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Informist, Monday, Dec. 23, 2024

 

By Rajesh Gajra

 

NEW DELHI – Escorts Kubota Ltd. is seeing some growth in the sales of its construction equipment segment products on the back of pre-buying by customers before changes in emission norms kick in from Jan. 1, according to its Chief Financial Officer and Whole Time Director Bharat Madan. "A pickup (in construction equipment sales) is visible now," Madan told Informist.

 

The sales volume in the construction equipment segment in the December quarter, though improving, is still lower compared with a year ago, Madan said. The volumes in last financial year were at a peak and so there is a base effect also, he said.

 

The demand for the segment's products - cranes, backhoe loaders, mini excavators, and compactors - is dependent on government initiatives to stimulate economic activities. Government "tendering has not really started in a big way", Madan said, adding that execution of major announcements made before the General Elections has seen delays.

 

The government is likely to speed up projects in the March quarter but "we don't think they will be able to spend the kind of Budget which is earmarked," Madan said. According to data from the Controller General of Accounts, the government's capital expenditure in Apr-Oct accounted for just 42.0% of the full year's target compared with 54.7% in the same period last year.

 

The chief financial officer expects Jan-Mar sales to be better for the construction equipment segment, but the overall sales in the segment in 2024-25 (Apr-Mar) will still be lower than last year.

 

In the trailing four quarters up to Jul-Sep, Escorts Kubota's revenue from the construction equipment segment accounted for 17.5% of the total, while agri machinery products, which is dominated by tractors, had a 73.5% revenue share. Railway equipment accounted for 9% of the total revenue, Informist Credit Standard data showed.

 

In the September quarter, the agri machinery products segment revenue increased 5.3% on year to INR 18.84 billion, while that of the construction equipment segment fell 13.7% to INR 3.8 billion. The revenue of the railway equipment segment fell 9.9% on year to INR 2.11 billion in Jul-Sept.

 

According to monthly sales volume data disclosed by the company, sales volume of the construction equipment segment declined 8.2% on year to 1,116 units in Oct-Nov, following an 11.8?ll in volume to 2,719 units in Apr-Sep. In contrast, the company's domestic tractor sales volume was up 10.5% on year to 26,569 units in Oct-Nov. But domestic tractor sales declined 2.5% in Apr-Sep to 55,587 units.

 

Escorts Kubota's revenue from operations in Apr-Sep rose 0.2% on year to INR 52.77 million, while net profit increased 24% to INR 6.3 billion.

 

On Monday, shares of the company ended 0.6% lower at INR 3,143.60 on the National Stock Exchange.  End

 

Edited by Saji George Titus

 

 

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