Escorts Limited (NSE: ESCORTS) Q3 2025 Earnings Call dated Feb. 10, 2025
Corporate Participants:
Bharat Madan — Whole Time Director & Chief Financial Officer
Neeraj Mehra — Chief Officer, Agri Machinery Business Division, Domestic Sales
Prateek Singhal — Investor Relations & ESG
Analysts:
Annamalai Jayaraj — Analyst
Gunjan Prithyani — Analyst
Mitul Shah — Analyst
Jinesh Gandhi — Analyst
Unidentified Participant
Mumuksh Mandlesha — Analyst
Presentation:
Operator
Ladies and gentlemen, good day, and welcome to Q3 FY ’25 Earnings Conference Call of Escor 78 hosted by Batlivala and Karani Securities India Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistant during the conference call, please signal an operator by pressing star and 0 on has turn. Please note that this conference is being recorded. I now hand the conference over to Mr Jayaraj from Battiwala and Karana Securities India Limited. Thank you, and over to you, sir.
Annamalai Jayaraj — Analyst
Thank you. Good evening. On behalf of Batlivala & Karani Securities India Private Limited, I welcome you all for Escorts Kubota Limited Q3 and 9 months FY ’25 Earnings Conference Call. I also take this opportunity to welcome the management team from Escorts Kubota Limited. Today, we have Mr. Bharat Madan, Whole-time Director and Chief Financial Officer; Mr. Neeraj Mehra, Chief Officer, Tractor Business Division; Mr. Sanjeev Bajaj, Chief Officer, Construction Equipment Business Division; Mr. Sanjeev Garg, Head, Finance and Tax; and Mr, Prateek Singhal, Investor Relations and ESG. We’ll start the call with a brief opening remarks from the management, followed by question-and-answer session. Before we start, I would like to add that some of the statements made by the company in today’s call will be forward-looking in nature and are subject to risks as out in the annual report and investor relations of the company. Over to management for their opening remarks. Over to you, sir.
Bharat Madan — Whole Time Director & Chief Financial Officer
Thank you, Mr. Jayaraj. Good evening, everyone, and thank you all for joining us today. Please note that from quarter ended December ’24, Railway Equipment Division business profitability is shown separate at discontinued operations. The financial statement for prior period has been adjusted accordingly. Continuing operations now consist of Agri Machinery and Construction Equipment segments. Few highlights of the company’s standing financial performance for the quarter ended December ’24 are as follows: operating revenue from continuing operations at INR2,935.4 crores, up by 8.5% year-on-year. EBITDA at INR335.3 crores, up by 3.5% year-on-year. EBITDA margin in Q3 is at 11.4%. PBT from continuing operations at INR380.2 crores, up by 6.4% year-on-year. Net profit from continuing operations at INR290.5 crores, up by 7.7% year-on-year. Net profit including discontinued operations at INR323.2 crores, 8.5% year-on-year. EPS stands at INR29.9 as compared to EPS 27.1 year-on-year. The Board has approved the sales and transfer of approximately 33,000 plus square yards of the land adjusted to Railway Equipment business revision to Sona Comstar for a total of INR110 crores. This industrial plot is currently being used for a spare part business division of the company. We will reallocate the spare part division to a new location before finalize the sale. Board declared interim dividend at 100%, INR10 per equity share. On consolidated basis, company financial performance for the quarter ended December ’24 is as follows: revenue from continuing operations at INR2,948 crores, up by 8.1% year-on-year. EBITDA at 383.8 crores, with margin of 11.3%. Net profit from continuing operations at INR287.9 crores, up by 6.5% year-on-year. Net profit, including discontinued operations at INR320.6 crores, up by 7.4% year-on-year. Moving on to the segmental business performance. Starting, with the Agri Machinery business. On tractor business, in Q3 FY ’25, the total tractor industry domestic export was at 2.89 lakh tractors, up by 12.7% as against of the corresponding quarter last year. Our total tractor volume was 32,556 tractors, up by 4.5% as against INR31,155 tractor in the corresponding quarter. On the domestic front, the tractor industry Q3 FY ’25 was at 2.67 lakh tractor, up by 13.5% as against corresponding quarter last year. The industry in the North And Central region grew by 2.5%, while the rest of the country saw a substantial growth of 28.6%. Our domestic volume stood at INR31,585 tractor, up by 6% at 22,784 tractors in the corresponding quarter. We also reduced our channel inventory and our domestic market share in Q3 FY ’25 stands at 11.8%. Continuing with our strategy to offer innovative products, recently, we have launched PROMAXX series in Farmtrac brand in 30 to 50 HP category. PROMAXX series delivered exceptional performance with advanced technology and a sleek design, offering superior comfort and a facility for various applications. We currently have around 1,540 exclusive dealers for our Kubota Farmtrac and Powertrac brand. For FY ’25 full year, we expect the domestic tractor industry continuing growth trajectory with a growth of around 6% to 7% for the full year. On the domestic front, the tractor sector industry in Q3 FY ’25 came at up by 3.9% as against 21.3000 in the corresponding quarter. Our export volume came at 971 tractors as agaist 1,371 tractors in the corresponding quarter. During the quarter, the sales to Kubota global network accounting for approximately 27% of our total export volume. Non-tractor revenue comprise of Agri Machinery business, Indian business and the service and the spare part business in Q3 FY ’25 constitute 21% of the Agri Machinery revenue as that of 19% in the corresponding quarter and 18% in the sequential quarter. Agri Machinery Products segment revenue was up by 9.4% to INR2,416.6 crores as against INR2,209 crores in the corresponding quarter. EBIT margin for the Agri Machinery business were at 10.4% as against 12.1% in the corresponding quarter. Coming on to the Construction Equipment business. In Q3 FY ’25, farm industry volume for crane backload and mini excavator tractor were up by approximately 14% as against corresponding quarter last year, mainly led by the loader industry of around 18-odd percent. Our total volume for CE business were at 19,089 machines as against 2,008 machines in the corresponding quarter. CE revenue came at INR515.7 crores, up by 4.1% as against INR495.4 crores in the corresponding one. EBIT margin for the quarter ended December ’24 for the Construction Equipment business up at 11% as against 8.1% in the corresponding quarter. CE industry has moved to higher emission from January ’25. During the quarter, we have introduced a range of Stage 5 emission standard compliant product and also showcase a new entry of hydro cranes and a new BLX 75 backloaded product. This is new addition under E-Kubota brand featuring a sleep design, cutting edge in personalities. Looking ahead, we anticipate a temporary volume impact due to price escalation within Construction Equipment industry due to transition to BS-V standards. Despite the short-term impact, remain optimistic about the mid- and the long-term growth prospects driven by government initiative in infrastructure products such as road, smart city rail and education system. Moving on to the Railway Equipment business division, that is the discontinued operations. Revenue from the quarter ended December ’24 came at INR200.4 crores, down 2.2% as against INR205 crores in the corresponding quarter. Order book for the division at the end of December 2024 stand at more than INR890 crores. This order book however exclude BMBS orders for trade variance for approximately INR380 crores. Supply for which have temporarily been hold by RDSO. Now I will request the moderator to open the floor for Q&A.
Questions and Answers:
Operator
We will now begin the question-and-answer session. Anyone who wishes to ask a question may press R and one on the touchtone telephone. If you wish to remove yourself from question queue, you may press R and two participants. I requested to use answers while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles. The first question is from the line of Gunjan Pritiani from Bank of America. Please go-ahead. The first question is from the line of Gunjan Prithyani from Bank of America.
Gunjan Prithyani
I just wanted to get your thoughts on the market share. Because if I look at the industry as a whole, it seems to be doing quite well. But I think our growth has been lagging across industry across regions. So if you can just share some thoughts on what is it that is dragging the performance? And how should we think about market share improving from here on?
Neeraj Mehra
Gunjan, this is Neeraj Mehra. Thank you for your question. So actually, for quarter 3, the geographic growth industry is actually a bit unfavorable from EK’s perspective. As you heard in the Opening comments, the growth has been to the tune of about 28% to 30% in nonstrong market. So one of that is one of the factors that has the quarter 3 market share. Also, secondly, our retail are substantially higher. Our retail market share is better than what is shown in the wholesale market share. And thirdly, what we have done is, in quarter 3, we have, to a certain extent, reduced the channel inventory of our dealers. So all these 3 combined, to a certain extent, give the performance that you’re seeing at the moment.
Gunjan Prithyani
And where does the channel inventories stand now? The reason I’m asking this was I thought when this whole Kubota once the Kubota entities were merged, there were a fair bit of product interventions were due and even the captive FinCo. So when do we see the impact of all this start to reflect in terms of market share moving and growth coming back?
Neeraj Mehra
So there are a lot of questions in one question. So the impact of various product integrations and the captive finance, to a certain extent, you will see in the next fiscal year, that’s in the second half of the next fiscal year. As regards to your initial question at what level the inventory levels are, currently, the inventory levels are at about four weeks.
Gunjan Prithyani
Okay. Okay. And maybe just a follow-up, and I’ll join back the queue. On these product interventions, if you can share more what is it that we are doing in terms of the Kubota portfolio as well as your own portfolio. How can that help in terms of bringing back the growth? And again, captive Finco, is that a big lever, if you can touch on that? I’m just trying to get comfort on when this integration plays out, how should we think about market share?
Neeraj Mehra
So you heard in the comment, Gunjan, that we have very recently launched a new product range in Farmtrac known as PROMAXX series. So PROMAXX Series is primarily for the market, that is Gujarat, Maharashtra, and certain markets where we are not present currently. That is basically Chhattisgarh, Orissa and some parts of MP. We will sell it across the country, except South, but with the introduction of this range, which wherein the models are primarily some 37 HP category to 47 HP category. Change actually caters to the mass segment and has a variety of models, 2-wheel, 4-wheels. So the lot of product gaps. So we see our market share improving. Again, it will take it’s not going to be overnight. So over the next couple of quarters, you will see Farmtrac market share going up. As regards to the captive finance, it has been initiated in some states. Pilot is going on. We identified certain dealerships and certain districts where it has got started. But the due impact of the captive finance will actually come into play in the second half of next visible.
Gunjan Prithyani
Okay, got it. Thank you so much. I’ll join back the queue. Thank you. Thank you.
Operator
Thank you. The next question is from the line of Nikhil Shah from DAM Capital. Please go-ahead sir.
Mitul Shah
Similar to the previous question, sir, if you can quantify, as you highlighted, the retail market share were much higher. In terms of the number is against INR31,500 wholesale number, what would be approximate difference between retail versus wholesale? Or how much retail was higher?
Bharat Madan
So as shared, one aspect is that we have reduced our stock. So one way to look at it is a stock reduction that we have done. So we are currently at about four weeks of deals. The second aspect is that to quantify it, it will be on the retail side, it will be a bit difficult for me. But the growth is if I might say so, the growth is pretty decent in terms of retail.
Mitul Shah
Okay. Sir, second thing on this again adverse geographical mix, which impacting overall performance. But it seems that even that is not so bad, for example, on January or last few months. North has seems to be as an industry-wide more or less flattish, whereas our volume instead of flat, declining in double digits. So what is exactly happening? Either it is in terms of the product-related challenge. Or what we are hearing from the channel is that post new management, it’s the stricter norms on the credit side or we are reducing our data then all those type of initiatives, which has some impact. So if you can to give some qualitative perspective here, that would be more helpful.
Bharat Madan
See, you are, to a certain extent, right. It’s a combination of all these things that you have mentioned. It is a combination of all these aspects. There is issue pertaining to the product aspect, but the other aspect that you have mentioned, it is all those things, all those corrective actions that we are taking.
Mitul Shah
Sir, and lastly, again, on the market share side also. As we earlier also as a stand-alone ESCO entity, we reached to about 6% to 7% market share in our opportunity markets, like AP, Telangana and all. But after amalgamation, where the Kubota’s even more stronger, still our market share seems to be about just 4%, 5% in those markets. On the other hand, Gujarat and Maharashtra, where it is even higher than our blended market share, it’s about 13% type. So despite that, why the adverse geographical things should play out?
Bharat Madan
So I’ll take a couple of minutes to explain this. So in my previous two or three conversations during these calls, these quarterly calls, I had mentioned that our focus initial focus was in North and in the West because these two markets actually together contribute about 72%, 73% of the total industry. And for the past three, four years, we had been continuously dropping our market share in our stronger markets. So to first get back that market share. So in the last 12 months or so, we have been working on that, and our market share games have been pretty decent in our stronger margins. In the West, though this year we have not gained market share, we have not dropped market share as we normally do when the industry grows substantially. So West also, there are certain channel-related issues, channel capacity rate issues. So because as the industry grows exponentially, the capacity of the dealers to grow with the industry is a little limited. So that aspect is there in the Western part country. Yes, what has actually happened is the industry growth post September has been phenomenal in South, in West and in certain opportunity markets like Chhattisgarh,. So and the growth was so phenomenal that it was unforeseen. And we have a lot of white space available at these locations. So post September, we have started working on these opportunity markets how to cover the white space. The product has come in for these opportunity markets. So I believe over the next 3 to 6 months, you will see a gradual improvement in terms of market share. Now coming to the Kubota aspect that you have mentioned as regards to Kubota being strong in South and in West, you are right. But as you already know, that for the past 12 months or maybe more, the industry was in a very declining trend in West and South. So the dealers liability and the dealer profitability got impacted severely. Yes, they are a strong player, but relatively still. With respect to the industry, they are still comparatively small. So the dealers and the brand is slowly limping back. They have done reasonably well in the quarter 3. And we will see if the industry keeps its momentum of quarter 3. In the West and South, we will see growth in Kubota market share and overall ECL market share as well.
Mitul Shah
Understood, sir. Thanks and all the best.
Operator
Thank you. The next question is from the line of Tinesh Gandhi from Ambus Capital. Please go-ahead.
Jinesh Gandhi
My question pertains first to any update on the greenfield, which we are looking for what are hurdles there because it’s now almost more than location. Any update on this?
Bharat Madan
Yes. So I think as we mentioned in the last call, so we had already given express of interest to UP government for the land. And now is the government who has to acquire the land from the farmers. So earlier they had told us they’ll be able to complete the acquisition by January end. But since there has been some delay in the acquisition process, so it’s still going on. I think once they complete the acquisition, they will ask us to complete the balance from Agri. So we’re waiting for government to work when they complete the acquisition will last.
Jinesh Gandhi
Okay. Okay. Got it. And secondly, the non-tractor machineries which we are talking of, which contributed at 31% to revenues. How much of the non-tractor machineries will be from non-tractor machinery?
Bharat Madan
See, like in Agri Machinery, we mentioned there are three, four verticals, like engines, spare parts, and then you’ve got this agri solution, which is actually the implement business. So the larger business obviously is the implement business in this. So out of the 20% sales, I say, spare parts and Indian gave about, and balance really comes from 2% to 3% comes in the agri solution, which includes harder, transfers and other.
Jinesh Gandhi
Okay. And would it be fair to sum, given that implement business has been seeing a reasonably ramp up faster than other categories, but still we have some negative impact on our margins given it could be either normal or loss-making business at the scheme?
Bharat Madan
Yes. So that’s the reason you’re seeing there’s a different the EGS margin even though the top line has grown, and in the harvest has done very well in this quarter and have seen almost 30% plus growth. So but this is a traded item right now and we are importing. So the margins are not similar as you do in the manufactured component or manufacture parts in India. So which is why you’re seeing the dilution is happening, although the growth will continue to be there. I think once you start localization of a certain part, then you’ll see the margin improvement will start happening there. But for us, I think objective is to capture market shares. As you know, Kubota and tractor has got significant market share in India. It’s almost 20% plus. And the other categories, the numbers are not better, in the transplanters and other implement, the volumes so low. But harvest which is driving the entire growth right now.
Jinesh Gandhi
Got it. Got it. And lastly, on the structural equipment business, given that additional loans have been implemented from Jan ’25, what would be our outlook for FY ’26? And what kind of price increases we have taken in this segment?
Bharat Madan
Yes. So decide. So it has come into effect from 1st of January. And our intent initially is to pass on the cost to the customer, and we will try to recover that cost. It will be slightly difficult, because in about three and half years, it has been the second generation on change, and the cost to the customer is going up consistently without much of an increase on the rental rates. So there will be a pressure in terms of recovery of that cost, but that’s how every time when the price increase happens, it takes a bit of a time for price recovery. So this increase is in line with what is the contributed margin on the increased. And we will see that in the next three, four months, we will try to recover it. But how given the condition that we are also reaching monsoon in Q1, so it might take a little longer. So that will be dependent on market conditions at that time.
Jinesh Gandhi
Okay. But what would be the total cost increase because of addition now? We may take it in tandem or the pass-through, but the total cost increase because of norm. And in that context, would FY ’26 be a flattish year? Or you see a decline?
Bharat Madan
So we are not expecting a decline, it will be a flattish year. But in terms of cost, it varies from product to product. So there are certain products which are moving from BS-III straightaway to BS-V, where the cost increase for the customer is to the tune of 10% or so or slightly more than that. And products which are moving from BS-IV to BS-V, which is about 5% to 6%. So it’s quite a steep increase for the customer. And therefore, we are not very bullish of a huge jump in profitability, but we would over a year of period of, I think we will be able to lower the cost to be slightly positive to flattish kind of profitability growth.
Jinesh Gandhi
Got it. Got it. And lastly, possible to share railway business PBT for the quarter?
Bharat Madan
It’s about INR44 crores, and this is about 22%, 21.9% in this quarter.
Jinesh Gandhi
Got it. Great. Thank you and all the best.
Operator
Thank you. A reminder to all participants, you may please start in one to ask questions. The next question is from the line of Vijay Pande from Nuvama. Please go-ahead.
Unidentified Participant
Just wanted to check about what the industry outlook, both for the fourth quarter for the next year after the like the recent government budget announcements. If you can just give us a brief overview about how the industry looks like, what the EBITDA growth like in FY ’25 and then three to four years time frame that will be very helpful.
Bharat Madan
So Vijay, we’re looking at 14% to 15% of growth in quarter 4. So this is going to be a robust quarter. So we’re looking at a growth of about 14%, 15%. And for quarter one also, we are looking at a pretty decent good growth in industry. So for financial year ’26, see, it’s a little bit early to comment. It will actually depend on the monsoons. So what actually has happened, if you see in the current fiscal year also, we were able to we were a little bit pessimistic before the monsoons. But as the monsoons were very, very good, the industry has taken a sharp upturn post September. So to comment on financial expectation as of now will be a little bit premature. We can look at it post the monsoons for the entire year.
Unidentified Participant
Okay. Okay. Thank you.
Operator
Thank you. The next question is from the line of from Anand Rathi Institutional Equities. Please go-ahead.
Mumuksh Mandlesha
Just firstly, on the just on the inventory correction. I just want to understand, are we done with the inventory correction as of Jan? Or do you see more correction ahead as well?
Bharat Madan
No. So we are almost through with the inventory correction. So I will not call it an inventory correction, it’s more of rationalization, bringing it to a level primarily to look at the profitability of our channel partners. So that is what we’ve done, and we are more or less through with the correction.
Mumuksh Mandlesha
Got it. Sir, mostly, sir, basically, as a company going ahead, mostly the 4 weeks would be like a normal range, but then a 5% to 6% earlier we used to have reason?
Bharat Madan
Earlier, we were at about five weeks, five and half weeks. Prior to that, we were at six weeks. So the last year, we have, to a certain extent, operated a little more than at five weeks. So it brought it down to about four a little over four weeks kind of a thing now.
Mumuksh Mandlesha
And that should be the normal levels going ahead for us, right, sir?
Bharat Madan
Yes.
Mumuksh Mandlesha
Got it. Got it. Sir, in the export side, we have seen a recovery very good recovery in recent months. I just want to understand what is driving the recovery? And any outlook for the exports tractors?
Bharat Madan
So this is essentially the export to project. As we indicated earlier that from this quarter, the numbers will start improving. So that’s what we’ve seen now. And January, also these are good numbers and we’re expecting similar numbers will continue. So the growth has started there. So hopefully, things should only continue to improve from current level.
Mumuksh Mandlesha
And sir, which market generally we are exporting now for Kubota, sir?
Bharat Madan
Mostly Europe.
Mumuksh Mandlesha
Europe. Got it. And then the new products has been launched, sir, for Europe.
Bharat Madan
It’s being introduced. So that will also go along with the product volumes.
Mumuksh Mandlesha
Got it. And sir, in this quarter, we have seen a notable gross margin change Q-on-Q around 350 bps change in the gross margin. Can you just make us understand what has happened Q-o-Q, sir?
Bharat Madan
See, major reason was because in the second quarter, there is an inventory buildup which happened because the production levels were high. And in third quarter, the sale numbers were high. So all your overhead is on actually get addressed in second quarter itself, which is the reason you’re seeing a string happening. So the production benefits come in the second quarter. While in Q3, that impact is missing, which in a normal quarter, your production sales would have been equal, then you would have seen a better margin. But this major string is because of that. Second is also because of there’s some inflation on commodity we’ve seen in this third quarter, which hopefully, in Q4, we are seeing again softening. So Q4 should be better than Q3. And then in the season time, normally the discounting levels in the industry are higher. So most of the schemes still get quoted in this festival season time of September to November, which is also the impact which is there, so which earlier will not be continuing on that basis. So there, we will see better margins coming forward because of these two reasons.
Mumuksh Mandlesha
Got it, sir. Sir, on the component exports, sir, just can you share some gains, how is the current run rate for the company exports? And you have the new warehouse there also, so how is that is ramping, sir?
Bharat Madan
So it takes some time. They are already talking to the suppliers now and building up those inventory which they need to really start exploring. So obviously, this is a bit to a lot of quality checks. The cohort team also we’ll be visiting the suppliers and informing the suppliers before they start to sync. So we expect I think that will start happening from next year. So we have taken some targets for next year for the sourcing team, and the numbers should start looking up for next year onwards. This year, it will not be much, really.
Mumuksh Mandlesha
Got it. So a notable jump next year is something we can expect from like a INR250 crore current run rate, sir, yearly?
Bharat Madan
So it will really depend on how the quotas requirement for global market really start picking up. If the demand picks up there, then we expect the sourcing. I mean that’s also in the focus for.
Mumuksh Mandlesha
Got it, sir. Thank you so much for this opportunity. Thank you.
Operator
Thank you. The next question is from the line of Harsh from Marculus. Please go-ahead.
Unidentified Participant
My question was with respect to margins in the Agri Machinery business. There has been around 60 blips impact on a year-on-year basis. So this impact largely because of the production shrink, which happened from Q2 to Q3? Or is there something more to it, the margin decline?
Bharat Madan
So I said three reasons. One obviously is the production scheme. Second was the inflation in the sector, which you’ve seen on the commodity sector, which is which is roughly 0.5% And then there’s also the discounting, which is slightly higher this year in September to November festival season time, which is in line with the competition. So that is also an impact. But this was only for the festival season. So going forward, this will not be there. So we’ll see that there will be a positive impact going forward on the margin front.
Unidentified Participant
But shouldn’t the production swing in the festive season, in fact, last year’s Q3 margin result?
Bharat Madan
So it again depends on which month the festival season falls in. So this time since everything happened in October, so the inventory buildup was more until September, which came the benefit of which came in the Q2. Last year, it was spread between October and November, so the production continued into Q3 also. So those strengths will always be there depending on the seasonality, how the season moves. So these ranges will be normal.
Unidentified Participant
Okay. Got it. And on a sustainable basis, you do we roll it out initial guidance or margin improvement in entity?
Bharat Madan
Yes. So like I said, we are continuously working on improving the margin in this business. So this similar trend will continue even in next year. So you will see the gradual improvement will be there. But we don’t see a significant jump certainly on the margin front. So unless you see a major operating leverage playing out and the volumes start picking up. Otherwise, at the normal level, the kind of inflation which is there and the kind of commodity price we have, we expect will have marginal improvement over the current year level next year. And we’ll continue to work on cost line items to see where we can have further improvement possibility.
Unidentified Participant
Okay. Got it. And secondly on the exports getting access to the Kubota network, especially in the European market, do you with respect to how the how you see the export business growing in FY ’26?
Bharat Madan
So we expect the next year to see growth in high double-digit growth, it could be anywhere between 20% plus, 20%, 25% sort of growth should be there. One, because the base is also very low this year. We’re not going to much numbers. I think overall export will be close to 5,000-odd numbers. So the basis is very low. So I think most of your European markets start picking up, the export number should start to gain good. So we expect next year should be a good level of growth.
Operator
Thank you. A reminder to all participants, you may press RN1 to ask question the next question is from the line of Nandin Pradhan from Emkay Global Financial Services. Please go-ahead.
Unidentified Participant
Sir, just to follow up on the export, we have talked about introducing some products in European markets, if you could just give some flavor on that perspective.
Bharat Madan
So like I mentioned, the product has already gone into production. So the export is starting from this quarter, so which is going to be part of the volume, which we’ll see coming in. Can you hear us?
Unidentified Participant
Yes, yes. Sir, I’m your question. And sir, in terms of margins, how would this product carry? Would it be better in terms on domestic sales or how?
Operator
The export margins are, I think, more or less similar to what we have in domestic, though contribution is slightly lower, so your realizations are better in export. But now with the exchange rate, the way it is, I think the margins are more or less in line with the domestic market. As that was the last question, I now hand the conference over to the management for closing comments. Over to you, sir.
Prateek Singhal
Thank you, ladies and gentlemen, for being present on this call. For any feedback of queries, feel free to write us on investor.relations@exportskubota.com. Thank you very much, and have a good evening. Thank you.
Operator
Thank you. On behalf of Batlivala & Karani Securities India Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.