Key takeaways

Net sales was lower by around 2% for 12 months ended Mar'16 due to 54% drop in net sales of large engines to Rs 111 crore.

FY'16 expenditure includes expenditure of Rs 10 crore due to VRS and Rs 14 crore on account of stamp duty provision for KBIL merger.

Ebidta has improved in FY'16, particularly in Mar'16 quarter, after excluding the EO items, due to cost savings and lower raw material prices. The company was able to retain some benefits of lower raw material prices.

Overall DG market declined by around 1.5% in FY'16. Ex-Telecom, the DG market even declined by around 6%. However Mar'16 showed some healthy traction with market increased by 6% on QoQ basis. Telecom sector particularly the Tower demand for 4G towers should see some strong demand for engines in next 12-18 months period. This is the only positive sector which is expected to result in good volumes for power gen sets, as and when the demand from telecom comes in.

The new product like 750 KVA Gensets and KOEL Chhota Chilli range of 2-5 KWA petrol and diesel variants were introduced during FY'16. Management is satisfied with the response.

In industrial segment, off highway and construction segment witnessed positive trend and continued to show strong traction. Due to government's action in road construction and mining, the sector has shown substantial improvements. Construction equipment showed double digit growth in Mar'16 quarter, while Earth moving equipments also showed positive trend after many quarters and so was the fluid handling equipments. Tractors continued to remain under pressure in FY'16 largely due to uneven rainfall. However Tractor segment after a continued fall in past 18 months is expected to do well in FY'17.

New products, increase in market share etc led the Agriculture segment grew by 13% for FY'16 on a lower base of FY'15.

International business sales grew by around 12% YoY. While competition and currency continue to be the concern for the company. New markets aiding higher sales. The company received some major breakthrough for large engines in UAE.

The company has geared itself for Defence and Marine orders in large engine business segment. It has entered into technical collaboration with Bio Cube, Canada for sales and services. Large engine orders are expected in H2 of FY'17. Defense revenues was around Rs 80 crore for FY'16 and management expects to cross around Rs 100 crore in FY'17. There is a long gestation period in these orders. While outlook continues to remain encouraging, order visibility is yet to be seen.

Going forward, while some sectors have clearly shown strong visibility, management expects to wait for couple of more quarters, before giving a clear indication on the momentum. While the turnaround is for sure, management expects the couple of quarters will decide on the momentum side.

R&D benefits resulted in lower tax in FY'16.

The company has cash equivalent of around Rs 825 crore.