Ladies and gentlemen, good day and welcome to the Action Construction Equipment Limited Q4 FY2025 earnings conference call hosted by Anand Rathi Shares and Stock Brokers Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Santoshi Ellapoo from Anand Rathi Shares and Stock Brokers Limited. Thank you, and over to you, sir.
Good afternoon, everyone. On behalf of Anand Rathi Institutional Equities, we are pleased to invite you to Q4 FY2025 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. Saurabh Agarwal, Executive Director, Rajan Muthra, CFO, and Vikas Agarwal, the President from Action Construction Equipment management. I shall now hand over the conference over to Mr. Sorab Agarwal, Executive Director of Action Construction Equipment. Thank you, and over to you, sir.
Yeah, good afternoon and welcome everyone to this earnings conference call for the fourth quarter year-ended March 2025. Along with me in today's earnings con call, we have our CFO, Mr. Rajan Luthra, and our Head of Investor Relations, Mr. Vikas Agarwal. I hope you have had an opportunity to look at the company's financial statements and the earnings presentation, which have been circulated and uploaded at the stock exchanges. Last year, FY 2025 has been another year of strong and resilient performance by our company, and we have been able to yet again deliver our best ever quarter with better quality and consistency in earnings while maintaining a strong balance sheet position. Let me take you through to some of the highlights of this fiscal.
To begin with, sorry, to begin with, it gives me immense pleasure to report that on a standalone basis, we have achieved a total income of INR 3,420 crore in this fiscal and recorded our highest ever yearly sales and profits in the year gone by. Our growth of 14.47% is ahead of the industry in our core sectors. Our EBITDA margin for the year expanded by 148 basis points to 17.52% from 16.04% last year, and PBT expanded by 138 basis points to 15.88%, and PAT increased by 83 basis points to 11.8%. In absolute terms, EBITDA grew by 25% to INR 599 crore, as against INR 479 crore in the preceding year. We were able to increase our PBT by 25% from INR 433 crore in FY 2024 to INR 743 crore in FY 2025.
Similarly, our PAT also increased from INR 328 crore to INR 404 crore, thereby registering a growth upwards of 23% in the last financial year. To brief you on the financial performance of the fourth quarter of the last financial year on a standalone basis, total income stood at INR 967 crore, 67.55 crore for the quarter, which is up 7.16% sequentially and grew by 12.98% on year-on-year basis. The EBITDA for the quarter stood at INR 171.26 crore, whereas the PBT and PAT stood at around INR 160 crore and INR 118 crore, respectively. Our company was able to sustain expanded margin profile, and the EBITDA margins stood at 17.7%. The PBT and PAT margins also expanded to 16.59% and 12.24%, respectively. The strong margin profile was led by better realizations, favorable product mix, along with efficient cost control measures.
We continue to be long-term debt-free with sufficient availability of liquidity for future growth. The Board of Directors has recommended a final dividend of 100%, that is, INR 2 per share for the year ended March 31, 2025. Now, moving on to the segmental business performance, we have strengthened our role as a market leader in the industry, and with our consistent efforts on a standalone basis, we have scaled our crane, material handling, and construction group business to over INR 3,090 crore in the fiscal gone by, and this segment has registered a growth of 15.55%. The growth was both in value and volume terms. Our numbers for crane, material handling, and construction equipment have increased by 14.75% from 11,643 in FY 2024 to 13,360 in FY 2025.
In this segment, we have been able to grow our profits by 35.36% to INR 564 crore with a margin expansion of 18.26% versus 15.58% for the last year. The agri division registered revenue of around INR 230 crore with margins at 3.73%. Further, in the quarter gone by, we were awarded our company's single largest order till date to deliver 1,121 rough terrain forklifts, telehandlers, with attachments and accompanying accessories at a total value of INR 420 crore to Indian Armed Forces. The third order marks a pivotal step towards modernizing India's defense infrastructure and empowering indigenous manufacturing. Our relentless innovation and commitment towards developing new products empower us to deliver such specialized equipment under the government's Atma Nirbhar and Make in India initiatives. We are confident that going forward, supplies to the defense will contribute to around 5% of our revenue in the medium to long term.
Our strategic position in the core sectors of infrastructure, construction, manufacturing, logistics, and agri will provide necessary impetus to our growth trajectory. It is crucial for us to highlight that our organization's revenue is robustly supported by all the core sectors. Manufacturing and logistics contribute approximately 45% to our revenue, while agriculture accounts for 7%-8%. Real estate makes up around 12%-13%, and construction and infrastructure sectors represent the remaining 35%. The balanced revenue distribution is an outcome of our strategic efforts over the last five, six years to steer the company towards countercyclical domains. In the past year, we have successfully completed our capital expenditure as planned, expanding our capacities. Our crane capacity now stands at 13,200 units, while the material handling and construction equipment capacities are at 2,700 units and 1,800 units, respectively.
Our blended capacity utilization for cranes, material handling, and construction equipment stands at around 70%. Going forward, we plan to further enhance our operational capabilities with modernization and automation, aiming to boost our capabilities and market competitiveness. In line with our focus on product improvements, we have successfully upgraded our products to meet the revised CEV-5 emission norms and the new safety norms as per AIS 160 phase 2, which have come into effect. This transition is not only about compliance but also about elevating the overall performance and eco-friendliness of our products with focus on safety and operator comfort as well. On the macro front, India continues to stand out as the fastest-growing major economy. Despite prevailing global uncertainties, our GDP is expected to grow at a steady pace of around 6.5%.
This momentum is backed by strong macroeconomic fundamentals, including easing inflation and a supportive stance by the Reserve Bank of India on interest rates. Resilience in domestic consumption, coupled with government-sustained focus on capital expenditure, continues to drive India's economic trajectory. However, external risks remain, such as rising trade barriers, disrupted global supply chains, and ongoing geopolitical tensions. To sustain growth amid these challenges, India must capitalize on its internal strength and remain agile in adapting to the evolving global landscape. With India now standing as the world's fourth-largest economy, we are confident of our nation's potential to evolve into a global sourcing hub for goods as well as services. As we move into FY 2026, we anticipate a subdued start to the year due to geopolitical issues, tariff-related conflicts, and especially the implementation of CEV-5, that is, BS-V emission norms, with price implications for customers.
Nevertheless, we remain cautiously optimistic. For the full fiscal year, we are targeting top-line growth of approximately 14%-15% while maintaining a stable margin profile. We will revisit and refine these projections by the end of the second quarter, depending on how effectively the industry navigates the upcoming challenges. Looking beyond the near term, we are confident of our company's medium to long-term growth prospects. We are steadfast in executing our strategic roadmap, focusing on cost efficiency, disciplined capital allocation, and strategic pricing initiatives to enhance both competitiveness and profitability. Our core strategies are well-defined and robust, enabling sustained growth across all segments, ultimately creating long-term value for our investors and stakeholders. With this, I would like to open the call for the question and answer session. Thank you.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone phone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Garvit Goyal from Nvest Analytics Advisory. Please go ahead.
Hello. Am I audible?
Yes, you are audible, yeah.
Good evening, sir. Congrats for the setup number. My question is on guidance part only. As compared to Q3 concall, when doubling guidance was reaffirmed, can the management clarify this inconsistency in guidance and what has changed now that our growth guidance literally got half than what we were aspiring to do in the event in this case? I agree you have mentioned three, four reasons already, but my point is simple. It is very much evident that most of these reasons were already there when we interacted last time. Despite that, you had shown a decent confidence of doubling FY 2023 revenue in FY 2026. So please let us know what went wrong in these two to three months that suddenly that confidence is vanished now.
Confidence has definitely not vanished. Like I did mention in my speech or address, being cautiously optimistic. We were very hopeful that between FY 2023 and FY 2026, we will double ourselves. I think it appears that we might just fall a little short to the truth. There is no denying the truth. Yes, definitely, if you look at FY 2022 to FY 2025, we have doubled ourselves from INR 1,600 crore that we have done, in excess of double. I am sure if not the third year, definitely somewhere in between the third and the fourth year, we will be able to do that. Yes, we were projecting about approximately a 20% growth, if I am not wrong. Right, Vyom, for the next year?
Yes, sir. We were.
For FY 2023?
Yes.
Yes. Yes, we had projected that this year, current FY2026, would be close to about a 20% plus-minus. Looking at the scenario and the overall momentum, apart from ultimately the rains and the monsoons also setting in a little early, I think it will be prudent to give the right guidance, which is 14%-15% as of now for the current year.
Okay, sir. Secondly, you mentioned in your opening remarks, defense is going to be 5% of our revenue in the medium term. Is it like we are a bit down in terms of execution timeline? I remember, I think sometime back, we have also quoted that exports plus defense cumulatively are going to be 15% of our revenues, right? Can you put some color on that? What is the exact timeline by when we are targeting it? What is the percentage we are targeting here?
Yes. Hopefully, defense alone within this year should be close to 4% or a little over 4% for us in FY2026. Definitely in FY2027, it will be 5% or beyond because this particular order that we have got for INR 420 crore, execution will start sometime in September or October. There are a lot of formalities and trainings and things that have to be done before that. Execution cannot start before that. We will be executing maybe close to INR 80-90 crore plus-minus in this year. The balance will go into the next year. We have a three-year timeline there. Like I said, just in the current year, about 4% from defense can be the contribution to our revenue, apart from another 5%-6% coming from exports.
Both put together, contribution from defense and exports in the current year will be 9%-10%. Yes, our medium-term target is to take it to between 10%-15%. I think we are on track. Yes, we did suffer a little setback in our exports in the year gone by. It has dipped the contribution because one or two of our main markets suffered on account of their own economic growth. Yes, still in the current year, FY2026 will do a 9%-10% exports and defense put together. Hopefully, in the next financial year, we'll be able to take it forward further.
Got it, sir. Sir, we mentioned about the CEV-5 norms, right? What kind of impact are we witnessing? Is it going to be a temporary phenomenon, or are you seeing it will be continuing for the next, let's say, two to three quarters? That is why we are pretty much losing on the revenues in this financial year?
We are talking of the emission norms, BS-III, BS-V, right?
Yes.
I think it is a temporary phenomenon because what has happened, some rebuying has happened in quarter three, and I would say December, and especially in quarter four. Apart from that, let's say about 60% of our product, the pricing has increased by about 12%-13%. The balance 40% has increased by about 5%-6%. The balance 40% is not a problem. That price has easily been adopted by the market. Yes, where the price has gone up by 12%-13%, which is about 60% of our produce. With our experience of what we saw when the industry moved from BS-III to BS-IV with respect to engines bigger than 50 horsepower in 2021, it is a two to three-month settlement period, out of which I feel that April is gone, and we are more or less May is finishing.
Hopefully, the pain should be in this quarter only with respect to the acceptability of the increased pricing. Because what also happens, you have to understand that about 50% of our customers are rental or hiring companies. They also need to renegotiate and work out their rental prices with their end users and customers. It is a little time-consuming. The price increase this time is not 2%, 3%, 4%, but about 12%-13%. Obviously, they need to adjust their rentals by about 12%-13% with the end users. That is the effect in all probability that we are seeing. Hopefully, it is, I would say, a localized phenomenon within this quarter. Generally, Q1 and Q2 are similar. As it is, we do about 55%-60% of our revenue in the second half.
We believe that second half should be much faster this time as compared to the first half.
Are we assuming any degrowth in the first half, or it can be a year-on-year mutated?
The first half, I don't think so. Q1 may be a little bit here and there, but I think it is still a little premature to answer that because we have the whole of June pending. There could be a possibility of a little degrowth, if at all, on a year-on-year basis in Q1.
Here, Garvit, I would just like to add one more thing, that the company is focused very strongly on the bottom line. On year-to-year growth, you can see some margin expansion as well. Actually, sir, as you mentioned in the opening, because margins will be, I think, in the similar range. You are saying it will be on the upside, right? What is the end result? If you try and compare year-on-year, then you will see a growth because when we say that we are going to maintain a stable margin profile, we are referring to the last quarter, which is already on an year-on year.
Got it. Okay, obviously, I think last.
Understood. Last year was a deep margin. Great. Yes, sir, you were saying something.
Yeah, Vyom, I was thinking it might be a little premature. It would be similar or maybe slightly expanded. That's what we feel because whatever price increase has happened on account of BS-V, we have pushed it into the market.
Got it. Got it. Sir, lastly, on the overall demand outlook, particularly domestic side, we know exports are challenging now. I want to hear from you, are you seeing any kind of slowdown in government CAPEX or any delay in the releasing of the payment from the government side that will kick the growth in the government CAPEX? Anything like that you are witnessing which can hamper our growth apart from the export side?
Nothing from the government side with respect to CAPEX plans or especially payments and all. As a matter of fact, the budgeted estimates are definitely higher than the revised estimates of last year, above INR 11 lakh crore with respect to the CAPEX for this year. There, we are not seeing anything. Yes, there has been a slight slowness with respect to the inquiry and order levels, especially in the, let's say, the last 20 days. I would say rather after the Pehelgam attack, there has been something, and especially after this conflict that happened at the borders. I am sure it will normalize.
Understood, sir. Thank you very much, sir, and all the best for the future. Hope we will be achieving the guidance that we have done, that we have already done in the past as well, and we will keep on doing that. Thank you, sir. Thank you very much.
Thank you.
Thank you. We take the next question from the line of Vijay Pandey from Nuvama. Please go ahead.
Hi, sir. Thank you for taking my questions. A couple of questions. First, on our selling price, our average realization. So our average realization for the cranes, construction equipment, and material handling business has gone up by 2% in fourth quarter. I just wanted to check. We said that the emission norms created a 5%-6% growth on price increase. I just want to check where is this delta coming from?
That could purely be product mix because very few BS-V, CEV-5 machines were sold and delivered in Q4. The overall impact for BS-V will start to come in from this quarter. Rather, even in April, a lot of deliveries were happening, which were for BS-III, first half of April, I would say, because the registration of these vehicles is allowed up till June end. Yes, definitely the month of May and the month of June, it is purely BS-V. You will see the price realization improving with respect to our sales price, which have increased. Like I said, the prices increased approximately in the range of 5%-12%. The blended increase that you can see is about 7%-8%.
Okay. Blended increase will be around 7%-8%. Okay. Secondly, sir, just if you can help us think about what is your margin expectation because we did 18% margin in second quarter and third quarter, but it has now slid below 18%. Do you expect it? Do we expect 18% level to be maintained, or will it be like 18%? Is that floor level should be considered, or is it a mid-level or top level? What should we take 18% for FY2026?
See, in the December quarter, we did about 17.76%. In the March quarter, we did 17.7%. Last year, March quarter, we did 17.53%. They are all hovering between 17.5%-17.7%. That has been the range: 17.5%-17.7%. On a whole year basis, last year, we did 17.5%, 17.52%. I would say that we should be able to maintain our margins between 17%-18%. Yes, if some extra operating leverage comes in in the second half of this year, we might be able to better it also. As a guidance, I would say it is between 17%-18%.
Okay. Lastly, sir, our previous guidance was INR 4,400 crore for FY 2026. Should we expect this to be achieved by FY 2027? There should not be any delay beyond that. FY 2027, we should be able to achieve it.
I think so. In all probability, I see no reason why it should not happen. I mean, I thought we were on track to do it, if not a 4,400, maybe a 4,200, 4,300 within FY2026. Unfortunately, things have started looking different, especially now, with most of the industry also looking and thinking on the tariffs and plus-minus, whatever, whatever. Yes, definitely by FY2027. In saying that, obviously, we had targeted and had conveyed that we will do it in three years. Like you are saying, yes, definitely, it will be exceeded, and it will be four years. It should definitely be exceeded in four years. I am sure we will exceed 4,400.
Sir, can you just help us understand what is our, in terms of sales, what is our share in terms of lemon green cranes, Hydra cranes, and what is our expectation moving forward?
In Hydra cranes, our market share is more than 75%. The other type, the new generation, our market share currently is 51%. Going forward, in Hydra, we are more or less at peak. It is going to be somewhere there only with the market being 1%-2% on the upside only. We are very confident that in the new generation cranes, our market share will increase. Internally, obviously, we've targeted much more to make it reach similar to Hydra cranes. I'm sure within this year, we should be able to increase at least 3%-4% in the new generation cranes, which are lemon green in color now.
Okay. What will be their contribution in the industry-wide? For Hydra cranes, how many in India will be their generally sales and new gen cranes sales in India?
You're talking of overall volumes?
Yes, the industry volumes.
Close to about 15,000 units, both of them put together. Out of this, about 30%-35% will be new generation cranes.
Okay.
Just a second.
Thank you. That's all. Thank you, sir.
Thank you. We take the next question from the line of Divy Agrawal from FICOM Family Office. Please go ahead.
Hello, audible?
Yeah, yeah.
Yeah. Thanks for the questions. So a few questions from my side. Firstly, sir, could you provide an update on the anti-dumping duty investigation on the Chinese steel imports, both above and below 100 metric tons? Because in the previous call, you had indicated the process was at an advanced stage. What is the current status compared to the last quarter?
We were very hopeful that we should get a judgment within April. Unfortunately, the final hearing was deferred two times within April. Now, obviously, there are also plant visits involved in the final investigation. The plant visit is happening in the end of May. We are hopeful that in the first 10 days, the hearing will come up in the month of June. Hopefully, we should have a final order within June or latest by July. I think, as per their own internally set targets and guidelines, June is also the deadline for the department as well. Hopefully, we should see the judgment on this anti-dumping within June. Yes, definitely, the finance ministry takes another two-three months to put it in effect. In all probability, in quarter two, it should be put in place.
Sure, sure. Sure, sir. That was helpful. Secondly, sir, I wanted to know, have you seen any pickup in crane orders recently, or are the inquiries arising from any particular sector or end market?
See, on the contrary, the scenario is a little subdued, like I mentioned. There is really no pickup or improvement in inquiries or orders. Rather, so far in this quarter, there has been sluggishness in the inquiries as well as orders.
Okay. Sure, sure, sure. Also, sir, there seems to be an attraction from the wind and renewable sectors. What are the key constraints preventing from scaling up in this space? Is it primarily due to our focus on cranes below 100 metric tons?
You're talking of the wind sector?
Yeah, right. Wind and renewable sector, yeah.
Renewable also includes solar. A lot of cranes are used in solar. For example, in Gujarat, Khawda, where Adani is doing this massive solar thing, just giving an example. A lot of pick and carry cranes are used in solar. Rather, it is more of pick and carry that is used in solar, first thing. With respect to wind, the weights and the heights at which the generators and the members have to be, sections have to be installed, are much higher and heavier also. There you require bigger cranes, cranes even going up to 200 tons, 300 tons, 400 tons, which is not in our range with respect to truck cranes especially or all-terrain cranes.
That is the reason we are not operating there because they are using bigger all-terrain cranes generally and/or crawler cranes, which are above 250 tons or 300 tons for such projects, which we do not do in India.
Right, right, right, sir. Got it. Lastly, sir, from my side.
Which eventually we will start to do through the joint venture.
Okay. So you are planning to do it?
Yeah. Maybe one or two years, three years down the line, yes.
Okay. Sure, sure, sir. Lastly, sir, I just wanted to know, how do you compare the cranes of your company versus the Chinese and German alternatives? Could you highlight any two, three key positives and negatives, differentiating pointers related to these competitors?
See, with respect to pick and carry cranes, the Germans or the Chinese do not make a similar crane. This is no difference. I mean, there's nothing to say because they practically don't do it.
Right.
With respect to tower cranes, the cranes that we do or the Germans do or the Chinese do are very similar in terms of technology and in terms of safety and features and, let's say, the build quality or the factor of safety. With respect to the crawler cranes and truck cranes that we do, obviously, we do them of smaller tonnages like crawler cranes. We are not doing the really big ones. What we are doing are very similar in terms of capacities and capabilities as compared to what is made in the developed part of the world or what is made in China.
Sir, what sets you apart from them?
We are an Indian manufacturer trying to sell in India these machines. Obviously, with respect to the European or American, our pricing is much better. Unfortunately, the Chinese have been dumping last five, six years like madness. I mean, their prices are at least 50% lower than what they should be ideally, looking at their historical prices, even the imports into India, if you go back to 2008, 2009, 2010. That is why this DGTR investigation is going on for anti-dumping duty. Otherwise, if a prima facie case was not established, the government would have never taken up, let's say, this particular aspect for anti-dumping or safeguard duties.
Correct. It's basically in the pricing, right, in terms of technology building and strength and all. It's only related to the pricing that we are differentiated, right?
Yes. Mainly, it's the pricing. Otherwise, the capabilities and the functioning and all is very similar.
Okay. Sure, sir. Thanks. That is all from my side. All the best, sir.
Ladies and gentlemen, one management line seems to have disconnected. Please wait while we reconnect them. Hello everyone. We have the management line connected with us.
Yeah, hi. I think we can continue with the question and answer.
Nabeel, can I ask a question?
Yes, sir. Sir, should we move on to the next participant?
Yeah, please do.
Okay, sir. Next question is from the line of Rahul Ranade from Goldman Sachs Asset Management. Please go ahead.
Yeah, hi, sir. Thanks for the opportunity. Hope you're able to hear me well. I also just wanted to understand, when you're talking about a 14-15% kind of a top-line growth, and like you also mentioned, there is a 7-8% kind of a blended price increase, right? Are we looking at a 7-8% kind of a volume growth? Would that be a fair understanding?
Yes. That is what is precisely that is going to happen. We feel and believe that the volume growth could actually be more than this and would actually be more than this. That is what maybe in the second quarter, maybe around the end of first half, we might be in a position to revise the guidelines.
Okay. Okay. Got it. To your mind, this kind of little bit of a falloff in terms of volume growth, how much would you kind of attribute that to in terms of the pre-buy that has already happened versus the current demand environment, like you're saying, is not that great? Which would be the bigger factor out of the two?
I would say that the pre-buying that has happened is about 10%-15% of a quarterly sale. It has got pre-folded to quarter four rather than end of quarter three and quarter four rather than Q1 of this year. Another thing I would just like to say here is that, obviously, it is not only the volume growth or the price growth. There would also be at least some market share growth for us going forward in this year. That will also help us.
Understood. Understood. But pre-buy, like you said, 15% of quarterly growth. So that isn't a very material factor, right? That would be the right understanding? It's more of demand-led uncertainty that is kind of holding us back in terms of the volume growth.
I think it is demand-led uncertainty, which we have felt in this quarter, in this Q1 so far in the last 50 days. I think, like I said, it also has to do with a little pre-poning of the sales which has happened. The new orders are coming through a little slowly because of the price impact and the extended negotiations that are happening. It is actually a mix of really cannot pinpoint. Even we have not been able to understand what are the exact root cause. It is a combination of pre-buying happening, so comparatively a little lesser inquiries coupled with the current inquiries not immediately converting to order because of a substantial price increase. It is a mix of both these factors.
Got it. I sir, just I'm new to the company, so probably a repetition from previous calls. But in the statutory P&L that I'm looking at, there is a line item in terms of expenses called income in terms of financial. So what does this pertain to exactly?
Somehow, you were not very clearly audible. If you could just repeat your question. Luthra Sahib, if you can just take that question.
Can you repeat the question, please?
Yeah, yeah. No, no. I was asking about impairment losses on financial assets, line item in terms of the P&L in the statutory results. I just wanted to check what this pertains to.
Yeah. Actually, this pertains to the accounting standard which requires for providing for expected credit losses. We are very stringent policies regarding making provisions for the if any of the receivables become more than six months old. Keeping that into consideration, we have been very, very stringent in providing. These are only mainly provisions which will be probably when the money comes back, may come back into the system again into the profit and loss account. Out of that, only INR 3.5 crore have been because of one export order of the government three years back. There was a liquidity damage was there. That way, your return of it is a combination of provision as a return off of one of the LD clause which happened in one of these sales.
Okay, okay. Largely then, this is expected to be returned back, and then probably a new provision gets created when new sales happen. This will kind of continue to go on. Okay.
Continue. Definitely, if you see compared with last year, the provisions have been going down. Because everything will be provided for. Yeah.
Understood. Okay, sir. Thank you.
Thank you. We take the next question from the line of Richard from Equitymaster. Please go ahead.
Sir, thank you for the opportunity. My question is related to defense and export businesses. I just wanted to understand what kind of margins do we enjoy in these segments, and how is the working capital requirement different, if at all? Are there higher receivables and all?
Defense margins are more or less similar in line with our current company margins. Maybe slightly on the lower side, but similar, let's say, band. Export margins are definitely slightly better than our company average margins. Definitely, the working capital requirement both for exports as well as defense business is slightly more because the payments are in export, generally, it's a 60- or a 90-day LC generally, but there are obviously cases of advances and payment before shipment also. Yes, with respect to defense, depending on the orders and the different departments, it could be anywhere between a 60-day to a 120-day cycle after supplies are accepted.
Okay. Sir, could you also share CAPEX guidance for the current year? From what I understand, you already have more than INR 5 billion, INR 5,100 crore kind of revenue capacity. Would it be primarily maintenance CAPEX, or do you have a big investment kind of plan for this year?
Like you rightly said, we already have a INR 5,000 crore-plus, INR 5,100, INR 5,000 crore-plus availability of capacity. That is for various different types of products within the segments and also agri. In the current year, FY 2026, we are going to be doing a CapEx of somewhere between INR 300-350 crore. Out of this, INR 100 crore, we have earmarked for modernization and upgradation of our existing facilities and processes so that we come totally at par with the global manufacturers with respect to our general processes and the quality and the consistency. Another INR 100 crore to be spent within this year has been earmarked for, we have started setting up a new plant for expanding our capacity in a particular type of a crane. The total cost is about INR 250 crore for that.
Out of this, INR 100 crore will be spent in this year approximately, a little plus minus. The total cost will be about INR 250 crore, a little plus minus. The balance will be spent in the next year. Apart from that, an additional INR 150 crore will be spent in the current year on account of the payment for different lines which are under the procurement process. In the last year, we capitalized, took over about INR 51 crore worth of land for our future expansion. The balance of all the land tranches will be coming to us within this year. There will be an INR 150 crore payout for land which we are acquiring for our future expansion plans because the cost of land are increasing reasonably fast. We thought it prudent.
Even during the time when we did the agreements and now, the prices have increased quite a lot. As a matter of fact, doubled in some cases already in the last six months, one year. In the current year, it is about INR 300-350 crore that we will be spending.
Okay. Thank you for the detailed answer. My last question is on the JV with the Japanese player. Do you have any updates on that? How is it progressing? Do you expect something to come by third quarter of FY 2026 as you were expecting initially, or are there any kind of revised timeline?
I think we are very much on target to make it functional by Q3 of this year.
Could you also talk about, I understand the opportunity you said is around INR 1,500 crore, but in the first two, three years, what exactly are we targeting, and is it for export markets or domestic?
Saying INR 1,500 crores for the joint venture with Kato, right?
Yeah. That was the opportunity size, I think, that you mentioned, right?
The opportunity size total is close to about INR 1,000 crore, INR 800-1,000 crore. I think INR 1,500 crore is misquoted or whatever you have from wherever you've taken. The immediate opportunity will be INR 300-400 crore on an annual basis.
Okay. Thank you so much.
Yeah.
Thank you. Take the next question from the line of Mudit Bhandari from IIFL Capital. Please go ahead.
Hi, sir. Thank you. Sir, the 13,200 capacity number that you mentioned, which is currently operational, so there is no undergoing expansion going on on our existing land or new land. Only the land we are purchasing will focus on the expanding capacities, let's say, beyond FY 2027 or beyond that, right?
Yes. In saying this, like I said, modernization and upgradation activities are happening. There might be a little construction here and there, but that is not really CapEx for increasing capacity. That is happening to better and improve our processes and totally modernizing that.
Got it, sir. Got it. Earlier, I think we mentioned for ADD that we are expecting rough terrain, crawler, and truck crane. Are these the same segment in which these final orders are pending, and any expectations of range of amount of duty?
Rough terrain, I do not know. It is not on rough terrain. It is on truck cranes and crawler cranes primarily. Rough cranes as well as crawler cranes. Very difficult to put a figure to it, but let's say the calculations which we have done ourselves, it should be somewhere in the vicinity of at least about 40%.
Okay. Got it. In any way.
These are as per our calculations, not as per the department's findings. Everything will finally depend on the department's findings.
Yeah. Got it. Got it, sir. In any case, truck cranes and crawler cranes do not constitute a very significant part of our overall considered revenue, right?
Today. Let's say the overall size of these two types of cranes put together, our addressable size is close to about 800 machines, which translates into INR 1,500-1,600 crore of revenue. Our current would be, I do not know, maybe INR 60-70 crore. Maybe Luthra Sahib can correct me. This is the potential that our country has been missing out on because a lot of dumping has been happening from China in the last seven or eight years, ever since the market for such type of cranes started increasing in India. With the Modi government's focus on infrastructure and bigger projects, countries started using new cranes, and the Chinese started dumping at a very low this thing. This is also the main reason that over the last five or six years, a company like Tata Hitachi stopped producing crawler cranes. A company like Kobelco stopped producing crawler cranes.
If not for the joint venture with Kato Works, made these cranes, but the joint venture never took off because the selling price was prohibitive. This is from the letter they sent to everybody. That's it. A company like TIL went into financial problems because of the Chinese dumping. There was another company, ABG Cranes. They were making crawler cranes. They shut down. Practically, the Chinese, with their very predatory pricing, have totally taken off the Indian bigger crane industry in the last seven, eight years, nine years. Now, hopefully, with the anti-dumping in place, I'm sure some of them will come back.
Okay. So we have from, let's say, 13,200, we have capacity to produce truck crane and crawler cranes, given that any reasonable amount of anti-dumping duty is implemented. And we have, let's say, all processes and other.
Yeah. We have a capacity in 13,200. We have a capacity to produce actually 400 cranes.
Of truck cranes and crawler cranes.
Yeah. Truck cranes and crawler cranes, yes.
Okay. Currently, out of 400, we are utilizing?
This year, we have the FY2025, we have done a sales of nearly INR 70 crore. I think Luthra Sahib should be what, about 60-70 units? Before, we were valuing in rupees, but number-wise, we did about 42 in the crawler cranes and 35 in the truck-mounted cranes. Seventy-seven.
Okay. Okay. Got it, sir. Then the white labeling which we were planning or were executing, is there any impact or whether we have started for some international clients or any domestic clients that we were planning to do?
We have started some white labeling, but it is for comparatively smaller imports in a couple of countries. Yes, we have started that. Hopefully, everything goes well in the next three-four months, two months. I cannot really put a listing to it. There is another very big white labeling opportunity on the annual. I think it is still three months away. A lot of discussions are going on.
Okay. Is it in crane segment only?
It is in similar segment. Let's say it falls within our construction, with cranes, material handling, and construction equipment sector. We would not like to disclose what type of product it is.
Okay. Okay. Got it, sir. Thank you so much.
Yeah.
Thank you. Next question is from the line of Kamlesh Bagmar from Lotus Asset Management. Please go ahead. Kamlesh sir, you are online. Please unmute and ask the question.
Yeah. Thanks for the opportunity, sir. Just based on the numbers which you provided, like the cranes which are subject to ADD, how much revenue did you? I know, like I said, 42 cranes, crawler cranes, and 35 truck-mounted cranes you mentioned about. How much is the revenue on this?
INR 70 crore. INR 70 crore, but Luthra Sahib, this number of truck cranes you are mentioning, this would also include some lorry loaders. Actual truck cranes would be 10 or 12 only, if I'm not wrong. It will be 42 plus 10-12, maybe 52-53 such cranes which are under the scope of ADD because we do another type of truck-mounted crane which is called lorry loader, which is smaller in size and costs only about INR 1.5-2 million. It is mounted on a standard commercial truck. If we exclude that, I think the number should be around 50-52.
Okay. Okay. Okay. Sir, on the revenue side, we have been maintaining 15% as a growth. How are the things? Let's say, are we confident to achieve that particular guidance for this year, next year?
I think doing a 15% should be easily possible. In the past, let's say, the last five years, we've actually gotten used to doing about 30%. Let's hope that those times come back. Yes, doing a 15% with our focus on different product categories and defense and export, and obviously, Indian market growing, I think that should be doable in most of the circumstances.
Yeah. I do appreciate your kindly remarks with regard to the slowdown which you are seeing over the last 15-20 days or a month. Is it majorly from the government side or the, let's say, the infra or the real estate or other sectors also you are seeing the slowdown?
We have not seen, to be very frank, we have not felt anything from the real estate side. We have seen this or even from the infra side, to be very frank with you. It is not from the real estate or the infra side. It is more to do with the hiring and the rental segment, which constitutes directly and indirectly about 50% of our sales, approximately. With the increase in pricing, the hiring and the rental segment just taken a step back and into more negotiations with us also and also with the end users where they provide these machines on rentals. Because if the machines are going to become costlier by, let's say, about 12%, then obviously, the rentals also need to go up.
It is happening on both ends, negotiation with us and negotiation with the end users who take these machines on rentals.
Okay. Okay. Thanks a lot, sir. Thank you.
Yeah.
Thank you. We take the next question from the line of Garvit Goyal from Nvest Analytics Advisory. Please go ahead.
Hi. Thanks for the follow-up. Sir, just want to know the update on our E-Cranes.
Which cranes?
Electric cranes.
Yeah. With respect to electric cranes, I mean, we have been ready for the last one and a half years or more. In January and February, the Ministry of Road, Transport, Highways guidelines for EMVR also came. It turned out there was some discrepancy in a couple of clauses which needed correction. Another two-three months were spent on that. Now everything is in place. Hopefully, we are expecting over the next one month, we will get our approvals for registration of electric cranes, and we will be able to sell them commercially.
On the Kato side, you mentioned 400 per annual opportunity, and we are starting it in Q3. This year, how much revenue are we projecting from that?
I think for this year, the revenue should be to the tune of INR 100 crore plus minus.
It will entirely contribute to the top line—sorry, bottom line, right?
Because it's a JV.
Of the top line.
I'm talking of the top line, and because it is a 50/50 JV. So Luthra Sahib, if I'm not wrong, we will not be able to consolidate the top line, only the bottom line, right?
That's right.
From the first year itself, are we expecting it to be a similar kind of margin that we are doing currently?
Yes. I think so.
Got it. Okay. Thank you. Thank you, sir. Thank you very much.
Okay.
Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants, please limit your questions to one per participant. We take the next question from the line of Rashmika Rao from RICA Enterprises. Please go ahead.
I have two questions for you. My first question is, some time back, you said that you were bidding for 1,800 telehandlers to be delivered to the army and that Bid and a foreign company were the only bidder for this contract. What is the status of that bid? When will we know whether we have won the bid or not?
I will answer your first question. This order of 1,121 numbers telehandlers, the army calls it RTFLT, Rough Terrain Forklifts, is the same tender you are referring to, 1,800 units. We were the lowest bidder, and there was a foreign competitor, JCB, for this. There was a provision of splitting of order in 60/40 ratio. If the L2 or the second lowest bidder was willing to match the price of the lowest bidder, and that is what JCB did, they matched our price, so 40% order. The remaining of approximately 1,800 units, let's say 600 plus units, has gone to JCB.
Okay. My next question is, you have been telling us for a long time that the Agricultural Equipment Division will turn around and deliver steady sales growth and profit growth, but it continues to disappoint quarter after quarter. When will the Agri Equipment Division finally turn around and start delivering sales and profit growth consistently? When will that happen?
Obviously, they are delivering profits, but obviously not in tune with the company. They are just at 3-4% level. We are working very hard in this direction. We have been doing that, but somehow the results have not been forthcoming. We are at it as of now. That is best I can tell you.
Thank you. We take the next question from the line of Vijay Pandey from Novama. Please go ahead.
Thank you for the follow-up. Just wanted to check, sir, on the margin opportunity. What is your margin expectation for the recent defense order win? What is the starting?
Defense order.
Defense order. Yeah. The starting as well as long term.
It is in tune with our country, our company margins. Whenever we are bidding and quoting, we are keeping in mind the type of margins that we are doing. That is how we are quoting for it. We have been able to become L1. We have been taking this big order. It is in tune with our company margins.
17%-18%, that is how we should think about it.
We could pinpoint the percentage to it because it's a big order to be executed. Yes, our gross margins are similar in line with the company's gross margins.
Okay. Thank you.
Yeah.
Thank you. We take the next question from the line of Aman Shah, an individual investor. Please go ahead.
Hello.
Can't hear you really.
Mr. Shah, the line is very unclear.
Is it okay now, Luthra Sahib?
Yes. Yes.
Yeah. Sir, Echo Loader, how could you use for FY 2025 or FY 2024?
Were you able to make out the question? Because I was not.
No, sir. I think the line is very choppy.
Sir, Mr. Shah, I'm so sorry to interrupt, but your line is breaking a lot. You may take this question offline. Thank you. Ladies and gentlemen, that was the last question. I would now like to hand the conference over to Mr. Santosh Yallapur for closing comments.
Thank you, everybody. On behalf of Anand Rathi Institutional Equities, that concludes today's call. We thank you all for joining us, and you may now disconnect your lines. Thank you.