Good afternoon, everyone. I would like to invite the management of Action Construction Equipment and thank them for this opportunity.

Today we have with us Mr. Sorab Agarwal, Executive Director; Mr.

Rajan Luthra, Chief Financial Officer; and Mr. Vyom Agarwal, President.

I shall now hand over the call to the management for their opening remarks. Over to you, sir.

Thank you. Good evening and welcome, everyone, to this earnings conference call for discussing the results for the quarter ended June 2026.

Along with me in today's earning concall, we have our CFO Mr. Rajan Luthra and our President Mr.

Vyom Agarwal. I hope you have had an opportunity to review the company's financial statements and the earnings presentation, which have been circulated and uploaded on the stock exchanges.

I will now take you through some of the key highlights of our performance during the quarter. Following the normalization witnessed during the second half of previous financial year, demand across the construction equipment industry remained stable during the quarter, and we have maintained our growth momentum.

The financial year has begun amid an unpredictable domestic economy, as the global operating environment has become increasingly uncertain. India's macroeconomic fundamentals continue to remain strong.

However, escalating geopolitical tensions in West Asia, volatility in energy markets, firm steel prices, elevated freight costs, and inflationary pressures across most of the industrial commodities have added to cost volatility and supply chain uncertainty for manufacturing businesses worldwide. Against this backdrop, our company registered its best-ever Q1 performance with continued focus on disciplined execution, operational excellence, and maintaining a healthy balance between growth and profitability.

Our continued emphasis on product quality, manufacturing efficiencies, cost optimization, and calibrated pricing actions enabled us to record our best-ever Q1 performance in terms of revenues and profits. Now to brief you on the financial performance for quarter 1 FY '27 on a standalone basis, on a yearly standalone basis, the total income grew by around 19% to ₹836 crores, with an expansion of 12 basis points in EBITDA margin to 20.40%.

The EBITDA during the quarter increased by 19.66% to ₹170.58 crores, as against around ₹142 crores. The PBT expanded by 73 basis points and grew by 23.81% to approximately ₹156.79 crores.

The PAT expanded by 41 basis points and grew by 22.47% to ₹118.59 crores, as compared to ₹96.83 crores in the last year's corresponding quarter. The PBT and PAT margins now stand at 18.75% and 14.18% respectively for the quarter.

On a sequential basis, that is on quarter-on-quarter basis and as per our past trends, the total income recorded a drop of 18.15%, and the EBITDA, PBT, and PAT have expanded sequentially by 438 basis points, 395 basis points, and 353 basis points respectively. Moving on to the segmental business performance, the company has sustained its growth momentum across all operating segments.

In the cranes, construction equipment, and material handling segment during the quarter gone by, we registered consolidated revenue of ₹738.37 crores, as compared to ₹605.43 crores in Q1 FY '26, which is an increase of around 22%. The volumes grew by 17.25% year-on-year.

The margins also expanded to ₹134.09 crores versus ₹107.83 crores, thereby registering a growth of 24.35% year-on-year. The agri equipment division clocked a revenue of ₹42.67 crores, while registering a margin of ₹4.34 crores.

Our performance during the quarter reflects continued operation discipline and prudent cost management. Going forward, we continue to closely monitor commodity markets and remain focused on protecting profitability through sustainable operational improvements, rather than relying solely on price actions.

The strategic joint venture with Kato Works Limited, announced during the previous quarter, will commence by end of July, and it marks another important milestone in our long-term growth strategy. This partnership combines ACE's manufacturing strength and domestic market leadership with Kato's globally recognized technology and footprint in the heavy crane segment.

The joint venture provides an excellent platform to expand our domestic presence in truck cranes, crawler cranes, and rough terrain cranes, while also supporting technology upgradation, localization, and export opportunities over the medium to long term. This initiative further strengthens our positioning in the higher value-added heavy crane segment and complements our existing leadership across pick-and-carry cranes and tower cranes.

Our defense business also continues to progress steadily, and we have started manufacturing the rough terrain forklifts in the current quarter. Further, we remain committed to developing specialized products for defense applications and expanding our participation in this strategically important sector.

Over the past few years, we have consistently invested in expanding manufacturing capacity, modernizing our facilities, and strengthening automation across our plants. These investments have significantly enhanced our manufacturing flexibility, product quality, and operational efficiency.

With our existing capacities and improved manufacturing capabilities, we remain well positioned to cater to future demand across our product portfolio, while maintaining disciplined capital allocations. Coming to margins, commodity prices remained volatile during the quarter, owing to continuing geopolitical developments and fluctuations in the global energy markets.

Commodity prices like steel, rubber, oil, and all its derivatives, along with freight costs and currency movements, continues to be at elevated levels. Amid these evolving market conditions, we remain focused on protecting profitability through a combination of operational efficiencies and calibrated pricing actions, wherever necessary.

Our endeavor continues to be maintaining the right balance between volume growth and sustainable profitability, while maintaining and preserving our margin profile. This disciplined approach has remained consistent over the past several quarters and continues to be central to our operating philosophy.

Looking ahead, the structural growth drivers for the Indian construction equipment industry remain firmly intact. Continued government emphasis on infrastructure creation, investments in roads, railways, urban infrastructure, manufacturing, and logistics, together with sustained public capital expenditure, continue to provide a strong foundation for long-term industry growth.

In addition, increasing private sector investments, expanding industrial activity, and continued focus on domestic manufacturing are creating new opportunities across several end-user sectors that we serve. Historically, our business has exhibited a seasonal pattern, with approximately 40% to 45% of our revenue being generated during the first half of a financial year and the remaining 55% to 60% during the second half, supported by post-monsoon project execution, improved construction activity, and the festive season.

Our healthy balance sheet, expanded and upgraded manufacturing capacities, diversified product portfolio, and strong market position provide us with a solid platform to create sustainable long-term value for our stakeholders. With this, now I would like to request the moderator to open the floor for the question-and-answer session.

Thank you.

Hi, sir. Thank you for the opportunity.

My question is, how much did defense and export order contribute to this quarter revenue? What's the order book visibility in this segment for the rest of FY '27?

See, I think for the current quarter, exports has been slightly subdued because of shipping issues and the prices that have really gone up. All our Middle East orders, and especially Saudi Arabia, we've not been able to ship them in the last quarter, some were pending from March onwards.

I think as a percentage of this quarter, export sales is close to 3%, but I'm sure it will catch up because all these orders are live and pending. I don't really have a number for defense.

Luthra sir, do we have a number for defense as a percentage for this quarter?

This quarter was around 4%-5%.

Defense was around 5%. Export was close to 3% and defense was 5%.

As a matter of fact, on a whole-year basis, we are looking at at least a 6%-7% contribution from export if not more, and about a 5%-6% contribution from defense. Totally it will go somewhere between 10%

to 12%. Sir.

My second question is, can you give a progress update on the Kato JV?

More or less, all the formalities are complete, and the JV should become functional in end of July. JV will start having some revenue from quarter 3 onwards.

Quarter 3, quarter 4, a lot of time will be spent on upgrading of products. It's already in process; it'll further be speeded up.

Actual meaningful revenue from the joint venture will start to come only next year onwards, FY '28 onwards.

Sir. Thank you.

That's it from my side.

Thank you.

Hello, am I audible?

Yes, you're audible, yes.

Hi, sir. Good evening.

Sir, how are you seeing the demand and supply chain situation? Sorry if you have answered it in the opening remarks, I missed that.

Just wanted to understand like what is the current demand and supply chain situation during Q2 FY '27 and onwards? How should we think in the terms of the growth at company level for rest of the year?

I just wanted to understand it because last year we didn't grow, right? Can we make up for the last year, entire last year FY '26 in FY '27?

See,

this is one question especially with respect to demand and supply chain, which rather I would like to put to all of you people on the lighter side. Demand had been very strong till mid-June, and obviously traditionally it slows down a little in the rains.

That is what we are experiencing, but we experience this every year. Supply chain, so far we've not experienced any major problem, but yes, we did face problems with our engine supplier and the casting suppliers, and especially castings for the engines in the last one month or so.

Our suppliers have found ways and means to overcome that, and hopefully that should smooth out in July. Apart from that, I don't think there was any major supply chain issue so far, apart from the inflation and the costs.

As far as the demand or the growth scenario we can talk of, we had mentioned in the last concall also that sometime for end of September, we would like to give a full-year growth target with respect to our revenue. We still maintain that, but in saying this, I would like to say that we are definitely looking at growth because what we see that growth is going to come to us from three, four different avenues.

Primarily the Hydra type of crane market, which was very much subdued due to price increase and technological changes last year, that has started improving, so that will add to our numbers. Then as it is, let's say apart from Hydra, our construction equipment numbers, our road machinery backhoe numbers, forklift numbers, tower cranes, here we are definitely looking at growth in numbers within this year, obviously coupled with cranes, but specially Hydra type of cranes.

I think we will get some extra revenue on account of inflation. We will get extra revenue on account of the big defense order we got, the execution is getting started in August onwards, August should be the first lot supplied.

We are looking at growth, but to put a number to growth is slightly difficult because we are in unpredictable times with so much geopolitical things happening. Another thing we want to wait till September before we give out a whole-year guidance is primarily that we have increased prices three times already in the first six months of this calendar year.

It was January, and then we again increased prices in May, and then again the biggest chunk came in June, which is still underway. Obviously there is a lot of resistance, and this is coupled at a time when the market is at its leanest because of rains.

The buying sentiment because of rains as it is is subdued, and there is a phenomenal price increase on top of it, which has been pushed in one month back. On the whole, we will grow.

To put a number to it, I think September beginning, middle September, or the finest figure we can give by September end. Like I mentioned in my initial address, generally 40%-45% of our revenue happens in the first half.

Obviously whatever we do in quarter 2, which will definitely be better than last year and which should be similar to our current quarter 1, because quarter 1, quarter 2 are similar. If you just apply the 40%-45% ratio in first half and 55%-60% in the second half, you will be able to get a range in any case.

To put a number to a percentage growth, we want to refrain from doing this, keeping in mind our conservative nature and in light of prudence, that's what I'd say. Thank you.

Got it. Secondly, how the competitive landscape is shaping up for now in the industry?

Have you seen any kind of increasing competition for us, specifically in the domestic market in the last maybe three or four months?

Not really. We have had players in the segments for a long time, and the competitive intensity remains the same.

Yes, like I said, the biggest challenge, current challenge and going forward, is inflation because of two things. A, inflation will make things expensive and our products expensive, obviously making customers to realize and to get that price increase is a difficult task, is a time-consuming task, and sometimes in some few percentages you're really not able to recover that also.

Another part is if the inflation is increasing and generally everything is becoming expensive, it can depress the economic growth somewhere, which is also evident from different forecasts of leading banks and financial institutions which have been coming. They have already reduced India's GDP forecast a little bit.

I think the biggest challenge is inflation, and competitive intensity remains same, and we have been doing a good job of it in the last so many years. I'm sure that is not an issue at all.

Lastly, are you people seeing any kind of issues in the terms of contractors getting the payment from the government departments or government projects? Is there any kind of issue prevailing right now?

See,

nothing in particular that comes to us, to comes to our knowledge, but yes, in some cases and specially state government level, sometimes there are issues, but they generally get sorted out. It is a part and parcel of being a EPC company or a contractor.

Certain things can get delayed or postponed or preponed, but we really don't see a problem or an issue on that front.

Got it. That is it for my side, sir.

All the best for the future. Thank you.

Thank you.

Hi, and thank you for the opportunity, sir, and congratulations on a good set of numbers. Sir, my first question is regarding the pick-and-carry cranes market structure.

You said you expect a good volume uptick coming in the Hydra segment. Sir, my sense was that post the CEV-V norms emission implementation, a lot of market has shifted to the new generation cranes, and that is why we are seeing mix improvement as well in our crane, construction equipment volumes.

Going ahead, what kind of trend we should be seeing in that market? Will the mix keep improving towards new generation?

If not, then will we see a detrimental impact on our mix coming up going ahead if Hydra cranes pick up much faster? See,

I would say let's talk of last year or the year before that. I'm talking of FY '25.

The Hydra type of cranes were close to 60%-65% and new generation were 30%-35%. Last year, because Hydras went straight from BS-III to BS-V emission norms, their price increase was much more as compared to new generations, which went from BS-IV to BS-V.

Last year, the market was somewhere around, let's say I would say, Hydra was a little less than 60% and new generation was a little more than 40% overall volume share. See Hydra as a machine forms a core with respect to our all the industrial areas and industrial bases in the country, and which is used as a main pick-and-carry, lift-and-shift machine, whereas new generation forms a core for most of the infrastructure and construction activities.

Obviously even after the price increases, there is still I would say about a 40% price gap, 35% to 40% between, just a second, maybe I'm a little wrong, maybe 30% to 35% between a new generation and a Hydra type of crane. What happened last financial year that when the new emission norms came, the retail segment, which primarily uses Hydra cranes and gives it out on rent even to the industrial areas, they were a little skeptical about the electronic engines and the change in technology coupled with a sizable price increase with respect to all this emission norm changes.

All of that has settled in the last I would say 7-8 months, and I feel that in this year the Hydra to NG will again go back to 60-40, where 60 is Hydra, 40 is NG. This is one part of your question.

The second part is that going forward, we feel that Hydra and NG share would eventually maybe in the next 1 or 2 years, maybe 3 years, land up at around 50-50 and should stabilize there. Here what I'm saying is the number of absolute cranes, Hydras which were sold last year reduced mainly because the retail segment was skeptical.

That skepticism has gone, so that's why we feel the numbers of Hydra, which have already started increasing in the last 3-4 months, they will come back and they will also bring growth to our company because the numbers will increase.

Okay. A part of my question was, if we see Hydra mix improving this year, then will we have some negative impact on realizations as well?

I don't think so. Realization will only increase for two reasons, that even in the Hydra, we are seeing a shift towards higher tonnages, and in the last 3 years, 4 years, we've also launched models which are 18 tons, 20, 25 tons bigger.

There again we have seen a shift happening. In any case, prices of Hydras have increased last year because of emission norm changes.

The product mix both Hydra, NG and within new generation itself, we are again seeing higher tonnages gaining traction. On the whole, I think our average selling prices are only going to increase within the pick-and-carry segment.

Okay. Sir, you said three price increases have taken place so far.

First question is regarding is this price increase across the product segments you have taken? What would be the quantum of this price increase taken till now?

See,

we pushed 1%, 1.5% in January, then a 3%-4% across the range in March, and in June another 5%-6% depending on models and products. The June price increase is still work in progress, hopefully it should be totally realized within the month of July.

If you put all of this together, it's close to about 10%, in which the last 4%-5% is under implementation as of now.

All right. Second last.

This quarter over last year, we have seen a gross margin contraction of almost 140 basis points. Is this all related to commodity cost headwinds that we are facing or is it something related to mix as well?

I think in all probability it would be related to commodity cost only, but I think Mr. Luthra or Mr.

Vyom would be able to give a better answer on this if they differ.

Basically it is impact of commodity prices, because, as you are aware, that steel prices have gone up by nearly 20%, and not only steel, all other commodity like tire, belt, rubber, plastic, everything has gone up. Because of all geopolitical tensions and all, the prices of everything is going up and up.

That is which has led to the decrease in the gross margin. We are taking necessary actions to mitigate this increase by increasing selling prices so that we maintain our margins for the full year.

This is the first time or maybe the second time that each and every possible commodity or any input material or component that we were buying, I'm saying any, practically prices have increased all across the chain.

Right.

This is a massive commodity increase. Rather, I'm sure for all other companies as well, the procurement and the vendor development teams have been totally busy over time in terms to pacify the vendors and manage the least possible increments.

Right. Okay.

Just one last question, sir, from my side. We were mulling to increase our tower crane capacity.

What's the progress on that new facility? Have we made any progress, our sites have been finalized, or what would be a progress in that?

Yes, we have already taken a land for that, and all our plans are ready. As a matter of fact, we wanted to begin work from April onwards, but unfortunately this war unfolded in March.

We will be waiting till September, and we'll finally take a call on the timing of the expansion in September. Maybe we start it off immediately looking at the market scenario, or we might defer it by another 6 months.

It can start in October or it can be deferred by another 6 months, so that we'll decide only in September. In saying this, last year what we had done, we further did some minor rearrangements, and also did rent a small factory premises very close to our existing, and so we've actually in the last one year been able to increase our capacity to about 1,000 cranes now.

That should suffice in the current scenario with respect to demand.

Okay. What would be the location of this land?

This land will be very close to our existing facility, about 4-5 kilometers.

Sir. Okay.

Thank you. That's it from my side.

Thank you.

Sir, how many backhoe loaders were sold this quarter and last quarter, and last quarter of previous year? Same for tractor.

I think we've been averaging close to 150-160 units backhoe loaders. Just a second.

Close to about, what about this construction equipment? We have close to about 150 plus/minus, 150-160.

Right,

sir. Sir, how do you see this segment evolving over next 3 years?

We are very hopeful, yes. We have not tasted success so far, but we see a tremendous potential with respect to exports of backhoe loaders as well as domestic market.

We are very hopeful that going forward, this could and this will be one of our fastest growing segments within the cranes construction equipment segment.

Right, sir. Got it, sir.

Thank you.

Hi, congratulations on a good set of numbers, and thank you for the opportunity. In last quarter, you had mentioned that the specific proof of concept regarding the backhoe loader segment would be ready by June or July.

Can you share the outcome of this initiative, and also what kind of volume and revenue contribution we can expect from this in this financial year? See,

it is work in progress as of now, but yes, we have tasted success by something we were trying to do around finance companies. Hopefully by July and August, we should have full clarity.

It's definitely working in the right direction. We had implemented it in three, four specific pockets.

Hopefully that should help us increase our numbers at a much faster pace, and that is what in the previous answer I just mentioned, that gives a lot of confidence that, yes, backhoe loaders specially could be our fastest growing segment going forward.

Okay. Thank you.

That's it from my side.

Thank you.

Hi, sir. I hope I'm audible.

Yes, you're audible, yes.

Yeah. Sir, what has been our volume in pick-and-carry segment for this quarter?

Luthra sahab, you have the exact volume data? You can just send us an email.

I think we'll send you all the volumes.

I think that will be better if I can send an email to them. Okay.

Okay. Sure.

Sir, when I see our unit economics and realization per unit, how much of it for the last two, three quarters has been due to price hike and how much is it due to the mix change? See,

the price hike we did in January was all of 1%, 1.5%. The realization increase in Q4 of last year would have been primarily be product mix.

Even in the last quarter, let me just compare. I think it is a combination of both, but specially in Q1 more to do with I would say price increase.

Yes, that also happened May onwards, the effect was only in June. You will see a substantial improvement in quarter 2 with respect to further the price increase that was done in May and June.

In this current quarter Q2, we should all see even a better average price. I hope I've been able to answer your question.

If you want to ask something more, otherwise we move on to the next question.

Thank you for the opportunity, sir, and congratulation on good set of results. Sir, I just wanted to ask on the commodity cost pressure.

What was the commodity cost inflation for our mix we saw in this quarter, and what kind of pressure do we expect in the next quarter, Q2? See,

we've seen a lot of pressure in the last 3-4 months ever since the war started. The pressure was tremendous.

Like I did mention in our last concall also, I think in the month of May, led by steel, because steel is one of our biggest inputs. We feel that the overall inflation is going to be somewhere in the tune of, final effect, which hopefully should be finally settled July or latest by August with respect to reflection in our costings, would be anywhere between 11%-12%.

We have already pushed around a 9%-10% price increase. Maybe going forward if further volatility happens and there is any further push because of all the unforeseen things which are happening in the world, and the Iran war further escalating and maybe some more choke points being created.

Yes, we are expecting it to be around 11%-12%. We have already moved towards a 10% price increase.

We might have to do another 2 odd percent going forward. Yes, but if there is any further pain that comes into the system over the next 1, 2, or 3 months, which cannot be ruled out, I think our next price action will be depending on what happens in the month of August and September.

Sure, sir. That was helpful.

Sir, despite 11%-12% price hike in the commodity, we were able to maintain our gross margin. You mentioned that in the last half of the June, we have taken another 4%-5% price hike.

Are we expecting margin improvement from quarter 2 onwards?

No, that is not the aim. The aim is just to be able to recover our costs.

We are not looking at margin expansion. It just happens that basically some 2-3 months of inventory is generally rolling in the system at the vendor end.

Price increase happens with a 1-month, 2-month, 3-month lag depending on the different suppliers. Obviously there is some inventory available with us also.

In rotation, the full effect comes generally in 2-3 months. Our final price increase would have become effective totally by July end.

Final impact of inflation will also happen by July end, August. It should more or less marry each other.

We are not expecting or planning for any net increase in our margins. We are just planning currently to maintain and sustain our profitability, and that is our aim.

Got it, sir. Sir, if you could just give me breakup of how much raw material cost inflation we have seen in quarter 1 and how much we would be seeing in quarter 2 out of that 11%, if you could just break it up, if you have?

Vyom, if you want to break that 11%-12%?

Preet, we may not have the exact numbers, but close to around 5% to 6% could be there in Q1, and going ahead we have to see the impact coming in Q2.

Got it. Thank you so much, sir.

I'll join back in

the queue. Costing of more than that has flowed down, Vyom.

Yes,

that

has flowed down in Q1, some of them will spill over in Q2 now.

7%-8% has flowed down.

Because the price increases happened with a lag, with some price increasing happening in April, some of them happening in June, the complete effect will hit us in Q2.

Some price increases are still pending, which will happen in July and early August.

Yes. That is why our pricing action in the market as well as the price increases that we have taken with our vendors will marry each other in the next couple of months.

Yeah.

Got it, sir. Sir, do we expect to maintain same 15%-16% kind of margins for the full year, or what would be our guidance on the margin?

Yes, last year on operating EBITDA level, we did a little over 15%, and that is our aim to be able to maintain and sustain, and that is our primary aim in quarter 2 and maybe even in quarter 3 to maintain our profitability.

Thank you, sir. I'll join back in the

queue.

Hello, am I audible?

Yes, you're audible.

I just want to understand your defense segment. Are you still on the track of delivering around ₹200 odd crores of order in FY '27?

Yes, I think we should be doing more than that. It could be another 10%-15% more than this, maybe slightly more.

What will be the segment mix at the end of the FY '27?

I think what we are seeing is somewhere between 40%-45% will be manufacturing and logistics, somewhere between 40%-45% will be infrastructure and construction, including about a 10%-12% in real estate. Then about a 6%-7% exports, 3%, it will be 5%-6% from defense, and about a 6%-7% from agri.

Whatever I just said might add up a little more than 100, but that's why I said 40%-45% and 40%-45% for infra and manufacturing.

Overall we can conclude that defense will be contributing around 5% to 6% of your overall revenue?

Yes. That we are confident.

Any orders received in this particular year from this quarter, we were around ₹570 odd crores from defense, so?

Can you just come with that question again, please?

Sir, did we receive any new orders in this quarter? See,

not any really big order, but yes, small ones keep on happening every month. So, ₹2 crore, ₹5 crore, ₹1 crore keep on happening, but yes, not a big one.

We are expecting a repeat of a big order, which should be more than ₹100 crores hopefully in the next 2-3 months, because the execution of the initial order has started in the last quarter. I think in the next 1 or 2 quarters, we are expecting a repeat order of one of the bigger orders.

That is one good-sized order in pipeline.

Okay. The new facility you are targeting this September, October around, what revenue are you expecting from that facility?

See,

this particular facility, which already is under construction and hopefully in the next two quarters, by end of December we should be making it functional, let's say end of quarter 3, early quarter 4, whenever. This facility will be dedicated for defense manufacturing, the special machines, and apart from that, a couple of other products which we are currently designing and validating.

I think from this facility combined together, where we are investing close to about ₹40-₹50 crores, eventually we should be able to do a turnover of, just a second, maybe close to about ₹500 crores.

Sorry, ₹500 crores from that facility itself,

no? That facility will have a turnover capacity of close to ₹500 crores.

Okay. That is

within the existing complex? We're doing it in our existing complex only, where we had land available.

This is actually the last meaningful chunk of land within our existing complex, close to about 100 acres. After this, the existing complex will be more or less full.

Yes, by doing some more modifications here and there, a little capacity can further be increased. Yes, practically the land will be exhausted in our current complex.

Lastly, what would be the total capex for that facility? See,

this one is ₹40-₹50 crores, this we call it plant 9 within our company. For the whole year, I think our capex should be somewhere around ₹200 to ₹250 crores, in which the major chunk will go to take over that about ₹130-₹140 crores to take over the land which we had contracted for about 1.5-2 years back.

And ₹40-₹50 crores in this facility, and another ₹50-₹60 crore in upgradation and some more robotics and automation, and coupled with some routine capex, maintenance, and all that. Somewhere between ₹200 to ₹250 crores would be the figure.

Okay. All right.

Thank you.

Hi, thank you. One question regarding your demand planning.

Traditionally, bottom-up demand planning in construction machinery relies heavily on periodic dealer projections. Over the last 3 years, just want to understand how have you integrated the real-time dealer's inputs and what are changes you have done from a demand planning perspective to ensure that there's limited channel stuffing or it can also optimize your factory production runs?

Just want to understand how your demand planning has actually evolved and what are the changes you have done in demand planning. See,

obviously demand planning plays a very important role, and in our company it's a very dynamic process. Obviously we plan for 6 months, 3 months with respect to production numbers, tentative numbers, but we keep on fine-tuning them on a monthly basis.

Apart from that, just to cater to some additional demand which fortunately, which is a good thing to happen, goes beyond our plan for the month, what we're doing is with respect to our inventory of semi-finished and finished goods with respect to each plant, we do carry a 10%-20% extra inventory in that category every month to cater to any upward fluctuation. Obviously if, for example, there's a downward fluctuation, then it gets adjusted in the consequent month.

Got it. How you improved the predictability in the last 4-5 years because we've had a good growth in the last 3-4 years.

How have you improved your demand planning predictability? See,

predictability is the only problem that has been in problem in the last 1, 1.5 years, especially after the war last year, that Operation Sindoor, things subdued, then Mr. Trump tariffs, just playing with the sentiment of everybody around, and now the Iran war.

I think when these special situations arise, and that's one of the main reason why we're not giving a growth number. We know there will be growth, we want to give that number, but I think it will be most prudent for us to be able to give a growth number also sometime middle of September, end of September because once we'll be very sure.

Predictability is one big thing, which we have been suffering from because of these unknown reasons or whatever these events you can call them, and that's a real pain as of now.

Got it. My second question is regarding the growth drivers.

Of course, there are several growth drivers we actually mentioned in our PPT. If you can just call out two or three very specific growth drivers which you think would shape up for the next 3 years, what would they be in which you are really focusing your efforts on?

See,

I feel yes, current year our country's growth might be subdued. I think, but let's say let me put in sequence of possibilities.

I think our biggest two growth drivers going forward would be inorganic growth and growth in exports. We feel these are going to be really big growth drivers for the company, inorganic growth as well as exports.

Then at number two, I would place, let's say the growth which is happening within our country, 6.5%-7% GDP, whatever, which will lead to growth with respect to our business. Obviously last 1 or 2 years have generally been troubled because of various factors, but as soon as we see some stability, we feel that this is going to be another major driver, which has traditionally been a major driver, which will help us grow further.

This ACE-Kato joint venture, this will also help us 2 to 3 years from now, once the export-ready products which are totally built on lines of Kato base in Japan, they will also contribute. Like I said, inorganic growth and exports, in the current scenario we feel are going to be the major drivers.

Yes, overall time frame of 3 years apart from these, the growth of our country, basically our infrastructure growth, our manufacturing growth, our logistics growth, just look at everything, even data centers, they've also started contributing about 1.5%-2% to our revenue, which I noticed. Growth in some form keep on happening in our country.

Just on that because these are all something which is already there. I think top down you can look at India growth, etc.

Is there any specific things you're looking at if you want to call out? For example, in defense is something which you already called out.

I'm saying is there two or three things, okay, X state will actually grow well or very very specific things, sir. That's what I was looking at.

Also on the Kato joint venture, want to understand what is the localization plan and then at the end of let's 3 years, what percentage of our production will be localized?

That Kato question I'll take up separately. See, looking at particular states, I really can't comment because every state is doing something or the other.

Yes, South Indian states and Maharashtra are doing much more than others, even Gujarat. There's continuous activity happening and it's an ongoing process.

Yes, if we talk of prospects, I think further the first high-speed rail is already under construction and hopefully something should be started in the next one year. Another seven more DPRs are under planning.

That will be a very big boost. Going forward, these data centers will further add some boost.

I'm sure that even the energy storage, specially oil storage facilities are to maintain the reserve levels, so that is going to add a big boost. Even nuclear energy going forward.

Solar is already currently giving a big boost if I talk of a segment. If you look at the revenue of our company to just to have an extra spike, I think inorganic growth, apart from all other growth factors, would be one of the significant ones, inorganic growth, I think in the next 1 to 2 years.

Because we have lot of cash available on the books and we have to put it to meaningful use,

but

obviously we do not want to take any decision where the business we are acquiring does not have a competitive moat or let's say the future prospect of 3, 4 times, 6 times the possible growth in that business. We have identified some opportunities, we are working on them, and hopefully they should get through.

Things are happening and we feel inorganic will give us a lot of help in our effort. Sir, and

localization of Kato also?

Yes, see Kato business will have two types of things, the joint venture. First is our existing cranes and some new models for India are under evolution and they will be upgraded and made equivalent with respect to technology and things with respect to the Kato technology and the standards.

In this, further localization is going to happen because the quantities are going to improve, I would say some hydraulic components and certain other high value, yes. With respect to 100% Kato models, which are also going to be used for exports apart from the domestic models, there I think the indigenization level I feel that, because these models will start to roll out approximately 2 years from now, the specific export models which are based on Japanese design, there I think our aim is to reach a localization level of close to 50%-60%, and we think it's easily possible.

Okay. Thank you.

Then

in this venture, there is another feature that Kato Japan, because Kato is a big manufacturer not only of cranes, but they also do other construction equipment, they will also be sourcing components and material from India, for which ACE is supposed to render those services. That will again be a revenue stream with respect to ACE.

Mhm. There'll be a lot of impetus on localization and manufacturing locally.

This was helpful, sir.

Thank you.

Hi, sir. Sir, one question on the Kato JV, sir, how much capital is Kato Japan contributing towards the JV, or is it only a technology partner?

Total investment envisaged is about ₹200 crores, and ₹100 crores is being put in in cash by Kato, and our portion of ₹100 crores is in kind in form of the current machines, models, technology, and the infrastructure.

Right, sir. Sir, by when do we expect to begin the production of the civil cranes with Kato?

Also, Indian models included.

The current Indian models which we have will remain in production. Sometime quarter 4 onwards, these Indian models, when the upgrades are ready with Kato technology, hopefully the upgraded products as per Japanese standards, we should be able to bring out as early as Q4, and it'll be a continuous process.

It'll keep on happening for 1, 1.5 years after that starting from Q4 of this year. In about 1 year from now, we will start making dedicated Kato models in India for Indian market as well as exports.

That will happen in year 1 to 2.

Right, sir. No royalty on it, right, since we're anyway selling to Kato on 50%?

There is no royalty on the machines which are being made for India. There is a small royalty, I think 2%-3%, that is for Kato specific design models, which Kato will make in India in the joint venture for the export markets.

Then the pricing there is nearly double of Indian pricing. I think is it, Luthra sahab, 2% royalty or 3%?

3%.

3% on the net selling price of the JV to Kato, right?

That's right.

Right, sir. Thanks for that.

Lastly, can you throw some light on the anti-dumping duty, you haven't got that?

You'll have to be a bit louder, please.

Sir, views on the anti-dumping duty being rejected by the Finance Ministry?

No leads so far, but we are still trying to do whatever best we can. We feel there is a ray of hope somewhere.

We've not put down our guns totally. We still feel there is a ray of hope.

Sir, just one small counter on that. Any reason you think why would they have withdrawn the process, because I guess the government was the one who had insisted that the industry apply for the anti-dumping duty, right?

See, the process, we were motivated by Ministry of Heavy Industries, which is Government of India, that why are these Chinese and imported cranes flooding the Indian market.

Then

obviously Ministry of Commerce through DGTR, they did the complete investigation and the duty was recommended. Finance Ministry is the implementation agency with respect to these duties, and it is only in the last leg, the Finance Ministry didn't do it.

It's like Government of India wanted, Government of India did all the investigation and provided the duty, Finance Ministry did not. I think it is more to do with certain geopolitical things, because the whole of last year, and especially second half of last year, our country was in line of fire with respect to American tariffs.

I think our country was posturing that we are becoming a little pally with China, and that's why I think the government has so far avoided to put or implement custom duties. That is my best guess, because apart from that, there is no other logical reason why Finance Ministry should not make these duties, because every second day, third day, fourth day, you see an article in one of any of the leading newspapers, India is looking for to be Aatmanirbhar, self-reliant, manufacturing in India, export from India, import substitution.

Here, in a small way only fiscal current account deficit is only going to be catered. Apart from that, for any machines which are going to get imported into the country, the government and the Finance Ministry is going to get some revenues in form of additional custom duties.

There is no practical explanation, I think, even with the Finance Ministry, why will they not do it if it is in the interest of the country, if it is in the interest of the manufacturer. It is a win-win situation.

As luck would have had it, I think the timing of our DGTR order with the recommendations was just after Mr. Modi had visited China.

I really can't comment. I don't want to go that far, but I see no reason.

Everybody gains by just implementing that duty. Our country's capacity and capability with respect to bigger cranes is not only going to remain intact, it is going to grow much faster.

I think it is a totally uncalled-for indecision or a wrong decision which is currently happening. These are my views.

Right, sir. Thank you so much for the explanation.

All the best for the future.

Thank you.

Hi, thank you for the opportunity. My question is just one, sir.

You said the mix of the crane industry moving 50-50 towards Hydra and new generation.

My question,

yeah, going forward, yeah. What do you think will be the incremental factors contributing to this, because the pricing differential will still be there, right?

See what will happen is the new generation type of cranes are more stable. They are safer as compared to the old generation or Hydra type.

I believe that certain industrial users, at least the bigger ones, will also move towards the new generation. That's why I feel that it'll go and stabilize around 50-50.

Okay. For us also, the mix is 60-40 in our volumes, correct?

Yes, and last 2 years, we have been leaders in new generation segment also, and if everything goes well, we will expand our market share in the new generation segment within this year.

Okay. Okay.

All right. Thank you.

Yeah. Thank you.

Hi, sir. Good afternoon.

Congratulations on a good quarter, and would just like to ask a couple of questions, sir, that you mentioned regarding recent events. Sir, when we take a price hike based on commodity pricing, once the commodity price historically normalizes, do the price hikes stick?

How does that generally work across maybe a three, four-year cycle in our business?

See, generally what happens, if the commodity cycle rolls back, let's say in the preceding 6 months, 8 months,

then

obviously certain portion of that needs to be passed back, and that will be prudent. If the commodity price increase sticks on for longer than that 6-8 months, then generally there is a tendency in the industry not to give it back, because even our vendors also don't really pass it back.

Understood. The 6-8 month threshold is what we measure with this.

Sir, and secondly, just another small question on recent events. For us generally, given the nature of the monsoon, as you've also guided, Q1 is generally leaner versus first half is generally leaner than the second half because of the monsoon and the construction activity.

In a year like this where the monsoon has been erratic, or it might get delayed, does that change plans or does this again, is this only if it persists for a longer period of time, does this change your client's purchasing patterns generally?

It does. See, to be very frank with you, even our economy as a country, if the monsoons are sufficient is the right word, then the economy tends to do well.

Yes, if the monsoons are deficient, then somewhere there is definitely a hit, and specially in the, I would say, Tier 2 or the rural areas, because construction and cranes and things even do go there. That side of the business definitely takes the hit if the monsoons are deficient.

I'm not, when I say hit, I don't mean something huge, but yes, it can lead to a 5%, 7%, 10% up and down if the monsoons are not full or effective.

Understood, sir. That makes sense.

Sir, and this hit and hit is an aggressive word or this variability,

we see, but I also try to tone it down,

yeah. I understood, sir.

I understood your point. Sir, this variability, sir, generally this impact we can see in the same calendar year in the same season, or is this something that comes one year down the line, just trying to understand the purchase patterns of our clients?

Then does this affect

It happens in the second half of the same year.

Understood. They generally get deferred.

It becomes evident in quarter 3 itself.

Understood. Perfect, sir.

Thanks a lot, that's it from my end. Thank you for these couple of questions, and it has been very insightful hearing you on this call, and will definitely bother you for some more questions.

Thank you.

Thank you.

Economy, growth, everything, and we believe that currently we are in turbulent times, and I think we, each of the nations in the world, and specially India being such a fast-growing economy, everybody is looking forward to energy security, and in the meantime all of this mess is causing a lot of inflation. We are, I would say that there is uncertainty with respect to the growth in demand going forward.

Even in light of the inflation and the demand forecasting being in a little jeopardy, we believe that we are on a growth track within this year. How much we will be able to grow, I think definitely end of quarter 2, we should be able to project and come to a conclusion.

All our building blocks with respect to our medium-term to long-term growths are in place, our capacity is in place, we are even continuously working on our costs and our process and system upgradation, even as we speak. Hopefully future will hold good things for the country and also for our company along with all other companies.

I think going forward, we should be able to create even better value for our stakeholders. Thank you.

Thank you.

Thank you.