Escorts Kubota Limited (ESCORTS) Earnings Call Transcript & Summary

Good afternoon, dear shareholders. On behalf of the Board of Directors, I welcome all of you to the 76th Annual General Meeting of your company. As a requisite quorum being present through video conference for the AGM, now I'll begin with the business of the meeting. In view of the COVID-19 pandemic and social distancing norms, this meeting is being held through video conference and through other audio visual means and is in compliance with various circulars issued by Ministry of Corporate Affairs and Securities and Exchange Board of India. The company has taken all feasible efforts under the present circumstances to ensure that the shareholders are provided an opportunity to participate in the Annual General Meeting and the Board. The company has also provided a webcast facility to view this AGM live on company website and social media channels. The register of directors and key managerial personnel and their shareholding and register of contracts and arrangements in which directors are interested are available for inspection of members electronically during this meeting. Taking the meeting forward, I will introduce the Board members who are present and joining through video conference. Mr. Hardeep Singh, Non-Executive Non-Independent Director. Mr. Singh is also the Chairman of Stakeholders Relationship Committee of the company. Mr. P. H. Ravikumar, Independent Director; Mr. Ravikumar is Chairman of Audit Committee and the Chairman of the Nomination Remuneration Compensation Committee of the company. Ms. Vibha Paul Rishi, Independent Director; Dr. Sutanu Behuria, Independent Director; Ms. Nitasha Nanda, Whole Time Director. Ms. Nanda is also the Chairperson of Corporate Social Responsibility Committee of the company. Mr. Shailendra Agrawal, Executive Director; Mr. Sunil Kant Munjal, Independent Director; Ms. Tanya Dubash, Independent Director; Mr. Harish N. Salve, Independent Director; Mr. Dai Watanabe, Non-Executive non-Independent Director; Mr. Yuji Tomiyama, Non-Executive, Non-independent Director. I would also like to introduce the new Board members who are present and are joining through the video conference whose appointment is also for approval and regularization of the members is being proposed in this meeting. It is our privilege to have people of such great structure on your company's board. We're extremely glad to have you all with us and look forward to grow the company under your guidance. Mr. S. Fukuoka in the capacity of all-time directors designated as Deputy Managing Director; Mr. S. Watanabe, Non-Executive Non-Independent Director; Mr. R.C. Bhargava, Non-Executive Independent Director, Mr. K. Toyofuku, Non-Executive Independent Director; Mr. V. Bhandari Non-Executive, Independent Director; Ms. R. Nanavati, Non-executive Independent Director; Mr. Y. Kamada Non-Executive, Non-Independent Director; and Mr. M. Sharma, Non-Executive Independent Director. On behalf of all the stakeholders, we welcome and thank them for extending their mentorship and support to your company. In today's meeting,, 2 of our directors, Mr. P.H. Ravikumar and Ms. Vibha Paul Rishi's tenure is coming to an end. Mr. Ravikumar and Ms. Rishi had joined the Board of your company in 2013. Since then, we all are fortunate to receive their strategic directions and support for your company. We owe them deep gratitude and wish them a great future ahead. I'm personally going to feel their absence, and I'm thankful to them for their guidance. Our following auditors are also present in this AGM Mr. Ashish Gupta, partner from Walker Chandiok & Co LLP, our statutory auditors; Mr. Gavish Uberoi, partner from EY along with his team as our internal auditors; Mr. Jayant Gupta, Practicing Company Secretary and our secretarial auditors; and Ms. Parvathy Venkatesh from Ramnath Iyer & Co, cost auditors of the company. Thank you, everyone, for your support and continuous guidance. In the Q&A session, you may please feel free to ask questions directly to the auditors. Also present are the key executives of your company joining through videoconference from their respective locations, including Mr. Bharat Madan, President, Finance, Group CFO and Corporate Head; Mr. Shenu Agarwal, President, Agri & Construction business; Mr. Sanjeev Bajaj, Chief Executive Construction Equipment; Mr. Ankur Dev, Chief Executive Railway Equipment division; Mr. Amit Singhal, Group CHRO and Deputy Corporate Head. And of course, Satyendra Chauhan, your Company Secretary and Compliance Officer, is also joining through the video conference. I would now request Mr. Satyendra Chauhan, Company Secretary and Compliance Officer, to take us through the general instructions pertaining to the Annual General Meeting of today. Satyendra, over to you.

Thank you, Mr. Nanda. Good afternoon, ladies and gentlemen, shareholders. As this meeting is held through video conference, I would like to mention a few things that every member joined is muted by default to avoid any disturbance arising from background noise and ensure seamless conduct of the meeting. [Operator Instructions] Also members may post their queries in the message box provided in their screen, and we will appropriately respond to the same post the AGM. We at Escorts Kubota are committed to answer all queries of the shareholders. That question which we may not be able to answer due to bad network connectivity on the part of the company or shareholders or for any other reason whatsoever, the shareholders can e-mail their queries to the e-mail address provided in the notice of AGM, and we will e-mail the answers post the Annual General Meeting. The entire proceedings of the meetings are being recorded. Now I request Chairman to address our shareholders.

Thank you, Satyendra. I'm sure you all have received the annual report and have gone through the financial of the year ended 31st March 2022. Moving on to my main speech. Dear shareholders, today we are witnessing challenging times in the world in wake of COVID pandemic and war. Inflation has reached the highest level in decades. Prices of various raw materials like steel, rubber and diesel have caused component prices to increase significantly along with logistic costs with war, conflicts adding more upwards pressure on price of energy and fuel. While the COVID-19 pandemic has still not ended, the world has started reopening and recovering from its impact. Everybody in the value chain, including dealers and suppliers are equally impacted by this. While we are learning from the new order of doing business in this new environment or we call it the new normal, this requires the business to become extremely cost efficient, responsive to market dynamics and embrace digital in all its engagements. In current geopolitical situation, the world has once again known the biggest challenge to humanity is food security. And we are committed to our efforts to enhance our contribution towards food security through our agri business. Also, the most important responsibility for us as an organization is to ensure continuity and well-being of our entire ecosystem, covering employees, partners, customers and community at large. India has emerged stronger in post-COVID era. As a nation, we are on the right path to grow substantially, and India has the potential to become a food basket of the world. Our core sectors fundamentals are strong. In last 5 years alone, the government has doubled the agriculture budget to INR 1.24 lakh crores, and NITI Aayog is working on transforming agriculture sector of the country. As per World Food and Agriculture Organization sources, other high population countries roughly produced 3 to 4x more food grains and horticulture produce in comparison to India on lesser hectares, which indicates India has huge upside in all areas of agriculture production. Agri sector is growing decently and tractorization level have improved in the last decade. And in next few years, industry can reach 1 million tractor units mark. Export from India is also expected to grow significantly, but in India, complete farm mechanization story is yet to unfold. In comparison to countries, which are about 80% mechanization level, their farm equipment industry revenue is roughly 3x of tractor units revenue, which presents a huge headroom for growth. To build new infrastructure, the government has allocated USD 1.5 trillion for the period of FY 2020 to FY 2025. Most of this investment will get into roads, railways and related infrastructure. Escorts Kubota Limited has the opportunity to leverage USD 5 trillion national and global opportunities in agriculture and infrastructure, which is further getting bigger. To participate in this opportunity, we wanted your company to be in the best position to take advantage of this growth alongside our responsibility to institutionalize Escorts so that it continues to serve nation for decades and play its due role in nation building. I'm delighted that our partnership with Kubota will help us to achieve our vision. I personally have great admiration for Kubota. Our shared values and common goals brought us together to integrate our mission in the win-win partnership. This partnership is based on the fundamentals of leveraging best of each other's to develop world's best technologies to serve our customers and make them prosperous. I welcome Kubota as joint promoter of your company. Escorts Kubota Limited is starting point of a very exciting future ahead of us. It is also a reflection of the ideology of our founders' vision: to bring the world's best to India, Kubota's technology, quality, processes and offer India's best which is Escorts frugal engineering, agility and speed to the world through Kubota's global presence. This will serve our aspiration of profitable growth. We have initiated the medium-term business plan for the future, and we are making plans for the next 5 years period and beyond to significantly enhance the value created for our stakeholders. This is jointly being created between Escorts Kubota and Kubota Japan, and we expect this to be finalized by quarter 3 of this year. And thereafter, we will share the detailed plan with you with the details and priorities. But moving on to some of the goals, in the long term your company will work towards leadership in domestic and India-led exports. Our global research and development would be established for innovative and cutting-edge products for Indian and global markets. Global sourcing center will come up to serve the global requirements of Kubota around the world. Capacity expansion for tractors and farm equipment. Capital allocation strategy for business growth and expansion for all business of agri, construction and railway. This new construct will offer opportunities for our key businesses and our stakeholders to participate globally to cater to broader customers and emerge as most respected future-ready engineering organization for decades and centuries. I am thankful to Kitao-san, the President and Representative Director; and Watanabe-san, Director and Senior Managing Executive Officer from Kubota Corporation, for showing the trust in your company's vision, values and philosophy of serving farming community and other customers in India and global markets. Our shared values and common goals brought us together to integrate our mission. Kitao-san through his video message would like to share his vision for Escorts Kubota Limited.

Thank you, everyone, for making time today. The success of Escorts Kubota Limited is very important for Kubota's corporate vision. Since its foundation as a casting maker, Kubota has been taking care of social issues in food, water and the environmental sectors. Kubota's ideal role is to become an essential innovator for supporting life committed to a prosperous society and cycle of nature. I promise the collaboration in development of value, creating new technologies with Escorts Kubota Limited. And also, we aim at providing a total solution to the society through the collaboration and our superior products and technologies for India and world society. We will be ambitious to make Escorts Kubota Limited to be a company needed by the society.

Thank you, Kitao-san, for your message. Now through a video, I would like to showcase the vision of your company and the culture and how we are bringing strengths and competencies of both companies together to create a bright future. [Presentation]

Thank you for watching the video. As you heard his message in the video, I welcome Fukuoka-san, Deputy Managing Director of your company. Fukuoka-san and I along with executive team also comprising of Kubota's second wings will jointly work on charting the path of your companies towards a profitable growth and expansion. Our new exciting journey has just begun. As we move forward to making Escorts Kubota Limited the exclusive vehicle of business in India and simplifying the corporate structure, Escorts and Kubota have decided to take necessary steps to evaluate and consider the feasibility of merger of Kubota's 2 subsidiaries. Kubota Agricultural Machinery India Private Limited and Escorts Kubota India Private Limited in India, where Escorts is also a partner into Escorts Kubota Limited, subject to necessary approvals. Now I will talk about business performance and challenges we are facing. Against a backdrop of a weak farm equipment market and rising raw material costs and subdued rural demand, we managed to grow our consolidated revenue from operations by 4% year-on-year to INR 7,455.2 crores, our highest ever. Margins, however, remain under pressure due to very high material costs, which increased to the level of 30% from FY '21. We have managed to pass on a large chunk, but we are still carrying forward some of the unabsorbed inflation, but still this remains the second year in terms of operating margin. Our consolidated EBITDA was at INR 951.5 crores. Our consolidated net profit was recorded at INR 736.1 crores. I'm happy to announce the Board of Directors have recommended a total dividend of 70% per equity shares. Some other financial highlights you can see on the screen. Talking about agri business, which continues to remain fundamentally strong, and we have a belief that in mid- to long-term business we will continue to grow due to government's focus on productivity improvement, irrigation infrastructure and crop diversification. You can see the key highlights on the screen. In last decade or so, your company has invested heavily in new product platforms for domestic and export markets. Many products are in the pipeline and many more would further be developed as a part of medium-term business plan. I'm sharing some of the new products your company has introduced in the last 1 year. In Farmtrac, new platform is under market testing and due for launch in this year. With this launch, we expect customers to experience a superior Farmtrac technology and performance with new transmission of 4-wheel drive range, comfort and styling. In Powertrac, Euro Next Series has been commercialized in 50- to 60-horsepower range. With this Powertrac brand makes entry into the higher horsepower segments with fuel efficient Powertrac engines and more suitable for commercial applications. In Export market, also a new stage 5 engines have been introduced. I'm delighted to share that your company is the first from India to receive a European certification for stage 5. Talking about construction business, industry has been in slow down. But due to government's infra push, we believe that new next few years will bring better growth prospects. And with that, margins will also improve gradually. You can see the key highlights on the screen. In Construction business, we launched a series of new products and applications like F20 Piling Master with lifting capacity of 20 tonnes. Trx 15 and F23 for providing higher tonnage capacity to customers for emerging applications. In addition to these, HD85 PLUS compactor with robust compact design, along with fuel efficient engines of Escorts, and backhoe with new cabin, which is designed for better comfort, experience and safety. In Railway business, last year, we registered a growth of 32.8% in business revenues. We are witnessing good traction in tendering process as Indian Railways has started gradually recovering towards pre-pandemic level and long-term growth drivers remain attractive. You can see the key highlights on the screen. In Railway business, we launched indigenously developed dampers for metro segment for comfortable suspension and maintenance-free life. The microprocessor controlled brake system for 3-phase electrics, locomotive for an efficient braking application. Air Spring, which is another product for providing comfortable ride. Brake disc and brake pads have also been put into trial with Indian Railway, which are indigenously developed friction products for passenger coach brake system. Going forward, we have started seeing the softening of commodity prices and impact of the same may start getting reflected on our margins from half -- second half of FY '23 onwards. But given the current environment and global geopolitical situation, it is difficult to predict. Given the cost increase since FY '21, we feel it may take another year's time to get back to normal margin levels. The recovery will be gradual and will take time. In next few years, talking about our key areas where your company will bring in a lot of focus to build Escorts Kubota Limited of future. Post-merger, Escorts Kubota Limited will be uniquely positioned to cover all key segments of the market with Powertrac, Farmtrac and Kubota brands, respectfully. And in the mid-term business plan, we will use 3 brands for a unique market positioning for meeting our growth aspirations. Your company will promote range of mechanization solutions like harvesters, for major crops; rice transplanters, full range of rotavators for dry and wet land cultivation and spraying solutions. In Construction and Railway business as well, our focus on developing advanced products will continue. Rajan Nanda Innovation Lab. With this, we have made a humble start to establish innovation as a process in the DNA of your company. In future, Rajan Nanda Innovation Lab will closely work with Kubota's global innovation team and work on solving many problems of farming and other businesses. Under our Carbon Neutrality Strategy, our focus on alternate fuel technologies will continue, and we are working in the direction of sharpening our strategy to expand our electric portfolio. We have recently established a new organization structure with business leaders from Escorts jointly working along with the secondments from Kubota to enable seamless integration of capabilities of both Escorts and Kubota organizations. This team will work together on short-term and mid-term goals along with long-term vision of Escorts Kubota Limited. In our structure, our Culture Officer position is also being created to work with teams across the organization on jointly developing a new culture of the best of Japan and India. The most important part of our investment strategy will start from investing in skill sets of our people. We will build capabilities required to execute our medium-term business plan and vision to development of internal pool of young leaders towards building a workforce which is diverse and inclusive. We want people to join Escorts Kubota with thoughts of boldness and mindset of growth and performance in the aspirational journey of your company. Business strategy, along with people's strategy would need to be blended well to deliver and execute your company's future. Your company always has been committed to give back to society, work for the upliftment of nation and its people. Last year, under various projects which your company undertook can be seen on the screen. COWINNER vaccination program, the COVID support, the community development, road safety and health care. Escorts Kubota Limited is committed to continue its journey towards well-being of planet and people. Your company will embark on aggressive ESG goals and work on system and processes to improve operations to achieve environmental goals related to carbon emissions. I am happy to share that your CSR Committee has decided to establish a Escorts Advanced Farm Mechanization Institute in Haryana to focus on the upliftment of small and marginal farming community through skill set developing and knowledge transfer in the areas of farming. This is in addition to similar activity being done at our Farm Institute at Bengaluru. With this initiative, we want to continue your company's legacy of uplifting farming in the country. We will collaborate with some of the best universities, institutes, and research centers to bring the required infrastructure and knowledge. Initially, we will focus in North India. And with time, we will explore expansion of our efforts in other areas as well. I'm also pleased to share that this year, the company was rated by one of the India's leading proxy advisers firm on Corporate Governance practices and improved your company's rating to leadership, which is a category -- the highest category of evaluation in the Indian Corporate Governance scorecard. The company's long-term financial rating has also recently been upgraded by both leading reading agencies, CRISIL and ICRA to AA+. And now we are just 1 notch lowered than the highest rating of AAA. As I conclude, I would like to deeply thank our Board of Directors who have guided us and played an instrumental role in growth of your company. I also express my heartfelt gratitude to all the stakeholders of your company, shareholders, dealer partners, suppliers, who stood by us shoulder-to-shoulder to help and support whenever your company needed it the most. I'm also deeply thankful to all our employees in various offices, our union, employees in all the plants for your contribution in making what your company is today. I'm thankful to our customers who have trusted our brands and gave us an opportunity to serve them. We will continue to create benchmarks of excellence of customer experience. I am confident that together Escorts Kubota Limited will script an exciting growth journey ahead. I'm excited to embark on this journey together with all of you. I commit to you that each day I serve through Escorts Kubota platform, I will put my best efforts to serve our customers, serve the interest of our shareholders and most importantly, build a trusting and a respectable organization, which serves the society and our nation. Looking forward to a great future at Escorts Kubota Limited. Thank you. As the notice is already circulated to all the members, I take the notice of the AGM as read. Before we put the proposed resolution to vote, I would like to invite the registered speakers one-by-one who can ask their questions by unmuting themselves. In order to accommodate maximum numbers of speakers, I request you to be brief, restrain from repeating of the points already put forth by other shareholders. Request all shareholders to ask their questions. And at the end, we will answer them all together. Now I request the moderator to welcome the shareholders to ask their questions. Over to you, moderator.

Thank you, Chairman, sir. I am moderator here. I will bring the preregistered speakers who are currently available one by one. The first speaker is Mr. Ravi Shankar Kapur.

[Foreign Language].

[Foreign Language] We can hear you very well, and thank you, Mr. Kapur, for coming and asking your question. Please go ahead.

Respected Chairman, Board of Directors, my name is Ravi Shankar Kapur. My client ID is 1203865050251. [Foreign Language].

Thank you, sir.

Thank you, Mr. Kapur. Moderator, I'll just take a minute to just respond. While I'll answer the Q&A towards the end, but Mr. Kapur, thank you for your good words. But all the great progress of your company is with the great guidance of your Board of Directors, now the co-promoter Kubota and your entire leadership team and all your stakeholders and many people who are on the ground. We are -- rather, I am only a reflection of the great environment that I'm surrounded by, but thank you for your blessings and your good word, and I look forward to meeting you in person in the near future. Thank you very much. Moderator, back to you.

Thank you, sir. We'll move to the second speaker. The second speaker is Mr. Yashpal Chopra from Delhi. I would like Mr. Yashpal Chopra to unmute your audio and switch on your camera.

First of all, I would like to just compliment our CMD dear Nikhil Ji and Ms. Nitasha and among the independent directors, our Mr. Munjal is the hero of auto industry. So and all the eminent professional team we are having, I must congratulate that the company has made a big heights, and achieved a zenith. Now our share price has made a lifetime high of INR 1,927. And the price at stock exchange, that shows intrinsic strength of the company, that shows that how strong the management and his strategies are there. Sir, our AGM is that of 78th AGM. And for me, it is 47th AGM because I'm with the company since 1975. And I have seen our Nandas in 3 generations. I have seen the founder Chairman of the company Mr. H P Nanda, who laid down a very strong, strong condition of the company. He was a great visionary person, and he had selected a subject, a product, which he knew that is for the upliftment of our country. That's not only for the Escorts and Escorts employees, that is in serving the national interest. So he has chosen those subjects. And then thereafter, Mr. Rajan Nanda, he just brought the company to the golden era and that he had made a rapid progress made during his time. And now in the hands of our Nikhil Ji, the company is just touching the sky, it's being the platinum period of the company. So I must complement the management and the Kubotas also because they have seen the strength of the relationship. They have seen the integrity, honesty, transparency, investor friendliness of the Nandas. And so that's why they have just strengthened their relationship, their friendship, and they've announced their, what you call equity, and we are thankful to them because now with their international thinking of strategies and along with our own stalwarts, our company will definitely achieve the new heights, new zenith. So we are very, very, very much proud of that. Sir, I can speak at large regarding performance of the company. It was just for only 9 months because 3 months were impacted by COVID, and that was disruptive period, where there were a lot of disruptions and stoppages and all that. And still, our company can give a very good, grand performance was given and being investor friendly, they have declared a dividends of 70%. So we are proud of the management, sir.

Yes, once again, we would request you to wrap up your question. Thank you.

So I have got two questions, Sir. Sir, the first question is that the government has announced PLI Scheme. I just want to find out how much benefit we have derived out of that PLI scheme. And the second thing is that our company being just on the international level and all that, so we must be exporting also. What is the share in this revenue as a foreign exchange because these 2 points are quite important. And our company is just supplementing the dream of our prime minister. His dream is just to double the income of our farmers, which were being neglected for the last 70 years, and our company is just doing the noble cause of uplifting those farmers, and our agri equipment, they are from the tilling to sowing and to a last point in the market, we are -- our Escorts are just contributing to them, so that's a matter of achievement, sir. So before I wind up...

Please wrap up. Please. Thank you.

Before I wind up, I must thank the corporate governance under Mr. Bharat Madan. Mr. Satyendra Chauhan, Mr. Vicky Chauhan and the team for just giving us a chance to express ourselves, and the moderator, I'm proud of them even for the -- and I pray God to bestow positivity on you all from the top to the last man. Best of luck to you.

So, Chopra Ji, firstly, I just want to convey my deepest gratitude. You've been a shareholder of Escorts Kubota Limited since 1975. And these are some of the values that we hold very dear to our heart that we have your blessings and your support and your participation over the decades. I wish you great health, and please continue to participate because the relationship with our stakeholders and shareholders are very important. Just very briefly, while I said I'll answer all the questions towards the end, on the PLI scheme, I believe the tractor industry is not eligible at the current regulation in the scheme on the PLI. In terms of the export growth potential that you talked about, we do believe that the opportunity is huge. And as I mentioned in my presentation that in the medium-term business plan, we are planning. And in the next 2 to 3 months, we will come back to you with plans to showcase about how Escorts Kubota Limited will aspire and strategically look at increasing our export volumes to meet that opportunity. Thank you. Moderator, back to you.

Thank you, sir. We'll move the third speaker. The third speaker is Ms. Celestine Elizabeth from Mumbai. I would reference to the speaker, Ms. Celestine Elizabeth to unmute your audio and switch on your camera and proceed with query. I would request the speaker to restrict your question. Thank you.

Am I audible, sir?

Your audible, ma'am. Please proceed.

Yes, very much. We can hear you loud and clear.

Thank you, sir.

Thank you, ma'am.

Respected Chairman and MD, Mr. Nikhil Nanda, other Board members, including our Japanese directors, attendee from Japan, my fellow shareholders, I'm speaking from Mumbai, Mrs. Celestine Elizabeth Mascarenas. First of all, I thank Mr. Aman who reminded me that I have definitely registered and I should make my time to speak here. I thank you very much. I also thank Kfintech for registering me as a speaker. And I would be very happy if I would get a physical copy of the annual report as I am senior citizen because of old age eyes problem. Even then anyhow, I have gone through because this is an interesting story with the Japanese Kubota partnership. So I find lots of things will be happening. Now my straightway queries because I will be then limited. We are in Escorts agri machines, EM; Escorts Construction Equipment, ECE; Railway Equipment Division, RED. Sir, I would like to know where we'll get very good margins in spite of the inflations and what is -- which will be -- there will be double growth in which of these? Because all are very good, and there is a great future, especially in India because we are a growing nation. My second one, we are the first Indian company to design backhoe loaders within India for the global market. Sir, what is the market share means as of now? And how many -- this you have exported? Next question is 6 plants. We have 6 plants and 1 in Poland. What is the capacity utilization of these on average? You can tell me, sir. Our next -- my next one, farmtrac 45-power max is the most powerful tractor in 50-HP segment. What is the average price of this tractor and the margins we enjoy and what is the market share? My next one is, have you done any ESG rating? If so, what is our rating and the name of the rating agency? Last is, what is the future road map for the next 24 or 25 years? Why I ask you, as we have completed already 75 years beautifully growing, the next 25 years will be the big partnership of Kubota as our partner with all geopolitical problems and logistic and supply chain bottlenecks. So could you throw some light on it? Lastly, I would say, we are committed -- our company is committed to spreading prosperity impacting our lives of the stakeholders with good returns and market cap. And we have earlier examples also like Kokuyo, Camlin, Kansai Nerolac and JSW Steel, et cetera, et cetera, where I feel this partnership will give us a real great reward to the -- especially to the small shareholders so that in this great difficult days, we will be really rewarded like anything. With this, I thank you and wish you all the best.

Sorry, I'll just respond quickly. Burke, ma'am, thank you for your questions, and it really is wonderful to hear you ask these questions. On the margin front, in the past, where we have seen double-digit margins, both in the agri vertical and in the debut vertical. And as I mentioned in my presentation that the inflation has been extremely a challenging situation for the entire industry and the world. And I do believe that we will go back to the original margins of what we have showcased in your company in the past. But as I mentioned in my presentation that it will take time. So I do believe the prospects of both tractors are agreeably extremely, extremely strong in terms of getting to double-digit margins. In construction as well, we are working very closely with the leadership team to get back -- to get to a double-digit margin. And we will explain and talk to you about that in the future time. As for the backhaul loader story is concerned, I take your point and I agree, the potential is tremendous. We are exploring and even looking at possibilities of how we can use Kubota network for export potential for this product. In the domestic market, our market share is low, but there are teams who are working on creating a plan of how we can improve and increase our share of business for this product in the domestic market. In terms of the 70, 25 years next plan, which I had talked about. So as I mentioned, that we are right now making a plan for the medium-term business plan along with Kubota Japan. A lot of detailing is being drawn out in terms of the products that we will develop for the domestic market, products that we would develop for the international market. We are also looking at, as I mentioned in my presentation, Escorts Kubota Limited to become a component supplier hub for Kubota's infrastructure support from India, a global R&D setup. So a lot of these plans are being drawn out. Sometime in September, ma'am, I'll be more than happy to invite you and present to you about your company's future for the next 5 years and hopefully give you a glimpse of what the future, if not 10 at least for the next 10 years. So we take your point. On the ESG rating that you asked, that rating has happened by CRISIL, and we have just started this journey. We are very -- at a very nascent stage. But I can assure you that this is a very important program for us. And every year, we will ensure we make tremendous progress and earn the respect within our ecosystem in the journey of ESG. On the governance, as I presented in my presentation, your company was rated amongst the highest rating, which I'm very happy to share with great efforts and work from all our team members in the company. I believe I would have answered most of the queries. But if I have not, you can please e-mail us and we have also taken a note of your request of a physical copy of the balance sheet, and we will send it to your home. Thank you very much, and please stay well. Thank you.

We'll move to the fourth speaker. The fourth speaker is Mr. Manjit Singh. I would request Mr. Manjit Singh to unmute your audio and switch on your camera and proceed with your query. Thank you.

Am I audible, sir.

You are audible, sir.

[Foreign Language]

So Mr. Singh, thank you for your question. I think you've given some wonderful ideas and our engineers and our R&D have heard them, and I will ensure to convey this message to them on what we can do to better on the safety aspects of the products that we have developed in the cranes and on other product lines that we will think about in the future. Your question on the capacity very, very briefly, Escorts Kubota Limited today has a capacity of about 120,000 tractors. And in EKL, which is a subsidiary of Kubota where your company has an equity shareholding, there, the capacity is 50,000. So combined capacity is at about 170,000 tractors and the current utilization is at about 75%, which is about 120,000 tractors. In terms of the future, as I explained in my speech that we are developing and creating a medium-term business plan, and we'll be happy to walk you through about the future capacity that we will create to meet your company's aspiration for both the domestic growth and for the export potential. Thank you, sir. Moderator, back to you.

Thank you, sir. The fifth speaker, Mr. Dinesh Amruta Hota has not joined at this moment. We will move to the sixth speaker. The sixth registered speaker is Mr. Pradip Sood. I would request Mr. Pradip Sood to unmute your audio and switch on your camera and proceed its query. I would request the speaker to restrict your questions, so with 3 minutes' time. Thank you.

Yes, yes, yes. Can you hear me, sir?

We can hear you and also see you.

Yes. Chairman, sir, thank you very much. [Foreign Language] Thank you, sir. Thank you very much.

So Mr. So, thank you for your questioning, and it's wonderful to see you, so energetic and healthy. I also just want to convey that with now with the partnership with Kubota, the future prospects for your company is huge. I personally have the deepest respect for Kubota Corporation, I've been working -- and me and my entire team have been working with Kubota now for the last 6 years. And I can only tell you that the future is something that I am also excited about and can only assure you that we will put our best efforts and hard work, not only to make sure that the company goes towards the next line of growth but to serve our nation as well and the world outside our country for the future farm mechanized solutions. Thank you very much. Moderator, back to you.

Thank you. Thank you, sir. We'll move to the seventh speaker. The seventh registered speaker is Mr. Santosh Butani from Delhi. I would request Mr. Santosh to unmute your audio and switch on your camera and proceed with your query.

[Foreign Language]

Mr. Santosh Butani, sir, I believe you have 2 instrument in the same room, so that's the reason we are getting an echo. I would like us to keep only 1 device on.

Thank you. Mr. Butani. We can hear you. Go ahead.

[Foreign Language].

[Foreign Language]

Sir, my question is what are the company's strategies to counter competitive platform. And the second is that what are the steps the company have taken to strengthen business and position of close CDD stems and balance sheet here is sufficient room for improvement. Therefore, I want to know the future steps to increase the assets quality and capital improvement to strongest to balance sheet your value creation road map for 2 years. Thank you, sir.

Thank you, ma'am, for asking your question. So there are 3 pointers we want to focus to look at our growth aspirations, one is to build a robust product range, which are going to be innovative. I feel that the opportunity is huge because now we will bring the best of Kubota and offer the best of Escorts. So in my presentation, I talked about the best of technology, quality process of Kubota and Escorts frugal engineering, agility and speed. We will create a culture and an R&D that will create products which are going to be very, very unique. So that's going to be one of our main levers on product development and product innovation. Second point that we will use as a lever for growth are basically the 3 brands that I presented to you in my presentation that we are very uniquely positioned to have Powertrac, which is a mass brand, farmtrac, which is an entry to the premium brand and, of course, Kubota, which is absolutely a premium brand. So with products and the brand, that's going to be the second lever we will use for our growth aspirations. And third, we will look at appointing channels,dealership appointments to have the kind of presence that we require to achieve that market share. And in terms of the strategy that you asked, the detailing of it, as I mentioned to other shareholders, we are right now in the final stage of finalizing our medium-term business plan, which should be prepared and completed in September. It will be a pleasure, ma'am, to walk you through that strategy to build in addition to the points which I've highlighted right now. Thank you, ma'am.

Thank you, sir. We move on to the next speaker. The next registered speaker is Mr. Manoj Kumar Gupta from Kolkata. I would request Mr. Manoj Kumar to unmute your audio and switch on your camera and proceed with your query. I request you to restrict your questions within 3 minutes. Thank you.

Hello. Good afternoon, respected Chairman, Board of Directors, fellow shareholders. My name is Manoj Kumar Gupta, equity shareholder of Escorts Kubota Limited, and I've joined this meeting from Kolkata. So first of all, thanks to you, your team and entire secretarial department for their hard efforts that are showing in the market today under your leadership that people start getting return and everyone is getting return, and thanks to your company secretary and his team, especially Mr. Aman that always help us to join this meeting through VC. And thanks for your dividend, in this deprived market, you are paying a dividend to the investors. Thanks for your CSR that he looks after the community and the society to serve them in better manner. And sir, have you any plan to split the shares to attract the small investors that they can buy the Escorts plate, and also be part of Escorts. And sir, what will be the impact direct or indirect through Russia, Ukraine war. And sir, how you face that challenge from inflation? Inflation has gone so high, sir. And some days back, there was a shortage of semiconductor. So how you face these problems, sir? And sir, how much your order book as on today? And sir, try to increase your market share. And I thanks to you, your team to tie up with Kubota. Kubota is a world-renowned company of Japan, and Japan is a very friendly country with us. And recently, we have lost our best friends who has helped us to increase our infrastructure in the country in Gujarat, Delhi, Maharashtra, other estates in UP, Shinzo Abe, who we have lost. So we believe that Kubota will help us to increase our market share and increase to help you to take the company on new heights under your leadership in coming time. And sir, why are you not manufacturing the bulldozer. Now the bulldozer season has gone up, bulldozer demand is going up in UP, Madhya Pradesh, Gujarat. And last but least, to try to reward the shareholders because you have forget on 75th year platinum jubilee. And it would be my pleasure to meet you at your office. I come to Faridabad, my house in Faridabad. So I want to meet you for 2 minutes because I'm also a shareholder for a long time. I've attended a 1 AGM in airforce auditorium under the leadership of your beloved grandfather. So I respect you and your family that your family is totally dedicated to the employees and investors, sir. Thank you, sir.

Thank you, Mr. Gupta, for asking your question. We are more than happy to meet with you. Our Investor Relations team has made a note of your request. So whenever you are coming to Faridabad, let us know. In terms of the share split, we will, at the right time, deliberate this with our Board of Directors and do what is good for the company. Your point is noted. As per the conflict of Russia, Ukraine is concerned, we are all aware that this has created huge challenges on supply chain, new challenges on inflation. And in my presentation also, I mentioned that since FY '21, our material cost has gone up by 30%, something that we have never seen since inception of starting our business. These are challenging times, but I can assure you that your company is putting its best efforts to mitigate, to look at all aspects of lever that we can look at to ensure that we gain back the margins that I talked about. It will take time. It will be a gradual process to go back to the levels of the margin that we enjoyed and what we have presented or done for the company in the past. So I can assure you that we're working extremely hard on that. In terms of the order book for exports, yes, we have a bit of a backlog due to supply chain constraints. The opportunity for our exports, for our products are very, very good. But we are working with our material and supply chain team to ensure that we get the supplies as for the expectation, so we can meet these obligations for the exports. As for the market share is concerned, I can assure you this is one of the most important focus for your company. And jointly with Kubota, Escorts Kubota will look at, as I mentioned to the previous shareholder, in aspects of the products that we will develop, the technology investment that we will do and the brand positioning, along with application features that we will look at to uniquely position our company's strength to get the desired market share aspiration. Your point is well taken, sir. I appreciate your questioning, and I hope to present to you on some positives on these points in the next Annual General Meeting. Thank you.

Thank you, sir. We'll move to the next registered speaker. The next registered speaker is Mr. Mahendar Paul Butani from New Delhi. I would request the speaker Mr. Mahendar Paul Butani, once again, I request you to please have only 1 device on. The rest of the devices, please keep it on mute.

[Foreign Language]

Thank you, Mr. Butani, for coming and asking your question. On the electric tractor, as you are aware, your company, and I'm happy to share this with you that we are the first company to have commercially launched electric compact tractor outside India. And I'm also happy to share with you that we are receiving very good feedback from countries within Europe and even within U.S.A. We are obviously going to continue to expand on that range, and we would want to take the first move advantage through what we have already done in the last 2 years. As for the electric tractor is concerned for launch within the domestic market, we are working on all aspects of possibilities. Right now, cost is still a constraint. We want to look at how we can bring the cost down and also as for the productivity of the tractor to the levels of what our farmers expect for electric tractor to function in the climatic conditions of the Indian environment. We're also, of course, looking at other technology in hybrid technology, which is something I can't speak of because these are confidential projects. But all I can say is that your company is putting all efforts -- we're putting all our knowledge and discussing this in the innovation team to see how we can come out with breakthrough products. We will appraise you and announce as and when we are ready to launch these products in the near future. Thank you very much.

Thank you, sir. The tenth registered speaker, Mr. Dinesh Gopala Bhatia from Mumbai is not available at this moment. We will move with the 11th register speaker, Mr. Aspi Boman Shah from Mumbai. I would request the speaker, Mr. Aspi to unmute your audio and switch on your camera and proceed with his query. Thank you. Mr. Aspi, we are unable to get your audio. Mr. Aspi, we are not getting your audio. Since we are not able to get the audio from Mr. Aspi, we will move to the next speaker. The next registered speaker is Ms. Savita Rani. I would request Ms. Savita Rani to unmute your audio and switch on your camera and proceed with your query.

Yes, am I audible?

Yes, you are.

Yes. I'm Gagan Kumar, joint holder with Savita Rani. I welcome you all to this AGM. I'm joining this meeting from Delhi. [Foreign Language] Thank you. Thank you so much, sir.

Thank you, sir. Thank you. Moderator, please continue.

Yes, sir. We'll move to the next speaker. The next registered speaker is Mr. Anmol Jain. I would request Mr. Anmol Jain to unmute your audio, switch on your camera and proceed with query.

Good afternoon. I am Anmol Jain. After reading Chairman's speech, I clear all my doubts and appreciate the Chairman's speech and the bright future of the company as well as shareholders also wish to secretarial department, legal department, and entire whole team that's in your leadership play toward our respective company and more and more and get shareholder benefit. Thank you, sir.

Thank you, sir.

Thank you, sir. We will move to the 14th speaker. The 14th registered speaker is Mr. Rakesh Mat from Delhi. I would request the speaker, Mr. Rakesh Mat to unmute your audio and switch on your camera, proceeded to query.

Hello? Am I audible, sir?

Yes, sir. You're audible. Please proceed.

[Foreign Language] Thank you, sir. Thank you.

Thank you.

Thank you, sir. We'll move to the 15th registered speaker, Mr. Praveen Kumar from Delhi. I would request the speaker, Mr. Praveen Kumar to unmute your audio and switch on your camera and proceed to query. Thank you.

Hello. Am I audible, sir?

You're audible, sir.

A very, very good afternoon to my respected Chairman, my decorated esteemed Board of Directors and by co-fellow shareholder who joined this meeting online. I am Praveen Kumar joining this meeting from New Delhi. Sir, I have few observation, which I love to share with the entire house. Number one, sir. I'm with the company for more than 2 decades. And over the period, my experience is very, very satisfying as a retail investor, sir. I put my hard earned money into the company and I got return, fantabulous returns. So thank you very much, sir. And I welcome Kubota, who have worldwide presence. And it's a marriage between 2 winners. So the result will be fantabulous. And I pray to the Lord, he bless you so that you will take along with Kubota to our company to the newer height in the future. I put my 100% ascent to the resolution, which we set out for the notice today, sir. And sir, as far as the retail investor is concerned, sir, the barometer of the company is also, sir, decided by the corporate governance. And in this regard, sir, when we have used to have digital meeting also, I'd love to thank respected Mr. Vijay Dixit and Mr. Chauhan and Vicky Chauhan they are doing fantabulous jobs as per as they welcome us. It's a red carpet welcome for retail investors. It really shows that yes management is very, very focused on our retail investors. And as far as future is concerned, sir, I wish all the luck to you and the entire Board, and I love to thank the management to give me a platform to express my views and feelings to answer. One more thing I'd like to add here, sir, is that presentation. I never saw this kind of presentation. It is in-depth, I repeat my word, in-depth speech along with the graphics, which cover almost everything. When I say almost everything you cover almost everything beautifully, sir. I wish you all the very, very best for the future. So thank you very much.

Thank you.

Thank you, sir. We move to the next registered speaker. The 16th registered speaker is Ms. Kanika Jain from Delhi. I would request the speaker, Ms. Kanika Jain, to unmute your audio and switch on your camera, proceed with the query. Ms. Kanika Jain, please proceed with the query. Your audio is on. Ms. Kanika Jain, please proceed. Since there is no response from the speaker, we will move to the next speaker. The 17th registered speaker is Mr. Ashok Kumar Jain, who is not joined at this moment. We will move to the 18th registered speaker, Mr. Narender Singh Chohan. I would request the speaker Mr. Narender Singh to unmute your audio and switch on your camera and proceed with the query.

Hello. Am I audible, sir?

Yes, you're audible. Please proceed.

Good afternoon to all. This is Narender Singh Chohan this side. Respected Chairman, sir, Board of Directors and my fellow shareholder friends, I would like to thank you for connecting in this photo. Sir, I have no queries, but I just want to thank you to all secretarial department because of they solve all our queries and problems of any type immediately and respond as quickly and timely. So thank you so much. Thank you to all.

Thank you, sir.

We'll move to the 19th registered speaker. The 19th speaker is Mr. Krishan Lal Chadda from New Delhi. I would request the speaker, Mr. Krishan Lal, to unmute your audio and switch on your camera and proceed with the query.

Am I audible, sir?

Yes, sir. We are able to hear you clearly.

Thank you, sir. Thank you to the give me the opportunity to join with you. I'm really thankful to the management and entire Board for giving me the chance to speak with you. [Foreign Language] Thank you. Thank you so much for giving me the opportunity.

Thank you.

Thank you, sir. We move to the next registered speaker. The 20th registered speaker is Shekel Khurana from Delhi. I would request the speaker, Mr. Shekel Khurana, to unmute your audio and switch on your camera, proceed with the query. Thank you.

Hello? Sir, am I audible, sir?

Yes, you're audible, sir.

Now it is good afternoon, now it is good afternoon, sir. Good afternoon to all of you. I think most of the shareholders, they have already -- they have queried their questions and you all responded well. But 1 thing I want to say, sir, we want better results, we want a dividend, better share value for you as well as your esteemed team of directors. As we are associated with this company since Rajan Nanda. So we keep -- we want a better result from you. We are not satisfied, we want better results. So first I hope that all of you should work hard for all of the stakeholders and for all the employees who have dedicated, and they have -- I think they have given their best during this COVID period. And last but not least, the share department Chauhan sahab, Dixit ji and Pradhan sahab and all those who have been very cooperative and very good to the all shareholders. So I think whatever be the query of even a single shareholder, even if small shareholders that is responded well in time. So with this words I will again thank you very much. Thank you.

Thank you, sir. The speaker, Ms. Kanika Jain, who couldn't speak earlier, we are giving 1 more opportunity. Ms. Kanika Jain, I would request you to unmute your audio and switch on your camera, proceed with the query.

Hello, am I audible?

You're audible.

Okay. Good afternoon, Chairman and everyone present in the meeting. I'm Kanika, and I'm joining this e-meeting from Delhi. So I have full faith in the management, but I have a couple of queries. Sir, I want to know how has the HR team initiated to support its employees and their families in the period wherein there are certain inflationary pressures on the company. My other question is, has a collaboration with Kubota affected the incentives or the size of workforce of our company? And thank you to the management for arranging this e-meeting that has enabled me to join from my place and for giving me the opportunity to put up my questions. Thank you.

Thank you, ma'am. Chairman sir, with this, we have completed the Q&A session with the preregistered speakers actually who are available during their turn. Now we are handing over the session back to you, sir. Thank you.

So Kanika Jain, thank you for asking a very important question. And also in my presentation, I had put in a great emphasis that the most important asset of any company is its human assets. I believe that this is 1 value that we very much respect and care about is human relationships and human relationships not just within the organization of all the people are working within Escorts Kubota Limited, but also with our stakeholders who are doing whatever they're doing, day and night in taking your company to the next level of growth. So we are very, very conscious, very, very mindful about what we can do with the company to ensure that we extend all health care facilities, look at an environment whereby we can get them to participate where they feel supported by the company. And in terms of increments as well in the last 1 or 2 years and even during the COVID time, your company ensured that we paid everybody even when there was a total blackout and total stoppage of work temporarily for the period of 2 to 3 months. I can assure you that we will always nurture and value this element of human relationship and rest assured that this is something that's going to be some of the most important factors that the company will look upon to build its future with its foundation. Also, there were some very interesting and good questions by many shareholders about the growth of Escorts Kubota Limited for the future. And as I mentioned that we are in the midst of preparing our medium-term business plan. And the entire team at Escorts Kubota Limited is very joyfully and working extremely hard to create that paper, which we will share with you and give you all the details that you've asked for. But I would like -- I have Watanabe-san with us, who's, as you know, a very senior executive at Kubota Corporation and also our Director in Escorts Kubota Limited. I would request him very, very briefly for him to speak about the future plans of his vision from Kubota Corporation and also as a Director of Escorts Kubota Limited. So Watanabe-san, over to you, if you can briefly give some idea about the future aspiration for Escorts Kubota Limited.

Nanda-san, can you hear me?

Yes, very well. We can hear you. Yes.

My name is Dai Watanabe. I'm a Director and Senior Managing Executive Officer in Kubota Corporation. And also, I am the Director of EKL. It is a great honor for me to join the AGM. I would like to answer the question. In addition to aspiring for doubling our domestic market share by March 2028, Kubota Corporation expects EKL to place our growing roles: first, B2B strategic base for value for money tractor in the board; second, establishing the global R&D and innovation center; third, B2B and export base for components in the world that take advantage of India's competitiveness. Thank you very much.

Thank you, Watanabe-san, and I also want to thank Watanabe-san, who played a very important role in building the relationship of what we now look at as Escorts Kubota Limited, and I look forward to his continued guidance from -- for the future. With that, we come to an end on the Q&A session. I do look forward to continuing these interactions. And if there are any speakers, any shareholders who still have questions, I would please encourage you to reach out to us. All the details have been provided. As a company, we want a participation of all our shareholders. We want your blessings, we want your inputs, and we value every word of inputs that you have to offer to us. So please feel free to reach out to us, and we will do -- we will get back to you. Moving forward, for the remaining part of today's AGM, the Companies Act 2013 has provided an option to you shareholders for casting the votes through e-voting process. The entire procedure for this purpose has been stated in the detail in the notice of this meeting. I'm confident that you have gone through the same. The option for e-voting was exercised by shareholders during the period of 11th to the 13th of July 2022, and the company has appointed Mr. Jain Gupta, practicing Company Secretary, as a scrutinizer to supervise the voting process. The voting results together with the scrutinizer's report shall be placed on the company's website and also on the website of KFintech. A communication to this regard will also be sent to the stock exchanges. Now the members are given 15 minutes to cast your valuable votes in respect to the items stated in the notice. The instruction for the voting has been described in the notice of the Annual General Meeting. [Voting]

I now announce the conclusion of the 76th Annual General Meeting of the company after completion of the 15 minutes time given for e-voting. I look forward to seeing you all in the next year, and I do want to thank you for taking your valuable time to participate in today's session. I want to thank all our shareholders. I want to thank our Board of Directors. I want to thank the entire team at Escorts to be part of today's AGM. With that, I formally conclude today's AGM. Thank you, [Foreign Language].