Action Construction Equipment for stronger thrust on agri, defence and export business

BSE-listed construction equipment manufacturer Action Construction Equipment (ACE) has chalked out plans for stronger focus on three segments — agri equipment, defence and exports — due to favourable growth outlook and as part of business derisk plans.

In agri equipment business, the company plans a multi-pronged strategy to grow the share and revenue. It has been selling tractors (in 35-90 HP range), harvester combines and rotavators, among others and has a capacity to make 9,000 agri equipment.

The business has been witnessing good momentum and the revenue from it is pegged at ₹180-200 crore for FY21 against ₹143 crore in FY20.

“We will focus on tractors and other agri products like track harvester combines where we are already at No.2 position in India. We have a strong experienced leadership team which is focussing on driving the growth in this segment. With a strategic approach, we expect to increase our presence and share in the coming years in this segment,” Sorab Agarwal, Executive Director, ACE, told BusinessLine .

Distribution channel

It has about 200 dealers for tractors across northern, western and eastern parts of the country and will be strengthening the distribution channel further. In Assam, it claims to have garnered 10 per cent market share in tractors.

It will be rolling out Orchard Special Tractor (26 HP, 4 WD) and next-gen light-weight harvesters for deeper market penetration. Harvester segment is the second-largest application segment after tractors, with the market in India projected to register a CAGR of 10.6 per cent during 2020-2025, owing to the rise in agricultural activities and increased mechanisation. The company has also forged tie-ups with leading banks and top NBFCs to provide financing support to end users.

The company sees growth opportunities in defence and export segments. “In exports, we especially see good potential for African, Middle East and South-East Asian countries for cranes, backhoes and tractors. We are targeting to reach around 15-20 per cent of sales through exports in coming years,” he said.

In the defence segment, the company is developing unique products like customised cranes, forklifts, skid steer loaders, multi-purpose tractors, telehandlers and special mobile equipment wherein it sees a strong growth potential in coming years with the government push on Atmanirbhar Bharat.

During the nine-month period of FY21, cranes contributed about 61 per cent to the company’s revenues of ₹770 crore, while construction equipment, material handling products and agri equipment accounted for 11 per cent, 9 per cent and 14 per cent respectively.