I am proud and happy to present to you our 75th Annual Report. The journey started witha purpose led vision of an Indian to spread prosperity and impact lives of millionsacross the globe. We did witness good as well as challenging times on the way but weemerged stronger year on year. Ever since inception we have always given primacy tonational priorities and we are proud to partner India's journey as an emerging economyand contributing to its socioeconomic development with our presence across core sectorsviz agriculture infrastructure and railways.
We are committed to mechanise agriculture; partner national infrastructure build-up andmake rail transport safe and comfortable. Escorts feels immense pride in continuing thisjourney to build the future of India creating value for our stakeholders and transformingour organisation to an institution delivering excellence.
Been a difficult year but we remained steadfast
COVID-19 and its two waves impacted livelihoods health and existence of many. Itcaused social and economic disruption and the lockdowns had a devastating effect acrossmany sectors. This time the second wave has impacted the rural geographies as wellaffecting our core customer base.
As an organisation our priority has been safety and wellbeing of our employeespartners customers and community at large. While the government is extremely active withsupport and stimulus measures we continue to support our stakeholders and community withbest of our abilities and resources.
We did our best to provide agriculture equipment and technology to farmers whocontinued to toil hard to produce food enough to feed people across the nation. Wecollaborated with state authorities and local partners to keep our communities supportedin the time of uncertainty. We are building resources for our current and future readinessto fight the pandemic with our resolute strength and resilience. Escorts as a responsiblecorporate will keep supporting government initiatives to pull the nation out of theseunfortunate times ensure agriculture remains normal in the post-Covid world While thecontribute to infrastructure growth.
Leveraging national and global opportunities in agriculture and infrastructure
Food and agri business form a $5 trillion global industry that is only getting bigger.Agriculture globally is evolving to precision-based mechanisation creating a huge demandfor innovative-agriculture solutions.
A larger infrastructure play would see a significant demand for constructiontechnology. Metros and highspeed rail corridors by 2030 will witness a huge influx ofbudgets for mobility intra and intercity connectivity offering greater opportunity forrailway equipment.
This makes Escorts a strategic fit in the evergrowing industry segments of farmmachinery construction equipment and railway mobility on the national and global front.
Our focus remains food security for the world and contributing to smarter and robustinfrastructure in India and overseas geographies. We wish to be a leading player in theexport of made-in-India farm machinery construction equipment and railway products tomarkets like US Europe and Africa. We will continue to make strategic and financialinvestments in strengthening our technologies and products required to make significantentries in these markets.
In India our focus would be to contribute towards making agriculture self-reliant withmechanisation through affordable technology and efficient and farmer friendly serviceplatforms and solutions. With positive monsoon prediction government food procurementmeasures record harvest and increased sowing 2021-22 could be another growth year foragriculture. Similarly as the COVID-19 wave subsides and pending projects getreactivated we hope to see positive momentum in construction and railway businesses goingahead. The Government of India has significantly raised budgetary allocation for theinfrastructure sector as a part of its fiscal stimulus to bring the economy back intogrowth territory. The Railway sector may take some more time but with progress invaccination mobility is expected to reach pre-Covid levels. The Agriculture sector hasremained resilient even during the pandemic and the positive macro developments in thisspace augurs well for our business going forward.
Historic milestone and sustained performance
Your Company achieved a historic milestone of more than 100000 tractor sales andproduction in the financial year with tractor volumes up by 24.1% to 106741 tractors asagainst 86018 tractors during previous year. We are thankful to all our customersdealers suppliers employees and everyone who contributed to help us reach thisimportant landmark.
Agri machinery industry remained buoyant in Q4 of FY21 owing to positive macro-economicfactors and pent-up demand from first and second quarters of the year. Escorts did well inthis space by registering significantly higher share of market in Q4 than our averagemarket share of the year as the supply chain normalised.
The momentum also picked up with positive developments in the construction equipmentand railway equipment space. This should now accelerate further. While the nation isfighting the pandemic we are sure that with ongoing government initiatives acceleratedvaccination drive and supportive measures safety will prevail for all and the economywill be back on strength.
Sharpening strategy for profitable growth ahead
At Escorts our focus will be on the following strategic pillars which will help us indriving the next phase of growth. Our strategy emphasises continuous innovation growththrough partnerships and collaboration further strengthening our presence in untappedmarkets across domestic and global geographies and leveraging technology to createdifferentiated positioning for our brands.
We are continuously rolling out new products in line with the evolving requirements ofour customers.
In tractors higher HP products are continuously gaining market traction. We launchednew series of tractors in both our key brands: Farmtrac Powermaxx' Series and thePowertrac Euro Next' series setting new benchmarks of performance and quality inthe domestic market.
Identifying a distinct need of technology-rich and affordable agriculture implementswe are investing to enhance our offerings in the FARMPOWER range of implement line. UnderEscorts Crop Solution initiative we have partnered with global agri input corporations toprovide farmers access to innovative agri technologies for greater yields.
We are continuously focusing on expanding our distribution network both in domestic andglobal geographies. Our major focus remains South and West India and global emergingmarkets.
To cater to the emerging requirements of fleet owners and corporate customers in theconstruction segment we launched the Whiteline range of products with integratedtelematics and performance monitoring.
Our Railway Business is focused on providing safety and comfort in rail transport.During the year we also received Research Designs and Standards Organisation RDSOapproval for our new products Air Spring Brake Disc and Brake Pads for passenger coaches.They are now launched for field trial and expected to be commercialised by FY 2023-24.
We are in the last year of Vision 2022 wherein we embarked on an aspirational journeyand goals. We are happy to share that we have achieved our EBIDTA margin and ROCE targets.We are in continuous efforts to achieve the rest of the parameters and are hopeful toreach the milestones in a short duration. The time has time has come to think ahead forthe future. We have intiated the MTBP (Mid Term Business Plan) exercise across ourbusinesses to be able to achieve even better results through process improvementdigitisation disruptive marketing and cost optimisation.
Accelearting growth through collaboration
We strongly believe that collaboration at the global level will help in taking usforward and closer to our aspirations. Leveraging on the strengths of our partnersincluding their global distribution channel will pave new ways for us to grow.
We are happy to state that we have taken our partnership with Kubota to the next step.We have cross-invested in the joint venture during the year further deepening ourrelationship. We have opened South Africa Europe and Sri Lanka markets with Kubotachannel and initial shipments have started. We will shortly ramp up our spread toThailand Malaysia Kenya Tanzania Brazil and USA. The partnership is expected tofurther accelerate our export presence. Our JV with Tadano provides us an opportunity tofill key white spaces in the high margin cranes segment. The portfolio including roughterrain and truck mounted cranes in the fast growing 20-80 tonnage category caters to bigconstruction companies servicing oil refineries metro rail projects smart cityconstruction solar power projects and ports among others.
In our RED business we are aligned to the Make in India' initiative and offeringour innovative technology to support rail transport periodically in its modernisationefforts with our cutting-edge technology- driven products. Our world-class research anddesign facility and collaboration with leading technology providers aid us in creating aniche for ourselves in terms of providing safe and reliable products. During the year wehave collaborated with technology partners from Europe Japan and South Korea to cater tonew markets and address the gaps in the existing product offerings.
Expanding our presence
We are continuously taking initiatives to grow our presence in the Southern and Westernmarkets of the country thus establishing us as a truly pan-India player. In addition toour regular products we are investing in products especially focused on thesehigh-opportunity markets for us.
Our wide range of products spanning from 20 HP to 120 HP conforming to Europeanstandards of safety and emissions shall further expand our export presence. We arecurrently exporting our products to more than 62 countries across the world.
Our partnership with Kubota will help us in opening opportunities in several othercountries.
Designing products for the world
We are exploring new frontiers of innovation to design and develop new products for thedomestic and global markets. This led us to develop the electric tractor and successfullycommercialise it. We are now regularly shipping electric tractors to various globalmarkets. We are also working on a new engine technology which will further strengthen ourpresence in the overseas market.
We have set up Rajan Nanda Innovation Lab to drive collaborative innovation. We rolledout an Innovation Challenge programme where college students across India participated totransform their ideas into successful business propositions with social impact. The aim ofthe initiative is to spot the emerging technologies in the country and around the world bycollaborating with leading technology centres academia and research institutions. Throughcrowdsourcing we plan to identify technology innovations and then incubate them with thedesired funding support. Under RNIL we are also collaborating with government ag-techinnovation platforms like Pusa Krishi and Agri Hackathon to scout emerging technologiesand business ideas.
We have already showcased our indigenously developed rural transport vehicle supposedto be an off-road as well as an on-road vehicle relying on frugal and innovativeengineering. We are evaluating the commercial launch of this product line in the next fewyears in domestic as well as export markets.
Leveraging on future trends
As an engineering company we are aligned to future industry and technology megatrendsin the areas of alternate fuels autonomous and connected machines. Our key focus is onDigitisation of core operations business models and connected applications.
We are working on strengthening our servitisation play as there will be a distinctshift from asset ownership to a service model with emergence of "Pay Per Use"models in agriculture and construction equipment space.
Our journey to 2030 will be to create a globally admired engineering company offeringinnovation in technology and marketing.
Winning with the team and building young leadership
2020-21 was a year in which we showcased the power of collective strength andresolution. Our efforts ensured that this year could prove historic in many ways. I amconfident that our teams will achieve greater heights of excellence in the coming yearsand set new benchmarks.
We are continuously investing in capability building of our employees and creatingyoung leadership across businesses to leverage on new and fresh thinking.
Elevating ESG performance and gender diversity
Compliance and governance are deeply embedded in our processes and each departmentstringently adheres to standard protocols and guidelines. Our overarching culture promotescorporate fairness transparency and accountability in the best interests of customerspartners teams communities and all other stakeholders.
Aligned to global sustainability goals our electric tractor range adds to ourcommitment towards green and climate friendly agriculture. We have initiated plantationdrive across our plants premises and around and target multiple tree plantations thisyear. Your Company is on the path of integrating sustainability development goals andseveral green initiatives have been planned in our social responsibility charter.
We are also working towards creating a culture of gender diversity by hiring womentalent and skilling our existing women base to take up key responsibilities acrossbusinesses. Multiple women empowerments and welfare initiatives have also been adoptedacross businesses to create opportunities for our women workforce.
Extending care to community
We take various initiatives to support local communities and focus on creatingsustainable livelihoods for farmers. We are also working towards creating platforms forhelping farmers with the information on best practices of farm mechanisation and growingyields.
Our priority remained supporting the community in fighting the pandemic and wefacilitated various initiatives in providing food shelter medical help in associationwith state authorities and collboration with local partners.
Smart water management horticulture road safety promoting education and disastermanagement were some of the other initiatives that we undertook.
Building a legacy of pride
We continue to evolve to navigate the new normal weaving together a digital workculture and putting in place relevant reforms to step up the efficiency curve. We areembracing innovative technologies and building strategic partnerships across segments. Bycollaborating with world-leaders in farming technology and other sectors such as Japan'sKubota Tadano and various smart construction equipment enterprises our overriding visionis to create a powerful and sustainable agricultural infrastructure and railway ecosystemthat helps drive global economic growth.
I would like to thank each one of you for placing your precious trust in our vision andcommitting wholeheartedly to our mission.
Your faith and unwavering support helped us in achieving what we managed in a pandemicyear.
Strategic direction and guidance from our visionary Board of Directors andcollaborative efforts by all our partners and stakeholders have been instrumental indriving our journey of profitable growth and delivering value.
I sincerely thank all our customers employees business partners investors andstakeholders for being there with us at every step! Together
I am sure we will achieve even more and continue building a legacy that is rememberedwith pride.
Collectively we will win over the current uncertainty which shall pass shortly.
On behalf of the entire Escorts family I wish you and your families safe and healthytimes ahead.
Chairman and Managing Director.