Ladies and gentlemen, good day and welcome to Action Construction Equipment Limited conference call hosted by Emkay Global Financial Services. 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 the 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. Chinmay Kabra from Emkay Global Financial Services. Thank you, and over to you, Mr. Kabra.
Good evening, everyone. On behalf of Emkay Global Financial Services, we are pleased to invite you to the Q3 FY25 earnings call of Action Construction Equipment. I would like to welcome the management and thank them for this opportunity. We have with us today Mr. Rajan Luthra, Chief Financial Officer, and Mr. Vyom Agarwal, President. I shall now hand over the call to the management for their opening remarks. Over to you, sir.
Thank you, Chinmay. Good afternoon, everyone, and welcome to this earnings conference call for discussing the results for the quarter and nine-month end date 31st December 2024. We take this opportunity to wish all of you a fabulous new year with good health and happiness. Unfortunately, our Executive Director, Mr. Sorab, is under the weather and down with seasonal flu, hence, he could not join the call today. Along with me in today's earnings call, we have our CFO, Mr. Rajan Luthra. We hope that all of you have had an opportunity to look at the company's financial statements and the earnings presentations which have been circulated and uploaded at the stock exchanges.
With continued focus on customer-centricity, execution, and agility in operations, we have set ACE on the course of a predictable and sustained high-performance trajectory, and today, we have the opportunity to highlight our execution rigor through our best-ever performance in the quarter gone by. Further, in the recently announced Union Budget of FY26, the Government of India has sustained its infra focus with their CAPEX spending estimated to remain above 3% of the GDP for the third consecutive year. Productive CAPEX to create infra assets is crucial for amplifying productivity, which will further fuel economic growth, enhance global competitiveness, and accelerate operation in the country. Now, to brief you on the financial performance for the third quarter of FY25, on a standalone basis, the operational revenue grew by 15.93% on a Y-on-Y basis from INR 753.15 crores to INR 873.1 crores, which is our best-ever quarterly revenue so far.
The EBITDA margins of the company grew by 27.4% to INR 160.38 crores, as against INR 125.89 crores in the corresponding quarter last year. The EBITDA margins expanded by 154 basis points to 17.76%. The PBT grew by 26.49% to INR 144.93 crores against INR 114.58 crores and stood at 16.05%. The PAT grew by 21.05% to INR 107.15 crores against INR 88.52 crores and stood at 11.87%. The PBT and PAT margins expanded by 129 and 46 basis points respectively on a year-on-year basis. We are delighted to share that these are our best-ever quarterly revenues, EBITDA, PBT, and PAT numbers in the history of our company. For the nine-month end date FY25, the operational revenue grew by 13.75% as compared to a similar period of last year and stood at INR 2,361.07 crores, with EBITDA of INR 428.07 crores, which is a 30% growth. Our PBT grew by 27.37% to INR 382.61 crores.
The PAT stood at INR 285 crores, which grew by 24.29% on a Y-on-Y basis. The EBITDA margins expanded by 202 basis points to 17.46%. PBT expanded by 151 basis points to 15.60%, and PAT margins expanded by 86 basis points to 11.63%. Now, let me give you a sequential perspective. For the third quarter of FY25, the operational revenues grew by 15.74% on a quarter-on-quarter basis. The EBITDA grew by 12.79%, PBT increased by 14.79%, and PAT during the quarter grew by 13.54%. The company sustained its growth momentum across all operating segments during the quarter gone by. In the cranes, material handling, and construction equipment segment, we have registered revenue growth of 15.19% year-on-year to INR 795.73 crores. The margins also expanded by 375 basis points year-on-year to INR 154.38 crores, vis-à-vis INR 108.1 crores, thereby registering a growth of 42.81% year-on-year.
The company recorded sales of 3,539 units in the quarter, which is up by almost 18% year-on-year. The agri segment clocked a revenue growth of 24% at INR 77 crores, while maintaining margins at 4.73%. Going forward, with adequate water reservoir levels and government focus on agri productivity, the company expects the farm mechanization needs to continue creating demand momentum in the agri space. Our consistent, strong, all-round performance is a testimony to our strategic clarity, strength of our brand, our capabilities, our execution skills, along with the agility in running the business, and most importantly, the determination and passion of our talented and purpose-driven team members. On the operational side, the growth momentum in India continues to be strong, and the recent repo rate cut by RBI will provide further relief to the borrowers. The global economy remains uncertain, and the recent tariff war has heightened the geopolitical risks further.
India remains a bright spot amidst the global economy, with a real GDP growth for next financial year projected at 6.7%. The risks are evenly balanced. Commodity prices, especially steel, remain stable in the quarter gone by, and the consumer sentiment remains healthy. As discussed during the last phone call, our CAPEX plans are on target, and the ongoing expansion will bring our total capacity to approximately INR 5,000 crores by the end of Q4 of this year. With this enhanced capacity, the company remains optimistic about the medium to long-term prospects and remains focused to deliver on its sustainable growth agenda. Further, our Honorable Finance Minister has presented the Union Budget 2024-26, which set out a realistic and inclusive vision for the nation. A mix of judicious and bold policy moves, while maintaining fiscal discipline, lays down a strong foundation of a
[Foreign language] विकसित भारत.
The share of capital expenditure outlay in total budget has been stepped up to 22.1% in FY26 from 15.6% in FY22. The government is focused on infrastructure, manufacturing, power, logistics, and housing sector development, which augurs well for our company. Going ahead with our capacity build-up, we are well prepared, future-ready, and remain optimistic about the prospects of the company in medium to long term. Also, we would like to reiterate our guidance of around 16% plus growth in cranes, material handling, and construction equipment segment for the current year, and expect agri segment to remain flattish during this year. On the whole, we are looking at a growth of around 15% plus with a stability in EBITDA margins at current levels. With this, I would like to open the call for questions and answers. Thank you.
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on your touch-tone telephone. 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 comes from the line of Rohan Mehta with FICOM Family Office. Please go ahead.
Hi. Am I audible?
Yeah. Hi, Rohan. You're audible. Yeah, please.
Thank you so much for taking my question, sir. So I want to know what is the current duty structure for cranes below 100 MT, and if in case there are any, what are your expectations going forward with respect to any changes in it?
I'm sorry, Rohan. The line was a little disturbed. Can you please again go ahead?
I wanted to know the current duty structure for cranes below 100 MT, and what are your expectations regarding any changes going forward?
See, basically, I understand you are talking about customs duty.
Yes. That's correct. Yes.
Yeah. See, right now, the basic customs duty on import of fully finished product cranes is 7.5%. As we mentioned in the last phone call also, there has been a lot of dumping of these products by the Chinese company in India, especially the heavy cranes related to crawler crane or truck-mounted cranes having capacity of more than 40 tonnes and above. The government of India has already initiated an inquiry to find out whether the Chinese players are dumping their products in India or not. They are already in an advanced stage, and we are also party to helping the government in their investigation. It is already gone for investigation, and they have been summoned to give the costings and all those things.
We are expecting a favorable reply somewhere in the, you can say, probably March end or mid of April, in which we expect the government will be putting anti-dumping duties on those products.
Got it. Got it. Got it. One final question. How do you assess the current demand environment for your products? Essentially, are you seeing any sort of a slowdown in the demand for cranes?
Yeah, Rohan. The current scenario, the demand scenario remains quite healthy, as I have mentioned in my address. India is in a very bright spot. With the current budget, we have seen that government has reiterated their stand on infra, allocating more than 3% of the entire GDP. Especially the reforms which are coming in the housing sector with Pradhan Mantri Awas Yojana coming in, and more and more reach going to the rural areas along with water and sanitation facilities getting upgraded. The whole urban infra space is getting revamped, and the demand scenario remains healthy on the infra side. Most importantly, apart from infra, the kind of products that we make are also very widely used in the manufacturing industry.
So we believe that the certain steps which have been taken that will revive the private CapEx also going forward, and our equipments are used wherever there is lifting and shifting. So whether it is logistics, whether it is manufacturing, or infra, we believe that we are in a very good shape going ahead. And the demand scenario definitely remains healthy at the ground level.
Sure. Got it. Got it. Thank you so much. That is all from my side.
Thank you.
Thank you. A reminder to all the participants, Nadeem may press star and one to ask a question. Next question comes from the line of CA Garvit Goyal with Invest Analytics Advisory LLP. Please go ahead.
Hello. Am I audible?
Yeah. Hi. Good afternoon.
For a decent set of numbers, I want to understand on our export. While we understand domestic demand is driven by infra, manufacturing, and real estate, but considering the geopolitical tensions and expected trade war, do you see any risk to our internal target? Because I think while giving the medium-term guidance, we are accounting for exports in a decent manner. So can you put some color on that, like how exports are going to shape up from here?
Yeah. So definitely, going back a few quarters, we had set our targets for the export and the defense business to reach somewhere around 15%-20% of our overall listing. So this was made as a conscious effort to move the company towards a countercyclical domain and we are very much on target there.
However, in this year, because of various factors, whether it was sea freight, whether it was geopolitical issues going on, and now the recent tariff things, this year exports have been slightly sticky. And last year, however, we were able to close at around 8%. This year, it will be slightly less than that. But from medium to long-term perspective, I think 15%-20% coming from defense and exports seems very much on track for us.
Looking at the current environment, so do you see the situations are going to improve in FY26 as far as the exports are concerned?
Yes. We are very hopeful that it should happen. And in fact, we are very confident that it should happen because it seems to be a very temporary phenomenon. And moreover, come January 25, the revised emission norms, which is CEV Stage V norms, have also kicked in. So once we have started manufacturing these cranes and other equipment as well, apart from agri, they have migrated to CEV Stage V. And now we can think about taking these equipment to markets in Europe as well as North America. So this, I believe, in FY26, the situation will further improve. And as I said, in the medium term, going from 15%-20% from export and defense seems very much achievable.
Understood, and sir, half of Q4 has already gone, so looking at the current environment, where do you see FY25 ending up from here in terms of top line, sir?
So again, in the address, we have already reiterated our guidance. In fact, so we are looking at around 16% plus growth in cranes, material handling, and construction equipment segment. Agri to remain flattish. And overall, we are looking at a 15% to a little ahead from that with stability in EBITDA margins. Yeah.
In agri segment, earlier quarter, I think we were guiding for some growth, right? Or I'm wrong?
Yeah. So actually, if you see, we have done well in agri when it comes to last quarter. But the first quarter of this year was quite slow compared year on year because there was a base effect of a big export order, which we were executing last year, Q1. So we are still to catch up with that. And hopefully, we can grow in agri. But for the time being, we are saying that we would remain flattish. That time will tell if we can grow in agri. Yeah.
The guidance of doubling our top line of FY23 in FY26, that is intact, right?
So we said that whatever we had achieved in FY23, we are going to double that by FY26. More or less, that's the medium-term guidance, and we are sticking to that as of now.
Understood, sir. That's it from my side, sir. All the best for the future.
Thank you so much, Garvit.
Thank you. Next question comes from the line of Rashmika with RIKA Enterprises. Please go ahead.
Congratulations on a good quarter. I have a few questions. This quarter has been heavily influenced by pre-buying. To that extent, demand will be slacker in the future. Also, in the latest budget, the government has reduced CapEx expenditure from INR 11.5 lakh crores to INR 11.2 lakh crores. That is a negative for us. So how do you see demand going forward in the next 12 months? And how has demand behaved in this particular quarter four? We are already halfway through the quarter. That is why I'm asking. So how has demand behaved in this quarter? And how do you see demand going forward in the next 12 months?
Thank you, sir, for the appreciation for the numbers. And as I've said, the demand on the ground remains healthy. As far as to answer your pre-buying thing, if we see Q3 year on year for cranes, material handling, and construction equipment, we have delivered a growth of around 18% in terms of volume. And for agricultural equipment, we have delivered a growth of 24.36%. On a blended basis, our volumes have grown by 19%. And on a nine-month comparison, our blended volume growth has been close to 10.5%. So there is no reason to believe that this growth will not continue in the future. Going ahead, these numbers can even better from where they are. And going on to the budget thing, see, government is very much focused on developing infra, for which they have allocated a reasonable amount of capital, which is in excess of 3%.
And they have been doing it for the last three consecutive years. And there is another metric to look at it. Now, the share of capital expenditure outlay in the total budget that has stepped up from FY 2022, it was around 15%, and to FY 2026, it has gone up to 22%. So this spending is going to hit the markets, I mean, to hit the ground. And at the same time, because of last year, the government came out with revised numbers because the spending target could not have achieved because in the first quarter, we had the general election thing. So now, with everything off the back, the spending is going to continue from here, and it gives us real confidence that going ahead, our growth trajectory will be sustained. And the private CapEx is also going to pick up.
With the announcements in the budget, I believe that the consumer sector is also going to benefit quite a bit from there. And with manufacturing segment picking up, I believe that the growth story is here. And with the kind of portfolio that we have, the cranes, the forklifts, warehousing equipment, they will show and continue to improve on their growth trajectory going ahead. Now, with respect to this pre-buying thing, see, it is very difficult to pinpoint the reason for the growth in Q3. Was it because of the festive demand? Was it because of the pre-buying? Or was it because of the pent-up spending that hit the markets post monsoon season? So we would like to believe that the demand scenario is very much in place and quite healthy on the ground.
Thank you. Participants, please rejoin the queue for more questions. Next question comes from the line of Mudit with IIFL Capital. Please go ahead.
Hi, sir. Congratulations on a very good set of numbers. So your margins.
Good afternoon. Thank you, Mudit. Can you be a little louder, please?
Yeah.
Yeah. So am I audible now?
Yeah. Thank you.
Yeah. So if you see your gross margin, so your gross margin has itself expanded if you see both YoY and QoQ. And almost that has flowed into your EBITDA margin. So in your commentary, you mentioned that steel prices have almost remained stable. And if you look derived blended realization, it has slightly fallen if you see on QoQ basis. So what has led to this gross margin expansion?
See, basically, these margins have expanded because of a number of factors. One is the production mix. If you talk about the overnight realization, it has come down because this quarter, we had volumes of smaller cranes, 14 tons, 15 tons, and much more because of shifting from CEV Stage IV to CEV Stage V norms. That has slightly pulled down the average price generation overall. But because of cost efficiency and the operating leverage and other factors, cost reductions and whatever we have done and value engineering, etc., so that has contributed to the increase in the gross margins. Yeah.
Okay, but if you see, with the percentage increase in gross margin, that has not completely flowed into EBITDA margin, excluding other income if you see. So there has been some expenses one-off or?
Yeah. There were some expenses. One-off expenses can be in the current quarter. Normally, the third quarter is slightly on a higher side because of dividing other factors. Yeah.
Okay. Okay. Got it. And any update on KATO JV, so going on track and any progress upon that?
See, that is going on the right track, as we mentioned in the previous calls also that there has been some delay on account of some unavoidable circumstances which will be beneficial for the company in the long run. So that has been delayed. But the negotiations and that process is already on. Probably that we will be able to complete either by March or it may spill over to next quarter. But I'm sure it will not spill over the second quarter of this year, FY26. But probably it will be concluded either coming this quarter or mid of next quarter maximum. Yeah.
So revenues will start flowing into from second half of FY26?
Yeah, definitely. Definitely.
Here, Mudit, I would like to just add a little bit that we intend to start the production in this JV by, let's say, Q3 FY26 or maybe Q4 FY26. So somewhere those timelines are similar to what we had mentioned in last con call. So things are on track with respect to that. The full steam production will happen in FY27.
Okay. Got it. Thank you.
There can be some revenue which can be recognized in next financial year, maybe two, three months there. That time will tell. But FY27 should be a full steam revenue.
Okay. Got it. Yeah. That's all from my side.
Thank you.
Thank you. Next question comes from the line of Aman Soni with Invest Analytics Advisory LLP. Please go ahead.
Hello. Yeah. What is the margin guidance for Q4 and FY26?
Sorry, Aman, can you please repeat that? We didn't catch much.
Margin guidance, EBITDA margin guidance for FY26 and Q4 FY25?
So we would like to have a little bit of stability in the current EBITDA margins. Of course, there is a scope because of operating leverage and pricing actions. There is a scope of a little bit of expansion also. But as of now, we would like to guide that the EBITDA margins will remain stable at the current levels.
When we say current levels, it is Q3, current quarter level, right?
Yes, that's right.
Okay.
Mr. Soni, are you done with your questions?
Yes.
Thank you. A reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Vijay Pandey with Nuvama. Please go ahead.
Hi, sir. Thank you for taking my questions. Congratulations for good set of numbers. Sir, I wanted to check with you, what are the main export markets you are targeting? Is it North America, Europe, and in Europe, which NATO countries? That will be my first question.
Yeah. So basically, we are exporting to countries like Latin America, some of the CIS countries, some African countries, and of course, Southeast Asia and Middle East. So that is the segment where we are currently exporting. Mainland North America and Mainland Europe, as I mentioned, that there is an emission gap. Now, come January, in the current quarter only, India has migrated to CEV Stage V norms. Now, our machines are at par and can be sold in these nations. So once we get our machines certified, we will definitely be opening our territories there. But as of now, in the developed Mainland Europe and Mainland America, we do not have it. But having said that, we have started doing our groundwork there.
Okay. Okay. That's helpful. And secondly, sir, in the third quarter, I see that there's been a big jump in other expenses of around INR 18-19 crore. If you can help me understand where that difference is coming from, that will be very helpful.
So I think Luthra sir can take this question in a little bit more detail. But as he has just mentioned that traditionally, Q3, we have a little bit more expenses, which happens on account of the festive season. But Luthra sir.
Yeah, right. I already explained in the previous question that third quarter, we actually now have dealer meet and all festive expenses that come into the picture, and we start planning for the next year also in the third quarter, so that is what I was telling, but I think going forward, it will normalize and will be in line with the last quarter only.
Okay. Okay. Thank you.
Thank you.
Thank you. Next question comes from the line of Garvit Goyal with Invest Analytics Advisory LLP. Please go ahead.
Sir, can you give us an update on the E-cranes? What is the kind of development happening at that side? Is it going to contribute significantly in the upcoming year, or where is the status now?
So Garvit, if I've got the question correctly, you're talking about the electric cranes, right?
Yes, sir. Yes, sir. Electric cranes only.
Yeah. So as you are aware that we are already ready with the product, and we are awaiting the CMVR guidelines, which is pending some final paperwork. So once that is through, I think we'll be able to take our machines to the markets for that. And as far as the enthusiasm in the customer space goes, they are pretty excited about this product. Some of the big companies who are particularly bothered about the ESG scores, they have given us a very encouraging review of these cranes. And apart from that, there are a lot of manufacturing sectors which would need a crane which does not run on an internal combustion engine. So the feelers from the market space and the customers are very, very encouraging. As soon as we have the CMVR guidelines, I think we'll be good to go. So this space is very much active here.
As of now, we have sold a few numbers in areas where there is no registration required. So for example, if the crane is running in a closed territory, there is no registration required. So in those segments, some very few single-digit numbers have gone, and the customers are pretty happy with the result.
Sir, who are the other players in India doing the same electric cranes and how big the market size is?
So as of now, I think we are the only ones who have the electric mobile crane. In fact, we are the first in India to launch a fully electric construction equipment. That's the reason I believe the government was also not ready with the exact CMVR guidelines because these are different when it comes to vehicles and passenger cars. The construction equipment follows a different path. So we are the only ones who have it. And as I said, the market size, as of now, it is very difficult. The whole crane market size is open, but how much of the customers can migrate, that time will tell.
Understood, sir. Thank you very much, sir.
Thank you.
Thank you. Next question comes from the line of Shaleen Seth with Seers Fund Management. Please go ahead.
Hi team. Thank you for taking my question. I have two questions. Good afternoon. I have two questions. First is on the CAPEX. Can you put some color on the CAPEX for this year and next year?
Yeah. So, in nine-month FY25, we have done a CAPEX of close to INR 90-95 crores. And with this, we are expected to reach a capacity of INR 5,000-5,100 crores. Now, this will hold us in a good space. But with nominal CAPEX, we can further increase this INR 5,100 crores to, let's say, INR 600 crores more. That is possible in the near future. So, as of now, the current capacity by the end of this quarter, which will be operational, will be close to INR 5,000-5,100 crores.
Okay. And any color on the land deal, the 82 acres deal total?
So in that 82 acres, some around 22 acres is already there, done. It is there in the books. And for the balance, 60 acres, the agreements are going on.
Okay. Perfect. If I can take one more question?
Yeah, please.
JCB very recently announced that they are coming up with hydrogen engines. And I think the EU is definitely going to be a market for them. So do we have any perspective on that?
See, whether it is hydrogen engine, whether it is electric cranes, these are alternative energy sources which definitely, as a country, we have to adopt. And definitely, that's the way forward because fossil fuels are not the thing of future. Having said that, our power trains that we have, we buy engines from almost everyone in India, whether it is Tata Motors, Ashok Leyland, and Volvo Eicher. You can name a company who manufactures engines in India. We buy it from them. Given our equipment, which ranges from a 15-horsepower tractor to a 180-ton crawler crane. So given the product range that we have, our requirement of engines of various power and various torque combinations is huge. So we are in touch with almost all the engine manufacturers, and we'll be very open to adopt any stable technology as and when it hits the market.
And it will not be out of place that we were the first ones in India to actually get going on electric equipment. So as soon as some of the manufacturers have a stable hydrogen cell or hydrogen power technology for a power train, we are very much interested in that going ahead.
Great. Perfect.
Ultimately, Shaleen, it is not only about we launching a crane with the technology. Ultimately, it's about the operation of that crane also. So just for the announcement's sake, I don't think so that's the right approach. But how far the entire infrastructure is ready to run that crane on the road, on the site, that's also very important.
Yes, absolutely. Great. Thank you.
Thank you.
Thank you. A reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Vishal with Swan Investment. Please go ahead.
Thank you for taking my question, sir. So my question is regarding the CEV products. What kind of increase in the realization we expect with these products across the lines?
So it totally depends upon the equipment. But generally, what we expect is around eight%-15%, let's say in that range.
Okay. By when? What time we are expecting to fully move our product line to CEV Stage V?
We have started manufacturing CEV 5 equipment. As soon as there are some inventories which align with us, and as soon as we are done with them, we'll be completely moving on to the CEV 5.
Okay. Okay. So when we say 8%-15%, so similar kind of cost increase also there, or is it moving towards CEV 5 will be a bit slightly margin-accretive for our side?
See, as of now, we would say that we would like to stabilize our margins at the current place because in the last three, four years, you must have seen that we have expanded our bottom line quite swiftly. And now it is totally up to us that whether we want to keep focusing on a competitive landscape, produce cost-effective equipment, or keep on pushing the price increases. So I believe in the next two, three quarters, we will start to take a price-calibrated approach. But as of now, the thing that is on the top of our mind is to stabilize the margin profile of the company where we stand. And if possible, it can expand a little bit further.
Okay. And don't you think that the rising exports, because the opportunity for us in CEV Stage V, will increase in export markets? So then it will be a price-accretive business. Am I right in this understanding?
Yes. Because see, when we talk about CEV 5 norms, it is not only about the emissions. Along with CEV 5, migration comes a host of safety features as well as electronic communications which are integrated with the machine. The market is also now getting feature-sensitive. Going ahead, when you add a lot of electronics to the machine with enhanced features, and as you correctly said, that the export markets, which will also open up in years to come, I believe that overall on the medium to long term, this movement should be favorable for us from the bottom line perspective.
Okay. Okay. Can you also throw some light on our KATO JV? What kind of annex products will be launching through this JV? What would be the realization we are targeting? Things like that.
So I will give the line to Luthra sir for that, please.
See, basically, the JV, what we are planning with Kato Works is related to heavy cranes. When we say heavy crane, it is crawler cranes, truck-mounted cranes, and deck cranes. These are products which we are already manufacturing. So what we are expecting to do is that once and we are competing with the Chinese players, who are dumping these products in the market at a very throwaway prices. And it's so difficult to match their prices. Although we are making money in this product, but not to that level of what other cranes and what we are doing on. So that is why we are selling this. The whole objective of making JV was to first introduce Japanese technology in these products because Japanese technology will command a premium over the Chinese players. The first part.
Second is by government putting anti-dumping duties on Chinese products, then their cost will increase, which will give us more leeway for increasing our sales. What we are doing is this JV has three components. One is that they will be improving the technology of these products so that they become Japanese products for which we're selling in India. Plus, we will be manufacturing those cranes which are not right now in our product portfolio, 200-ton crane, 250-ton cranes, or a better technological product which will be supported by the Kato Works to all the countries where right now they are manufacturing and selling to. So it has got both components, main position for both us and Kato because with this, the cost will go down overall for the Kato also.
For us, it will not only improve the technology, improving our market share in this line, but also export opportunity directly open through Kato Works because they will be selling these products in the international market.
Fantastic, sir. Sir, so in the current market, can you roughly estimate what would be the market size of these kind of products which you want to explore through KATO?
See, if you look at the market size of this last year, overall India, in India, it was 900 cranes all put together, between 900-1,000 cranes.
Okay. And roughly, what will be the realization per unit for these cranes? It will be close to around 80-90 lakhs, 1 crore or plus?
It will be more than INR 1.2 crores.
Okay. Fantastic, sir.
Vishal, approximately the market size in terms of rupees would be close to INR 1,500 plus-minus.
Okay. Super. Thank you so much for answering my question. All the best.
We have just addressed the market size in India.
Wow. That's great, sir. Thank you and all the best.
Thank you.
Thank you. A reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Keval Shah with MK Capital. Please go ahead.
Hello. I joined the call a bit late. So I just want to ask, in your previous quarter con call, you were expecting some defense order. So can you throw some light on that, update on it?
Yes, sir. So we are expecting one of our biggest defense orders. It should have come by now, but it is just held up with some paperwork and should be here, I believe, within this quarter.
Any ballpark revenue expected from that order? If you can give.
So once we get this order, we'll be having approximately 24-30 months to execute. And we firmly believe that the revenue will start flowing in from next financial year.
Okay, and my second question is that how much revenue growth we have seen because of this quarter because of CEV Stage V compliance? So any revenue increase we have seen in this quarter because of that?
No, sir. Because up till 31st of December, the earlier emission norms were active. So barring a few proto machines, we have not sold them.
Okay. Thank you.
Because the regulation came into effect from 1st of January, so till the nine months, CEV 5 was not into the picture.
So because of this, have you seen any pre-buying in this quarter?
Yes, definitely. There has been some action, but it's very difficult to pinpoint and quantify the numbers. But the market has been very, I would say, the undercurrents are very, very strong. The market is healthy, and the sentiments remain good.
Okay. Thank you. All the best.
Thank you.
Reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Ravindra, an individual investor. Please go ahead.
Hello. Am I audible?
Yeah. Hi.
Hi. Good evening. My question is, what is the average work life span for pick and carry cranes? And what is the demand on account of these cranes being phased out in volume terms?
Sorry, sir. Can you please repeat the question in words?
Sure. My question is, what is the average work life of pick and carry cranes? Okay. As a replacement demand, what are the current crane work procured on account of replacement in the current fiscal?
A typical lifespan of a pick and carry crane is around seven to eight years. It totally depends upon the way you use them and the way you maintain them. Can also extend up to nine to 10 years if you are using them properly. But unfortunately, in India, the kind of environment in which these machines operate in, it's very challenging. So typically, a span of eight to nine years is very fair to assume. Going by that volume numbers, I think if we date back eight to nine years, I would say we don't have an exact number of how much market is coming from the replacement side, but I would say around 15-odd% should be there. 15 or maybe, let's say, 20%, but I don't have the exact number.
But I'm framing my answers on the basis of the volumes which were there 8-10 years back.
All right. Thank you so much. Thank you. A reminder to all the participants that you may press star and one to ask a question. Next question comes from the line of Nirmal, an individual investor. Please go ahead.
Sir, in the last concall, you talked about that you have put foreign acquisition on hold, and you are pursuing something better in India. So any development on that part?
Sir, we are still working very actively. And as soon as something concrete happens, of course, everyone will be made aware of the development.
So can it happen by next quarter?
It's very difficult to pinpoint. But as I said, that as soon as something concrete happens on the ground, I think we would be very happy to share it with everyone.
Okay. Okay. Thank you.
Thank you. On behalf of Emkay Global Financial Services, that concludes this conference. Thank you for joining us. You may now disconnect your lines.
Thank you, everybody.
Thank you.