Dear Fellow Shareholders
Hope all of you and your loved ones are keeping safe and in goodhealth.
I began the journey of Genus at a time when meters wereelectro-mechanical by nature. The technological transformation from electro mechanical toelectronic and now Digital loT Wireless and Artificial Intelligence (Al) based meteringsolutions has become the driving force for the growth of Genus. Currently the meteringindustry is witnessing the dynamics of that transformation given the massive demand fromutilities for smart and prepaid metering solutions. There is no doubt that in the lastthree decades the metering industry has grown by leaps and bounds locally and globally.The on-going digitalisation of the power sector with AMI and Smart Meters is very crucialand highly beneficial for the entire energy value chain from generation companies toend-consumers. A robust AMI infrastructure having Smart Meters enables power utilities toenhance their operational and financial performance by significantly improving billing andcollection efficiency and thereby reducing cumulative AT&C losses.
Currently the metering industry faces a number of imponderables.Foremost is availability of raw material and that too at a reasonable price. In FY 22 theIndian metering industry continued to face severe shortage of semiconductors and otherelectronic components due to the worldwide phenomenon of logistical and supply chainissues in the wake of COVID-19 pandemic. The supply- demand mismatch resulted insignificant increase in prices of these key raw materials. This has severely hampered thecapacity utilization in FY 22. We expect both - the supply and prices of raw material - tostabilize in the second half of FY 23 leading to significant uptick in revenue growth inthe coming financial years.
Standalone Financial Performance Highlights .
We have recorded revenue of Rs. 68507 lakhs for FY 22 up by around13% as against the previous years sales of Rs. 60860 lakhs. Our EBITDA (excludingother income) was Rs. 5963 lakhs for FY 22 as against Rs. 10193 lakhs in the previousyear. Our profit after tax (PAT) was Rs. 2582 lakhs for FY 22 as against Rs. 5116 lakhsin the previous year. The earnings per share (EPS) came to Re.1. The astonishing increasein raw material prices and lack of operating leverage due to lower capacity utilizationresulted in lower operating earnings and margins.
The Board has recommended a dividend of Re.0.25 (i.e. 25%) per equityshare of face value of Re.1 each for FY 22 which is in line with the dividenddistribution policy of the Company. The dividend is however subject to the approval bythe members in the annual general meeting.
Operational & Technological Excellence
As we embark on the journey of historic upgrade cycle of the Indianmetering industry we are confident of meeting the highest industry standards. We are afull-fledged vertically integrated company with backward and forward integration from theconceptual designing of the product to final packaging - wherein we build everythingin-house. We have tool room moulding machines assembly lines test labs and our ownsoftware development infrastructure for providing end-to-end solutions. A full-fledgedR&D centre with world class equipment and manpower resources is our most significantUSP. It allows us to customize products to meet the specific needs of our clients in atimely and cost-effective manner making us a one-stop shop for all their metering needs.We have developed our services capabilities alongside our technological capabilities so asto provide end-to-end service solutions such as meter installation meter servicingdomain-related software data analytics HES & MDM solutions and so on. This providesus with an unparalleled competitive advantage over our competitors.
We have got the BIS license for Gas Meter and thereby become the firstin India to have this certificate for the Gas meter. This also attests our technologicalcapability and preparedness for future business.
In June 2022 we won the prestigious "The Economic Times EnergyLeadership Award" for our contributions to the energy sector as an equipmentmanufacturer.
I feel enthused and elated with the way Indian government is workingstrenuously on various reforms of the power distribution sector. In a recent developmentthe government announced a marquee Rs. 3.03 trillion power distribution company (DISCOM)reform scheme namely Revamped Distribution Sector Scheme - Reforms-Based andResults-Linked Scheme. Of this half of the total funds of the scheme i.e. about Rs. 1.5trillion are to be deployed for installation of smart meters. I strongly believe theScheme has potential to significantly shift the whole landscape of the Indian meteringindustry with a likely multi-fold upsurge in industry size. This will surely result in asignificant transition in the Indian metering industry from conventional meters to smartprepaid meters allowing for better operating margins. Smart Meters are a value-addedproduct that is 3 to 4 times more expensive than traditional meters. They are alsoescorted with a lot of allied and after-sales services. As a result I anticipate higherrevenue inflow from service delivery towards smart meters which typically have betteroperating margins. All of this will alter the Indian smart metering industry's economicdynamics in the coming years.
Given that context I feel all efforts must be made to have indigenousmanufacturing capabilities for semiconductor and other raw materials for the entire powersector so as to minimise dependence on imports. In line with the same the government hasrecently invited bids for setting up a manufacturing zone for power and renewable energysectors on pilot basis. The scheme/zone aims to promote local manufacturing to developproducts which are currently being imported on a huge scale. I feel this will go a longway in creating a long-lasting impact in the entire power value chain.
Further recently the government sanctioned Rs. 76000 crore under theProduction-Linked Incentive (PLI) scheme to encourage the manufacturing of varioussemiconductor chips within India. This scheme comes amid shortage of semiconductor chipsin the global market which has severely affected the production of meters among otherelectronic goods. I feel this would eventually put an end to the countrys dependenceon imports to meet its semiconductor needs.
The government has also increased the allocation for incentive schemessuch as the Modified Special Incentive Package Scheme (M-SIPS) for providing a boost tothe semiconductor as well as other electronics items.
We have been in the electricity metering business for more than twodecades. On the foundation of our inherent strengths we hope to recreate our leadershipposition in smart metering and prepaid metering business. As one of the largest players inthe Indian metering sector we are well-positioned to benefit from the multi-fold increasein the industry's size.
Within domestic geography we have continuously received orders forSmart Meters across multiple State Electricity Boards. Recently we won one of the singlelargest orders as an Advanced Metering Infrastructure Service Provider (AMISP) thatincludes design of AMI system with supply installation and commissioning of around 10Lakhs Smart Prepaid Meters DT Meter level energy accounting and FMS of these smartmeters. This order reaffirms our market position and capability as a technologicallyadvanced metering solutions provider. We are happy to add orders of Gas Meters which willdiversify our order- book in the coming years. Our all-time high order book continuedorders inflow and pipeline velocity give us confidence to achieve more milestones in ourjourney in the coming years.
Adoption of smart metering is also growing fast in other regions of theworld. Since we have achieved global competitiveness on the back of strong R&D workon smart metering Genus has been targeting Asia Pacific Middle East and African regionswhere governments have come out with the power sector reform programs with adoption ofsmart meters advanced metering infrastructure and smart grid. We have engaged ourselvesin a thorough understanding of global standards put all the desired certifications andtesting in place and developed a supply chain with traceability and quality awareness.Genus is continuously tracking available opportunities in the global markets with an aimto extend our global footprint in the smart metering field. During the year under reviewwe got some good orders from export markets that are lucrative as they come with bettermargins. Going forward we expect our export business to pick up rapidly.
I am grateful to my board colleagues for their brilliant managementcounsels and always being the strength of the Company during the year under review. I lookforward to their continued support.
I appreciate and value the contribution made by every member of theGenus family.
On behalf of the Board of Directors I want to thank you for yourcontinued trust confidence and support.
Ishwar Chand Agarwal
Jaipur August 03 2022