Action Construction Equipment Ltd

Ladies and gentlemen, good day, and welcome to Q3 FY '26 Action Construction Equipment Limited Conference Call, hosted by Emkay Global Financial Services. 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 assistance during the conference call, please signal an operator by pressing star, then zero on your touch-screen phone. Please note that this conference is being recorded.

I will now hand the conference over to Mr. Abhishek Taparia from Emkay Global Financial Services Limited. Thank you, and over to you, sir.

Good afternoon, everyone. I would like to welcome the management and thank them for this opportunity. We have with us today 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, gentlemen.

Yes. Good afternoon, and welcome to this earnings conference call for discussing the results for the quarter and 9 months ended 31st of December 2025. We take this opportunity to wish all of you a wonderful new year with good health and happiness. Along with me in today's earnings con call, we have our CFO, Mr. Rajan Luthra; and our President, Mr. Vyom Agarwal.

I hope that all of you have had an opportunity to look at the company's financial statements and the earnings presentation, which have been circulated and uploaded at the stock exchanges.

Innovation, value and trust are the pillars on which ACE has built its market leadership as a reflection of our engineering capabilities and our deep understanding of India's project site requirements. The company has recently unveiled an extensive suite of new generation technology powered equipment.

The new portfolio includes intelligent tower cranes, passenger lifts, AI-assisted pick and carry cranes, advanced aerial work platforms, high-performance telehandlers and a range of advanced material handling systems and robust construction equipment, reflecting ACE's sustained focus on new age technology, driving performance, reliability and safety across India's infrastructure and industrial sectors.

These machines offer higher productivity, enhanced safety and more intuitive operation, while ensuring reduced total cost of ownership for our customers. As India's infrastructure momentum accelerates, ACE remains committed to delivering world-class solutions that strengthen our nation's growth story.

Now to brief you on the financial performance for the third quarter of FY '26. On a stand-alone basis, the total income was flattish on a year-on-year basis at INR 888 crores approximately with an EBITDA margin of 18.5%. The EBITDA of company grew by 2.48% to INR 164 crores as against INR 160 crores in the corresponding quarter last year.

The EBITDA margin expanded 74 basis points to 18.5%. The PBT grew by 4.28% to INR 151 crores against INR 144 crores and stood at 17%. The PAT grew by 8.15% to INR 115.88 crores against INR 107 crores and stood at 13.04%. The PBT and PAT margins expanded by 96 basis points and 17 basis points, respectively, on year-on-year basis.

For the 9 months ended FY '26, total income declined by 3.21% year-on-year, reflecting the subdued performance in H1 and stood at around INR 2,373 crores. Despite this, EBITDA grew by 7.15% to INR 458 crores with EBITDA margin expanding by 186 basis points to 19.32%.

Profit before tax increased by 8.54% to INR 415 crores with PBT margins improving by 190 basis points to 17.5%. Profit after tax stood at around INR 316 crores, registering a year-on-year growth of 11%, while PAT margins expanded by 171 basis points to 13.34%.

From a sequential perspective, in quarter 3 FY '26, operational revenues grew 15% quarter-on- quarter. Operating EBITDA increased 16.28% to INR 128 crores, while PBT and PAT rose by 9.9% and 11.5% quarter-on-quarter, respectively. Margins reflect a INR 5.5 crores provision towards additional gratuity and leave encashment arising from implementation of New Labour Codes. Excluding this, margin profile would have been even higher.

The contribution of Crane Metal Handling and Construction Equipment segment stood at 90% of our total revenue, and we reiterated our market dominant position while registering revenue of INR 763 crores, which has grown by 10% as compared to quarter 2 FY '26. The company recorded sales of 2,710 units in the quarter. The margins expanded to 20% and stood at INR 152.82 crores. The revenue contribution of Agri segment stood at about 10%, and we registered revenue of INR 89.44 crores.

Our quarter 3 performance, along with the sequential improvement in demand as the year progressed, has reinforced our assessment that the initial softness following the transition from BS III and BS IV to CEV V was temporary. Demand stabilized in quarter 2 and returned to normalcy in quarter 3. Quarter 3 sales has been particularly encouraging, especially when viewed against the higher base of quarter 3 of last year, which had benefited from prebuying of equipment.

Looking ahead, we expect timely project awards, improved on-ground execution, supportive policy measures and higher government spending to create a favorable operating environment for the company in the coming quarters. The India EU FTA and the proposed U.S. deal at the rate of 18% tariffs are structural positive for Indian manufacturing, boosting both competitiveness and sentiment.

India is now better placed than key competing markets, especially China, and these developments are likely to reignite the China Plus One strategy, driving manufacturing growth, which augurs well for us. Further, the Honorable Finance Minister's Union Budget 2026 reinforces a growth-oriented and physically disciplined road map for India's development with a continued thrust on capital expenditure.

The Government of India has sustained its infra focus with capex spending growing at a CAGR of 19.4% over financial year '22 to financial year '27 budget estimate. The government has

budgeted the capex spending at 11.5% year-on-year in FY '27 budget estimate to INR12.21 lakh crores. The capex spend to GDP is healthy at 3.1%. Productive capex to create infra assets is crucial for amplifying productivity, which will further fuel economic growth, enhance global competitiveness and accelerate technological innovation in the country.

The budget prioritizes infrastructure and manufacturing through measures such as the enhancement of construction and infrastructure equipment scheme to promote domestic manufacturing of high-value and technologically advanced equipment.

The proposed infrastructure risk guarantee fund and the development of dedicated freight corridors, 20 new national waterways and 7 high-speed rail corridors as growth connectors, an outlay of INR 5,000 crores per city economic region over 5 years has been proposed to support infrastructure development in Tier 2 and Tier 3 cities through a reform and result-linked financing framework alongside incentives for municipal bond issuance and continued support of the AMRUT scheme.

These initiatives are expected to accelerate project execution, strengthen logistics, and drive sustained demand for the company. With our enhanced capacities and execution readiness, the company remains well positioned to capitalize on these opportunities, and we are optimistic about our medium- to long-term growth prospects. Also, we expect our top line to remain flattish during the current year with improved margin profile as compared to the last year.

With this, I would like to open the call for question-and-answer session. Thank you.

The first question is from the line of Garvit Goyal from Serene Alpha.

My question is more on the industry side. What are you seeing in terms of the competition from the Chinese players? Are you seeing any kind of increase in their intensity in terms of more imports from China in the crane category?

We are specifically talking about the crane category?

Yes, sir. More construction equipment and import?

See, Chinese players are reasonably aggressive. There is no denying the fact, and before going on to cranes, let me just brief you a little on the excavator market. Although, we are not present there, I'm talking of the tracked excavators. In the last 5 years, they've taken up 20%, 25% market in India on account of their predictive pricing and the credit terms and all they offer.

So yes, they are reasonably aggressive in terms of their pricing and their positioning strategy with respect to credit. Often, they keep it so attractive and lucrative that customers get attracted.

Coming on to the cranes. See, obviously, the pick and carry cranes and, let's say, less than 30, 35 tons capacity, India is self-sufficient, and we produce more or less all the cranes in India, and we are the market leaders there. We face no problem from any Chinese company or any competition.

With respect to the bigger cranes, the truck cranes and the crawler cranes, yes, Chinese have been very aggressive in the last, I would say, 5, 7, 8 years, and with their pricing, again, predated pricing and credit terms, so when the Indian infrastructure is growing, Indian manufacturing, let's say, the infrastructure construction market was growing.

The crawler crane and the truck crane market manufactured in India remains subdued only on account of that the Chinese players were dumping at low prices at very aggressive credit terms.

Not out of ways to mention that 4, 5 of the companies which were in the larger crane segments also shut shop in the last 4, 5 years, whether it was Tata Hitachi, they stopped making crawler cranes the last 5, 10 years, TIL was in some sort of financial problem.

Tadano in a joint venture in India did not start to produce even though they developed the cranes in India. Kobelco stopped taking the bigger cranes. We only have a pricing problem from the Chinese and there's another one ABG Cranes.

Looking at all this and because we were also in the bigger crane segment or heavy crane segment, we had applied for filed for protection or what you can say, study in Ministry of Commerce and a proper DGTR, General Trade Remedies proper assessment happened, and it was a public trial, you can say, and it lasted nearly 1, 1.5 years. Finally, duty was recommended on the Chinese cranes in the month of September. Unfortunately, for some good-bad reason, it has not been notified by the Finance Ministry.

Obviously, Finance Ministry was totally busy with their budget in the last 1, 1.5 months. We have been trying to seek time from them as to the reason why it has not happened or any additional information or anything is required.

Although, there is a very clear order from Ministry of Commerce, DGTR specifying the entire proceeding, which is public knowledge, it can be seen anyway. That is the situation what it is today that the antidumping duties, which were the DGTR findings and ruling is there, but they have not been notified by the government, which would have happened in December.

In your opening remarks, it seems like industry environment is improving, right? Yes.

Considering both the cases, the industry environment is improving on the other side, the Chinese competition is rising. How do you see the growth outlook maybe in FY '27 and FY '28? Because we are having the capacity with us, right? What do you think about growth are you looking?

I've understood your question, you are mixing 2 things. With respect to our core business of mobile cranes of construction equipment that we manufacture in India, we have hardly any competition from Chinese. With respect to a particular segment of that business, which is heavy cranes, cranes bigger than 30, 40 tons, there is competition. As it is, we are small in that segment because the Chinese have captured it over the last so many years.

We were trying to increase the manufacturing capacity capability of our company and our country by getting that order. We really do not face any problem or competition from China or

Chinese aggression with respect to our core business. There is no problem there. Everything is fine. We are expecting growth there. Yes, last 1, 1.5 years was slow, especially after the election results were a little not as per expectation.

Luckily, we were saved because of prebuying happening of BS III last year, I'm talking of last financial year. This year was slow because a lot of prebuying had happened, some extended monsoon, overall geopolitical plus, Mr. Trump and tariff sentiment. We were expecting some telehandler execution to happen from the government order, which got delayed. This is beyond our control.

With the market last 8, 9 months, 10 months, we were able to not really increase our revenue, but now things seem to be on track. The sentiment is very much there, and we are market leaders in our core segments. We do not face any threat, any competition from the Chinese manufacturers with respect to our core business. We expect that we should be in positive territory year-on-year in this quarter and going forward in the next year.

With respect to the ramp-up, I just want to understand. Right now, what is our peak revenue capacity that we have? How fast do you think we can reach close to that number?

See, our current capacity is upwards of INR5,000 crores. I think a little tweak here and there, it can go to INR5,500 crores to INR6,000 crores. We are at a revenue level of close to around INR3,300 crores, INR3,400 crores as of now. What we feel and what we have thought and planned that by FY '29 or latest by FY '30, we should be somewhere between INR6,000 crores to INR7,000 crores.

Like I said, we already have a capacity of close to INR5,500 crores. We are doing close to about INR3,400 crores plus/minus. Yes, we have capacity available for the next 1 or 2 years of growth, maybe more. As and when we see the opportunity that -- or the need to increase capacity, we will immediately work on it. We have got ample land available. In the current year, we bought land. In the last year, we bought land.

Now we have enough land, whether in Indore, whether in Faridabad for our future expansion.

Hopefully, we can do it very quickly as and when required. Yes, I do not see any foreseeable expansion in the next 1 year apart from a lot of modernization and automation, which we are focusing on.

Yes, in saying this, I would just like to say that with respect to tower cranes, we have envisaged increase in capacity. Maybe in the next year, we will try and start to expand that, expand our capacity by setting up a new plant for tower cranes. That will be totally based on the momentum we see in the market and then accordingly we start to increase our capacity.

Yes. Can you expand a bit on your defense as well as export capability or what you have in mind on both these spheres?

Yes. See, both of them combined together, we feel that we can easily do a 15% type of revenue, defense as well as export business put together, maybe a 10% contribution coming from export on an increased base as well and a 4%, 5% coming from defense.

In the last year, we did close to 2% in defense. In the current year, again, we would be somewhere around 2% on the defense business, but in saying this, I would just like to say that currently, we have orders of approximately INR500 crores in hand, which have to be executed. Because of certain procedural delays, they did not go into execution and we start to go into execution now very soon.

What I can say that for the next year, we already have around INR500 crores or INR550 crores of orders. To put it in percentage of next year's growth, I mean, our defense revenue can go up to 8%, 10% in the next year, but it will not happen because obviously, it will be phased out or with respect to delivery. We expect that next year, we can go up to 4%, 5% contribution from defense, at least about 4%.

Going to exports, last year, we did 4% contribution from exports. This year, we are looking at somewhere around 6% to 7%, more towards 7%. In the current year, 7% exports and 2% defense will make it about 9% contribution to our business. Currently, 9%, so next year, we can be pretty confident it will be somewhere upwards of 10%. Our plan was 10% to 15%. The first benchmark, hopefully, we should be reaching in FY '27.

In this budget, there was some -- this incentive or something to be given for your construction equipment and all those things. Can you expand on that?

Yes. The Finance Minister did mention a call CIE scheme, that is Construction and Infrastructure Equipment scheme. To the best of our knowledge, because we have attended certain meetings in Ministry of Heavy Industry with respect to this and to the best of our knowledge.

This is a PLI scheme, wherein for the first time, focus is being given to construction and infrastructure equipment in India and especially to those equipment where our country relies mainly on imports of equipment or where the percentage of the demand fulfillment in India is more from imports, even if it is made in India, but let's say, still good quantities are being imported. That's the focus.

To indigenize or to do that in India, whatever is getting imported into the country. Obviously, most of it is from our neighbouring country only because of the price and policy. Here, this will be a proper PLI scheme with the incentives based on attaining revenues turnovers. FY '25 revenues and investments would become the benchmark.

FY '25 revenues will form a part of the added investments that would be required in the scheme -- sorry, FY '25 investments would be considered while becoming eligible for the scheme.

Hopefully, it should be out in the next 2, 3, 4 months, maybe it can be a favor in the absence of the antidumping duty order, which we were expecting.

This new scheme that is to be come in 3, 4 months or something, will this be for newer products or for your existing products?

This is mainly for categories where our country is importing more than manufacturing in India or totally based on where products are totally being imported. If you look at it like that, crawler cranes and truck cranes will get included in this.

Basically, import substitution based on import substitution?

Yes. The heavier cranes, where we were expecting antidumping duty in all probability should get included in this, apart from categories like piling rigs, reach trackers, aerial work platforms, which are hardly being manufactured in our country, plus a lot of other machinery, road machinery, construction equipment, smaller and bigger dumpers, smaller excavators, really big mining excavators, tunnel boring machines, ropeways, a lot of other things, which the country is really not producing in.

Tunnel boring is specifically mentioned in the budget. That's what I see.

Tunnel boring is how the entire process started because China stopped our machines.

Now these things, you are capable of manufacturing or you require some kind of expertise for manufacturing such things?

A couple of truck crane, crawler cranes, we are already there and a couple of other machinery categories, which are coming under the scheme. As it is envisaging and we have the capability to design and to manufacture that in India.

The next question is from the line of Rochan Charan from Global Consilient Research.

My question is with regards to your margins on product-wise. Construction equipment on a quarterly basis has seen a lower growth as compared to the agricultural equipment, right? I just wanted to know out of these two, which one has a higher margin?

Construction equipment is definitely has a higher margin. Agri, we are struggling as a matter of fact, especially in the last quarter.

Do you expect any increase, like further growth, how much has been happened in this quarter in the agricultural equipment to continue?

First, we are focused on construction equipment or agri? Agricultural.

I'll talk of both. See, construction equipment, this quarter, we are already at close to about 20% EBIT level, which I think is one of the best in the country and maybe in the world as well. I think we are touching our peak. Obviously, with numbers of our construction equipment and certain other type of equipment increasing going forward in the next 1 or 2 or 3 years, more operating leverage will kick in, and we will have the flexibility to either further increase these margins or pass on these benefits to the customers that we will decide in due course of time because I think at 18%, 20%, construction equipment business is at the right level of profitability.

Going to the agri equipment, yes, we were close to about 4%, 4.5% here and there generally at EBIT level, but due to certain provisioning and whatever, which Mr. Luthra can explain. Our profitability has gone down to about a percentage there in this last quarter, which I'm sure will bounce back. Yes, from there from 4%, 5%, our endeavor and target is that, that needs to go to at least 12% to 15% level so that it comes to some sort of a sensible margin profile over the years to come, and then we are definitely working towards it.

The next question is from the line of Vijay Pandey from Nuvama.

I have a couple of questions. First is, in terms of the guidance, our guidance is slight growth or is it flat growth for FY '26 for full-year? Does it include volume or is it on value terms?

Current year, I think we will be flat, flat to positive, but yes, flat. That is what I can tell you. It is in value terms. In volume terms, definitely some decline, but I'm sure we'll more than make up for it in the next year.

Secondly, in terms of the PLI scheme. What is our expectation on which of the products will it and where we have the capability to supply it?

There is a PLI scheme, we would be focused on crawler cranes and truck cranes for sure and maybe some bigger rough terrain crane. Apart from container reach stackers, and piling rigs and maybe some aerial platforms because recently, we had started to do some aerial platforms. Till date, we have not done any piling rigs or any reach stackers, but yes, we want to enter that line.

We have not manufactured any filing rigs in India. We only do trading.

Truck cranes and crawler cranes, we've already been doing. I believe these 4, 5 products is what we will be focusing on if the PLI scheme comes. Obviously, if we are eligible for that, whatever the conditions the government of India will lay down for that, yes.

The next question is from the line of Aditya from Old Bridge Mutual Fund.

My first question is on the volumes part. We saw in the construction and crane segment volume dropped by 23%, but is that the case similar degrowth we have seen in tower cranes?

Not really. I think tower cranes has reasonably held up. Yes, for a couple of months in between, we saw a 10%, 15% dip on a year-on-year basis on a monthly level. I would say that tower cranes has more or less held up with respect to its numbers. It was more to do with mobile cranes and especially because of a lot of -- in quarter 3, quarter 4 last year, there was a lot of prebuying.

That was the main reason which contributed to this issue.

If I may ask, what would be the volumes you would have done in tower cranes this year as compared to last year?

See, in the first 9 months, we have already done close to about 500 machines, a little here and there. Last year, we did a little upwards of or close to 650 tower cranes. This year, we've already done 500 cranes. By the end of the year, we should be somewhere close to 680 to 700 cranes.

That is an 8%, 9% increase over last year.

if you look at the smaller, the self-erecting tower cranes, there, again, we did 161 units last year.

We've already done 113 in this year. Here again, we would be, let's say, 4, 5 percentage more than last year. Tower cranes closer to about 800 last year. This year, it will be closer to 900.

What would be our capacity in tower cranes?

In the fixed tower cranes, our capacity is 800, 900 units. Once we do 700 cranes this year, so we will be touching close to about 80% capacity. That is also one of the main reasons which I mentioned that in the next year, we will try and expand our capacity for tower cranes. Because our current capacity is 800-900, we are doing a small rejig so that our capacity comes closer to maybe 1,100 units, which can suffice for next year requirement. That is also one of the main reasons that we might envisage. We already planned for expanding our capacity in tower cranes in the next year, setting up a new facility.

My second question is on the realizations part. In the agricultural equipment, we have seen significant jump in realization both Y-o-Y and Q-on-Q. We are reaching almost INR9,90,000 per unit in agriculture, so what's driving this?

I will take the question. This is mainly because of the increase in the harvesters. Harvesters, now we have become #2 in the country and average selling price of the harvester is somewhere about INR21 lakh to INR2 lakh. We had a very significant growth in the harvester this current year.

This has led to the increase in average realization in the agri department.

In the agricultural volumes of 900, how much would we have sold harvesters? Harvesters, we have done around 410. This is for the quarter? For 9 months. 9 months then what is total agri for 9 months?

Total agri and tractors, we have done slightly, 1,600 Tractor, is 471.

We have done 2,000 units, I think, in agricultural equipment in 9 months. Out of that, we are saying 400 units are harvesters, right? Yes. Then around 1,600 units are tractors. Then around.

Just to understand the harvester market a bit better. If you say, we are the second largest player, how big would that market be? What is our market share there?

Our market share, the biggest is now the class, which has now been sold to Yanmar. The market will be somewhere about -- our market share will be around 30%.

Aditya, I'd just like to add one more thing. Here, we are talking about harvesters, we are only talking about track harvesters. We are not talking about the wheel harvester, which is manufactured in Punjab. We are talking about a very niche segment of track harvesters.

The market I told you, only track harvesters.

One last question is on gross margins. We have been posting really healthy gross margins of 32% to 34% range, probably more on 33% from the last 5 quarters to say. Earlier, we used to do anywhere around 29%, 30%. The jump of the delta that we have got of 2% to 3%, what would be the major reason driving it consistently? How sustainable is it going ahead?

Yes, I think it is a combination of 4, 5 things. Obviously, gross margin is a combination of sales price your material cost and obviously, the manufacturing expenses. With our cost efficiencies, which we are building in and automation and productivity improvement and our continuous focus on maintaining, ensuring and increasing our sales price and our input cost in terms of raw material. It is a combination of that. On all fronts, we have been gaining something, and that is what we have been -- it's reflecting in our gross margin.

I think going forward, it should be sustainable because there is a reasonable amount of pricing power and the market today understands that, yes, if the commodities go up here and down, especially steel, and which we have demonstrated in the last 7, 8 years that as and when there is a drastic increase in any input cost, it can be passed on to the market with a lag of 3- 4 months.

I think gross margin profile should be sustainable. Going forward, with the operating leverage playing in because we already have capacities up to INR5,500 crores, which I mentioned. Further with increase in operating leverage going forward in FY '27 and FY '28, we will get an opportunity to further increase it, I believe, but that would not be our endeavor. Our endeavor would be that we get a better contribution from our agri business and improve it in the other way, not by increasing it further in the construction equipment of crane segment.

Just I want to add the market -- because of the product mix also because market is moving towards telematics and what we have done, which nobody has done. That is also giving good margins.

There's something more I would just like to add that with the BS V, CEV V, and very recently, in the last 2, 3 months again, we have, in our cranes, introduced certain added features, AI-based features, safety and other features or different types of platforms, flexless transmission, which is the first in the country for pick and carry cranes or a single chassis crane where safety is enhanced.

Plus, we have really focused on operator comfort. We are one of the first companies in India.

Rather, I would say, one of the first in India and maybe in the world with our ACE.Live app and telematics. It's not that we get some information on the machine, on the customer or our dashboards or different devices, we can talk with the machine and pass on some instructions and

some controls and parameters from our cell phones or tablets or laptops onto the machine, and some extended safety features, which we have added.

Obviously, the market is willing to pay a price for all these advanced features. We believe that not only a better price, which is definitely one of the agendas of every company to maintain and sustain profitability, but these value-added features, which we are giving, whether on safety or whether on innovation or whether on the controls of the machine, in the next 6 months to 1 year or 1.5 years are going to be very instrumental in determining our future growth within the crane segment and other products in the country.

We are very hopeful that whatever we have done is more or less the first time it has been done in the world on pick and carry cranes and it is going to reap good results going forward. Already, we are seeing the change in product mix happening in the last 6 months to 1 year. This will, I think, work really to the benefit of the company in times to come in the next 1 year itself.

We are able to distinguish ourselves from any other manufacturers with respect to the offerings that we have. Today, our new generation cranes, we can very proudly say, have become fail-safe cranes. Basically, unless you actually want to turn off some system and have some accident with the crane, you cannot do it. You'll be protected from doing it. The operator skill level or, let's say, the safety conscience of the operator, that report can be generated by the machine learning that is going in through the data capturing, which is happening.

The next question is from the line of Pankaj Tibrewal from IKIGAI Asset Managers.

Firstly, when you talked about the longer-term vision of '29 and '30 and you talked about INR6,500 crores to INR7,000 crores. In your thought process, how does the things add up?

Because we believe that there's a large opportunity on the earthmoving equipment side, Backhoe especially where JCB is a very large player, which is today market share-wise. When you look at the overall next 3 years, how does the things add up from different pieces and export also? If you can dwell on a little bit of more detail, it will be helpful.

See, we have been fluctuating between 8,000 to 10,000 cranes. I would say 7,000 to 10,000 cranes in the last 2, 3 years, if we going a little down in the last 1 or 2 years. I feel that if you put all the pieces together, how we will reach that revenue.

Over the next 3, 4 years, this about 9,000, 10,000 cranes will definitely go to 14,000, 15,000 cranes for us, not only organically, but also with respect to some incremental market share, which we will get because of a lot of good work, hard work and better features which we have introduced in the market in the last 6 months, 1 year, which we are very sure of, and we are seeing a traction already.

With respect to our construction equipment, which has backhoe and some road machinery, we feel from the current numbers, that will easily double up from here or maybe more than that.

Tower cranes, we again feel will more than double up from here. Material handling will more than double up from here. Exports and defense. Defense, we are seeing doubling up 100% in the next year on an increased base. Exports is increasing steadily.

Apart from that, there are some inorganic opportunities which are there with us, which we are pursuing. If everything goes well, obviously, in due course, it will become public knowledge.

All of that put together, I think reaching INR6,000 crores to INR7,000 crores kind of scenario over the next 3 to 4 years should not be difficult unless something major was to happen in the world economy or Indian economy.

This all growth will be funded internally, right? There is no need for an external capital, either a debt or an equity raise to be happening, right?

We are a debt-free company. Last year, we were able to bring ourselves to a 0 working capital scenario in our final balance sheet, although in the middle of the year. We are very hopeful by the end of this year, again, we'll be able to bring ourselves to a 0 working capital. Plus, we don't have any debt, plus we have, I think, close to -- Luthra, you can correct me if I'm wrong, about INR1,200 crores on our books available to be deployed anyway.

In doing all of this, and we already have, like I said, capacity to go to INR5,500 crores and we will be close INR3,400 crores, INR3,500 crores right now. Obviously, once we are increasing our revenue, more profits will flow in. I don't think we should need any type of debt or any type of thing to double ourselves or even more than that, including some acquisitions.

Last but not the final question, any color on the ground level reality because as an industry, you are the first company to feel the slowdown or the excitement.

We are definitely improving. There's been a lot of traction December onwards. It took us by surprise. I think now, especially with the European FTA deal, just the sentiment obviously how much it will take shape, when it will take shape, but sentiment matters more than anything else.

There was already positivity in the air and in the business on ground in December. It continued into January, then the EU thing happened.

Now I think with the U.S., whatever swing of height has happened and a good budget with respect to manufacturing and focus on infrastructure. I think things will start to build up from here, hopefully, and we should also be playing along. I just hope that the 25%, 30% growth scenario comes back as soon as possible because it will be 1 or 2 years, and we are also feeling wasted.

That always is a part of the cycle. Good to hear that the ground reality has started to change for good.

The next question is from the line of Mudit Bhandari from IIFL Capital.

My question is upon the margin. If I look at Q-on-Q, 2Q FY '26 to 3Q, our crane or equipment division realization, average selling price slightly decreased on a blended basis, even then our margin has expanded. Which product is driving that or how that is being done?

Luthra sir, were you able to figure out the question? Our selling price has decreased across which product category?

Across our non-agricultural product, total construction equipment segment on a blended basis.

Our price realization has increased, not decreased. I think it has increased.

Whatever data you're looking at is wrong, our price realization has only increased.

Because in most of products selling price has increased.

If I calculate reported revenues by reported volume figures, so it's a blended realization.

There's a definite increase across all product categories, all product categories, non-agri in the last 9 months.

Which product has led to our margin improvement in this quarter?

The current quarter, I think it's more to do with the product mix, because what is happening, new generation cranes are becoming more popular than the traditional hydra cranes. In that, again, the higher tonnage cranes are becoming more popular. Tower crane again, is on a growth this thing. I think especially bigger pick and carry cranes, the new generation type and some tower cranes, that's further helping us in our margin profile.

If I look at current improved selling price, is this now accepted by customers post the changing norms of CEV?

Now that acceptability is very much in place. We struggled in quarter 1 and to some extent in quarter 2 on account of price acceptability. Now I think it is 9 months down the line, 10 months down the line. Now it has totally flown into customers. That is also one of the reasons that we've been able to improve our numbers in December, and we are very confident of this quarter because the price has flown down and acceptability is totally there in the market. It has been 8 - 10 months.

If, let's say, we get tower cranes, crawler cranes and truck cranes in FY '27 or so, then that will be an increased realization of increased selling price to our pick and carry crane or how is the difference in our selling price within these?

All the cranes are very different. Pick carry cranes, the price range is anywhere between INR 15 lakhs, INR 16 lakhs to INR 30 lakhs, INR 40 lakhs, INR 45 lakhs. Truck cranes and all crawler cranes, start at INR 80 lakh, INR 85 lakhs and go up INR 2 crores INR 2.5 crores INR 3 crores depending on models. Most popular, I would say, in the range of INR 1.4 crores, INR 1.3 crores average. They are totally different types of machines.

Yes, there is the issue of price realization in the truck cranes and crawler cranes. That is the reason our market penetration is small because the Chinese are dumping at very low predatory pricing. Hopefully, with the antidumping duty, if at all they come or going forward with the CIE scheme, which the government wants to PLI scheme. I'm sure somewhere it will have some

compensatory effect or benefit wherein we will be able to sell more machines as compared to what we are doing today.

Lastly, I think we mentioned we have a capacity of 400 truck and crawler cranes. Is that right?

Yes. We have capacity of about 400, we are doing close to 50-60, We were very hopeful that antidumping duty will come, and we will be able to utilize that capacity in the next 2, 3 years.

Unfortunately, it has not come. Now we are very hopeful that the PLI will come and we will be able to utilize at least 60%, 70%, 80% of that capacity. Let's see, let's keep our fingers crossed.

In any case, we had mentioned earlier that our KATO joint venture will be there in place.

Hopefully, we should be in a position to announce something very shortly wherein that joint venture definitive agreement shall happen and it will become operative. That will also help us in utilizing this capacity.

The next question is from the line of Mihir Manohar from Trust Mutual Fund.

Sir, Manufacturing, logistic and infra, mostly contributes to the 75-80% business. I mean when I see the EPC order book building factories, across all EPC business, the buildings and factories manufacturing order books are quite strong. I understand there is an increase in price which has happened, but I mean given the underlying demand which is strong, why did the volume growth not pick up? Should we see a material improvement from here given the fact that at least for EPC company, expected order book has picked up quite sharply?

Our execution and our orders have also picked up. Vyom, I think parts of the question, I was not able to figure out. Were you able to figure out because of the doubled in this thing?

What I could figure out is that I think there is some manufacturing uptick in the economy, and they want us to reflect upon that on our business.

Broadly, I mean, when I see the manufacturing order book across EPC companies, infra as well as building and factories, that order book has picked up quite sharply across last 1, 1.5 years.

However, I agree that there has been a price increase which has been there for us because of the new norms, but the volume growth has not been there. Now given the fact that such high order books are there for EPC companies, should we expect much better volumes for us? 100%. Even though order books were there, but the payments for EPC companies were lagging.

That is also one of the reasons that they were going a little slower. Now everything seems to be have sorted the price increase and the acceptance with respect to the emission norm changes that has happened. EPC companies, the order books are there. Fresh orders are also coming in at a good rate now. Let's say, the payment problem is sort of getting solved with liquidity being addressed here and there by the government.

Manufacturing sector, again, things seem to have picked up and a very clear indication for that is price of steel going up. I believe that all things are now coming back together in the right thing. That's why we are seeing increase in our own execution, our own order booking and

execution, which we have felt definitely in the month of December as well as continuing well into January and February.

The next question is from the line of Sidharth Srikumar from iThought PMS.

My question is what would be the volume for backhoe loaders in Q3?

In Q3, it should be close to about 200 numbers, approximately. I think it is the construction equipment will be put together close to 450 units.

How do you see this product category in the future, let's say, over a 5-year period?

I think that we are doing close to about 800, 900 units average in this category. It can easily be at least 3x to 4x of what it is now, I would say 3x. We are already feeling it in our domestic market in the last 1 or 2 quarters, yes, for the last 3, 4 months, the entire construction equipment market was down about 20%, 25% in volume. That was a drag.

We feel that even in the coming year from this 800, 900 units, we should easily go to 1,300, 1,200 units, that's a 30%, 40% increase. Over the next 5 years, maybe a 3x is what it seems things are. We are also getting a lot of good traction in the export market for this product.

We believe that whatever numbers we will be able to increase in the domestic market, similar numbers, we should be able to increase in the export market also. Things seem to be panning out as of now as we speak.

One related question I have is, from a product perspective, do you actually earn a higher margin or the same margin from this product compared to the cranes?

As compared to cranes, the margin would be slightly less because of our numbers. yes, as soon as our numbers start to hit more than 1,300, 1,400 units annually, we feel the margin profile for this product as well as cranes would be similar.

The next question is from the line of Kunal Tokas from FVC.

Just two quick questions. First is, can you tell me the share of cranes to the top line and specifically tower cranes?

Share of cranes to the top line. Tower cranes is generally around 10%, 12% to our top line. This quarter it was 10%, 11% or 12%. I think Mr. Luthra can do a quick calculation and send it over to you. In the entire cranes segment?

Cranes, generally for us is around Luthra, sir, do we have a figure for all cranes put together to our top line? We will send that number, sir.

Generally, it's about 60%, 65% Mr. Luthra will send it to you.

The second question is in backhoe loaders, which you say can be grown 3x in 5 years easily.

JCB is the leader. I assume that you have already tried to dismantle the leaders. What has been the challenge in doing that?

Yes, we have deciphered everything. We know the issues. Obviously, we can discuss in detail.

We have all the plan and why we are not able to do it or even other manufacturers why they are not able to increase the numbers. We definitely have understanding of those facts, and we are working very hard on them. We are hopeful that we should be able to break away the shackles very soon.

I was asking this question because I would assume that you would be more cost competitive with them, right? It has to be some other factors.

Yes. Our pricing is much better than JCB. Machine is very similar, but the issue is that over the years, what has happened that today, JCB as a company is really not selling their backhoe loaders, but all the NBFCs are selling their backhoe loaders. Because for them in a resale value perspective, or, let's say, a default perspective of their past experience in the last 15, 20 years, they feel JCB is the safest product.

Even JCB bull is the finance companies or the down the line officials to a certain level that if any of the individual person posted by NBFC in a particular area, if he funds any other machine, he gets blacklisted by the JCB network, they don't give them business.

A lot of things are happening. It's basically the NBFCs and finance companies are selling the JCB machine. It is become some kind of a self-fulfilling type of a property that it is happening automatically. Then we've understood that. We're working on it. Very soon, I think we should be able to break that cycle also.

It's not that those finance companies are not funding our machines. Somehow, they are in the trap of unknownly, they keep on funding. What they also do is that some neutral customer comes their way, they indirectly push it to JCB rather than thinking of any other machine. I'm sure it will happen. Nothing can sustain forever. I'm sure we'll figure out something.

Just to add to this, for the 9 months as per the ICEMA figures for earthmoving equipment, the market has contracted, the domestic market has contracted by almost 10%, whereas we have tried to remain flattish or grown a little bit. That clearly indicates that we have grown a fraction of our market share as well.

That is very miniscule room at the current juncture. I'm sure with all the right things that we have been doing and even currently, we are focused on, and I can very proudly say that our latest machine, which we introduced along with CEV V is one of the best machines in the world with respect to performance and reliability apart from aesthetics.

The next question is from the line of Pratik Kulkarni from KoSh Wealth Management.

I just had one question and correct me if I'm wrong. In the recent budget, there was a mention of some custom duties on the custom bond zones where foreign companies can grind their parts and machines that assemble and then sell it to -- they can sell it to Indian contractors, but they will be only -- the duty only be levied on the imported parts and not on the finished machine. Is my understanding right? If this does happen, could this reduce the gap between our total cost of ownership and the foreign players' total cost of ownership for the contractors?

First of all, on basic understanding, what I just heard from, I don't think this will make any difference, whether it is custom bonded or not because finally, custom duty is always paid only on the imported part. If it is assembled in a custom bonded or duty is paid first, the only difference would be the duty being paid when it is imported or duty being paid with a delay of 3, 4 months. Financially, that is the only difference. Luthra, is there any such thing? That is his main question.

I don't think so. The only benefit the government has given that the duty can be paid for a reputed manufacturers like us not on a 15 days, but on a monthly basis. Now whatever we import, we will have to pay duty on a monthly basis. If you keep the machines in the bonded warehouse, duty has to be paid when you remove the metal from the bonded warehouse, probably nobody wants to keep inventory unless somebody wants to have a lot of inventories in the warehouse.

Bonded warehouse is still there, Mr. Luthra, which is currently also applicable? Right now also its applicable.

What you saying, 15 days, 1 month, we can pay duty. This is AEO. We already have this approval.

We already have. Earlier, it was 15 days. Now we can pay duty on a monthly basis. On the 1st of every month, we can pay duty for all imports during the month.

We can calculate whatever is duty and pay once rather than paying it every time or every 15 days.

It is paid on a monthly basis at the end of the month.

The next question is from the line of Rajeev Maheshwari from Raj Investments.

I have a couple of questions. First is, has the government totally gone back on this electric cranes because it's long back, it was showcased in the exhibition, but still no update as such on that. Can you just throw a light on that?

Yes. No, I think they did come back with some regulations 4, 5 months back, which have been approved, but unfortunately, the approvals required from CMV are again, ARAI approval. There was some issue with the Exide batteries and all. Vyom, any update when is it getting finished?

The batteries have gone to ARAI on the test bench, and we are expecting their approval within this month or maybe next.

Within this quarter, the electric cranes will become ready for commercial sale Correct, sir.

They will be ready this quarter. Regarding the electric vehicles, will it help us to gain market in the EU and the U.S. after the trade deal, the new electric cranes and the newer version of the cranes, which we recently launched?

To be very frank with you, currently, we do not export anything to the EU or America, and that was never in our scope of things also. In the last 4, 5 years, 3, 4 years, we've actually started exporting to Middle East Asia, Africa, some South America and a little bit in Southeast Asia and some Central Asia.

Definitely, going forward in the years to come, we will be exporting these electric cranes and not only these electric cranes. Today, our emission norms are the best in the world, Tier 5.

Europe is Tier 5. America and Japan is Tier 4.

Yes, going forward in the years to come, not only electric, but even the Indian diesel engines, everything is going to go to the developed part of the world in the next 2, 3 years because first, our focus is on Middle East, Africa, South America, which we can penetrate easily.

The second part is regarding our defense order pipeline, it's a long time, none of the announcement has come on any big defense orders. Is this the government has gone slow or something is going up in the pipeline, which may be announced in the coming months?

There is an order of close to about 150 machines. They are called heavy recovery vehicles, which we are expecting any time. Each machine is approximately INR1 crore. First, it's 54 and then it's 90. am I speaking right, Luthra? That's how it this?

Joint tie-up with Ashok Leyland, HRV. This we will be announcing shortly. Even as of now, we have orders close to around INR500 crores available for execution. Within this year, we'll be executing further INR30 crores, INR40 crores. Let's say, we will be entering the new year with about INR460 crores, INR470 crores worth of orders. We are very hopeful that in the next year, we will execute about INR150 crores, INR200 crores worth of orders. That should increase make it about a 5%, 4% contribution from defense. We hope to maintain that 5%, 6% level going forward.

If I listen correctly, in your opening remarks or in some of the questions, you have mentioned about some acquisition of land in Indore. Am I correct? Was it Indore or some other places?

Yes. In Indore as well as Faridabad, Palwal, yes.

Faridabad, makes sense, but in Indore, any plan of setting up a new plant? Or what exactly is the rationale behind this?

The rationale was to rationalize on the outward logistic cost because Madhya Pradesh, Indore is, we believe, more or less like more closer to Central India. Dispatch of machines we realized to

South and West would be more economical from Indore. On a larger number of machines, this could lead to significant outward logistics.

Obviously, in Indore, there is a good enough base for -- to further diversify our input supply, the auxiliary industry base, as well as to benefit on the outward logistics. Especially, the port infrastructure. This was the main consideration why we also looked at Indore going forward.

By when can we decide on the framework of setting up that plant or now you have just planned to take the land and in due course, we will plan that?

Yes. Right now, we plan to take the land and it is being developed for commercial use because the land is under development. Hopefully, we will get possession for use in the next 1 year. We can expect something over there in the next 2 to 3 years.

Currently, first of all, we will be developing our tower crane plant on our -- this new piece of land, which we have bought in Palwal. We have bought 2 pieces. One is about 22 acres. The other which we are about to get possession is about 86 acres.

First, we will be developing the 22 acres in Palwal. We will have 86 acres in Palwal available for future expansion and this 30 acres in Indore for future expansion. We thought to lock in land at good prices because land prices in the last 2, 3 years have been increasing at a very significant pace. We ensure that we do not make a lot of capex on cost of land. That's why we locked in these lands.

Maybe you got at a competitive rate and that since fund was available out there.

Already doubled. This INR250 crores worth of land is already INR500 crores. By the time we are setting up factories INR600 crores, INR700 crores.

You have already doubled your money in a couple of maybe years or...

The company's money, but in any case, the purpose is not to sell them. The future expansion will come at a higher cost.

One quick update of the January sales, how much percentage is the January sales compared to last month? It's definitely higher.

The next question is from the line of Jenil Barad from Prudent Corporate.

Can you sort of give me the year-on-year growth of the subsegments in the non-agri segment such as cranes, what has the growth been for cranes, construction equipment and the material handling segment and the sort of direction for the next year on how you see the growth in these segment?

If you look at our segment results, so in the cranes and metal handling and let's say, the construction equipment, on a quarter-on-quarter basis, we've been able to grow at about 10% on

a revenue basis. Yes, as compared to -- on a year-on-year basis in this quarter, there was a 4% lower growth, negative growth.

On a whole year basis, I think it is going to be more or less flattish even in this segment as conveyed earlier. That is to maybe a minor positive. That is how it is. Next year, we are sure that there should be good growth. in both our segments, but yes, we are only able to put a number to it only in the next conference call, which will happen.

I was asking about volume growth in these three subsegments in the quarter. Can you give us a brief or an approximate number?

I think it will be better if Mr. Luthra send it across on the e-mail. Mr. Luthra, do you have this data, which you can just… We can send e-mail to him.

Please send us an e-mail. We'll immediately respond on that.

The next question is from the line of from an Himanshu from Individual Investor.

My question is regarding some of the new growth areas the company is entering into in terms of exports, defense orders and heavy cranes. Will these businesses continue to follow the current asset-light build-to-order model that has supported high asset turnover historically? Or do we expect higher asset base for all these incremental businesses?

We have always been asset-light and especially our ratio to asset to turnover ratio has been very good. We will totally keep that in mind in whatever we are doing.

The next question is from the line of Param, an Individual Investor.

Firstly, post transitioning to the BS V norms, what kind of EBITDA margins can we expect in FY '27 and FY '28 on a steady-state basis?

I think what we have been achieving in the recent quarters should be our benchmark for, let's say, the next year after that, maybe close to about, let's say, 18%, 19% if we include other income and close to about 15% plus/minus without other income.

Secondly, could you elaborate more about the AI integration in your cranes? How difficult it is for other players to sort of replicate the same?

Replication of the same should not be possible because the new 4-odd features which we have introduced in our machines, we have patented them before we introduced it on the machine. The technology and the procedure that has been used to make it function. In case, if any competition tries to get close to it or copy it, then obviously, we'll have to use our patents to stop them. What these do is they basically make the crane fail safe.

The operator can only do safe operations, and even if he does some unsafe operation, it will brought to a safety zone automatically. Whatever unsafe acts an operator is doing are being

recorded, so the operator grading, whether he's actually a capable operator or not, that also gets generated. It's a mix of a lot of things. Most importantly, that it will be very difficult for anybody to do an unsafe operation or put the safety in jeopardy.

Apart from that, there are a couple of other things, the first clutchless transmission. I'm sure this should gain a lot of traction with operator's because the operating cranes will be very easy, less tiresome, less cumbersome. Again, keeping in mind safety, as I mentioned, the first rigid chases, single chases crane, because there is no articulation, so the crane is much more safer than any other conventional pick and carry crane. All these things put together, I'm sure, we are moving in the right direction.

As that was the last question for the day, I would now hand the conference over to the management for closing comments. Over to you, sir.

Yes. Thank you. I think has discussed and going forward, we expect stability and visibility in the markets post the EU and U.S. trade deals and our own government's focus on infrastructure and manufacturing. I think this augurs very well for our future prospects. We expect that with our capacities and capabilities in place, going forward, our growth trajectory should get back on track soon, and then we are looking forward to it. I think that's it from our side. Thanks a lot.

Thank you. On behalf of Emkay Global Financial Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.