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Action Construction Equipment held a conference call on Nov 15, 2011. In the conference call the company was represented by Sorabh Agarwal, Wholetime Director and the top management of the company.
Key takeaways of conference call
Sales for FY12 is expected to grow by 25-35% compared to earlier guided 40%. PAT was expected to grew by 20-25%. The company expected to maintain a EBITDA margin of 9-9.5% and PBT margin of 7.5% for the current fiscal.
| Product |
Sales (in Nos.) |
Average unit Realisation (in Rs lakh) |
Volume for |
| FY12 (E) |
|
Q2FY12 |
Q2FY11 |
Change (%) |
Q2FY12 |
Q2FY11 |
Change (%) |
in nos. |
| Pick 'n' Carry |
983 |
971 |
1 |
8.95 |
8.6 |
4 |
4300 |
| Mobile Tower Crane |
63 |
46 |
37 |
14.6 |
13.9 |
5 |
270 |
| Fixed Tower Crane |
54 |
24 |
125 |
49.75 |
52 |
-4 |
160 |
| Backhoe Loaders |
110 |
61 |
80 |
14 |
13 |
8 |
500-600 |
| Fork Lifts |
208 |
140 |
49 |
6.8 |
6.2 |
10 |
800-850 |
| Crawler Cranes |
8 |
2 |
300 |
128 |
140 |
-9 |
30 |
| Tractors |
721 |
695 |
4 |
3.7 |
3.2 |
16 |
4500 |
| Roller |
20 |
29 |
-31 |
14.6 |
15.5 |
-6 |
100 |
| Motor Graders |
2 |
3 |
-33 |
40.5 |
39.2 |
3 |
25-30 |
Pick ‘n' Carry cranes volume for current fiscal was reduced to 4300 plus units compared to 4800 units guided earlier.
Tractor volume of about 1200-1300 units is expected for Q3FY12.
Market seems to be not so buoyant and clients are not finlising orders or taking delivery of orders already placed. Slowdown in demand in Q2FY12 was due to monsoon effect and Noida land litigation issue which bogged down realestate construction. October volumes were up on year on year basis but the pace of growth has moderated. However even with the October sales volume didn't show sharp growth there by igniting concern and thus the company has reduced its guidance.
The company has increased the price by 2-3% across the board effective Sep-Oct 2011. The company has also lowered the material cost to the extent of 2%. The fuller impact of the same will get reflected in Q3FY12 only.
Currently the capacity for cranes is 700 nos a month and the company is doing about 300 nos a month. Since most of the cost are variable in nature than fixed, the profits will not be impacted much on account of lower utilisation.
The company is going slow on its tower crane capacity augmentation project at Faridabad with slowdown in the market. However other capacity expansion projects were completed.
Cost of debt is up by 2% and average cost of debt is about 7%.
Pressure on Working Capital Cycles is on account of inventory buildup (about a rise of Rs 20-25 crore) and tightened receivables. The WC cycles will come down by Dec 2011.
Prime movers is sourced from Simsons, Kirloskars, Cummins and Ashok Leyland. The price of the engines have moved up with compliance to BSIII from BS II. This has escalated the pressure on margin.
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