Action Construction Equipment Ltd

NSE:ACE

Earnings Call Transcript 2024-Q1

[Operator]

Ladies and gentlemen, good day, and welcome to 1Q FY '24 Earnings Call of Action Construction Equipment hosted by Motilal Oswal Financial Services Limited. [Operator Instructions] Please note that this conference is being recorded.I now hand the conference over to Mr. Jinesh Gandhi from Motilal Oswal Financial Services. Thank you, and over to you, sir.

[Jinesh Gandhi]

Thank you, Rico. Good evening, everyone. On behalf of Motilal Oswal Financial Services, I would like to welcome you all to discuss 1Q FY '24 Earnings of Action Construction Equipment. ACE is represented Mr. Sorab Agarwal, Executive Director; Mr. Rajan Luthra, our Chief Financial Officer; and Mr. Vyom Agarwal, Senior Vice President.I'll hand over the call to Mr. Sorab Agarwal for his opening remarks, post which we'll start with Q&A. Over to you, Mr. Agarwal.

[Sorab Agarwal, executive]

Thank you. Yes. Good evening, and welcome, everyone, to this earnings conference call for discussing the results for the quarter ended June '23. Along with me in today's earnings call, we have our CFO, Mr. Rajan Luthra; and our Head of Investor Relations, Mr. Vyom Agarwal. The company's financial statements and earnings presentation summarizing the performance of quarter 1 FY '24 have been circulated and uploaded on the stock exchanges, and I will take you through some of the key highlights of our performance in the quarter gone by.The company has maintained its growth momentum in the first quarter of the current fiscal year. This has been yet another quarter of strong and resilient performance by our company, and I'm delighted to share that the financial year has started strongly for us. We were able to record our best ever quarterly performance in terms of revenues and profits. And also for the first time ever, our quarter 1 results have surpassed the preceding quarter 4 numbers.To brief you on the financial performance of the first quarter FY '24, on a yearly standalone basis and a year-on-year basis, the operational revenue grew by more than 30% to INR 650 crores with an EBITDA margin of 15%. The EBITDA during the quarter increased by more than 113% to INR 97.5 crores as against INR 45.72 crores. The PBT grew by 125% to INR 89.23 crores and PAT grew by 133% to INR 67.26 crores as compared to last year's corresponding quarter. The PBT and PAT margins now stand at 13.72% and 10.34%, respectively for the quarter on a standalone basis. On a sequential basis, quarter-on-quarter, the revenues are up by 6%. This is one of our most robust performance given the anecdotal evidence of our sales trend in the first quarter. The EBITDA, PBT, and PAT has increased sequentially by 20%, 22.5%, and 29%, respectively.Moving on to the segmental business performance. The company has sustained its growth momentum across all operating segments. In the Crane segment, during the quarter gone by, we reiterated our dominant market leadership position and registered revenue of INR 441 crores, which is up by 26% year-on-year. In volume terms, the crane business has grown by 17% year-on-year to 1,856 cranes in the last quarter.We are pleased to update that the growth momentum in the CE segment have sustained, and we have again surpassed our projected growth targets. The segment has registered a volume growth of 80% year-on-year. Further as compared to last year's corresponding quarter, the CE segments, Construction Equipment segment, brought the revenue growth of 78%, and we achieved revenue of INR 92 crores with margins in excess of 14%. This is a testimony to our clear and compelling strategy backed by the strength of our brand.The Material Handling segment recorded revenue growth of 10% and stood at INR 41 crores with margins at 10.17%. And our Agri division registered revenue of INR 75 crores, while reporting margins at 6%, thereby registering a growth of close to 30% year-on-year. Further, we were able to attain good traction in the overseas markets and increase our exports. We are on track to attain around 10% contribution to our revenue in the current year from export sales. On the operational side, India has remained stable in the continuing global macroeconomic volatility. The domestic activity in quarter 1 FY '24 has remained resilient as reflected by various economic indicators.The healthy balance sheets of corporate, normalization of supply chain, and stable commodity prices are favorable for continued growth in the sectors where we operate in. The manufacturing activity in the country has been on the upswing, aided by positive geopolitical scenarios in favor of our nation and continued focus of our government to increase the manufacturing progress of our country.According to data released by S&P Global Market Intelligence, India's manufacturing activity as measured by Purchasing Managers' Index, PMI, was at 57.7% in July as demand scenario improved and new orders increased. The enhancement in manufacturing capabilities and capacities of our country will further aid in the growth story of our company as manufacturing segment is one of the prime consumers of our Cranes and Material Handling segment equipment.The infrastructure growth story continues to play a significant role in the economic growth and will have a quantifier effect on the economy. We believe that going forward, the strong demand scenario for our products should sustain itself, supported by government's unwavering focus on urban infra and rural development. And the frontloading of capital expenditure announced in the Union Budget 2023, will further aid in the current year.We continue to be a debt free company with sufficient availability of liquidity for future growth. The envisaged brownfield CapEx of INR 90 crores to INR 100 crores for the current year is already under implementation, and we expect to make the expanded as well as the new facility operational by quarter 3, quarter 4 of the current financial year. This CapEx will expand our capacity and will enable us to attain revenue in the range of INR 4,000 crores at full utilization levels.Looking ahead, India is one of the fastest-growing economy and its prospects remain very strong for the period ahead with continued focus of government on infrastructure development and efforts to strengthen the manufacturing sector. We hereby upgrade our earlier guidance and expect a growth of at least 20% to 25% on a consolidated basis.In the Cranes and Agri segment for the current year, we foresee a growth of 18% to 20% at least. Further, we expect the Construction Equipment segment to grow by at least 45% to 50% and Material Handling to grow by 15% to 20%. We hope that we are in a position to revise these projections by the third quarter, which will predominantly depend on the overall macroeconomic scenario, especially the monsoons and the commodity prices. Further, we remain optimistic about the medium to long-term prospects of our company and remain focused to deliver on our growth agenda.We will continue to drive cost even harder and take calibrated pricing actions whilst ensuring we protect and grow our markets. We believe that our building blocks are firmly in place and are on path of sustainable growth in all our segments where we operate, leading to expansion in top line, bottom line, and margin profile of the company.With this, I would request the moderator to open the call for question-and-answer question. Thank you.

[Operator]

[Operator Instructions] Our first question is from the line of CA Garvit Goyal from Nvest Analytics.

[Garvit Goyal, analyst]

Congratulations for a good set of numbers. My question is basically on the demand outlook on the end industry. So basically, in your opening remarks, you mentioned about the near-term outlook. So how do you see at the medium-term and long-term perspective, like you mentioned in Q2, Q3 and Q4, you are going to do a CapEx that will give you a revenue potential of I think INR 4,000 here you mentioned. So how do you look at next 3 to 4 years down the line, sir?

[Sorab Agarwal, executive]

If I talk of the demand scenario, we -- currently, our major end segments are infrastructure and manufacturing. And luckily, the situation our country is [indiscernible] as of now. The government is very much focused on manufacturing, which is very evident. And with all the PLI and China Plus One, plus XYZ. And apart from that, we are also getting a lot of -- to be in frank outsourcing opportunities in the export market to manufacture for some other countries and players. So a lot of things are happening. The domestic demand and a lot of our cranes and material handling, everything goes to the manufacturing as well as infrastructure side. The manufacturing is booming the export potential, we are capitalizing on, and opportunities are only increasing. And infrastructure, everybody is aware of what is happening because what is happening infrastructure is again leading to more steel, more cement leading to more of everything, it is a continuous cycle. So it seems to be on a role as of now.And we speaks some time that we have on a monthly basis, not being able to fulfill the amount of clearances or dispatches, which were required across cranes and even construction equipment. And we generated by this pressure, and that's why we are expanding to brownfield expansion, which we are doing. So hopefully, a very small part of it should start functioning in September. Most of it coming in October, November.And finally, by [indiscernible] should be functional properly. So this will definitely help us increasing our revenue going forward in quarter 3 and especially in quarter 4, both of them, but I would feel they're more in quarter 4. And the way things are poised that and the feeling and the sense that I get, and even from real estate sector, which is 10% contributor within our Crane segment, which is about 67%, 68%. We require to make double the number of cranes, what we've been doing. And we've already started reaching that level.So things are looking good. Things are looking great. If I talk of it, only one bullet train construction project has started the second phase of has been awarded very recently. And very actively, another 6-7 DTRs are already on the way. This is just one bullet train. So I think a lot is happening. The government is really focused on developing the country, developing the infrastructure. And I can say that in some sort, even the CapEx cycle with respect to small and even the small and medium industries started happening. So when I look around even our vendors and a lot of our customers, so most of them seem to be on the expansion ride. So they can require more cranes and more material handlings even when they are trying to expand or do the CapEx.Then finally, to run that capacity, they again need more machines. So the scenario seems to be very buoyant. And to be very frank with you, the market, like I said, in quarter 1, going from quarter 4, it always squeezes a little 15%, 20%, 25%. But we saw the contrary rather we were able to increase our revenue by 6% in quarter 1 against quarter 4. And again, in quarter 2, where we are currently running it. The monsoons tend to slow down the demand. But I mean, I've seen different company for -- since 1998, company started 1995. And from Day 1, I was also involved in sales. So I have never seen this type of momentum in monsoon.We were thinking that we will load up, make some extra machines so that we are able to cater properly in quarter 3, quarter 4. But even the month of June, month of July, we have been loaded. We couldn't save anything rather we under delivered with respect to what we could have delivered. So the momentum is very strong. Now your main question in the last 3, 4 years, I think the type of scenario, which has been placed in our tank and the potential also not only for us, even for the whole country with respect to manufacturing with respect to exports and looking at alternated solution they're looking for against China. I think we are greatly poised. The entire country is that poised to grow. And I hope things remain like this.

[Garvit Goyal, analyst]

And secondly, sir, you mentioned about the export, right? You are saying you will reach out to 10% of the overall revenue. So what are those countries basically we are exporting to? Like in Europe, there are some headwinds going on. So might be there may be lower demand or might be -- that is not the area that we are targeting. So what are those countries that we are looking for?

[Sorab Agarwal, executive]

See, practically, there are no headwinds for us because 3-4 years back, we were hardly exporting anything. And this has evolved in the last 3-4 years and still continuing to grow on it. And our medium-term further, I would say, 10% to 15% of revenue contribution. And we would be, I think, competitively, we should be at 9%, 10%, if not more within this year. And we are focused on some Middle Eastern countries, some African countries, recently Turkey, Mexico, Argentina and Brazil in the South American continent also some CIS countries, even Uzbekistan, Kirgizstan and even Russia. So we are a exporting to about 37 countries now. So I have just given you some names. I mean there are many more names that are smaller buyers.So and this is -- we see that happening in the last 2-3 years. So we are building upon it, building upon the products, building upon the service, building upon our brand in those countries. And this will all further grow from where we are. Not only our footprint in other countries where we think there is potential, but even within these countries. So we've been entering the market and establishing your product and your service and then growing. It takes time. It takes 1 year, 2 years, 3 years and it continues to grow. So I think in certain countries, we have started to grow and things are looking good.And like I mentioned, we are also getting a lot of outsourcing opportunities from the developed world. And it's something like that [indiscernible] will materialize over the next 2, 3 quarters. That can again add in a very reasonable way to our top line with respect to exports. So that potential also very much exists, and we are actually working on it, apart from what we are actually manufacturing in India.We are also, for the first time, making products a couple of new products. I mean we already make similar products, but we are upgrading them with technology and even the styling and finish, which other countries where there is demand like it was. So and that activity should also happen by December-January. So I think some part of it in Q4, but starting from next year onwards, these new backhoe loaders and new [ semi-handlers ], which are very much suitable for every part of the world, developed or undeveloped because that is what we are used to using. And with their standard with respect to performance as well as [indiscernible] part of it.So I think next year should be even better for us. And also our [indiscernible] initiative with respect to exports. Unfortunately, it's got delayed on our 2 quarters. So let's see the final confirmation you've got that something could start to happen in quarter 3. So we were expecting that that will contribute in the current year to some extent with respect to our export initiative, but that is not delayed. And so maybe some part of it might come in the second half of this year. And but the major chance start to happen from FY '25 onwards. That will again add to our initiatives and all of this might lead us to 15% for contribution, which this year and -- 10%.

[Garvit Goyal, analyst]

And sir, lastly, on the margin side. So we are doing a decent EBITDA right now. So how do you see -- like how sustainable these margins are for next 2-3 years? Like you are mentioning with more than 20% growth for this year and next year also even better. So considering that, how sustainable these margins are? And secondly, what is your view on the competitive landscape for you in this industry?

[Sorab Agarwal, executive]

See, with respect to margins, I think for the last 2-3 quarters, I've been mentioning that double digit is great to say for us. And now that we have reached to 14%, 14.5%, 15%. I think we are very much sustainable. And all our efforts, including the operating leverage we see in coupled with our cost reduction initiatives and costs control initiatives and also our product mix which we are trying to move towards better margin products. I think all of these coupled together, these margins are there to stay. And I feel that there is still scope to improve these margins. But it will be better if we improve them and informally rather than saying that, yes, we are working on improving them further.And you asked about competitive landscape. So obviously market is very competitive. It is survival of the fittest. And our simple strategy is right product, right price, right service, and we are very much focused there with respect to whatever we do. And we have been doing it for the last 25, 26 years. And now with operating [indiscernible] our revenues going to a certain level. I think market sales side [Foreign Language]. So I'm sure [Foreign Language]. And we leave no stone unturned to make sure [Foreign Language]. So I think we are on the right track.

[Operator]

Our next question is from the line of Aman Shah from Jeetay Investments.

[Aman Shah, analyst]

Congratulation on good set of numbers, sir. My first question is, sir, on backhoe loaders, now we are seeing a good traction from last 2-3 quarters. Of course, our guidance is also quite good. What is your outlook now? What are we seeing like the way the volume growth that is happening, as you said, [Foreign Language] so that's clear, benefit is not clearly visible to us in backhoe loaders?

[Sorab Agarwal, executive]

Yes, obviously, our numbers are small. It is a market of 35,000 to 40,000 units. And this year, if everything goes well, we will be in there about 1,000 units, maybe a little less, but also we'll see more than that. And we would easily be going at least 45%, 50%, if not more. So this is again a thing that [Foreign Language]. And people are working hard. Our teams are working hard, we're riding on teams, we're adding on new locations, even within the country. We are also focused on export. So I believe that this is one of our segments, which can actually be the fastest-growing segment for us for the next 5-7 years at least. And we can look at very handsome growth rate in this segment on a year-on-year basis.And so for example, even in the current quarter, which we have finished the last quarter. I think on a segment basis, we've been able to slog 78% growth. So I mean there is one of, let's say, a really good quarter. But on a whole, I would say, 45%, 50% or more than that is doable, and we're working in the right directors. And I'm sure 2-3 years down the line, it will come to a state that we will not have to sell it, we'll not have to sell the product. The product will sell on its own. So that is the foundation we've been able to lay in the last 2-3 years.And I'm sure with our continued efforts, we'll further increase our market share from 1.5%, we've gone to nearly 3%. And going forward, I think add 8% 10% the next 3, 4, 5 years should not be difficult. That's in 5,000 units or 4,000 units annually multiply into the selling side, I'm talking about INR 1,000 crores or INR 1,500 crores worth of back within the next 3-4 years. I think it should be really doable.If you are able to perform better, it can even be faster than this. And just adding here, we are also working on upgrading these products to international levels with respect to styling and look, feel, safety initiatives. And hopefully, that project of ours should be over by December-January. So Q4 onwards, the product, which we will be offering in the market would feel like as good as a European product. Even for Indian market and even for our exports. So hopefully, we'll see even better days in the next financial year.

[Aman Shah, analyst]

On exports, currently, I just want to know like the new product that you would be exporting would increase, that would be one question. The second is, you also said in exports, we are getting some outsourcing opportunities. So is it like we are doing and then the branding will be done by someone else?

[Sorab Agarwal, executive]

Both your questions, first one first. We are currently with respect to exports focused on 3 things. One is the crane, second is backhoe loader and third is tractors. And we are seeing traction all across. And recently, we've opened up [indiscernible] also. So we have sent some backhoe loaders and let's say another 300-odd tractors are basically go within by December. That is the plan of the buyer and our plan. And we're again like special bigger tractors for the standard ones which are sold in India, the higher horsepower tractors with [indiscernible]. So like I said, cranes, backhoes and our tractors, especially the higher base.And with respect to outsourcing, I'm sure all of you are aware that China has been playing a big role in the outsourcing part of the world for even finished machines. So we have a reasonable amount of opportunities available on this front. And unfortunately, we were really not taking them forward because even limited amount of capacity to feed our domestic with respect to what we produce, which is our mainstay business. Now we've announced capacities, I think over the next 2-3 quarters, we'll accelerate this effort. And hopefully, we will start doing some decent products. And 1 or 2 of them are really global opportunities, which could also be in a joint name. So that's all commercial things are going on. And hopefully, over the next 2-3 quarters, we should be able to inform everybody once things go outwards. So the scale and size of the opportunities is huge is what I'm talking about. And even the margin profile is even better than what we are doing currently.

[Aman Shah, analyst]

So right now, what exports we are doing is not having any outsourcing element, right?

[Sorab Agarwal, executive]

No. Right now, we are practically, no. Right now, no. Right now, it is direct selling in our own name to our dealers and distributors. It is export of our own products, but now we are talking of making things jointly or making things for somebody else. But that is a look at the main product. But these companies also produce in their own countries. So we're very frank with you, we are also looking at -- we are also looking at us to supply them some high-end components and some other things so that we can also save some cost in the respected countries. So it is a mix of complete machines and even at some bigger component. And I'm talking about the developed world, all in 3 continents. I'm sure you can imagine that.

[Aman Shah, analyst]

Sir, on can you give the number of the multi-activity cranes and big tonnage cranes in our Cranes segment for this quarter?

[Sorab Agarwal, executive]

Can you just repeat it?

[Aman Shah, analyst]

multi-activity cranes, the new product line that we had and the big tonnage cranes are.

[Sorab Agarwal, executive]

The multi-activity, I don't have a ready number in front of the but I know for sure that we've been averaging around 20 cranes, so every month. So that would be about 60-70 cranes in the last quarter. That is a multi-activity cranes. So which would [indiscernible] maybe 3/4 of the center approximately. And for the bigger cranes, I would like to get, calculate for your [indiscernible]. And I'm excluding tower cranes here because those are [indiscernible]. And I think about 22, let's say, heavy [indiscernible] cranes, about 23 units of [indiscernible] cranes we have done in the last quarter, approximately. And we have done about, if I talk of tower crane, we have done 148 tower cranes and another about 47 mobile tower cranes. [indiscernible] about 175 -- 175 tower cranes. And like I mentioned, 22 heavy [indiscernible] cranes.

[Aman Shah, analyst]

So roughly 4%, 5% are still -- there's multi-activity and big tonnage that is coming from both of them?

[Sorab Agarwal, executive]

Yes. So all of the above [indiscernible] if I talk of 60, 70, we're talking about 3% to 4% is multi-activity. But yes, I think I did mention in my last call, I think over the next 1 or 2 years, they should go to 10%, 20% at least [indiscernible].

[Aman Shah, analyst]

And at that level, they should also yield better margins than current company margins?

[Sorab Agarwal, executive]

In margin, 2 things are happening. Obviously, multi-activity cranes, they will -- the margin are greatest. But within our Pick & Carry segment, our core segment, there is a upgradation happening. So the 15 tonnage customers are buying 20 tonnage and then the 20 tonnage guys are buying 25 tonnage, then the 25 tonnage guys buy 30 tonnage, and there is also a reason that recently we reduced 35-tonne. And going forward, over the next let's say 6 to 8 months, we'll also have another bigger market. So even the margin profile and, let's say, the revenue profile is changing within pick and carry sales. So 12 tonne, 4 years back was the maximum selling category. Now there's a 14, 15 tonne, which is moving towards 17, 20 tonnes. And everything is growing bigger in size. So pricing and the revenue and the margin, everything is going through, moving in the right direction.

[Operator]

[Operator Instructions] Our next question is from the line of Suraj Nawandhar from Sampada Investments.

[Suraj Nawandhar, analyst]

So what is our CapEx numbers that -- what is the amount of CapEx that we are doing for the…Yes. So what is the amount of CapEx that we are doing of brownfield CapEx?

[Sorab Agarwal, executive]

See, just now we are, it's close to about INR 90 crores and we slightly more can go up to INR 100 crores, wherein we are expanding our fabrication facility, we have had enough lane available with us over the last 8, 10 years. So we're expanding our fabrication capacities. We are expanding our assembly lines. We are setting up some new assembly lines. And we are setting up a standalone facility for the bigger blueprints because we intend to do at least 20-30 every month. In the last quarter, we did 22, but our intention is to take it to 60, 70, 80 units in a quarter. And then the market is, again, is growing and the market has developed and evolved.So in the process, what is also going to happen is that there are certain things are moving to new lines. So they will be take space for certain other things to grow. So on the whole, somewhere we are increasing our capacity by 70%, 80%, somewhere around 40%, 50%. And most of this should be in place by December. With respect to backhoe loaders, I think that could also happen by Q4 or…

[Suraj Nawandhar, analyst]

Is there any further land available after this CapEx because the kind of the commentary that you are giving it seems like even next year, we'll help do some capacity expansion?

[Sorab Agarwal, executive]

We will have some more land available, but I would say that we would have used a reasonable portion of it. And we are already in discussion with 2 state governments to take a 50-60 acre chunks at whatever best prices. Just to ensure that after 2 years, when we need more land so what to do. We are already under discussion, we are already in advanced stages. So in over the next 2-3 months, either we will move close to our setup in the state of UP or maybe Madhya Pradesh.

[Suraj Nawandhar, analyst]

And sir, can you give me debt and cash number in our books at the end Q1?

[Sorab Agarwal, executive]

I think we have a date about INR 35 crores, INR 40 crores of working capital is all we are using. And our cash investments are -- [indiscernible] what is the figure?

[Unknown Executive]

INR 455 crores.

[Sorab Agarwal, executive]

INR 455 crores.

[Suraj Nawandhar, analyst]

INR 455 crores of cash.

[Operator]

Our next question is from the line of [ Gaurav Gandhi ] from [indiscernible] Retail Capital.

[Unknown Analyst]

Congratulations on the excellent set of numbers. Just one observation. Agriculture division recorded revenue of INR 75 crores, which is a growth of almost 29% Y-o-Y. Even though the sale of Agri Equipment significantly came down from 976 units to 761 units. Can you explain what has happened here?

[Sorab Agarwal, executive]

Basically, we supplied certain bigger horsepower tractors. So the product mix change happened firstly. And also some export order got executed along with some Army orders, which were again higher horsepower and 4x4. So basically because of the price, the product mix, the overall revenue seems to be good. But in saying this, I think this is going to be maintained now. So now you will see the numbers also up and the price also going forward.I would just like to add, Vyom and Luthra sab, if you can next 1 or 2 questions, and I'll join back in about 2 minutes.

[Unknown Executive]

Sure, sir.

[Operator]

[Operator Instructions] Our next question is from the line of Chinmay from Emkay Global.

[Chinmay Kabra, analyst]

I just wanted to know that if you could just give an understanding of the couple of months of Q2, which have gone back, have you been functioning at 100% capacity utilization? Because sir was previously mentioning that we weren't able to like find enough time to focus on the CapEx and were really busy with completing the order. So just wanted to know the capacity utilization.

[Unknown Executive]

So for the Crane segment, we have been working at around 85% to 90% of the capacities because practically, there are certain inefficiencies in the system. And our capacity generally gets defined by the fabrication capabilities that we have. So because we are working at higher utilization levels, we are looking to expand in that area. With respect to the backhoe loaders and the construction equipment, we are working at around close to 55% of our capacity. And agri is currently working at 40% to 45% and Material Handling is also close to 70% to 75% of the capacity utilization.So post this expansion, which will happen in the Crane segment, specifically for the higher tonnage cranes like crawler cranes and heavy [indiscernible] cranes, which will move to a new plant, we will see capacity expansion also happening for tower cranes as well as forklifts.

[Chinmay Kabra, analyst]

And the other thing I wanted to know in terms of like the previous person had asked the question regarding the…Yes. I just wanted to know that -- I mean in the agriculture division that we have grown by 29% Y-o-Y in revenue. How -- I mean, if you could maybe just give us a much more detailed understanding of how is this going to be sustainable going ahead? Because a lot of the previous quarters have -- we have seen really the slow growth in terms of revenue in the agriculture division. So if you could maybe give a picture on that?

[Unknown Executive]

So Chinmay, we totally accept what you are saying that we have been slightly lethargic in our agri growth. But over the last 2-3 years, our fundamentals have been put in place. And our focus is basically on 3 things, which is, #1, strengthening our distribution channel domestically. So -- which we feel that now we are in a position to project around 10% to 15% growth annually, which will come from our strengthened distribution channel, which will help us to get some increased coverage for our agri product line. Second focus is on deepening our product range. So in the agri, we are coming out with the ultra-light combined. And we have also developed certain export-focused range of tractors, which are especially in the 50 to 100 HP range. That is where we are seeing some good numbers coming through.And most importantly, we are focusing on export market, which in the early end of the call, we have already explained. So all in all, we firmly believe that our fundamentals are strongly in place for future growth and what we have just seen in the first quarter is, we believe, quite sustainable going forward this time.

[Sorab Agarwal, executive]

Just to add to what you said and just to clarify more. I will not take the name of the country, but we've got some confirmed orders to be executed within this year from a reasonably good amount of orders that is for export. And it is slightly unfortunate that the Ghana opportunity did not play out in this year so far. So if that would have happened, then the number and the profile of the agri would have started to look very different. And so it's not this year, started quarter 3, quarter 4 will definitely happen in the next year. So that will also be one of the main sales apart from our domestic increasing, further exports increasing and exports in Ghana increasing.

[Chinmay Kabra, analyst]

The other question which I had was what are the -- in terms of units, if you can maybe give a perspective on the unit expansion that would be happening? I mean INR 4,000 is the expansion in terms of the revenue. I mean, what will be the expansion in terms of units, if you can maybe give a…

[Sorab Agarwal, executive]

To produce about 1,000 units in a month, so that will be about 12,000 units annually. Construction equipment, which is currently at about 150 units, we will have capacity to produce about 250 units a month, which is about 3,000 in a year. In material handling from 175 forklift, we have capacity to produce about 250 units per month, which is again about 3,000 in a year. And on the agri side, we are even as of today, about 40%, 45% utilized. So I think we have enough space [indiscernible] to continue with -- so there is no practical change happening with respect to agri.And in saying this, our tower cranes, where we could produce about 350, 400 units. So we will have a capacity which will go up to 800-900 units annually. And crawler cranes, tower cranes where we had a capacity to do about 50 units, that will go to 250 to 300 units annually.

[Chinmay Kabra, analyst]

Just want one more clarification. The market expansion that we stated that we are currently at 3% of the market is held back. Is that in the domestic?

[Sorab Agarwal, executive]

Can you be a little louder please so that the question is very clear?I think we can go to the next question and maybe he can come back again.

[Operator]

Our next question is from the line of [ Naman Shah ] from Monarch Networth Capital Limited.

[Unknown Analyst]

Congratulations on the good set of number. My first question would be, can you give us some update on the utilization of cash? [Indiscernible], we were looking for some inorganic growth. My question is like what kind of acquisition are we open to? Is it specific to India or even global?

[Sorab Agarwal, executive]

To be very frank with you. I start with the work we had planned. We've already taken over 2 much, much smaller companies in the last 1.5 years, 1.5 years, I would say, so that was finished. And we were looking at 2, one was backwards, one was forward. Unfortunately, both of them seems to have settled out. The forward one is still there, but it's really not moving anywhere. And apart from that, we are looking at some opportunities within the country and also one opportunity outside [indiscernible]. And that is why we are taking this watcher of liquidities to enable us in our organic endeavors as well as in organic endeavors.

[Operator]

We move to the next question. Our next question is from the line of Suhrid Deorah from Paladin Capital.

[Suhrid Deorah, analyst]

I have 2 questions. One is a follow-up to the previous answer question. You said you're looking at an opportunity outside of India. Could you explain what the purpose of that would be?

[Sorab Agarwal, executive]

I would love to, but I would refrain with respect to our proposed business strategy. But it would be more to utilize a develop country name to sell in the developed country.

[Suhrid Deorah, analyst]

And actually, my second question was something that you mentioned earlier about a profit opportunity and [ GDs ] and we thought it could be a very big opportunity. I was not entirely clear on that. So I think both the questions are very closely tied, so if you can give me some more color on that, that will be why you helpful.

[Sorab Agarwal, executive]

Yes. like I had mentioned that there are opportunities from the European Continent American and even let's say the developed Asian side to tie it together and produce for those countries. And we are working on them, and we are in an advanced basis, and I think some of them should close within the next 2-3 quarters. So that will also help us up our capacity, which we are creating faster and open up the sports market is a much bigger -- much organized way with consistent reduce project on numbers. And it is happening. I think I should not be speaking more than that at this time.

[Operator]

Our next question is from the line of Chinmay from Emkay Global.

[Chinmay Kabra, analyst]

I also just wanted, if you could just please give me the guidance for FY '24 once again, on the segmental level and maybe on an overall company level?

[Sorab Agarwal, executive]

Yes. So as of now, company level, we are looking at a 20% to 25% growth. Maybe some more upside, but that we can only confirm by [indiscernible]. And on the segment level, Cranes and Agri, we are looking at, at least 15%, 20%. And I'm adding the word at least. Material Handling 15% to 20% and Construction Equipment, 45% to 50%. And again, I'm adding the word at least..

[Chinmay Kabra, analyst]

I mean in terms of margins, we will be able to maintain the double-digit margins going ahead, right?

[Sorab Agarwal, executive]

Yes, yes. What we have delivered in this quarter. I think that is sustainable, 20, 30, 40 basis points here and there I really can't guarantee anything. And with our other endeavors which are in place with respect to our costs, we have also created a separate team headed by one of [indiscernible] industry who further work on our costing and our purchase and cost control, where we expect that over the next 2-3 quarters, where we should get another 1% to 2% in advances in our buy. So similar to other endeavors are also already in place. So there is further scope to further better what we are doing.

[Chinmay Kabra, analyst]

Just had one last question. The current market share that we have is 3%. And with the potential increase that we'll have in the -- with the expansion coming in, let's assume if we ramp it up to 100%. Then what could be the incremental market share that we could probably acquire with the unit that we are going to set up?

[Sorab Agarwal, executive]

I see in Construction Equipment we'll go to 3,000 units annually. So that can take us to 8%, 9% market share.

[Chinmay Kabra, analyst]

8% to 9% market share.

[Sorab Agarwal, executive]

The increase which I'm talking about is keeping [indiscernible] operation in mind. So with a little tweaking, we can easily take it up to maybe 350, 400, which will translate into 12% to 13% market share profitability with the facilities that [indiscernible] end of this year for that facility.

[Operator]

[Operator Instructions] Our next question is from the line of Naman Shah from Monarch Networth Capital Limited.

[Unknown Analyst]

Our other income is slightly higher this time. Can you give -- can you give some breakout of the other [indiscernible]?

[Sorab Agarwal, executive]

Yes. I think Mr. Luthra is the right man, but I'll try and answer. What happened in the last year, we were reporting some mark-to-market losses, which got translated into some mark-to-market benefits in this quarter. And coupled with that, our investments over the last 1 year also increased, so that also provided some extra other [indiscernible] do with that. Right, Luthram sir?

[Rajan Luthra, executive]

That's right, sir.

[Sorab Agarwal, executive]

Even we were looking at it.

[Operator]

Our next question is from the line of [ Sarika ], who is an investor.

[Unknown Analyst]

It's hard to understand the replacement cycle for the forklift, could you help me?

[Sorab Agarwal, executive]

Receivable only with respect to forklifts?

[Unknown Analyst]

Yes.

[Sorab Agarwal, executive]

I think we should be somewhere at about 25, 26 rate.

[Unknown Analyst]

At the industry level.

[Sorab Agarwal, executive]

Receivable?

[Unknown Analyst]

Replacement cycle.

[Rajan Luthra, executive]

I think her question is with respect to the replacement cycle of forklift.

[Sorab Agarwal, executive]

I heard receivable. Replacement cycle, ideally a forklift would last, if used for more than 12 hours a day, I think it will [indiscernible] in about 6-7 years. And if maintained very well and run less than 12 hours a day, maybe about 8 years. So I think 8 years, I would say, would be an average life for a forklift.

[Unknown Analyst]

Okay. Okay. So probably, if you can help me understand the breakup between the ESG replacement and the fresh demand for this quarter?

[Sorab Agarwal, executive]

I don't think we have analyzed ESG replacement with respect to this, but I know for sure that with our electric train, which we had not commercialized only because of the current load on the plant with respect to regular production. So we are seeing good traction even some of the [ LNT ] divisions with respect to their own ESG, they want to move on to electric cranes, including Reliance and even Sapa. I think we will start to evaluate that once a year into that. But yes, for sure, in the last 1 or 2 years, we have seen more traction in numbers towards electric forklifts that we do. So in our [indiscernible] forklift that we do, that has risen to 20%, 25% in our numbers. And going forward, I think it will go up to 50%. Electric forklift in our portfolio of, let's say, the numbers that we do for forklifts.Also for the reason that next year, the industry will be moving to BS-V cycle. And the smaller engine forklifts, the most popular 3 tonne the cost increase is going to make it similar price to an electric forklift. And the option of using electric is becoming cheaper for the customer because electricity is cheaper than fuel. So I think going forward, I would say, after 1 year, the demand for electric forklift is further going to increase. And accordingly, we are further strengthening our portfolio of electric forklifts as well as [indiscernible] based forklifts.

[Operator]

Ladies and gentlemen, due to time constraint, that was the last question of our question-and-answer session. I would now like to hand the conference over to the management for closing comments.

[Sorab Agarwal, executive]

Yes. Thank you. I think we have discussed most of everything. The country seems to be in a buoyant scenario. The entire world focus is on India. Manufacturing is growing, infra is growing. And even for manufacturing and infra, we are indirect benefits with respect to our end customers, mostly in place in these segments. And we are looking forward to at least a 20%, 25% growth in this year. The sustained EBITDA margins at 14.5% to 15% with definitely a scope to a possibility of upsizing or upscaling from here.And in the last -- about, let's say, in FY '21, we had planned and thought that we will double up our revenue and take INR 4,500 crores. And I think we are very much on track, and we should be able to exceed that by at least 5%, 10%, 15% and time will tell. And again, we have a sense and a feeling that from FY '24 and going to FY '27. We should be in a position to double up our revenue gains and even better margin profile in place. And in this year, in the second half, we are looking at the new product in production and commercialization, our electric crane, our aerial work platforms even have a 35 tonner that can carry crane 4x4. And also looking at materializing some, like I mentioned, export outsourcing opportunities. So all in all, I think this year can end up to be one of our best figures and [indiscernible] and lay the foundation for our doubling of process over the next 3 years again.And good evening, and thank you. That's all from my side.

[Operator]

Thank you. On behalf of Motilal Oswal Financial Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.