Action Construction Equipment Ltd

NSE:ACE

Q1-2026 Earnings Call

[Operator]

Ladies and gentlemen, good day, and welcome to the Action Construction Equipment Limited Q1 FY '26 Earnings Conference Call hosted by Avendus Spark. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Ravi Swaminathan from Avendus Spark. Thank you, and over to you.

[Ravi Swaminathan, analyst]

Good afternoon, everyone. On behalf of Avendus Spark, we are pleased to invite you to the Q1 FY '26 Earnings Conference Call of Action Construction Equipment Limited.

I would like to welcome the management and thank them for the opportunity. We have with us today Mr. Sorab Agarwal, Executive Director; Mr. Rajan Luthra, the CFO; and Mr. Vyom Agarwal, the President from Action Construction Equipment Management.

I shall now hand over the conference to Mr. Sorab Agarwal, Executive Director of Action Construction Equipment. Thank you, and over to you, sir.

[Sorab Agarwal, executive]

Thank you, Ravi. Good evening, and welcome, everyone to this earnings conference call for discussing the results for quarter ended June '25. Along with me in today's earnings con call, we have our CFO, Mr. Rajan Luthra, and our President, Mr. Vyom Agarwal. The company's financial statements and the earnings presentation summarizing the performance of quarter 1 FY '26 has been circulated and uploaded on the stock exchanges, and I will take you through some of the key highlights of our performance in the quarter gone by.

As anticipated in our previous quarterly commentary, the current financial year began on a subdued note. This was primarily driven by the implementation of CEV Stage V emission norms and enhanced safety certification requirements, which have aligned our industry with global benchmarks. These regulatory changes have led to a consequential price increase of 7% to 12% across majority categories of products.

Additionally, the Indo-Pak border tensions and surveilling global uncertainties have further weakened customer sentiment towards capital investments. The situation was compounded by prebuying of equipment in quarter 3 and quarter 4 of the previous fiscal year, along with the early onset of monsoon, all of which contributed to a muted demand in the quarter under review.

Amidst the challenging operating environment as stated above, the company delivered a resilient performance during the quarter, and we were able to achieve targeted margin profile. We continue to focus on improving product security, while fortifying our balance sheet and distribution strength to reinforce our competitive position. In the last few years, we have delivered high growth across our business segments, and our operating metrics are best in the industry now.

Now to brief you on financial performance of quarter 1 FY '26 on a stand-alone basis. Our total income stood at INR 703 crores, which is lower by 7.63% as compared to the same quarter last year. Despite the challenges, our margin profile expanded by almost 300 basis points and the EBITDA for the quarter increased by more than 13.6% to INR 142.55 crores as against INR 125.5 crores. The EBITDA for the quarter stood at 20.28%. The PBT grew by 13.66% to INR 126.64 crores, and the PAT grew by 15.67% to INR 96.83 crores as compared to INR 83.71 crores for last year's corresponding quarter.

The PBT and PAT margins now stand at 18.02% and 13.77% expanding by 338 basis points and 277 basis points, respectively, for the quarter on a stand-alone basis. Margin expansion for the company was driven by our cost efficiencies, soft commodity prices and price increase that we had affected in the last quarter on account of general inflation and implementation of revised emission and safety norms, coupled with increase in other income of the company. It is important to note that the first half of the year typically contributes around 40% to 45% to our annual revenues, with the second half generally being stronger as market conditions stabilize.

In H2 of last year, we saw a surge in demand, driven by anticipated purchases ahead of the transition to new emission norms, resulting in liquidation of older inventory within quarter 1 of FY '26. Looking ahead, we expect market activity to normalize from quarter 2 onwards.

Moving on to segmental performance. In the Cranes, Construction Equipment and Metal Handling segment during the quarter gone by, we registered consolidated revenue of INR 605.43 crores as compared to INR 690 crores in quarter 1 FY '25. However, the margin expanded to INR 107.83 crores as compared to INR 103.76 crores, which leads to an expansion by 279 basis points for the division. The agri revenue increased by 8.26% on a year-on-year basis to INR 46.51 crores as compared to INR 42.96 crores.

Going forward, with retreating monsoons, early festive season, better liquidity and consumer credit availability, we expect the demand momentum to improve across our product range. Looking ahead, the macroeconomic fundamentals of the Indian economy remain resilient despite global headwinds marked by geopolitical tensions. Evolving trade policy dynamics and heightened uncertainty and volatility in the operating environment, lower inflation, reduction in interest rates and liquidity support by RBI coupled with tax cuts announced in the recent Union Budget are expected to support growth in the coming quarters.

Cranes and construction equipment and metal handling business has done well in the recent time, and is poised well for further growth with government's trust on attaining sustainable growth in manufacturing and focus on infrastructure projects. There has been short-term turbulence, but the demand for construction machinery is expected to normalize post monsoons, and we expect the medium- to long-term growth momentum to continue. However, we will communicate our guidance post the monsoons depending on the overall macroeconomic scenario, settlement of geopolitical issues and the festive season sales trend.

Further, with our capacity built up and process optimization in place, we remain optimistic about the medium- to long-term prospects of the company and remain committed to deliver our sustained agenda of growth.

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

[Operator]

[Operator Instructions] The first question is from the line of Punit Jhaveri from Jhaveri & Company.

[Unknown Analyst]

Just wanted to understand, in this quarter, you mentioned that there were some new emission norms, and that's the reason why a lot of prebuy happened in quarter 3 and quarter 4. So currently, has that continued in quarter 2? Or do you see that demand has come in between July and August? I know you can't give any numbers, but the conversation with the customer, has that already happened that you are seeing that the demand is back to a certain level compared to the second half of last year?

[Sorab Agarwal, executive]

Yes. Quarter 1 was a dampener because of the price increase. And obviously, the technology change, especially from BS III to BS V. So a lot of customers, especially for machines having engines smaller than 50 horsepower are very skeptical about the electronic engine going straight from mechanical to electronic. And that seems to have settled. Even the price increase seems to have settled in now with a reasonable number of deliveries for BS III to BS VI compliant machines, which has happened. So things seem to be stabilizing there.

And yes, the inquiry level, I would say, especially in the last 10, 15 days, 20 days started to normalize a little. Yes. The only thing is this is more or less peak rain time happening and the rains start to recede post August 15. So that's when things really start to improve. And by middle of September, they are more or less normal. That has been the normal trend over all the years in the past. So yes, things are looking a little better.

[Unknown Analyst]

And sir, is the expectation that quarter 2 will largely be flat compared to the same time last year?

[Sorab Agarwal, executive]

Yes, I think so. It has always been like that generally. And looking at the current scenario, coupled with global uncertainties and a general sentiment, so it should be flattish, maybe slightly more, but the best time to comment would be with respect to quarter 2 would be, I think, another one month down the line.

[Unknown Analyst]

Also, sir, could you give us...

[Sorab Agarwal, executive]

The action would have started to happen.

[Unknown Analyst]

Right, right, right. And sir, could you give us some picture on your exports currently. I think in this quarter, you sold roughly 2,337 cranes, construction equipment and material handling equipment. So out of that, it's not a direct number, could you give us what was the export revenue in this quarter? And how is it shaping up?

[Sorab Agarwal, executive]

Yes. I think the export revenue in the current quarter was close to around INR 27 crores, and it is shaping up well. So in terms of what our expectation for the whole year for export, last year, we had gone down to 4% of -- to our total revenue contribution. And this year, it appears that it can easily go up to 6% to 7%. And so that is for exports. And like we've always said, coupled with defense. So 3% to 4% for defense and this year, 6% to 7% for export. So let's say about a 10% contribution can come from both of these put together. And like when we did in the past, our medium-term target was about 10% to 15% from these 2 segments put together. So hopefully, we should be making a 10% mark this year.

[Unknown Analyst]

Got it, sir. And in terms of margins as well as your exports currently at similar margins to domestic because the domestic margins -- your overall margins have actually now hit a life high, I think, at over 20%. So how should we look at margins for the export? Is it similar generally because it's a little higher than domestic, but for you specifically, if you can give us some color?

[Sorab Agarwal, executive]

Yes. See, definitely, the export margins are slightly better than the domestic margins. And this 20%, there has been a reasonable contribution in this quarter from the other income. So I think I believe that they should stabilize our overall margins somewhere around 16% to 17%.

[Unknown Analyst]

And sir, final question in terms of both defense as well as your -- one of your -- you had a Ghana project as well. So if you can give us some update on that. For defense, I think you mentioned in your presentation as well that you've gotten a single order. How much of that is already executed up until now, if you can give us some update?

And when will you -- when do you expect this to fully finish? Would it be in the next 2 years? And you also had a Ghana project, I think, sometime last year, but I think it had gotten stuck because of the government there. Is that still on? Or is that now -- does it seem distant to start at least in the near term?

[Sorab Agarwal, executive]

First, I'll answer with respect to Ghana project. I think it is in a limbo as of now. It has been like that for the last 1.5, 2 years. And until such time there is financial clarity, we really don't know how to proceed about it. Although our agreement with the EXIM Bank of India and the 3-party agreement, everything is in place, but the funding has been stopped. So obviously, so as of now, we see no light there.

With respect to defense, yes, we did receive our single largest order. I think it was in the last quarter. And execution stated to start to the quarter 3, but in a small way. So there are a lot of requirements with respect to training and a lot of documentation that needs to be done for this, which is happening. The order is in place, everything is fine. So hopefully, in quarter 3, we'll start executing and it will pick up steam in quarter 4.

So we'll get some contribution within this year from maybe about INR 50 crores, INR 60 crores, INR 70 crores of business we'll be doing out of this order in this year. And most of it will go into the next year. So maybe close to about INR 50 crores into 3. So let's say, about INR 200 crore execution in the next year and whatever the balance will go into the year after that. So about, I would say, INR 50 crores, INR 60 crores in this year, INR 200 crores in the next year and the balance, INR 100 crores plus, whatever will go into the year after that.

[Unknown Analyst]

And sir, have you participated in any more tenders? Or are you expecting any more tenders to come from -- at least from the defense space in the orders that you want to get -- go for in this year? Is that something that you're already doing in quarter 1 and the start of quarter 2?

[Sorab Agarwal, executive]

Yes. But this -- right now the business I'm going to talk about is basically with Ashok Leyland defense because the lot of projects, which are happening integrated on a Tata or a Leyland vehicle. So this particular order we are about to get is again a good order. It's not very big, but I'd say close to about INR 45 crores, INR 50 crores. It's already done. And another one, similar one, another 90-odd machines after this, which would be again close to INR 70 crores, INR 80 crores is on the envelope.

So yes, things are progressing there. In the interim, we are -- I think it's nearly finalized some more 602 model cranes, which we had supplied to Army recently, that is in the pipeline. Very recently, we have executed orders for BRO again for backfill orders. And for motor graders, again, there is this time, one of the biggest requirements they have come out within a single tender. So yes, things are happening. And I foresee this as some sort of a continuous pipeline of around maybe 3% to 4% on a yearly basis to continue.

[Operator]

[Operator Instructions] The next question is from the line of Ritesh Chordia, an individual investor.

[Unknown Attendee]

Sir, in the last quarter, we have taken part in the Bauma Munich exhibition. So do you have any key takeaway, especially with respect to the European or the export market post the exhibition?

[Sorab Agarwal, executive]

Yes, we had participated in Bauma in April. We got very good response. And the main purpose was to showcase our products and especially get dealership distributors and similar partners in different countries or maybe get better ones in the countries we are already operating in. So yes, a long list of possible future dealers, distributors has been drawn up and we're working on it. We have established a couple of new ones. And we have also been able to establish a couple of dealerships within Europe as well especially for our smaller tractor, the orchard tractor, which is very popular there. And I think very soon, again, in the next 2, 3 months, we are going to be participating in, I think, it's called AGRITECHNICA, or whatever, which is especially for agriculture in Europe. We intend to participate there as well.

[Operator]

[Operator Instructions] The next question is from the line of Aman, an individual investor.

[Unknown Attendee]

So my question was about the...

[Sorab Agarwal, executive]

You will have to be a bit louder. You're not audible.

[Unknown Attendee]

Am I audible now?

[Sorab Agarwal, executive]

Yes, yes, much better.

[Unknown Attendee]

Yes, sir. So one of your peers known as Escorts, so they have lost a market share of around 150 basis points -- they gained a market share of around 150 basis point. So like what's happening here. So have you lost any market share in the current segment?

[Sorab Agarwal, executive]

No, not really. I'll explain it to you. See, the Pick-n-Carry cranes consists of two types of cranes. One is a hydra type, the old generation, and the new generation. The split between hydra and new generation is approximately about 55%, 60% for the hydra type, and about 35%, 40% for the new generation type. Within the new generation, the market share between Escorts and our company is similar, we are about 50%, 51% rather. They're close to that 49%, 50%.

And the other type, which is about, I would say, 55%, 60% of the market, the Hydra type, there our market share is 70% plus, I would say, maybe in the range of 70%, 75%. And those are the machines which have majorly gone from BS III to BS V, which have gone that 12%, 13% price increase and not 5%, 6%, 6%, 7% price increase. And those machines primarily go to the retail segment, to the industrial areas, to the rental companies and transporters and handling people working in the industrial areas and manufacturing sectors.

And this is the part of the market which was in some sort of suspended abeyance in the last 2, 3 months, and that's why the numbers have not been so healthy. Because we had more than 70% market share here, and this market shrank the maximum because of CEV V, BS V effect. So that is the reason you are temporarily seeing maybe a 1% or 2% share here and there. By the end of this quarter, everything will normalize. As a matter of fact, we might be slightly a little up probably as soon as these hydra type of cranes, the market normalizes, which has started happening.

[Unknown Attendee]

Absolutely, sir. And the second question I had is on the construction equipment side. What is the outlook for the rest of year? And is [Technical Difficulty]. And we are seeing any government CapEx in the future?

[Sorab Agarwal, executive]

Yes, yes, quite a lot. See, construction equipment and road machinery side of our business, we are hopeful that, that should be able to grow at least 30%, 40% this year. And only 3, 4 days back, Mr. Gadkari, Minister of Road Transport & Highway, he is conveyed the process for releasing orders for roads and all is going to sped up very quickly. So INR 2 lakh crores worth of orders have been released, but INR 7 lakh crores would be released very quickly. And in the next year, he's planning for INR 10 lakh crores. So I think with respect to especially construction equipment and road machine, I think there should be good times ahead.

[Operator]

The next question is from the line of Deepak Ajmera from I.G.E. India.

[Deepak Ajmera, analyst]

On the volume side, since you said Q3 and Q4 was like early buying because of the transition. So this year, we will be looking at like degrowth in volume by the year-end? Or how should we look at it?

[Sorab Agarwal, executive]

I don't think so because the second half is definitely much better for us and all the rains and everything, most of the issues would have been settled, including the BS V. So I don't think we would be looking at volume degrowth or anything. As a matter of fact, there should be contribution with respect to price increase, which has happened coupled with some volume growth. But yes, the exact quantum of what growth we should be looking at for this year, let's say, a reasonably precise number, I think the best time would be end of second quarter to come out with that.

[Deepak Ajmera, analyst]

Got it. And would the absorption at the market means what sort of percentage increase is not impacting the volume? And what's the strategy, how much we are increasing say Q3, Q4...

[Sorab Agarwal, executive]

Deepak, your question was somehow not very clear to me, if you could just repeat it.

[Deepak Ajmera, analyst]

Yes. I'm saying what is our strategy on the price increase and how much we are planning to increase in Q3, say, Q4? And by when we can expect the transition is fully over in terms of price increase?

[Sorab Agarwal, executive]

Transition from our side with respect to price increase started happening in April. And obviously, there are no old stocks left anyway, not even with our dealerships, and they could not have registered post June. So price increase has been pushed, market has come to terms with the price that has been increased because of increased safety requirements and especially the Tier 5 -- the CEV V, BS V emission norms.

And so the effect is already showing somewhat in the last quarter's numbers, which we have released and there'll be more pronounced in the current quarter. And generally, on account of inflation and other expenses increasing, we take a price increase every January. So apart from what we have done in April, I don't see any price increase in December. And the commodity prices also, as of now, remain reasonably under control. So I see no need for pricing, there is a very swift movement in steel or some other major commodity price. I don't foresee any further price increase in the current scenario.

[Operator]

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

[Aditya Kumar, analyst]

Sir, my first question is -- sorry, if I'm repeating the question as I joined the call a bit late. So my first question is on the gross margins, so this quarter, we have seen gross margins expand considerably to 34% kind of a number. Sir, is this all due to the pricing increase that we have taken place?

[Sorab Agarwal, executive]

Yes, it's a mix of a lot of things, but yes, especially price increase and reasonably accommodative commodity prices, all put together. But yes, you can say the major factor is the price increases.

[Aditya Kumar, analyst]

Okay. So how much of this would be sustainable going forward? And where do you see this gross margin stabilizing for the year?

[Sorab Agarwal, executive]

Yes, I think this is totally sustainable. And as we have communicated earlier, so I think around gross margins of anywhere between 33% to 35% should be -- let's say 34% what you mentioned is actually the ball point, plus/minus percentage from there is sustainable.

[Aditya Kumar, analyst]

Okay. Sir, just on that, so with this new engine emission norm change, how much would be the price increase that we have taken in a vehicle? And in commensurate to that, how much would be the cost increase for the particular vehicle that we make?

[Sorab Agarwal, executive]

See, the price increase we have taken from machines, which were below 50-horsepower, so that is BS III to BS V is close to about 12% to 13%. And machines which went from BS IV to BS V is close to about 6% to 7%. And the price increases are accommodative of this approximate gross margin.

[Aditya Kumar, analyst]

Okay. Okay.

[Sorab Agarwal, executive]

Otherwise, we would have just passed on the price increase, our gross margin would have gone down.

[Aditya Kumar, analyst]

And one last thing on tower cranes, so in this quarter, so if we see the overall creams construction equipment segment volumes, volumes were down by 21%, what would be the case for tower cranes if you look at quarter 1 FY '25 last year or over last quarter as well. What would can -- if you can give some volume numbers for the Q1 FY '25, Q4 FY '25?

[Sorab Agarwal, executive]

Tower crane year-on-year, quarter 1 to quarter 1, tower cranes has increased from 144 to 167.

[Aditya Kumar, analyst]

This is year-on-year?

[Vijay Agarwal, executive]

Yes. The real estate side of our business has been holding up. So even when we look at the overall industry, not only our company, but let's say, all other segments of construction equipment wherein we are not present also. For example, earthmoving year-on-year has held up. Material handling, which includes our types of crane, primarily has gone down a little. And owing to that 50 horsepower, the price increasing 12%, 13% and engine from being mechanical straight away going to the high-end electronics, so this is the biggest sufferer.

If you look at material processing type of equipment, again, the volumes have held up. If you look at concrete machinery, concrete pumps, transit mixers, again, the volumes have held up. So I think this is a temporary phenomenon with respect to the price increase, coupled with the prebuying that happened. So like I said, the tower cranes have gone up. And most of the other categories within our -- even if you look at the forklifts, the numbers have gone up by about 10% on a year-on-year. And they were primarily driven by Pick-n-Carry cranes on account of pricing and other factors put together prebuying.

[Operator]

[Operator Instructions] The next question is from the line of Rajiv Maheshwari from Praj Investment.

[Unknown Analyst]

The first update which I want is, it's been almost a year when this Kato JV was formally announced in the stock exchanges. But somehow, the official statement on the finalization has still not come up. So can you just update me on the same?

[Sorab Agarwal, executive]

Yes, it is very much under progress, and we are hopeful that within this quarter or early next quarter, sorry, the agreement would be concluded in totality and work can start. So we are targeting to start work quarter 3.

[Unknown Analyst]

Okay. Another part regarding the Q1 result is, the other income has come up around, I think, INR 50-odd crores. So what exactly is this other income, which has come up in the numbers increasing by -- to INR 50 crores?

[Sorab Agarwal, executive]

Yes. This is more to do with the investments the company has made over the years with accumulated cash. And I think Mr. Luthra would be the right person to shed more light on it.

[Unknown Analyst]

Okay.

[Rajan Luthra, executive]

Sir, you are right. This is the income -- sir, you are right. This is the income generated on the investments, what we have made. We have surplus cash what we generate from a business. We invest into investment and all those things. Do not pump into our working capital and just save it for the future sanctions, so that is one.

[Unknown Analyst]

Okay. Coming to the July '25 sales, can you give me the numbers, how many equipments and machines we have sold in the month of July this year?

[Sorab Agarwal, executive]

I don't think we would be having July data with us right now. Luthra, do you have it?

[Rajan Luthra, executive]

July numbers are, you can say, more or less similar to June numbers. And overall, if we talk about the main -- all put together, I will have to work it out.

[Unknown Analyst]

So basically, this July number -- yes. Please go ahead.

[Sorab Agarwal, executive]

Maybe Mr. Luthra, you can send the numbers to Mr. Rajiv Maheshwari, right?

[Unknown Analyst]

Yes.

[Sorab Agarwal, executive]

Sure.

[Unknown Analyst]

No problem. So the number for July '25 or maybe till 10th of August is the same if we compare to year-on-year July 2024?

[Sorab Agarwal, executive]

Sure, sure. We will send them to you because otherwise, I don't have them in front of me.

[Unknown Analyst]

No, if you can just give me a fair estimate that it's slightly or it's a degrowth or it's a growth, that would serve. Mr. Luthra can send me later on, not an issue.

[Sorab Agarwal, executive]

It should be similar with a slightly negative bias, I'm sure.

[Unknown Analyst]

Okay. Okay. So maybe with a negative bias, it's on the similar level. One thing you told in the beginning of the call is I think 3 of the orders in which we are almost done or on the verge of getting it. One was you told is in tie up with the Ashok Leyland and the other one was some motor grader order and another third one was INR 70 crores to INR 80 crores. So can you throw a light on these orders in a bit detail? And when exactly do we expect to get a formal announcement for the same?

[Sorab Agarwal, executive]

Yes. I think first is with Ashok Leyland, with respect to 54 special machines, which are again for the Army. They are called HRV, which is more or less through. The only thing is, Army wants another 90. And looking at, let's say, the lead time for the components for putting it together, we are not able to confirm the delivery. So it is 54 machines, which is more or less confirmed. And the 90 machine orders, we are hopeful that over the next week, 10 days, we are able to try and -- our people are working on it how to catch up on the delivery part with the Army wants because otherwise, liquidated damages and other things come into play. And yes, there is a tender for motor graders, which has come up. We are very hopeful we'll be in a position to get it. So that's is in the process. These are the three things which were there in...

[Unknown Analyst]

And roughly, what is the value for this?

[Sorab Agarwal, executive]

Apart from that, another 2, 3 things, 4 things are also happening.

[Unknown Analyst]

Okay. So lots of things are there, which are expected to maybe come into the normal domain maybe next month or so. And any organic or inorganic growth, which we are looking currently or any discussions going or we are through all those things as of now?

[Sorab Agarwal, executive]

No, we are looking at inorganic growth. And we are working very actively on some proposals. So hopefully, over the next 1 or 2 quarters as things progress, we would like to update as and when there is something concrete. But definitely, we are looking at some inorganic proposals. And we're also looking at some organic and specialty from white labeling, small ones have started. There was a reasonably big proposal on the anvil with respect to white labeling. But unfortunately, the tariffs have placed quite a sport in the last 10, 15 days.

[Unknown Analyst]

Yes, the Trump tariffs.

[Sorab Agarwal, executive]

Trump tariffs, yes. As of now, there's one very big proposal, which was -- it was a very good thing to happen the way it was shaping up over the last 7, 8 months. And we were nearly there. It was sort of done. But nevertheless, I'm sure it will come back again. But not in a hurry. Until such time, we will wait.

[Unknown Analyst]

So is it still on with the time gap? Or I mean it's off the radar?

[Sorab Agarwal, executive]

No, the discussions were happening. Everything was in place. It has been suspended as of now till such time further clarity.

[Unknown Analyst]

Okay. And one final update. I read in somewhere that the ministry is considering of putting tax on the construction equipment from the Chinese imports and all. I read in somewhere. So is it coming into some discussion or reality? Or is it just a rumor or something like that?

[Sorab Agarwal, executive]

See, finally, I think the Indian government has understood that certain categories of machines and construction equipment are facing very stiff challenge from Chinese pricing -- subsidized pricing is the right word, and India is at a price visibility of 30%, 40%, at least because of the subsidies and the benefits they get in China apart from a 15%, 20% lower commodity pricing for their self consumption within China. So government has been very active on that, and they have been thinking of a lot of tariff and nontariff barriers. This article you're referring to is especially with focus to hydraulic excavators, which are produced by Tata, Hitachi, L&T, Komatsu, Hyundai, plus, plus, in the country and the government is serious on it. And generally, when Mr. Gadkari says something, he follows up on it.

The government is looking at in all directions. One is tariff and nontariff, how it is possible that the indigenous industry can grow faster and bigger. They are also, to some extent, looking at incentivizing the industry as they have incentivized other sectors. But I cannot say any more than that at this juncture, especially with respect to incentivization.

In our own case, last year, we had initiated the DGTR proceedings with respect to antidumping duties on heavier and bigger cranes, which are made in very few numbers in the country or not made. That is also in the process. We were expecting it to finish by June, July. All the final hearing, submissions, everything has happened. So hopefully, that should also see the light of day within August or latest by September.

[Unknown Analyst]

So if these things fall in place in terms of the construction industry as a whole construction equipment, just a minute, just final 30 seconds, and if these things formally happen in terms of the antidumping duty and this, so then it will be a really good boost for the domestic sector as well as our company as a whole in terms of that reduced competition and more realization from the revenues?

[Sorab Agarwal, executive]

Yes, especially with respect to the Chinese machines, where our company faces stiff competition for crawler cranes and truck cranes, and tough competition for tower cranes. Yes, it will be a very good scenario to be in. And over the years, over the next 3, 4, 5 years, it can lead to INR 500 crores to INR 1,000 crores revenue addition only on account of these type of machines. And we're very hopeful all of this will go through.

And if you look at the excavator industry, Chinese entered 5, 7 years back and in 4, 5 years, 6 years, they have taken 25%, 30% market share. So if they are not checked today, they will go to 50%, 60%, and eventually, they will make the Indian excavator industry seek. Just see what they have done in the past to our cell phones or other industries. They take over, they sell at ridiculous prices, ridiculous credit terms. So it is a very good thing to happen that the government at the senior most levels has taken notice of this and are proactively planning for this.

[Unknown Analyst]

Okay. Right. Let's hope this Swadeshi movement takes a leap and it helps everybody. That's all from my side.

[Sorab Agarwal, executive]

It has to. It has to. Thanks to Mr. Trump, it has to.

[Operator]

[Operator Instructions] The next question is from the line of Ravi Swaminathan from Avendus Spark.

[Ravi Swaminathan, analyst]

My question is regarding the growth, which we have seen in the past 5 years had been stupendous, we had tripled our revenue. Over the next 4, 5 years, what are the top 2, 3 sectors that you think might be driving the growth for ACE? And what kind of growth one should think of is the question that I have in my mind.

[Sorab Agarwal, executive]

Obviously, our growth is primarily driven by the manufacturing and the infra sector. And obviously, both of them are of prime importance and concern to the government. So hopefully, we are in safe hands. Now that the government, especially with respect to the current geopolitical scenario and the tariff scenario, the only way for the government to spruce up the sentiment as and when it goes down or starts to dampen a little is to focus more on infrastructure because that is where they can do direct spending. And we anticipate and we are very hopeful that -- and Mr. Gadkari has already said 3, 4 days back that the spending on infrastructure projects is going to increase immediately.

So hopefully, all of that is going to gel well for us going forward in our country with respect to manufacturing and infrastructure because most of our machines are made and developed for this scenario. And the government is definitely focused on the 2047 Viksit Bharat. So that is not possible unless and until self-reliance and manufacturing is increased in the country, coupled with focus on infrastructure and making world-class infrastructure.

One of the major disabilities India has as compared to China is also logistics cost, which is higher than China. So by improving infrastructure, even the logistic cost goes down. Apart from that, yes, our focus on more defense business and export markets will further help us grow a little in times to come. We have been doing that. Yes, this quarter has been a little slow on account of primarily prebuying and the cost factor and the technology factor, but such hiccups are sometimes good. They wake you up, they bring you out of complacency. They check your agility. So I hope all of that happens.

[Ravi Swaminathan, analyst]

Got it, sir. Sir, in private sector, I mean, as of now, it hasn't fully fire, like steel CapEx, et cetera. But if it does, can make a big delta to your top line, bottom line?

[Sorab Agarwal, executive]

Yes, yes, definitely. It will fire. It has to fire. See, you were talking about our growth, so we wanted to triple ourselves between FY '23 and '26. And unfortunately, we have a little slowness we had in the last year on account of elections and this year because of the emission norms or whatever. But I'm sure 1 year here and there, so as conveyed even last time, so maybe it will not happen in 3 years tripling of our revenue, it will happen in 4 years, FY '23 to FY '26. And then we had also thought -- sorry, doubling. And then we had also talked of tripling from FY '23, tripling by FY '28. So maybe things can get preponed, postponed by a year here and there.

But as a country and as a company, I think everything is moving in the right direction. And all our medium-term, long-term things are pointing to growth. And hopefully, we are able to capitalize on that. And in the recent past as well included, we have increased our capacity. We are capable of INR 5,000 crores plus. We did close to INR 3,300 crores. So we have excess capacity available. Apart from that, we are operating at around close to about 100 acres of land. For future growth and expansion, we have taken about 138 acres of land.

So going forward, first of all, we have 30%, 40% extra capacity available to increase our revenue without any CapEx, significant CapEx. And then even for future CapEx after that, we have most of the land available. And land is one of the most costliest resources when you're doing CapEx today. So I think we have put all our blocks in place. Things are looking good. So let's see how it pans out.

[Operator]

The next question is from the line of Vinay Maheshwari from IGE.

[Unknown Analyst]

Can you please elaborate some color over the current CapEx going on? And how could be the commissioning time lines?

[Sorab Agarwal, executive]

See, for our capacity expansion, which we had planned, most of the CapEx has happened and is in place, and our capacity is now -- revenue capacity is about a little over INR 5,000 crores. But apart from that, in the current year, we have envisaged the CapEx of over INR 100 crores with respect to further modernization and upgradation and introducing more robotics, et cetera, into our setup, so that we are able to compete in a global stage with respect to our export markets and also bettering our products and quality for the Indian market. So that's about a little over INR 100 crores.

And apart from that, the lines which I mentioned, we have to make some balance payments for those lines. So that will be close to about INR 130 crores plus/minus outflow that will happen in this year. We did have plans to further increase our capacity for a particular type of product, which currently we have put on hold for the next 3, 4 months. But yes, we are continuing with the land development and the other part of it. I think the major part of that expansion should take shape in the next year. So that expansion is close to about, I think, INR 250 crores to INR 300 crores of CapEx. But yes, most of that will be happening in FY '27 and FY '28.

[Unknown Analyst]

Got it. Is there any particular area where we are facing any kind of bottleneck as of now?

[Sorab Agarwal, executive]

Yes, sir, the market to come back to it same spirits, nothing else, for the markets to bounce back, and I'm sure it will happen because the festival season is a little early. So September onwards, things should be good. With respect to capacity, our readiness, our products, the upgradations within the products, I think we are totally geared up for the future and hope it is good as it has been in the past.

[Unknown Analyst]

Got it. And since you reiterated...

[Operator]

Sorry to interrupt you, sir, I will request you to join back the question to for follow-up questions as there are several participants waiting for their turn. [Operator Instructions] The next question is from the line of Karthik from Multiple Equities.

[Unknown Analyst]

So just wanted to understand one thing. When I look at, say, the Vahan volumes, how do they -- I mean, what would be, say, the time gap between wholesale dispatches and Vahan registrations or they would be fairly one-to-one basis?

[Sorab Agarwal, executive]

I think there is a lag of 1 to 2 months at least, minimum would be 1 month, average put out, you can easily say 45 to 60 days because the goods go, they are delivered, sometimes to the dealerships then to the customer and then the registration application. So the Vahan data is representative, but not of the current factual. It is with a lag of 1.5, 2 months.

[Operator]

The next question is from the line of Kushal Duri, an individual investor.

[Unknown Attendee]

Sir, my question is in relation to the previous one only. So for July, the IPO data showing volumes of some 577 units. So you mean to say that might be higher than what you have described?

[Sorab Agarwal, executive]

See, let's say, July 577, Vahan would mean machines which were delivered to customers in June or within July. So this data is -- because sometimes registration happens immediately, sometimes it happens with a lag of 10, 15 days. Then sometimes at our end, let's say, the delivery to their dealership and their dealership holding some stock for some time. So it is skewed by 1 or 2 months. So very difficult to put a number to it, but maybe next time when we have a con call, we will figure out a correlation for the last 4, 5 months. Maybe that would be helpful to all of you.

[Unknown Attendee]

But on a year-on-year basis, has there been any change in the volume for month of July? Is it lower or same, the volume number?

[Sorab Agarwal, executive]

Luthra, I really don't have the July numbers, but they were similar to June numbers for us because July is the heaviest. The rains are at their -- the fear fest and the peak of rains happened in July. So they were similar to June. But unfortunately, we have numbers from June end reports. We don't have a July number right now.

[Vyom Agarwal, executive]

And Kushal, Vyom this side. I would just like to add a little bit to the Vahan data, I mean, Vahan number which even Karthik also asked. See, there are a certain number of machines, which we manufacture, they do not go on the Vahan data. So for example, tower cranes, they do not get registered. So our numbers will have a little bit of a disparity with respect to the Vahan data. And as sir said, that there will be a lag. So Vahan data may not be the right or, I would say, the exact parameter to look at us because some of the machines, which are not getting registered, are also in our portfolio.

[Sorab Agarwal, executive]

Vahan data would be signifying more of the retail sales, right?

[Vyom Agarwal, executive]

Yes, sir, it will be more or less the registration sales, yes. It will not crawler cranes and tower cranes. And in fact, some of the forklifts, which we do and they are maybe running inside a factory premise, which may or may not be registered.

[Sorab Agarwal, executive]

You know, even for some cranes, people do not take registrations, which are running inside close premises.

[Unknown Attendee]

Okay. And sir, one last query from my side. Any development on the registration of electric cranes?

[Sorab Agarwal, executive]

Yes. I'll take that question, and then we can move on. Yes, development is happening. Our approvals are pending with ARAI, the CMBR authority. I think last stage, some Exide battery approvals with respect to electric vehicles are pending at the end of Exide. So we are hopeful it should get through quickly.

[Operator]

The next question is from the line of Jainin from Prudent Corporate Advisory.

[Unknown Analyst]

So my question was regarding the industry outlook. So there are numerous forecasts or something about the non-agri segment about cranes, construction equipment growing by around mid-single digit to some forecasting by growing it by double digits or so. So what do you think the segments like cranes or construction equipment can grow? Industry, what can the industry growth and what can the company see in its volumes, too?

[Sorab Agarwal, executive]

See, in the beginning of -- I mean, in our last call, being a little conservative, we had projected 14% to 15% of growth. But looking at the current juncture and all the things, I think it would be prudent that we take this call by end of quarter 2 to give a more realistic picture. And it would not be wise to come out with a number at this juncture.

So once there is more clarity on every front, including the BS V emission norms acceptance, which has happened and the numbers will normalize, and the second half of the year will start where the numbers actually start to normalize, the government's focus coming back to infra, all the basic things coming into place. So I think it won't be prudent to give, but yes.

One thing I can tell you for sure. Now let's forget our company for a second, but let's talk about the industry. The earthmoving industry has been flat year-on-year for the first quarter. The road machinery industry has been flat. The concrete carrying or concrete processing, that has increased by about 16%. So that is more of civil structure than real estate plus, plus, plus. The material processing is flat, and cranes were a little down and the main reason was 50 horsepower and below, which is what we have been able to pinpoint at. So I would feel that we would like to answer that only at the end of September when the second quarter has gone by to be able to give you a more predictively correct answer.

[Unknown Analyst]

You said something about construction equipment or some segment growing by around 30% or so. Sorry, if misheard that.

[Sorab Agarwal, executive]

16%, that is a concrete industry. When I say concrete, I'm talking of batching plants, concrete pumps, transit mixers, so the concrete part of the construction equipment industry has grown by about 16% in the last quarter year-on-year.

[Operator]

The next question is from the line of Punit Jhaveri from Jhaveri & Company.

[Unknown Analyst]

Just one question. You mentioned that, of course, the guidance will come at the end of Q2, so we'll wait for that. But your previous plan was for double revenues to roughly about INR 4,400 crores in FY '26 and INR 5,500 crores in FY '27. But given your capacity is roughly about of INR 5,000 crores revenue, when should we expect the additional, if any, capacity that we will need because by FY '27, you will be very close to almost 95% utilization. So is the INR 100 crore CapEx number of this year including that? Or do you believe we have to do a lot more CapEx either at the end of this year or the start of next year to get to additional revenue capacity of INR 5,500 crores and above. That's the only question.

[Sorab Agarwal, executive]

Yes. For the first part of your question, so hopefully, there's INR 4,400 crores instead of FY '26 should happen by FY '27, which I had clarified even in the last call. Tripling from our FY '23 revenue taking it to INR 6,600 crores would happen by FY '29. So that means we have enough capacity till FY '27, that is end of next year, end of next financial year. But in any case, in the next year, we will start to expand our capacity, which I did mention, making a new plant for a particular type of products and traits, which will give us an additional revenue of maybe around close to INR 1,500 crores plus/minus. But that will start to do next year.

Earlier, we were thinking of starting to do it in the second half of this year, but we'll start to do it next year. Once there's more certainty because today, already, we have INR 5,000 crores worth of capacity. And generally for us, keeping the land part, which we have more or less acquired. So let's say, INR 100 crore investment can generate about INR 800 crores to INR 900 crores worth of revenue for us. Right, Vyom? That is how it was hoped? Vyom, you are there? I think we've lost Vyom. So about INR 100 crores CapEx can lead to INR 800 crores.

[Vyom Agarwal, executive]

Yes sir, you are right on that.

[Sorab Agarwal, executive]

So our CapEx to revenue capability is about 8, 9x, which we will start to exercise in the next year again looking at the scenario.

[Unknown Analyst]

Got it, sir. But so essentially, because you mentioned that you're at least about 14% to 15% growth this year, and of course, you'll revise it. So I just saw that you were a little conservative because you've already done INR 3,400 crores of revenue in FY '25 and 15% growth would be INR 4,000 crores. So the guidance of INR 4,400 crores by FY '27 just seems very conservative because we should be able to touch INR 5,000 crores at a minimal growth rate as well, right? So that's where the question was coming from. But thanks so much for the clarification.

[Sorab Agarwal, executive]

Yes. So things are a little different from what they were perceived. So keeping everything in mind, but you can be rest assured we will leave no stone unturned in terms of doing a more revenue. And losing it out on account of CapEx or capacity, I think we are very well geared for that in our minds, and we will deploy our money as soon as possible as fast as possible as soon as the opportunity is there. So I mean you should be very comfortable from that aspect. And we have enough effort to make sure that we don't lose out on the market share or the growth potential.

[Operator]

Ladies and gentlemen, as there are no further questions, I now hand the conference over to Mr. Ravi Swaminathan for closing comments.

[Ravi Swaminathan, analyst]

Thanks a lot, everyone. On behalf of Avendus Spark, we will conclude today's call. We thank you all for joining us, and you may disconnect your lines. Thank you.

[Sorab Agarwal, executive]

Thank you, everybody.

[Rajan Luthra, executive]

Thanks a lot. Bye-bye.

[Vyom Agarwal, executive]

Thank you. Thank you, everyone.

[Ravi Swaminathan, analyst]

Thank you, sir. Bye.

[Operator]

Ladies and gentlemen, on behalf of Avendus Spark and Action Construction Equipment Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.