Escorts Kubota Limited (ESCORTS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Escorts Kubota Limited Q4 FY '23 Earnings Conference Call hosted by Emkay Global Financial Services Ltd. [Operator Instructions] Please note that this conference is being recorded. Before we start, I would like to add that some of the statements that the company makes in today's call will be forward-looking in nature and subject to risks as outlined in the annual report and investor releases of the company. I now hand the conference over to Mr. Chirag Jain from Emkay Global Financial Services Ltd. Thank you, and over to you, sir.

Thank you, Michelle. Good evening, everyone. On behalf of Emkay Global Financial Services, I welcome you all for Escorts Kubota Limited Q4 FY '23 Earnings Conference Call. I also take this opportunity to welcome the management team from Escorts Kubota Limited. Today, we have with us Mr. Bharat Madan, Whole-Time Director and Chief Financial Officer; Mr. Harish Lalchandani, Chief Officer, Agri Machinery Business Division; Mr. Sanjeev Bajaj, Chief Officer, Construction Equipment Business Division; and Mr. Ankur Dev, Chief Officer, Railway Equipment Business Division. As well as we have Mr. Prateek Singhal, Investor Relations and ESG at Escorts Kubota Limited. We would start the call with brief opening remarks from the management, followed by an interactive Q&A session. At this point, I would request management for their opening remarks. Over to you, sir.

Thank you, Chirag. Good evening, everyone. This is Prateek Singhal. Thank you all for joining us on the earnings call for the fourth quarter and fiscal year ended 31 March 2023. A few highlights of the company's stand-alone performance for the fourth quarter ended March 2023 are as follows: Revenue from operation during the quarter was up by 16.8% at INR 2,183 crores as against INR 1,869.6 crores in previous fiscal. On sales volume front, tractor volume was up by 13.1% to 24,765 tractors as against 21,895 tractors last year same quarter. On the construction equipment, volumes are up by 18.8% to 1,528 machines as against 1,286 machines in the last year same quarter. EBITDA for the quarter ended March 2023 came at INR 235.8 crores, down by 6.2% as against INR 251.5 crores last year same quarter and sequentially up by 23.9% as against INR 190.3 crores in Q3 FY '23. EBITDA margin for Q4, up by 240 basis points to 10.8% as against 8.4% in sequential quarter and 13.5% last year same quarter. PBT before exceptional item at INR 271.4 crores as against INR 269.5 crores last year same quarter. Net profit at INR 185.5 crores as against INR 202.2 crores last year same quarter, impacted due to exceptional provision of INR 24.4 crores on account of impairment of investment in the wholly owned subsidiary, Escorts Crop Solution Limited. Company continue to be net debt-free with sufficient availability of liquidity for growth. The Board of Directors has recommended a final dividend of 70%, i.e., INR 7.0 per equity share for the year ended 31st March 2023. On consolidated basis, company financial performance for the quarter ended March 2023 is as follows: Turnover is up by 17.4% year-on-year to -- at INR 2,214.5 crores. EBITDA margin at 10.5% as against 13.2% in last year same quarter. Profit before tax up by 7.8% year-on-year at INR 277.6 crores. Net profit margin up by 13.9% year-on-year at INR 216.5 crores. Moving on to the segmental business performance. Starting with the Agri Machinery business. The total tractor industry volume, domestic as well as exports, in FY '23 went up by 10.2% to 10.7 lakh tractor as compared to 9.7 lakh tractor in the previous year. This is a new record for the tractor industry, beating the last peak of 9.88 lakh tractor in FY '21. But our total volume went up by 9.7% to 1 lakh 3,290 tractors as against 94,228 tractors in the previous fiscal. Our total market share was maintained at 9.7%. Here to note that this is the second time that company has crossed 1 lakh plus tractor sales unit. The domestic tractor industry went up by 12.2% to record number of 9.45 lakh as compared to 8.4 lakh tractor in the previous year. All macroeconomic factors, crop production, crop prices, good monsoon and availabiity of retail finance remained positive throughout the year. Our domestic tractor volume went up by 9.4% to 95,266 tractors as against 87,043 tractor in the previous year. We ended the year with a domestic market share of 10.1% for FY '23 as against 10.3% in FY '22. The marginal drop in the market share was mainly due to drop in Q1 FY '23. Post that, we have taken some corrective actions in the last 9 months of the fiscal from July '22 to March '23. Our domestic market share improved to 10.4% as against 10.2% for the same period in FY '22. And in Q4, we ended market share at 10.9%. We have more than 100-plus dealer count. We continue to focus on channel expansion to cover the white spaces for both Powertrac and Farmtrac brand. We have also initiated step to focus on the health of our channel and are taking a step to develop a strong and healthy dealer network. On the export side, during fiscal FY '23, industry was down by 3.2% at 1.24 lakh tractors as compared to 1.28 lakhs tractors in the previous fiscal. However, our export volume went up by 11.7% to an all-time high of 8,024 tractors as against 7,185 tractors in the previous fiscal, driven by our continuous focus on new product development and expansion of our distribution network. Sales through Kubota global network is also gradually increasing and during the year contribute more than 30% of the total export volume. Segment revenue was up by 13.5% to INR 6,316.1 crores as against INR 5,563.7 crores in the previous year. EBIT margin for the Agri Machinery business stood at 9.3%, impacted during the year by steep inflation in commodity price, advert product mix and impact of price rationalization in certain products of the geographies. For the quarter ended March 2023, EBIT margin was up by 159 basis points to 9.9% as against 8.3% in the sequential quarter, led by a better product mix, improved price rationalization and softening of the commodity prices. In Q1 FY '24, domestic tractor industry is expected to remain almost flat due to advancement of the key festive season to March '23 as against April last year, combined with unseasonal rain. However, for FY '24, we expect the domestic sector industry to do well and made a still low mid-single-digit growth, led by positive macroeconomic factor. On account of group, rabi harvest improved crop prices and adequate water level is [indiscernible]. Coming on to the Construction Equipment business, our served industry of crane, backhoe loader and compactor was up by 24.5% in volume as compared to FY '22, led by growth in backhoe loader industry up 28%, crane industry was up by 25%, whereas compactor industry see a degrowth of 5%. Our total volume of manufacturing and traded products went up by 12.2% to 4,620 machines as against 4,117 machines in the previous year. Segment revenue went up by 19.5% at INR 1,179 crores as against INR 986.8 crores in the previous year. EBIT margin went up by 48 bps to 2.9% as against 2.4% in the previous year. There is a sustained demand for construction equipment industry supported by government continued trust across all infrastructure. We expect demand momentum to continue going forward for the current quarter and further accelerate in FY '23, '24. And margin for the segment to improve further, owning to softening of the commodity price and improvement in the product mix. Coming to the Railway division. Revenue for the year ended March 2023 went up by 32.3% to ever highest yearly revenue of INR 841.9 crores as against INR 636.2 crores in the previous year. Sales from the new product contributes 65% of the total sales division sales. EBIT margin for the year ended March 2023 stood at 13.8% as against 14.8% in the previous year. Order book for the division at the end of March 2023 stood at a healthy and ever highest level of more than INR 1,050 crores. With continuous focus on product diversification and export, we expect the Railway Equipment business segment to continue in the double digits in FY '24. Now we'll request the moderator to kindly open the floor for the Q&A.

[Operator Instructions] The first question is from the line of Gunjan Prithyani from Bank of America.

I have 2 questions. Firstly, on the outlook for the industry. I'm not sure if it was flat for F '24 or low single digit, if you could clarify that. And also give us some color on how did the recent festive go. Any color on the geo trends? Where are the inventory levels? Some color on the industry, what you're seeing on the ground.

Thanks, Gunjan. This is Harish. To give you our perspective of the industry, we expect first quarter of this year to be flat, given some of the adverse weather conditions, but overall for the year, we expect the industry to grow by single digit. That's for F '24. Going at the end of the festive season, the festive season in quarter 4 was -- if you were to split a quarter into 2 parts, the first part of the quarter was good for us because of good rainfall, good, what you call it, water supply, et cetera, good MSP prices. Last month, which was March, got impacted positively as well as negatively. The positive impact was because of the festival. Negative impact was because of unseasonal markets.

And I mean on balance, how -- I mean did it go as per your expectation? Was it growth versus if you compare with last year [ Navratri ] festive? Did these balance out each other? Or was it more on -- skewed more on the negative because of the unseasonal rain?

If you were to ask us if the unseasonal rain hadn't happened, and if you see the trend versus the previous quarter, growth could have been better. But given the fact there was unseasonal rains, the market still grew 14%, but it is not in line with the growth in the previous quarters.

Okay. And where are the inventory levels? Is there some higher inventory levels because it didn't go -- the festive didn't go as anticipated?

Actually not, because if you take a look at our quarter 4, our deliveries have been higher than our billings. Therefore, our net inventory at the end of quarter 4 stands lower than it was in the previous quarter.

So less than a month, I should assume?

It is in line with the 4 to 4.5 weeks that we normally have.

Okay. Got it. The second question is more around the margins. Now we've seen some sequential improvement given combination of mix, price hikes as well as the cost easing. But if I were to look ahead for -- going by the assumption that there's incrementally not much of operating leverage to play, if it's a flattish or a low single-digit volume growth, there's not incrementally much operating leverage as a lever. So how should I think about the various push and the pull factors? Like do we have scope to take more price increases? Are we expecting more commodity easing to flow through? So just some perspective on how I should think about margins for F '24 for the agri business.

Gunjan, this is Bharat Madan. So as you currently mentioned, operating leverage, we are not really banking on too much. But if you look at the trend in the last 2 quarters, so we are getting the benefit of the softening of the commodity prices. And it looks like the trend will continue in the coming quarters, too. So price increase doesn't look like the feasibility in this scenario when the commodities are softening. So that is something which we are still keeping a watch. It will all depend on how the competition plays out, and it is a possibility. So that will be explored. But right now, it looks difficult looking at the way commodities are moving. But as we mentioned in the last quarter, that was a bottom quarter from a margin perspective, and we're only looking at better margin coming in going forward. So this commodity cycle, obviously, is giving benefit going forward, too. So we expect that trend should continue, and that should actually lead to some better margin. In addition, there are also some cost control measures which company had put into place for this year. So that will also start playing out. So that also should act to the overall bottom line. So at least by the time we exit the year, we should be at least back to what it used to be the normal level of margin for tractor business.

The normal, you mean the low to mid-teens because we've gone through a huge range in the last 2.5 years, right, 13%, 14%, then we [indiscernible] even 20%.

I think COVID year, you should exclude. So I think pre-COVID level, which used to be just 14% sort of range. So that is the sort of number which we're targeting to end the year this year as an exit.

Okay. Got it. Just last question, if I can pitch in this Construction segment margin at 8%. Is this sustainable? Is it one-off this quarter? Any clarity on that?

So Construction, as you know, I think the demand started picking up only from December last year. And only second half in Construction Equipment business is good. And you've already seen the margin historically also. The last quarter used to be the best [indiscernible] margin. Whether the same numbers will sustain, I think difficult to say, but the demand momentum is continuing. We've seen good numbers coming in April also. There's some spillover of demand, which was there. So industry is right now struggling with capacity issues, but very good demand coming in both domestic as well as an export front. I think the demand scenario for this year, we expect the momentum should be good. The price increases have been absorbed in the market. So the idea, the margin should continue to be better than last year, whether the same level is sustained, I think it's difficult to say at this point in time.

The next question is from the line of Chirag Jain from Emkay Global Financial Services.

I have a couple of questions. On the market share front, within the tractor space, we have seen a decline last year. So how do we see that shaping up this year? And any major initiatives that you can call out, which can help in terms of boosting our market share?

Chirag, thanks. This is Harish. Chirag, again, if you take a look at the full year and if you take a look at the sequential quarter-wise, quarter-on-quarter, we have increased our market share from Q1 to Q2 to Q3 to Q4. Biggest drop that we had was in Q1. Subsequent to that, we have always grown in our market share. So that is point number one. Two is, this has -- already some initiatives have been taken. Key among -- is the focus on digital. Second is our focus on the 31 to 40 HP, our focus on 41 to 50 HP, and our focus of greater than 50 HP. Second, just in terms of geography, our focus on the strong as well as the opportunity markets, which is leading to a significant growth of share in this strong as well as the opportunity markets across quarters. The third is our focus on the haulage segment. So we see haulage segment as an opportunity for us going forward. And even in the last year, we have inroads into the segment.

Okay. Second question is, with respect to the product mix or, let's say, the segment-wise, let's say, growth profile within the tractor space, let's say, agri and nonagri, how do we see that, let's say, in this financial year? And this could have some implications on the margin profile as well. Maybe if you can discuss that as well.

Two bits. If you were to take a look at the market today, if you were to take a look at the pure nonagri, our estimate of the nonagri market is approximately 15% to 20%. And if you take a look at that specific market, that is predominantly driven by investments into infrastructure. Given that the government has the stated intent to double the spend in infrastructure this financial year as compared to the actual spend last year, we see this segment showing a significant growth. That is part one. I agree, if you take a look at it, given the current quarter levels that we have and the positive trend that continues into this year, we also see a positive momentum in that segment.

Okay. Sir, just last thing and then I'll come back in the queue. In terms of trend for regulations, any update do we have? I think in the last call, we mentioned that it might come probably in September '24. So any final notification or any update that we have?

So no further update. It is just that as part of the TMA, we have submitted a recommendation to the government to try and keep a 5-year gap between the [ Train 4 ] and the [ Train 5 ], but is yet to get back.

And also again on last call, we had mentioned in the original emission norm for more than 50 HP, then got delayed by almost 18 months. So we expect similar delays should be there for the lower HP segment also. So earlier, the initial change of emission you saw was supposed to happen from 1st April '24. Now if you look at 18-month delay, it would have been September '25, not September '24. So -- but right now, obviously, there's no notification being issued. So we're still waiting and we'll come back once the discussion is out and the notification is out.

We have the next question from the line of Devika Jain from Ratnabali Investment Private Limited.

So we have grown our exports by nearly 12%. I just wanted to understand how our players have performed and also the reason for our outperformance as against the industry.

So industry has actually declined by almost 2% last year. So exports in India have not done well. So the industry total was roughly 125,000 this year against 129,000, 130,000 a year before. So in our case, the exports have gone because, obviously, we have started exporting to quarter network also, which was also one of the reasons. So it's almost 30% export in our case, actually, this year or through quarter network. And that's the trend we are seeing probably will continue. So that's why we are more bullish on the export number going forward, too. So in the industry scenario, with some of the countries have started facing decisions especially in EU countries. So we are seeing some sort of decision condition are prevailing because of geopolitical issue. And the U.S. also is expected to get into this decision mode. So on exports, demand may get impacted slightly. But in our case, since we are banking more on the export to quarter network, so maybe we'll not see that sort of impact [ within this industry ].

Okay. This quarter, our excludes through Kubota was more than 40%. What is the number going forward? Is it expecting through Kubota channel?

So right now, we are projecting a similar level as we have seen in the last year. So once we open more countries -- and there's a lot of work needs to happen on the product side. So once the product is steady, then obviously, we'll see the numbers going up. So that will take some time. But definitely, I think the trend product portfolio, what we have, which we are already exploring, and there's certain new markets which are opening this year. So we expect the number should gradually continue to improve. It will be in the range of 30%, 40% in annually going forward.

Got it. And one last question, sir. So I also wanted to understand the reasons for our poor volume uptick in the Construction Equipment segment this quarter.

Poor volume uptick. Why do you say that?

As compared to the industry, the growth of our volume...

So essentially, because of the product mix which we have, if you look at -- we are -- our main product portfolio is in the pick-and-carry crane segment, where we have done almost at par with the industry. The issue is on the backhoe loader, which is the earth moving segment. Here, we're a very small player with about 1.5% to 2% market share, and the maximum growth in the industry has happened in that category. So it's more in terms of the issue, in terms of mix that the industry has and where segment has grown, where we are not a very strong player. So they're saying the service industry looks like as if we have been dropping the market share. But if you look at our own pick-and-carry segment, I think quarter -- this quarter, we almost gained our market share back to 40% plus, which is the largest segment for us.

The next question is from the line of Mitul Shah from Reliance Securities.

Sir, I have question on your yearly guidance of single-digit growth for the industry. Sir, in view of festival being not there in April this time, in March to last year, April had a festival, so the base was high. Even for this quarter, also base for the coming months, May, June remains high. Overall, climatic situation is still adverse and untimely monsoon. So despite all those negative factors fundamentally right now, what are the factors you see could help driving single-digit growth?

So Mitul, if you heard the commentary from Prateek, I think he mentioned in this quarter, since you've already seen April has declined, the industry has declined, and May, we expect to be almost flat industry, and June early, we'll see growth coming in. So overall for the quarter, we are anticipating flat industry this quarter. The low single-digit growth we were talking about is for the full year basis. So it's [indiscernible].

My question is on full year only. I asked that this quarter, we are seeing flat, and full year, we are seeing growth. These are the negative factors even -- in fact, inventory level is also high for the industry, which probably may come down slightly. So adjusted for that wholesale growth, you are indicating single digits. So that's what I want to understand.

No, no. So Mitul, if you take a look at it, there are 3 positive factors that are impacting the industry today. One is the good MSP prices that we have as well as the crop prices. The second one is the reservoir, which are significantly better than what we have in the last year. The third one and the most important one is the fact that it is an election year. Therefore, we expect infras trend, as I indicated, is doubling this year as compared to the previous years. So the haulage plus the mix segment, which accounts for close to 30% of the total industry, is expected to give a big boost to that particular entire space, that combined -- so that infrastructure growth, and hence, a significant boost in the 30% and 35% of the market, plus growth in agri because of MSP increased as well as irrigation. That is expected to give you that single-digit growth.

Okay, sir. Second question, again, on the same in terms of -- as for the commentary, it seems that the second half would see the growth, first half may not be very great. In terms of region-wise, where do you see high growth coming? Or which of the regions do you think still have some weakness? Because this monsoon impact seems to be more in the north and in central belt, where we are relatively stronger compared to south.

I think the growth we are expecting is going to be [ panning here ]. That is one. And second one is monsoon is -- if it comes, and I'm not sure what the outlook is going to be, but I think it will impact most of the geographies, if it does impact. In fact, irrigation in the northern and the western zones are actually better than some of the other areas, if you see the historical trend. So we feel a lesser impact would happen in our strong markets.

The next question is from the line of Hitesh Goel from CLSA.

Sir, first question is on the tractor margin, which has improved 160 bps Q-on-Q. You had highlighted in the last con call that there's not much commodity cost benefit, which you are expecting in the fourth quarter. But the commentary seems to be you've got some benefits, and that will flow through in the next quarter. So is it mostly commodity benefit that has helped margins, or it is also the mix to some extent?

So it is the 3 reasons we mentioned. One, we also mentioned last quarter since we've taken the price increase after the festive season was over. So the full impact on the last quarter was not visible, which we've got the full impact in this quarter, which still is almost 0.75% in the margin improvement. And then second, the softening of commodity price had happened. So still, some decline is happening on the last time, which was not visible. But during the quarter, when the rate got settled with the competition, the leader who actually take the lead in settling those rates on the commodity side, so we did get some benefit, which happened towards the later part of March. And that's why we got the impact on the full quarter, and that basically will continue in the coming quarters, too. And third is product mix, which was also positive. Because you look at the trend, the more than 48 sales number into the percentage has gone up by almost 3% in this quarter. So that also contributed to the better realizations. So all 3 factors were this module for the improved margin trend in the tractor business.

And sir, my second question is on this, which Harish also highlighted, actually. Irrigation intensity has improved quite dramatically, especially in states like Madhya Pradesh and [indiscernible]. So I did an analysis that only I think Maharashtra and Karnataka, to some extent, Gujarat is the areas where monsoon can have an impact on tractor volumes if the water levels are quite high. Is the analysis right? So we should not worry too much about monsoons at least because it's -- visible levels are only -- they are lower in [ UPB hardware ]. Anyway, the irrigation intensity is very high. Is the analysis right?

Broadly in line with what we are also thinking, that we don't feel there is going to be a significant impact of monsoon this particular year because of the reservoir levels across most areas, which are key markets for us being reasonably good. And plus, as I said, the infrastructure growth, which is happening because of the election year.

[Operator Instructions] We have the next question from the line of Raghunandhan N. L. from Nuvama Research.

Congratulations on the strong margin performance, both in agri and the construction equipment space, and very heartening to hear the improvement expected by end of the year. Sir, a couple of questions. Firstly, on Kubota Agri Machinery, if you can share your thoughts on the time line for [ Master ]. And also, how is the progress happening on the localization part? Would you see that exercise completing within the 2-, 3-year period and seeing EBIT margin of 15%? And again, on Kubota Agri Machinery, how do you see the component exports to global Kubota? What are the efforts there? And on a pilot basis, have you started exports?

So Raghu, on the merger front, right now, the -- we are waiting the approval from SEBI. So we had filed our application, and all the stock changes have given the -- all the queries were resolved, and the matter has been deferred by [indiscernible] to SEBI now. So we have yet to have received the approval. It's almost now close to 3 months since spending with SEBI. Once we get the approval from SEBI, then it will be filed with NCLT for the necessary processes. So it will take another 6 months' time. So right now, the way things stand, it looks like the process call gets delayed by another 3 months. [ So while here, ] we're expecting it should happen by September, October. But the way I think things are today, so SEBI has already delayed this whole process. So it looks like it may go somewhere around December, January types, assuming everything comes in line in future. On the localization front, so obviously, the localization in the JVs is essentially for the Indian manufacturing, which is a major part, which right now is getting imported, and also other products which are right now traded was in the manufacturing JV. We are only doing 2 models for them right now. And the balance of the models are actually imported from Japan. So that localization will happen once the more product gets introduced in the portfolio, which will happen I think over the next 2, 3 years, as you mentioned. Because we have already factored that in our midterm business plan, which was unveiled to the investors and analysts last year in November. So that obviously is very much on. So the work is happening on that front. On the component export, it's already -- the manufacturing JV is exporting to some of the countries, including Thailand and U.S. market. And as they grow and develop more components and do more indigenization, so the opportunity for export will also further increase. So that is also already indicated, and that will continue. Obviously, the visibility to numbers will only happen when the merger happens. So right now, they are still stand-alone entities, and we only consolidate the bottom line numbers there. So that is not really reflected right now. But since the -- the integration happens and the merger happens, we'll get to know more, I think, about them.

And the effective date will be from 1st April, right, sir?

Yes, I pointed it as 1st April 2023. So as and when it happens, so we'll do the consolidation of results from 1st April and produce consolidated results.

Kubota tractors are selling in the network of 300-odd outlets. Any thoughts on cross-selling using the Escorts Farmtrac or Powertrac network?

Yes. So like we mentioned, so this is one of the key synergy which is there. So when the integration happens, so definitely, there will be an opportunity for the dealers of both the companies to do cross-selling. So the good dealers and Kubota can also sell our products maybe through a different showroom, not in the same showroom. And same thing can happen with our dealers also. So especially in the northern, central India where we are strong. And [ core ] is not very strong. So that will give them also an opportunity to represent it to our network.

And on the Construction Equipment and Railways, if you can talk about outlook for FY '24?

Sanjeev, you want to talk about Construction, then Ankur can take the Railway.

Yes. Thank you, Raghunandhan. So this is Sanjeev. I want to talk about the Construction Equipment outlook for this year. Now last year, we've seen that the first half was very subdued. And second half only, we saw that the demand came up. And we expect that the speed at which the projects are moving at present and the demand from the infra projects is very, very high. So this year, it is expected that the same level of demand will continue. Although there was some backlog, which was to be covered in the last quarter for the first half of the year. Second half of the year -- I mean this year, we expect that the industry will continue to grow. Our served industry will grow at about 10% to 12% is what we are expecting. And we see that until the end of the year. This demand should continue except for the small period of monsoons when the projects actually went to a halt.

Yes. Raghu, this is Ankur Dev. So regarding Railway business, so as of now, we have a strong order [ pad ] of INR 1,000 crores plus, as we mentioned in our opening remarks. Most of this will be executed in current financial year only, financial year '24. Additionally, we are going to commercialize 3 more products, which were in field trial in the last financial year. And obviously, these -- commercialization of these 3 new products will add to order [ pad ] and the revenue in the current financial year. So overall, I can say that we are -- we will continue this growth momentum in the Railway business, and we are hoping that we will be able to grow by double digit in the current financial year also.

And to Ankur, sir, if you can talk a bit on the localization efforts of new products and how the margin trajectory will go ahead on railway.

So regarding localization, as of now, mostly, it is in the brake side for the [ LSV ] coaches. And we have already done the localization of the components which we are importing as of now. So all those localized components are put into the field trial as per the Indian railways regulation. So we expect that this localization benefit will flow into our margin in financial year '25, basically the next financial year.

So you see margins going back to the historical price of 18% to 20%?

It is difficult to say exactly to those high levels because we have been impacted by the inflation in the metal cost in last 2 years. But obviously, we are working towards that.

The next question is from the line of Pritesh Chheda from Lucky Investment Managers.

Sir, my question is with the Escorts Kubota tie-up in place. What kind of opportunities has opened up from a product perspective or what kind of gaps [indiscernible] from a product perspective? And over the next 3 years, alongside exports, this 95,000 or 100,000 tractor volume that we see, what kind of volumes are possible on a 3-year basis, if you could just give a small recap on that?

So Pritesh, we already unveiled our midterm business plan, so maybe you can have a look at that. It's already available on our website. It gives the overall picture in just how our aspiration is to go, not [ significantly ] 3 years, we're talking about 5 years there by FY '28. And it's both on the domestic front, export front, the outsourcing opportunity, which exists for EKL, which Kubota intends to use, both on the component side as well as on the finished goods side. So I think all those questions are getting addressed over there. So it's difficult to put a number right now and what will happen. But obviously, the idea is to make sure wherever the white spaces exist in the [ work ], so that gets addressed. And there's also what we do. Obviously, do a joint development of growth, which there's a plan. So most of the first introduction will happen by FY '26, as I think it stands today, and the projects are on, and I think with both the growth on the domestic side as well as for the export market.

Most of product introduction will happen by FY '26.

For the new products, which is totally under new development, but there are many opportunities which is [indiscernible] taking the existing product platform. So that will happen sooner. We will see some new products coming into the play.

The next question is from the line of [indiscernible] from Motilal Oswal. As the current participant is not answering, we move on to the next question, which is from the line of Kapil Singh from Nomura Group.