to broader inflation across economies globally.

Consequently, central banks started tightening monetary policies to combat the rising inflation.

The world witnessed a major increase in economic activities enabled by various factors such as vaccination at a massive scale, huge stimulus packages, and quality monetary and fiscal policies provided by governments throughout the globe. These initiatives helped the global economy recover at a quicker pace than expected. There was also an impetus on infrastructure investments, which drove the construction sector in FY2022.

Overall, the global economy grew by 6.1% in 2021, against 7.3% decline in 2020. The advanced economies grew by 5.2% and the Emerging Market and Developing Economies (EMDE) grew by 6.8%1.


The conflict between Russia and Ukraine negatively impacted the outlook for the global economy. It added to the inflationary environment as fuel and food prices skyrocketed and further impacted the global supply chain. Many emerging markets and developing economies are looking to rebuild fiscal buffers. Advanced economies announced interest rate hikes to control inflation. Some economies, including Brazil, Hungary, Mexico, Russia and Turkey, have begun normalising monetary policy measures to head off upward price pressures.

The Ukraine and Russia crisis has led to the loss of human life and triggered the biggest refugee crisis in Europe since the Second World War. The interest rates are expected to further rise as central banks tighten policy measures, exerting pressure on Emerging Markets and Developing Economies.

After a strong recovery in 2021, short-term indicators suggest that global activity has slowed. In 2022, the global economy is expected to expand at 3.6%, wherein advanced economies are expected to expand by 3.3% and EMDE are expected to grow at 3.8%. Inflation is expected to remain elevated for longer than in the previous forecast, driven by war-induced commodity price increases and broadening price pressures.

Inflation is projected at 5.7% in Advanced Economies and 8.7% in Emerging Markets and Developing Economies for 2022. If signs emerge that inflation will be high over the medium term, central banks are anticipated to react faster than current expectations—raising interest rates and exposing debt vulnerabilities, particularly in the emerging markets. Recent lockdowns across key manufacturing and trade hubs in China are likely to result in global supply disruptions.

There is a gradual resolution of supply-demand imbalances and a modest pickup in labour supply is expected in the baseline, which will eventually ease price inflation, an uncertain environment notwithstanding.


India was forecasted to become the fastest growing economy in the world in FY2022, despite the setbacks from the second wave of the pandemic. Most activities halted throughout the country as lockdowns and restrictions were re-imposed by respective state governments. The Indian government was quick to accelerate their vaccination drive with over 193 crores doses administered in India as of May 2022, including booster doses being rolled out. The agriculture sector cushioned the shock of the pandemic on the Indian economy in FY2021 and was the only sector, which contributed positively to the overall Gross Value Added (GVA) in Q1 as well as Q2 of FY2022.

As per the Economic Survey, during FY2021, while the GVA for the entire economy contracted by 7.2%, the agriculture sector registered a growth of 3.6% in FY2021 and 3.9% in FY2022. The area sown under kharif and rabi crops, and the production of wheat and rice has been steadily increasing over the years. This year, agricultural exports out of India crossed $50 billion and the country exported record volumes of wheat, registering a growth of ~288% in terms of value.

The GDP growth of the country in real terms was estimated at 9.2% in FY2022 after a contraction of ~7.3% in the previous year, implying that economic activity will recover past pre-pandemic levels. The monetary policy since the outbreak of COVID-19 has been calibrated to provide a cushion and support growth. However, it was also regulated prudently to avoid the medium-term dislocations of excess liquidity. Growth in FY2023 is expected to be supported by widespread vaccine coverage, gains from supply-side reforms, easing of regulations, robust export growth and availability of fiscal space to ramp up capital spending.

Source: Key Highlight Economic Survey 2021-22


The Indian economy is well placed to continue its growth and take on novel challenges in FY2023, as it witnessed a strong recovery in FY2022. According to the projections of the International Monetary Fund, the Indian Economy is expected to be among the fastest growing major economies in the world between 2021 and 2024 by growing at 8.2% in FY2022, 6.9% in FY2023 and at 7% in FY20242. The implementation of the Production Linked Incentive

2 International Monetary Fund Data Mapper

(PLI) scheme across 14 sectors has the potential to create 60 lakhs new jobs and an additional production of 30 lakh crores. Indias GDP is expected to grow ~8% - 8.5% in FY2023, aided by widespread vaccine coverage, gains from supply side reforms and easing of regulations and restrictions, robust export growth as well as increased capital expenditure. The Reserve Bank of India (RBI) tightened the monetary policy to combat the rising inflation driven by the surge in global oil prices amid the Russia-Ukraine crisis3. The projected inflation rate in India for FY2023 is 5.7%. The conflict between Russia and Ukraine has led to a rise in the prices of energy, oil and food, besides other commodities, which has added to inflation 4.



The agriculture sector became the driving force of the Indian economy during the COVID-19 pandemic. Agriculture along with its allied sectors, including animal husbandry, dairying and fishing are steadily emerging as high growth sectors. With accelerated farmer education and focus on mechanisation, the sector has seen growth in yield and production over the years3. According to the India Brand Equity Foundation (IBEF), India has the second-largest arable land resources in the world. Of the 20 climatic regions, India has all the 15 major climates and is home to 46 of the 60 soil types in the world6. These favourable conditions make India a better place for agricultural investments.

Even though Indian agriculture has come a long way, labour shortage in peak season and low productivity are still key issues facing the sector, which can be reduced by further improving farm mechanisation. The Government of India has been providing policy support in the form of growing institutional credit, introduction of new schemes such as Paramparagat Krishi Vikas Yojana, Pradhanmantri Gram Sinchai Yojana, Sansad Adarsh Gram Yojana and others, while increasing exports of wheat and rice.

Tractors have historically played a dominant role in farm mechanisation and increasing productivity across the world. The first tractors in India were bought in 1940s, but their use became widespread during the early 1960s, with full fledged entry of homegrown companies into the scene. Over decades, India emerged as the largest producer of tractors in the world and a major exporter, though the domestic industry retains its growth potential with significant headroom. The country has significantly lower mechanisation levels compared to the rest of the world. Inter-state differences in mechanisation levels also present considerable opportunity for growth. Volume growth in the past four decades show a CAGR of 7.5%. Government initiatives such as the National Rural Employment Guarantee Act (NREGA) and increased usage in non-agricultural domains such as construction and infrastructure projects are expected to further increase demand for tractors7.

Domestic industry performance

During FY2022 the domestic tractor industry volumes declined by 6.4% to 8.42 lakhs tractors as compared to 8.99 lakhs tractors in FY2021. This is primarily attributable to late monsoon rains, delayed harvest of kharif crops impacting rural cash flows and coming over high base of last year. A 6.4% drop over the peak of FY2021 notwithstanding, the tractor industry in FY2022 recorded its second highest peak. While the industry remained subdued throughout the second half of FY2022, recent trends are pointing to the building up of positive sentiment.

Export industry performance

On the tractor export side, the industry was up in FY2022 by 45.2%, with the highest ever 1.28 lakhs tractor volume as compared to 0.88 lakhs tractors in the previous fiscal.

3 Key Highlights of the Economic Survey 2021-22

4 Reserve Bank of India - Minutes of the Monetary Policy Committee Meeting, April 6 to 8, 2022

5 NABARD Annual Report 2020-21

6 IBEF – Agriculture & Allied sectors

7 Tractor Mechanisation Association

Domestic tractor industry segment-wise performance

(In lakhs) (%)
HP Category FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022 Y-o-Y growth 5-year CAGR
<30 HP 0.5 0.8 0.8 0.7 0.8 0.9 6.9% 12.5%
31-40 HP 2.0 2.6 2.8 2.4 2.5 2.4 -5.6% 3.7%
41-50 HP 2.8 3.4 3.7 3.5 4.8 4.5 -6.2% 10.0%
>50 HP 0.4 0.6 0.6 0.6 0.9 0.7 -21.7% 11.8%

Tractor industry outlook

As we step into FY2023, most of the macro-economic factors look positive for the tractor industry. In April 2022, the Indian Meteorological Department (IMD) released their predictions of a normal monsoon this year, making it the fourth consecutive year with stable monsoons. Quantitatively, according to the IMD, rainfall is expected to be at 99% of the long-period average (1971-2020), which was 87cm of rainfall for the entire country. In the second half of FY2022, we saw water reservoir levels rise and exceed the previous year as well as the 10-year average levels. We witnessed a heat wave in the beginning of FY2023, which has started to deplete the water reservoir levels in some parts of the country. However, we remain positive that normal monsoon predictions will ensure that the water reservoir levels of the country dont face any threats during the impending year. The capital expenditure in the budget for FY2023 rose by 24.5% over the previous year to 7.5 lakh crores, which is expected to improve rural cash flow.

Other macro-economic factors are also expected to be favourable, with steady increase in commodity price inflation being an exception.

Long-term growth drivers:

Continued government focus on agriculture Easier credit access from the government Fast transition towards mechanisation Scarcity of labour due to rising wages Product portfolio expansion

Escorts Agri Machinery (EAM)

Manufacturing assets

We are one of Indias foremost tractor manufacturers, offering 200+ variants in the 12HP to 75 HP segments within the domestic market, under three marquee brands, including Farmtrac, Powertrac and Steeltrac. We have a growing network of 1,100+ dealers and ensure the satisfaction of our customer base of more than 2 million. Additionally, we offer end-to-end crop solutions, engines, spare parts, lubricants, SHIP (Sprayers, Harvesters, Implements and Planters) and gensets to our portfolio.

Standalone Operations
3 Plants in India for tractors and components, Faridabad, Haryana 1,20,000+ Annual tractors production capacity 75% Capacity utilisation in FY2022
Consolidated Operations
2,500 Annual tractors production capacity in 1 Plant in Poland. 100% subsidiary 50,000 Annual tractor production capacity plant In Faridabad, India as Escorts Kubota India JV 1 Plant in Rajkot, India under JV with ADICO

EAM performance

Our domestic volume declined by 14.5% at 87,043 tractors in FY2022 as against 1,01,848 tractors in FY2021. During the year, we were highly focused on bolstering our channel profitability, which was strained because of frequent price hikes. This is unconventional in the industry and further slowdowns resulted in less volumes for dealers. Among other measures, we reduced our dealer stocks to bring down the working capital cost of our dealers. We are maintaining a lean inventory at our own depots and dealerships to support channel profitability. For

FY2022, our domestic market share stood at 10.3% as against 11.3% in the previous fiscal.

Our export volumes went up by 46.8% to 7,185 tractors in FY2022 as against 4,893 tractors in FY2021. This was driven by continued success of new products launched over the last few years by us and our expanding distribution network. Our partnership with the Japanese -Kubota Corporation has greatly enhanced our distribution network and service reach along with expansion of the product portfolio from high performance tractors to basic tractors.

Tractor market share improved from 10.2% to 11.8% between FY2016 and FY2019. However, over the following two years it recorded a marginal decline to 11.3% in FY2021, owing to various supply chain issues in the peak COVID-era inhibiting our ability to meet demand. In FY2022, our market share declined by 1%, as the industry in our strong markets like UP (at -14% to -15%) and Bihar (at -20%) underperformed compared to some of our weaker markets such as Maharashtra (at +20%), Karnataka (at +5%), Andhra Pradesh (at -3%) and Gujarat (at -4%).

EAM domestic market share performance

HP Category FY 2017 FY 2018 FY 2019 FY 2020 FY 2021 FY 2022
< 30 HP 2.1 3.5 4.7 6.3 6.7 5.9
31-40 HP 12.6 14.5 16.5 15.2 13.3 11.9
41-50 HP 11.7 10.4 10.8 11.0 11.8 10.8
> 50 HP 6.9 7.9 5.9 6.7 7.1 7.2


Through evolving operating landscapes, we have kept our customers at the core to ensure their satisfaction through continuous innovation and new product launches. During the year under review, we launched six new tractor variants under the Powerhouse series with improved power, fuel efficiency, application suitability, lower maintenance features at the best price. Every tractor under the series has enhanced power up to 5HP.

The newly launched tractors under the Powerhouse series ranges from 39HP category to 55HP category.


Farmtrac 45 Powermaxx is the most powerful tractor in 50 HP segment. With a bigger engine (capacity 3514 cc), this model generates higher power output and can run bigger implements with ease. Farmtrac 45 Powermaxx is also fully loaded with advanced features like MRPTO, dual clutch, power steering, DC valve, among others. Farmtrac 45 Powermaxx tractor is best suited to run bigger implements. With its high-power output and big tyres, it serves as the most suitable companion for various implements. The big tyres and EPI reduction make it the best in haulage and commercial applications as well.

Agriculture industry growth drivers:

Population increase coupled with increase in per capita income Trend of rising exports Introduction of countless government schemes Gradual increase in irrigated land in India Favourable climatic conditions allowing wide variety of crops
• One of the oldest and most reputed players in the market with significant market share and brand value • Ever expanding and market specific product portfolio enabling increased market penetration
• Constantly evolving to supply for demand increase • Entering new markets and strengthening distribution network by way of partnerships and alliances
• Government intervention and sudden policy changes can stunt short-term business growth • Supply chain issues impacting production
• Huge incentives by the government to improve the agriculture and allied sectors in the country • Amplifying the literacy rate of the populace, leading to better economic growth and higher demand
• Constant focus by the government to increase demand by bolstering the purchasing power of people • Forecasted economic growth to lead to increased urbanisation and higher demand
• Existing MNC players may flourish as the industry continues to grow, leading to pricing strains Bad climatic conditions can lead to poor yield and unsteady supply
• The agriculture sector is highly reliant on weather and the climate. • Geopolitical decisions can drastically impact the demand and supply of commodities

EAM outlook

Even as inflation lingers and commodity prices see a strong upward trend, we anticipate speedy stabilisation on both fronts. We have already made five quarters, including a recent price hike made in mid-April 2022. These hikes were implemented to balance our profitability and volume goals.

While such frequent price increases are unprecedented in our industry, we see another price escalation in the latter part of the first offsetting the impact of inflation for the pricehikesinsix ongoing year. The medium-term, macro-economic factors remain positive on account of record rabi harvest, sustained crop prices, and favourable monsoon predictions this year.

We are poised to gain market share by way of consistent product innovation, dual distribution strategy (Farmtrac and Powertrac brands),halfofthisyear, focused marketing efforts, solutions for channel partners, scientific sales management and comprehensive after-sales support.

Exploring a world of new possibilities

Escorts and Kubotas India business will merge operations going forward to single entity.

Market access:With Kubotas expansive network and global presence, Escorts will gain the advantage of entering high potential untapped markets along with leveraging each other strengths in India.

Joint R&D: Both companies will develop quality, efficient and future-ready products as well as more advanced farm and construction equipment by utilising Kubotas decades of product development experience and Escorts frugal manufacturing and engineering capabilities.

Manufacturing excellence: Escorts will leverage Kubotas culture of excellence in manufacturing to increase productivity, operational efficiency, capacity utilisation, thereby reducing cost.

Ensuring customer satisfaction: Both companies have always prioritised better customer experience through continued innovation, proactive after-sales service and customer support.


The construction equipment industry has a strong positive correlation with the progress in road construction and mining activities. The infrastructure sector received massive boost from the government in the form of expenditure support. Government initiatives such as Ujwal Discoms Assurance Yojana (UDAY), PMAY – Urban Housing for All and Bharatmala Pariyojana intend establish and improve quality infrastructure. India is expected to become the worlds third largest construction market by the end of 2022. India has the third largest road network in the world spanning over 3.3 million km. The three major heavyweights in the industry are earth moving equipment (backhoe loaders), contributing the lions share by value, material handling (cranes) and road building (compactors). These three account for 52% of the industry. With the addition of the excavators to the mix, the concentration goes to 81% of the total market for construction equipment.

Industry performance

Our served industry (backhoe loaders, pick-n-carry cranes and compactors) went down by 23% in FY2022 compared to FY2021. Only the Crane industry showed marginal growth of 1.8% while shifting to the price-sensitive HYDRA segment. Compactor segment declined by 11.6% and the backhoe loaders industry went down by 28.2%.

8 Press Information Bureau

Construction equipment industry outlook

The government, in its budget for the year, increased allocations to infrastructure, underlining the importance of infrastructure development in India. In the short term, the prospects of the construction equipment industry seem positive, barring inflation, which has been increasing steadily amid political unrests between Ukraine and Russia. From the medium- and long-term perspective, given the governments thrust on monetisation through disinvestment and huge investment through projects under NIP, we expect the industry to show stronger recovery going forward. The Parliament passed a bill to set up the National Bank for Financing Infrastructure and Development (NaBFID) to fund infrastructure projects in March 2021. The government allocated 13,750 crores to support initiatives such as ‘Housing for All and ‘Smart Cities Mission8. In November 2021, India, the US, UAE and Israel established a new quadrilateral economic forum to focus on infrastructure development projects in the region and strengthen bilateral co-operation. This agreement could prove to be a gamechanger for the construction equipment industry.


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

The JV with Tadano is helping fill key white spaces in the high margin cranes segment. It manufactures rough terrain and truck mounted cranes in the fast growing 20-80 tonnage category. These cranes cater to big construction companies servicing oil refineries, metro rail projects, smart city construction, solar power projects and ports, among others. The distributorship agreement with Doosan Infracore enables us to cater to a much larger proportion of the overall construction equipment industry, which includes crawler excavators.

ECE performance

Our total volumes (manufactured and traded products) went up by 5.2% to 4,117 machines in FY2022 as against 3,913 machines in FY2021. Segment revenue went up to 985.3 crores in FY2022 from 776.1 in FY2021 marking a 27% increase.

During the year, we sold 55% of the pick-and-carry cranes from the Hydra category with lower margins as compared to 58% in FY2021. But margins were impacted due to steep price increases as a result of emission norm changes coupled with higher inflation in commodity prices and muted rentals, impacting retails sales.

• Availability of low-cost and skilled labour along with training opportunities to fill the vacancy in the workforce • Abundance of natural resources and raw materials in the country enabling rapid growth and development
• Government incentive to push for infrastructure development through NIPs by 2025 • Huge investments in R&D to boost quality and portfolio of products
• Higher cost due to increase in labour costs due to demand for higher number of projects • Lack of defined frameworks, procedures and processes for construction as it is a predominantly unorganised sector
• Enormous capital requirements for infrastructure projects
• Increased availability of financial support due to government-led incentives and initiatives • In flow of private and public investments in the country along with increased in flow of Foreign Direct Investments (FDIs)
• Strong emphasis on renewable energy projects leading to investments in large projects under the renewable energy sector • Higher focus by the government on the education sector leading to construction of new schools, universities and institutions
• Introduction of Production Linked Incentive (PLI) scheme to boost the development of infrastructure • Emphasis on improved healthcare leading to construction of hospitals
• Political instability will pose as a threat across industries • The industry is prone to natural disasters
• Employee safety is among the most challenging tasks in the industry • Lack of political support can lead to slow development and decrease in infrastructure projects

Alliance with Doosan Infracore

Our distributorship agreement with Doosan Infracore helped us cater to a much larger proportion of the overall construction equipment industry, with crawler excavators.

External challenges

Low-cost manufacturing countries are expanding their distribution centres and after-sale network in India, which 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 across developed markets. We mitigated this threat through our JV with Tadano, which helped us become poised within the segments we serve. Through our manufacturing of rough terrain and truck cranes, we drastically improved and continue to enhance our product quality.

ECE outlook

With the governments thrust on infrastructure and export potential in emerging markets, we expect good recovery in construction business activities in FY2023. But continued inflation in input costs leading to higher owning cost for customers remains a key cause of concern.

Through our JV with Tadano, we expanded our product portfolio while continuously improving the quality at the same time.


India, with the worlds largest under single management and overall, fourth largest railway system, is only behind the US, Russia and China, which have over three times Indias land area. The Indian Railways is the single largest employer in the country and eighth largest in the world, employing ~1.4 million people.

9 IBEF - Infrastructure

As on FY 2022, the rail network has 1,23,542 km of total tracks over a 67,415 km route and ~7,300 stations. It operates ~22,593 functional trains (9,141 freight and 13,452 passenger) with a daily passenger count of 24 million and 203.88 million tonnes of freight. Indias railway network is recognised as one of the largest rail systems in the world under a single management. India is projected to account for 40% of the total global share of rail activity by 2050. Indian Railways plan to induct 90,000 new wagons. Additionally, there are 25 plus metro projects running across country. The railway component industry is intrinsically correlated to the Indian Railways spending and has become increasingly indigenous over the years. Governments decision to allow 100% foreign investment in railway infrastructure has capacity to change industry dynamics and overall efficiency. Increasing urbanisation, rising income and introduction of metros in urban areas is driving growth in the passenger segment.

The railway component industry, as the name suggests, caters to the railway industry, and is directly correlated to its performance.

Railway components industry outlook

The mid- to long-term factors remain strong, supported by a slew of expansion and upgradation projects being undertaken by the Indian Railways. The government announced 400 new-generation Vande Bharat trains, which will be developed over the next three years, besides 100 cargo terminals to be developed in the near future. Such projects would be extremely beneficial for the industry, along with the governments increasing push on adding to the number of metro cities in the country. The industry also continues to be buoyed by increasing urbanisation, rising disposable incomes across rural and urban India, and growing industrialisation across the country along with private sector participation.

In recent years, the Government of India undertook multiple policy changes, bringing more investor-friendly policies. The government is looking at increased interest in the form of foreign direct investment and public-private partnerships, which set the industry on a strong growth trajectory.

With the rapid pace of urbanisation and modernisation in India, the future seems bright for the Railway Industry. Freight is the major revenue earning segment for the Indian Railways as it accounted for 79.1% of the total revenue in FY2022. Growth drivers over the medium to long term include increase in ordering of rolling stock of freight wagons; conversion of conventional to the modern LHB coaches; new metro rail projects; new high-speed indigenous train launches; continued emphasis by the railways on safety and modernisation; and future surge in replacement demand.


Our railway products division is an Indian Railways approved source and manufacturer of diversified products in safety and comfort component for railways and metro such as brake systems, coupling systems, suspension systems, friction and rubber, and rubber to metal bonded products, besides other components.

We are the trusted supplier of the Indian Railways, whose modernisation efforts we are supporting with our cutting-edge, technology-driven products. Our world-class research and design facility, and collaborations with leading technology providers aid us in creating a niche for ourselves in providing safe and reliable products.

RED performance

Revenue for FY2022 went up by 32.8% to the ever-highest yearly revenue of 636.2 crores as against 479.0 crores in the correspondingfiscal. Sales from new products now contribute 65% to total division sales, as against 59% last year.

We are witnessing good traction in tendering process and order book for the division at end of FY2022 stands at 440+ crores.

For FY2023, we expect the railway equipment segment to grow in double digits.

• Strong presence in the industry with decades of experience • Government initiatives to push for investments in the transportation sector across the country for rail networks
• International Railway Industry Standard (IRIS) ISO TS/22163 certification
• Being a safety critical industry, usually lengthier gestation period before a new product launch (Compared to other sectors).
• Government is planning on rapidly developing the Indian rail network as a part of economic growth • ‘Make in India and ‘Atmanirbhar are at the forefront of schemes, which focus on increasing the consumption of domestic manufactured products
• More urbanisation and growing per capita income will boost the demand for transit system • Emphasis by the government to improve quality of track
• Government initiatives to modernise the Indian railways
• Governments decision to allow 100% foreign investment in railway infrastructure will bring new players • This segment, in general, is a highly competitive one


We launched three products in FY2022, which includes Emergency pull box, Coupler (Rev # 3), Metro Dampers (Chennai Metro). The Damper was our first time component supply to the Metro.

RED outlook

Precision manufacturing and advanced testing facilities, strong in-house R&D capabilities and technical collaborations will enable RED to attain a zero-defect manufacturing culture and set industry benchmarks with its product innovation. The division will expand its range of new products and explore inorganic growth opportunities, particularly with the Indian Railways introducing a new class of coaches and locomotives. It will augment localisation of the import content of its new and existing products, which, in turn, will aid margins.

Even as profitability brought in through new products remains low due to high import content, the division, benefitting from several cost reduction initiatives, maintained healthy profitability levels. Focus will be on conforming to more international standards and widening our export reach.

We are witnessing good traction in the tendering process, as Indian Railways began gradually recovering towards pre-pandemic level and long-term growth drivers remaining attractive. India is rolling out 400 Vande Bharat trains, which are expected to bring Rs.40,000 crores ($ 5.24 billion) of business opportunity for the country. Under the Union Budget FY2023, the government allocated Rs. 1,40,367.13 crores ($ 18.40 billion) to the Ministry of Railways.

Long-term growth drivers for the railway industry:

Government focus on infrastructure building Growth of freight traffic due to industrialisation Rising demand for urban mass transportation Improved safety and modernisation Increasing private sector participation


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. Our focused divestment of non-core operations freed up capital that was tied up in non-current investments. Several projects are helping us rationalise costs, including legacy bottlenecks, materials, manufacturing, and overheads, while strengthening our initiatives with prudent resource allocation and outcome mapping.


We have 11,207 employees, including temporary, casual, and contractual workers engaged in various roles across our businesses. A detailed review of the initiatives undertaken by us to transform our human capital is available on page 72 of this Report.


Corporate citizenship at Escorts is much beyond the 2% mandate. Our efforts span health and wellness, education, and environment safety, among others. They define our approach towards engineering holistic community development and environment.

Some of the initiatives undertaken by us include:

• COVID Care Support- We provide medical equipment to healthcare centres and hospitals

• Community Vaccination Programme – We administered More than 50,000 COVID-19 vaccines under the Cowinner Free Vaccination Drive

• Cataract surgery support to NGO- We funded cataract operations of several underprivileged rural citizens of Alwar and surrounding districts of Rajasthan

• Road Safety drive and crime control: We arranged for

10 vehicles for the Faridabad

Police Department

• Park development under Harit Haryana Project

A detailed review of the initiatives undertaken by us to transform our social life is available on page 70 of this Report.


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

The Chairman and Managing Director, President Finance, Group

Chief Financial Officer, Corporate

Head, President of the Agri and Construction Equipment business as well as the Investor Relations team manage and represent our Company in interactions with investors, the media, and various government bodies. We ensure that all critical information about us is available to all investors by uploading such information on our website (, containing a dedicated ‘Investor Information section where relevant information 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 earnings call, with the transcript and audio of the same made available on the 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:// overview.html.

Periodic reminders for unpaid dividends are sent to shareholders, as per our records. For any queries/ suggestions, one can write to and we will revert within three working days.


Escorts is transforming intrinsically, 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 digitisation as well as digitalisation. Digitised processes to improve productivity and controls and digital projects to increase customer outreach were implemented. EAM has embarked on a digital sales transformation programme known as Digital Contactless Sales, to enhance consumer experience and convenience, drive business performance, enhance trial and evaluation as well as improve purchase intent among consumers. As part of the programme, we are building a digital sales ecosystem that encompasses all internal and external stakeholders. It will introduce multiple digital assets like two new brand experience platforms, dealer microsites, enhanced digital marketing platform, sales force app, among others. In addition, to drive top of the funnel, we are also in the process of forging digital partnerships across the agri lifecycle with third parties like agri players, financial institutions, telcos and government bodies.

We are implementing parts planning, inventory optimisation and replenishment systems for our SPD business. This project uses the Syncron inventory system. Initially, this system will be implemented for the EAM spare division and based on the success rate, we will plan to evaluate the same for ECE SPD as well. The main objectives of the project are optimisation of our current inventory levels at warehouse and improvements in the first from our warehouse to distributors from the current levels.

We upgraded our oracle ERP from old version to the latest version to meet the demand of agile processes by putting better controls. The version is modern and guarantees an intuitive user experience, with Oracle native mobile application to support the need of mobile workforce.

We firmly believe in fostering a culture of learning and development, which we demonstrated by providing opportunities to our own people to grow within the organisation. We are pleased to launch our digital learning platform – The New E-STAR. The objective of this integrated digital platform is to provide best-in-class learning and certification programmes to our entire ecosystem, including employees, channel and supplier partners, customers, students, among others.


At Escorts, a strong risk management and internal control system formed the backbone of robust corporate governance practices. We have appointed Ernst & Young (EY) as our internal auditors, who conduct periodic checks and assurances 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 pre identified types of risks, risk events or factors that require regular assessment and probability-based responses.


We recognise that proactive risk fillrate management is an essential element of sound corporate governance and a crucial enabler in realising strategic opportunities.

A detailed review of our risk management framework is available on page 46 of the Integrated Report.


Our consolidated revenue from operations stood at Rs. 7,238.4 crores in FY2022, up by 3.2% as against Rs. 7,014.4 crores in FY2021. Consolidated Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) stood at Rs. 951.2 crores in FY2022 as against Rs. 1,126.8 crores in FY2021. Consolidated Profit Before Tax (PBT) stood at Rs. 992.8 crores in FY2022 as against Rs. 1,154.8 crores in FY2021, while Profit After Tax (PAT) stood at Rs. 735.6 crores in FY2022 down by 15.6% as against Rs. 871.5 crores in FY2021.

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 fi in key sector compared to the immediately previous specific financial ratios. We identified and listed the same below along with some key figures:

In Rs. crores (except EPS and Ratios)

Consolidated Standalone
FY20221 FY20222 FY2021 FY2022
Revenue from Operations 7,014.42 7,238.43 6,929.29 7,152.68
Material Costs 4,644.64 4,978.51 4,593.67 4,932.80
PAT 871.63 735.61 874.06 765.61
Revenue Growth 20.73% 3.19% 20.28% 3.22%
EBITDA 1,126.76 951.19 1,129.23 951.31
Operating Profit Margin 16.06% 13.14% 16.30% 13.30%
Net Profit Margin 12.43% 10.16% 12.61% 10.70%
Basic EPS 92.15 74.06 68.14 58.91
Trade Receivables 657.58 792.62 698.40 827.56
Trade Receivable Days 36 36 38 39
Inventory 718.16 846.56 674.46 803.57
Inventory Turnover 57 62 54 59
EBIT 1,168.86 1,037.15 1,168.09 1,034.58
Interest Expense 13.34 14.97 10.98 12.70
Interest Coverage Ratio 87.62 69.28 106.38 81.46
Debt 2.54 - - -
Equity 5,025.22 7,596.15 5,391.59 7,878.18
Debt Equity Ratio 0.00 - - -
Net Worth 5,025.22 7,596.15 5,391.59 7,878.18
Return on Net Worth/Equity 21.41% 11.65% 19.70% 11.54%
No. of Shares O/S 9,82,40,142 * 10,81,18,406 13,19,40,173 ^ 12,95,60,749
Share Price- NSE 1,287.80 1,690.85 1,287.80 1,690.85
Share Price- BSE 1,288.85 1,691.40 1,288.85 1,691.40
M Cap (As per BSE) 12,661.68 18,287.15 17,005.11 21,913.91
Revenue Multiple 1.81 2.53 2.45 3.06
PE Multiple 13.99 22.84 18.91 28.71

* Excluding 21,442,343 shares (FY2021: 3,37,00,031 shares) held by Escorts Benefit and Welfare Trust and 23,79,855 shares (FY2021: 28,94,393 shares) held by Escorts Employees Benefit and Welfare Trust.

* Excluding 23,79,855 shares (FY2021: 28,94,393 shares) held by Escorts Employees Benefit and Welfare Trust.

For more ratios kindly refer:-

~Note no. 49 of Consolidated financial at page 368

~Note no 48 of standalone financial at page 270

For and on behalf of the Board of Directors
Place: Faridabad Nikhil Nanda
Date: May 13, 2022 Chairman & Managing Director


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.