It would have to be our inherent ability to listen to our customers. This is our most valuable business driver that allows us to gain traction in driving product value, market value, brand value and ultimately, shareholder value.

A classic case in point is the January 2015 launch of Escorts’ Powertrac haulage tractors, India’s first Anti- Lift Tractor (ALT) series, positioned around the core benefit of ‘Driver safety, owner savings’. Our deep insights into customer usage patterns of tractors exposed a key vulnerability characterised by the front lifting nature of the tractor that could result in limited or no steering of its front wheels causing the driver to lose control, endangering both his personal safety and the integrity of the asset.

At Escorts, we brought the value of our R&D practice to the problem and developed features that could significantly augment the tractor’s front-lift resistance capability, thereby enhancing driver safety and ensuring lower operating costs for the owner.

Even as the overall Indian tractor market remained subdued with volumes declining by about 13%, we embraced a clear strategy to introduce innovative, features-rich and technology-led products.

In a move that is yet again consistent with our mission of enhancing agri-mechanisation and offering safe and cost-effective haulage operations in a product that also showcases extra style, comfort and power, we launched the state-of-the-art Farmtrac 6050 4×4 Heritage Series at Agrotech in Punjab in November 2014 A significant chunk of the international market runs on 4×4 tractors and this is indicative of the kind of potential that exists for these products in India, the fifth largest agricultural market of the world.

We also recently launched the revolutionary, nextgeneration ‘XP series’ engines in the Farmtrac brand of tractors that facilitated superior field economics by enabling the farmer to work across the entire 1,200- 2,200 rpm range without compromising on power and fuel efficiency, thereby opening up the widest range of farm and commercial applications.

It is a part of our well-defined strategy on portfolio premiumisation towards creating an entirely differentiated category and leading within it, especially in higher HP tractor segments. It is pertinent to mention that this focus is already yielding results as we could drive a near 54% growth in tractor volumes in the 50+ HP category and accrue a considerable increase in market share in this segment to 9.7% in 2014-15 even as the overall domestic market for this space grew by 5%.

What gives me further confidence of gaining mind share and, resultantly, market share in the higher HP segment is our focus on introducing 40–50 HP tractors within the Powertrac brand. This offering is anchored on the proposition of cost-efficiency through better mileage and higher power and we intend to seamlessly plug into this category and focus on democratizing the segment by leveraging our well-established Powertrac brand.

On the export front too, we reported a substantial 146% growth in volumes, demonstrating our largescale product acceptance.

Notably, we launched our futuristic Farmtrac Heritage line in South Africa in sync with our ambition of emerging as the leader in the sub-80 HP tractor category in the country. In another development, we also introduced two series of tractors in Bangladesh – the new Farmtrac 6060 Heritage series in the 60 HP segment positioned in the high-end premium category and the new Powertrac Diesel-Saver Plus 4455 Euro series in the 55 HP range covering the
popular mid-size segment.

Importantly, both these new launches set us up to grow our volumes significantly in the coming years on the back of our focus on the ‘right product–right region–right time’ philosophy.

Going into the future, we have identified key highpotential markets including those of Africa, Europe and the US that present significant scope for growth with regards to being large markets with relatively lower competitive intensity. Moreover, the twin benefits of a strategic organizational restructuring to enhance focus on exports paired with a product suite that can be easily plugged into these markets gives us the confidence that exports will be a sizeable
contributor to our revenues in the upcoming years.

Our stated ambition is to emerge as the most profitable tractor manufacturer in the country and towards realising this vision we activated Project Shikhar in 2014 that aims to institutionalise processes and practices for a lean and efficient operation led by benchmarked levels of material cost, design excellence, lean and quality supplier base and a sprightly supply chain.

I am proud to report that within a short duration of the launch, we have already derived substantial gains, which will result in increasing shop-floor value creation, going forward.

At Escorts, we believe that products alone do not build a business; relationships do. It is with this philosophy that we have engaged in a sales and marketing restructuring exercise at the division to focus on the frontend of the business, creating critical touch-points with dealers and the customers
at large.

As a means to create a future-ready organization, we also encouraged lateral intra-divisional movement among our people that not only strengthened the sense of collaboration among our teams but also fostered new ideas, helping crystallize and refine our go-to-market strategies.

During the year under report, we also identified financing as one of the key challenges faced by our customers in accessing our products. To help address this issue, we entered into channel financing agreements with major NBFCs and other regional players, riding on their distribution network and financing capabilities. This has not only enabled greater access to pockets that are our traditional weak spots including the markets of the South but has also widened the access of our Escorts range of products. In February 2015, we launched a partnership with DLL, the Indian subsidiary of Rabo Bank (one of the world’s most respected agriculture banks) to initiate Escorts Credit – an arrangement under which DLL will provide retail tractor loans to Escorts customers with convenien and fast options, thereby further widening our potential market.

I must also mention yet another exciting development that transpired in June 2015. We forged a partnership with the globally-reputed Cognizant Technology Solutions aimed at improving control and effecting greater collaboration across our value chain. This will result in mobile-enabling the workforce, strengthening integration across our ecosystem, creating adaptive production lines and manufacturing practices and developing digital
capabilities including analytics and mobility.

These alliances are consistent with our philosophy of creating value for our entire ecosystem, helping seamlessly integrate our dealers, customers and employees and fostering greater levels of association among them.

The Indian construction sector continued to remain in a state of near paralysis for most of the past financial year. However with the new government at the helm, there has been some optimism that the sector has bottomed out with future prospects looking better.

Even in this backdrop, the Escorts construction equipment division outperformed the industry by reporting a near 8% growth in volumes against the industry volume decline of 10%. Led by the strong and well-established brand franchise of Escorts cranes, we continued to lead the market in this segment with the product suite contributing to the bulk of our construction division sales. I must also mention that we are gaining good traction in the backhoe loader space, the largest segment of the construction equipment industry, with Dig Max II reporting both volume as well as market share gains
during the year under report.

Leveraging this platform for growth and looking to swing the business back to profitability, we undertook several crucial steps including optimising both fixed as well as variable costs, effecting price increases across categories, widening the channel network, reaching out directly to potential customers and securing financing through retail tie-ups. The results of these initiatives were evident in the last quarter of 2014-15 with losses coming down sharply, which gives us much confidence as we move forward into 2015-16.

We are very excited at the long-term prospects of our railways business considering the concerted efforts undertaken by the Indian Railways towards modernisation and capacity de-bottlenecking.

Our focus on driving product value and moderating costs resulted in EBIT margins moving up sharply despite revenues remaining flattish during the year, which clearly indicates a pick-up in buoyancy. Moreover, we closed the fiscal with substantial worth of orders in hand including the developmental order for our indigenously-designed axle-mounted disc brakes, and going into 2015-16 we intend to widen our product suite through either captive development or through forging technology partnerships, thereby taking the business to its next level of growth.

At our auto products division, we engaged in concerted efforts to get the business back on track. Towards this end, we implemented the Group-wide VRS initiative aimed particularly at restructuring the division. This largest-ever VRS at Escorts was availed by a significant number of employees and will enable
greater efficiencies and productivity on the back of manpower rationalisation. This initiative paired with a stronger focus on our dealership, productivity and shop-floor efficiency gains and portfolio optimisation geared towards value-added products resulted in EBIT losses declining in 2014-15, a traction that we
hope to sustain over the future.

It would undoubtedly be our people. Our engineering and our front-end teams constitute a knowledge pool that is undeniably one of the best in the world and share a common passion to make a real difference in the lives of our customers.

To reinforce this sense of being, we initiated the ‘Empathy’ programme that encouraged our employees to spend a week within the social milieu of our customers to ‘listen’ to their needs and transfer this knowledge onwards for the development of products and features that solve their challenges. Concurrently, we have also initiated the ‘MD for a Day’ initiative to invite members to come and take my position for a day, thereby fostering a culture of generating ideas from within and implementing them with speed. I have also engaged in several Town Halls to connect with our people and recharge their sense of passion while at the same time understanding the pulse of the organisation and channelising it for common good.

Going forward, talent acquisition will continue to remain a key spotlight of our HR division even as we focus on creating a dynamic, professional and committed talent pool that is drawn from some of the best educational brands in the country.

At Escorts, we launched a full-fledged corporate campaign centered around the positioning of ‘Engineering the Fundamentals of Growth’. This tagline is not just an agglomeration of fancy words. In fact, it is the very basis of our philosophy of responsible nation-building dovetailed with our
legacy of co-creating customer value.

With a focus on positioning brand Escorts as a holistic engineering and technology play, we launched an inspiring audio-video digital campaign that showcased our call to action to take India to its next orbit of growth through our comprehensive engagement in sectors that are core to the nation’s
secular and sustainable growth.

I am delighted to mention that this crusade found strong resonance among our employees, dealers, customers and financial partners and helped reinforce the value of the Escorts brand as one that is single-mindedly focused on making in India and making India.

The fiscal 2014-15 was a year of transition and today, we are decisively prepared for capitalising on tomorrow’s potential.

We have embarked on an ambitious program that emphasises on lean management and consolidation of operations to create a more profitable manufacturing practice. Simultaneously, we are also looking to engage with best-fit partners for technology infusion to tap into the larger opportunities available within our operational sectors. In the long run, our focus is to first boost earnings and then efficiently allocate capital to productive assets in order to generate superior RoCE. Going into 2015-16 and beyond, I am certain that these initiatives will not only enable us to target higher market share and margins but also make us the brand and partner of choice across our businesses.

I consider all the shareholders of Escorts as my partners in the business. Keeping the spirit of partnership in mind, through this message, my intent was to reach out to you to communicate the initiatives, performance and strategic direction of your Company.

I must mention that Escorts lends utmost importance to Corporate Governance. We have strengthened our Board of Directors with some eminent an soughtafter industry leaders to guide us on our quest going forward. In line with our core value of transparency, we have outsourced our internal audit processes to Grant Thornton in September 2014. Our objective has always been to constantly improve our systems and processes to match the best in the industry.

I want to seek the feedback of my partners in order to build this Company as we move ahead. I want to invite you to become a part of this journey to transform your Company into a customer-centric, technologically-driven and a highly profitable engineering enterprise. I can be reached through our Investor Relations team or directly at nikhil.nanda@escorts.co.in. Please feel free to share your thoughts and suggestions.