Key takeaways of the conference call

Income for Q1FY12 was higher by 66% to Rs 216.67 crore and the EBITDA was up by 44% to Rs 18.17 crore with EBITDA margin contract to 8.4% compared to 9.6% in the corresponding previous period. The net profit was higher by 40% to Rs 11.16 crore.

Expects, a revenue growth of about 40-45% and a bottom-line growth of about 60-70% for current fiscal.

Sales volume for Q1FY12

The company expects sharp growth in all its products segment.

With RM and staff cost exerting pressure on margin, the company has already effected 1-2.5% price hike and the company is pushing for another 2-2.5% price hike across the board. The company has already started raising the prices to the extent of 2-2.5%.

Targeted to reduce cost to the tune of 2-3% and the material cost is expected to start declining starting August 2011. The company expects at least about 2-2.5% reduction in material cost. This is expected to boost the margin along with second round of price hike which is already under implementation.

Infrastructure accounts only for 55-60% of the company's sales with 30% coming from heavy engineering and other industries such as steel, cement etc and the balance 10% from agriculture. On client type about 60% of the revenue is from end users and balance 40% from rental and leasing companies.

Even though large construction company reporting stagnation the medium size construction companies with a turnover of Rs 300-500 crore are growing and they are the one who are expanding their equipment base.

Similarly in hirer segment the company's sales are very little to large players such as Sanghvi Movers and ABG but there are about 25 such small/medium players in each city/town and they are the key customers for the company.

The company is targeting to acquire one company each in China and India. While the targeted Chinese company manufactures similar product but with better technology and lower cost the company could leverage on. The company is not a bigger player but with good presence in China as well as Africa. The Chinese company is in the process of forming a new company and transferring all assets and inventories barring debt. And expect the process to complete by Jan 2012 and the company will acquire the newly formed company so as to avoid any legal obligations. The company proposes to pick up about 80% stake initially at a cost of Rs 30-40 crore and balance 20% in 3 years. The Indian company operates in a niche segment and facilitates the company to enter into a new product line in the same segment. Currently the company is the market leader in its product segment. Since the company is privately held and hardly has service network struggles to keep its position and grow. The target company currently has a PBT margin of 15-16% and is debt free. ACE will pick up about 65-70% stake at a cost of about Rs 50-60 crore. The price is still under negotiation.

Tax rate for this year will be some where around 25%. Now the company's R&D has been eligible for tax breaks.

Tractor sale of the company is primarily for agriculture end users and the non agri sales will account only 10-15% of the company's tractor volume.

Carrying strong inventory for last 4 months and that will ease starting end Sep 2011.

Normally if interest rate hardens there will be shift in demand from end-user to hirer segment rather than reduction in demand.

The company has wide range of products when the competitors are on select segment. The company is market leader with a share of 90% and 60% in mobile cranes and tower cranes. The company is currently having a market share of 17% in Forklift and planning to increase it to 25% given superior product offering compared to Voltas and Godrej, the competitors in the 3500 unit forklift market. The company is currently a small player in backhoe loaders and is a new manufacturing entrant in crawler cranes. Telecon currently makes about 30 crawler cranes a year. The motor graders are dominated by Caterpillar and Komatsu.