Key Highlights

Power generation business is better than previous year. Bulk orders received have helped. Overall, management expects the power generation market will grow by around 5% in FY'17. High Horse Power segment in power generation is driving the power generation business for the company. The company gained the market share of around 34% in this segment. The company aims to sell more than 100 units of 750 KVA and above HHP engine. The company sold around 40 units in H1.

The enquiry level is significantly higher in this segment. The company claims that its product in HHP segment is superior to its competitors. The demand remains higher from segments such as Real estate, educational institutes, hospitals, multiplexes, malls etc.

Pricing was more or less stable in H1 FY'17 for power generation segment.

In Lower HP segment, the Telecom sector has generated the markets and competitors have received some 4000 unit orders. Other than Telecom segment, the lower HP segment market was more or less standstill in Sep'16 quarter.

There was around Rs 22 crore of MAT credit in FY'16 hence the tax rate for H1 FY'17 is looking high. There will be some R&D expenditure benefits in FY'17 otherwise, the tax rate will be normal for FY'17.

There were no major exceptional items except around Rs 4 crore of consultancy fees paid during the quarter.

While tractors market is recovering from last year dip in anticipation of good monsoon, applications like Backhoe, Transit mixers and compactors showed positive growth benefiting out of increased construction activity and investment in road sector. Construction equipment and earthmoving segment registered over 30% YoY growth in Q1FY17. The tractors segment demand was up by 6%yoy. The company expects the industrial demand for FY17 is expected to be good compared to last year driven by positive government policies.

The market for engines for off highway segment has grown by around 15-18% and management expects this segment to continue to grow for next 2 years.

In exports, the Middle East slowdown has significantly affected and particularly the Power generation engine exports was adversely impacted particularly in Saudi Arabia market.

Better penetration, strong monsoon and better kharif season has helped the overall agri engine market for the company. Higher penetration and some bulk orders also helped the company to achieve around 20% growth in Sep'16 quarter for the company.

The company sold around 1500 units of power tillers in H1 FY'17. The company will fall short of its guidance of around 5000 power tillers. This is largely due to changes in government subsidy plans and dealers are taking a pause before lifting. And this is true for the entire industry.

The company received its first ever orders for fishing boats engines. Overall the company has received some defence orders and expects some more to be received as the year goes.