Escorts hosted a conference call on Feb 8, 2022. In the conference call the company was represented by by Shenu Agarwal – CEO Agri Division, Ajay Mandhar -CEO Construction Division, and Bharat madan – Group CFO.

Key takeaways of the call

In Q3 FY22, Tractor volume fell 19.8% to 25,355 units and construction Volume fell 8.2% to 1,151 units on YoY basis.

For 9M FY22, Tractor volume fell 2.5% to 72,333 units and construction Volume rose 22.6% to 2,831 units on YoY basis.

In Q3 FY22 company's Domestic Tractor Market Share stood at 10.4% as against 11.6% in Q3 FY21. For 9M FY22 company's Domestic Tractor Market Share stood at 10% as against 10.7% in 9M FY21.

At end of December 2021, order book for the railway division, was more than Rs 400 crore.

In Q3 FY22, EAM ((Escorts Agri Machinery) segment contributed 76.9% of total sales, ECE (Escorts Construction Equipment) 14.1%, RED (Railway Equipment Division) 8.9% and others 0.1%. For 9M FY22, EAM segment contributed 78.6% of total sales, ECE 12.6%, RED 8.8% and others 0.1%.

During the quarter EBITDA margin was impacted due to impact of adverse commodity prices and Volume drop in Agri Machinery division.

Company expects inflation to start easing from Q1 FY23 onwards.

1/3rd of total buyers are first time buyers of tractors and 2/3rd buyers are repeat buyers. First time buyers are more in certain specific states which are under-penetrated.

For 9M FY22, Capacity utilization of EAM (Escorts Agri Machinery) segment was around 80%.

For 9M FY22, Capacity utilization of ECE (Escorts Construction Equipment) segment was around 40%.

In Q3 FY22, under ECE segment crane contributed 64.6% of total ECE segment sales, compactor 9.7%, BHL 16.7% and Traded+ Spare 9%. For 9M FY22, under ECE segment crane contributed 64.6% of total ECE segment sales, compactor 7.4%, BHL 17.2% and Traded+ Spare 10.8%.

In Q3 FY22, in RED segment, conventional contributed 36% of total RED segment sales and new product development contributed 64%.

Company expects huge demand for construction equipment segment in coming quarters.

Company plans to launch electric tractors in India going forward. The Board, on November 18, 2021, had approved the raising of equity capital through a preferential issue of 93,63,726 equity shares (Proposed Issue) of face value Rs 10 at Rs 2,000 per share (including a premium of Rs 1,990 for each equity share), to Kubota Corporation, Japan, a company. CCI (Competition Commission of India) has approved acquisition of equity in Escorts by Kubota corporation.

Board of directors on July 15, 2020 approved reduction of share capital of the Company by cancelling and extinguishing 1,22,57,688 equity shares, held by the Escorts Benefit and Welfare Trust. During the current quarter, the Scheme has been approved by the Hon'ble NCL T Bench, Chandigarh ("NCL T") vide its order dated December 23, 2021. This has led to reduction in share capital from Rs 134.83 crore to Rs 122.58 crore.