Key takeaways of the call

Fiscal year 2018-19 was an unusual year for the company. For the first time in the history of the company the H2 revenue was lower than H1. H2 usually accounts for 55-60% of the sales of the company.

Sale for FY19 was up by 24% to Rs 1342.49 crore facilitated by higher sales from all business divisions of the company. While the segment revenue of cranes was up by 29% to Rs 964.29 crore, that of construction equipment, material handling and Agri Equipment have registered a growth of 12%, 17% and 10% respectively to Rs 80.19 crore, Rs 94.38 crore and Rs 203.63 crore.

EBIT for FY19 was up by 9% with segment profit of CE down by 42% to Rs 2 crore. The segment revenue of cranes was up by just 8% to Rs 89.24 crore despite higher sales was largely due to fall in segment margin. The segment profit of ME and AE was up by 18% and 45% respectively to Rs 11.5 crore and Rs 6.8 crore facilitated by both higher sales and higher margin.

The company has effected a price increase of 3% in Jan 2019 to offset the increase in RM cost especially the price of steel.

On conservative basis, the company expects a sales growth of 10% for FY20 and EBITDA margin of 9-9.5% and PAT margin was 5%.

The company expects about 9-10% of FY20 sales to come from exports.

The order booking started to slowdown in mid Jan 2019 and continued that momentum in Feb and March as well.

All of the customers of the company (i.e. construction companies big and small across all verticals infra projects and buildings) are flush with orders. But despite requirement they become conservative and bought only minimum number of equipment. The customers require the equipment

For the company the 85% of revenue comes from equipment and 15% agri.

Sale in April 2019 was ok and that of May 2019 as of now is slow. The company expects to better the Q4FY19 performance in Q1FY20.

Capacity expansion is in place and ready with incremental demand if comes.

Preference share remain to be paid as end of March 2019 was Rs 6 crore and that was also repaid in April 2019.

RM cost went up by 12% in FY19 and the cumulative price increase in FY19 was about 7-8%. So a differential of just about 1-1.5% is still pending after considering recent cooling of steel price.

The company has taken a price increase of 1% in April 2019 in tractors. So for this segment the gap is just fractional or nil. For non-agri equipments the company will consider a price increase to completely offset the RM cost rise in Q2FY20.

The company lost a sale to the tune of Rs 30 crore due to glitch in RDO software in obtaining temporary registration for transportation of CE and tractors by road. This sale of Rs 30 crore shifted to Q1FY20. Unfortunately majority composition of this lost sale is tractors and that badly hurt the sales figure of agri equipment in Q4FY19.

Next 1-1.5 year the company is not looking at no significant capacity expansion for any of the products of the company. The capex for the year will be Rs 10-15% crore largely towards maintenance capex.

In Q4FY19 the company clocked a sales volume of 1440 number in case of pick ‘n' carry cranes; 11 numbers of tower cranes; 523 numbers of tractors, 115 numbers of backhoe loaders, 126 numbers of rotavators.