Escorts Q4FY21: Price increase imminent in coming quarter, says management
Speaking to CNBC-TV18, Bharat Madan, Group CFO of the company said that another price increase is imminent in the coming quarter due to rising raw material prices.
Farm equipment and engineering major Escorts Ltd on Friday reported over a two-fold jump in consolidated net profit to Rs 285.41 crore in the fourth quarter ended March 2021, mainly driven by robust sales. The company had posted a consolidated net profit of Rs 127.73 crore in the same period previous fiscal, Escorts Ltd said in a regulatory filing.
Speaking to CNBC-TV18, Bharat Madan, Group CFO of the company said that another price increase is imminent in the coming quarter due to rising raw material prices.
“Inflation was high, almost 7-8 percent in March and we were able to pass on with two price increases so far only about 4-5 percent. So there is still a lag which we are carrying and there is further pressure coming in this quarter too. It is not possible to pass on 100 percent cost increases to the market looking at the demand scenario right now. So, we are taking a cautious call but definitely, another price increase is imminent in the coming quarter,” he said.
The company is seeing an impact on demand due to the second wave of COVID-19, especially in the rural markets.
“The second wave has been quite serious. In the first wave, we had no impact on the rural side, but this time we are seeing that the impact has been coming on various states and rural markets are getting impacted. That we are seeing in the demand for April also. All other factors are positive, but that had impacted demand,” he said.
However, he is expecting demand to come through once things normalize. “Whenever the recovery happens, like we saw last time, after the lockdown there was so much of pent-up demand. So we expect the same thing might happen this time too,” he said.
According to Madan, sowing is yet to start which could play out in the company’s favour if things normalize in June.
“The good thing is that the sowing season is still to start. Normally it starts from mid of May after the harvesting is done and this continues till the first week of July or middle of July. So, even though May may be a washed down month, farmers do need tractors for sowing. So the demand is definitely there on the ground and the money is also available with them. If we are able to cash the month of June, then it could be a good month and we could see good demand coming in," he explained.
Watch the video for the full management commentary
(Edited by : Abhishek Jha)
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