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Action Construction Equipment held a conference call on Feb 7, 2011. In the conference call the company was represented by Sorabh Agarwal, Wholetime Director, Rajan Luthra, Financial Advisor and B V Bansal, CFO.
Key takeaways of the conference call
Q3FY11 is the biggest quarter for the company. Even the sales was robust the margin could be better but for escalation in material cost.
| Product wise sales & unit realisation |
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| Product |
Sales (in nos) |
Realisation (in Rs lakh) |
Sales (E) for FY11 (in nos) |
| Pick 'n' Carry Crane |
1064 |
8.65 |
4000 |
| Mobile Tower Crane |
54 |
14 |
210 |
| Fixed Tower Crane |
28 |
47 |
100 |
| Backhoe Loaders |
69 |
12.9 |
300 |
| Fork Lift |
169 |
6.2 |
600 |
| Crawler Cranes |
8 |
104 |
18 |
| Tractors |
955 |
3.17 |
3600 |
| Rollers |
25 |
15.25 |
100 |
| Motor Graders |
8 |
39 |
25 |
Demand is robust and thus a q-o-q growth of 15-20% is possible.
The company expects a revenue growth of 40% plus and a bottomline growth of 50-60% in FY12. The EBITDA is expected to be 11-12% for next fiscal.
The company has more orders for mobile cranes than capacity. The delivery schedule is 2-3 months for the crane orders. Against a demand for 575 cranes per month the company could deliver only 400 cranes, thus loosing out the volume to other players.
To address the capacity constraint issue the company is expanding the cranes capacity. The first unit of Uttaranchal unit has commenced operation and the second phase is to commence operation soon. The first phase which is expected to stabilize by March 2011 will take the capacity from current 380-400 cranes/ month to 500-550/month and the completion of second phase to 700-750 crane/ month by March 2012. With new capacity on stream the market share of the company for mobile cranes to go up to 80% from current 55%.
Sales volume of tractors is expected about 6000-7000 in FY12. Currently the company sells tractors in entire state of Haryana, and part of UP and Rajasthan. The company will now start selling in some parts of Punjab and MP. The company wants to deep penetrate in these states.
Currently the tractor capacity is 6000 tractors per year and it can be stretched upto 7000 units with out any capex so there is no capacity constraint as far as tractors are concerned. The company has planned to augment the capacity to 12000 units at a cost of 25 crore.
The company has effected a price hike of 3-4% during the current quarter and the benefits of it to kick-in in next fiscal. Apart from material cost the other costs have also increased by 0.25%-0.5% and thus the cost control measures will also be focused on in next fiscal.
Capex – the company has already spent about Rs 20 crore and for FY12 the capex is expected to be about Rs 25 crore especially for expanding tractor capacity.
Inventory days are 60 days and that of debtors days are 35 days.
ACE Steel Fab, a 100% promoter company which is supplying to ACE will be merged with the company soon.
As far as mobile cranes are concerned the company trails Escorts construction Equipment in markets such as Kerala, Orissa, Surat, Raipur-Chhatisgar, Hyderabad etc. With new capacity coming up the company will improve its presence in this markets.
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