Sales volume of tractor industry up 63.4% in Q4FY21 and that of the company was up by 62.1% to 32588 units.

Tractor Industry in Q4FY21 – Sales volume of North and central region grew by 78%YoY, whereas industry grew by 50.3%YoY in South and west region.

Construction Equipment (CE) sales volume up by 62.7% at 1,604 units.

Tractor

Currently the tractor demand is subdued and various state lockdowns are impacting supply chain, believe this is a temporary phase which shall soon be over.

All macro-economic factors are positive availability of finance is also good. On ground the situation is very uncertain/volatile from geography to geography. Currently 2/3^rd of dealers of the company are closed or they are opened for limited hours. Second wave is a dampener hitting rural hearland unlike last year. Fear Psycosis got into tier 2 and tier 3 towns. Rural India is impacted much higher than 1^st wave. Currently focusing on vaccinating staffs of the dealer. Unlike last year the lockdown happened in April, this year the peak of pandemic is happening in May. At mid of May, the industry in critical phase as it it's the start of the sowing season. With approach of sowing season, some pull has to come from customer side.

Financers are worried about provisioning in balance sheet, but it is unlikely to impact availability of finance to customers.

Expect some time by end of this month or June the market to pick up momentum. Overall, this fiscal will have pent up demand as macro economic factors continue to be positive irrespective of sowing season start early june or end June. So expect tractor industry to register single digit growth for FY22.

Inventory right now is at healthy level. Inventory at industry level it is not neither high or low. When customer is ready to buy the OEMs are ready with inventory. Dealer inventory is not at abnormal level. With less supply issues the OEMs are into production hoping to cater to pent up demand.

Raw material costs went up by 8-10% by the end of Q4FY21.

Taken up 2 price increase first in mid november 2020 and another in earlier April 2021. Expect to take a price increase in Q2FY22. Price increase in April 2021 is slightly under 3%. The November and April price increase cumulatively is 5% of selling price.

The company is not harping too much on govt subsidy as government to focus on covid this year as well alike last year. On the commercial side or non agri side the demand is very low we do see once open up fully leading to start of all project work. Last year non agrisales was very slow especially in the last 3 months of the fiscal. But this year there is an expectation of strong growth from non agri sales.

Non agri share for the company reached 32-35%. Last year the share is not at this level and expect that to reach back to 32-35% levels. Non agri sales growth can be higher than agri sales growth rate.

Normal margin for agri business is about 18%. Full year basis the company will hope full of neutralize the impact of inflation.

Domestic market share of tractors in Q4FY21 was 12.9% against 13.1% in Q4FY20.

Capacity utilization of tractors business stands at about 90%. Capex - Cash flow wise it will be about 300-325 crore of capex this fiscal. To result in expanding capacity from 120k units to 150k units.

Farmtrac :Powertrac sales ratio 41:59 as against 41:59 YoY.

Ratio of less than 40 HP : 40 HP Plus ratio at 38:62 (as against 49:51 YoY).

Expect growth in south and west continue to happen for the company in case of tractors.

Kubota jv plant - just started production. All export to Kubota channel are in Kubota brand and the numbers right now are small. The production will keep increasing with more demand for Kubota. This year the jv plant will also produce escorts brand of tractors.

Exports we are kind of back log and expect to clear that backlog by june 2021.

Construction Equipment& railway business

Served industry (Backhoe Loaders, Pick n carry crane and Compactors) went up by 52.1% in Q4FY21 wrt to LY. In Q4FY21 BHL industry up by 54%, compactor up by 38% and Cranes industry up by 50%.

Served industry up by 11% in FY21 wrt to LY. BHL industry up by 15%. Crane industry down by 8%. Compactors industry up by 9.5%.

CE capacity utilization at about 50% in Q4FY21.

Expect higher single digit growth for CE biz in FY22.

Order book of Railway business as of March'21 more than Rs 340 Cr. Execution time of the OB is about 6-8 Months.

Indian Railways is still not running its full operations, due to unprecedented COVID-19 pandemic situation and has done revision in the production plan, affecting fresh order tendering and order inflow.

Expect railway business of the company to register lower double digit growth for Fy22 and expect the margin to be in the range of 16-18%.