Action Construction Equipment Ltd. (ACE): A Comprehensive Overview #
About the Company #
Year of Establishment and Founding History #
Action Construction Equipment Ltd. (ACE) was established in 1995. It was founded with the vision to provide reliable and cost-effective construction and material handling equipment solutions.
Headquarters Location and Global Presence #
The company’s headquarters is located in Faridabad, Haryana, India. ACE has a presence across India and exports to various international markets, primarily in Africa, the Middle East, and South Asia.
Company Vision and Mission #
ACE aims to be a leading provider of construction and material handling equipment solutions globally, recognized for its innovation, quality, and customer service.
Key Milestones in Their Growth Journey #
- 1995: Incorporation of Action Construction Equipment Ltd.
- Early 2000s: Expansion of product portfolio to include cranes, loaders, and other construction equipment.
- 2006: Initial Public Offering (IPO) and listing on stock exchanges.
- Mid-2000s Onwards: Continuous expansion of manufacturing facilities and geographic reach.
- Recent Years: Focus on technology integration, R&D, and sustainable practices.
Stock Exchange Listing Details and Market Capitalization #
ACE is listed on the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE). Its market capitalization fluctuates based on market conditions; refer to current financial data for the most up-to-date information.
Recent Financial Performance Highlights #
Refer to recent financial reports for ACE’s most up-to-date financial performance.
Management Team and Leadership Structure #
Refer to ACE’s official website for a list of the management team.
Notable Awards or Recognitions #
ACE has received recognition for its performance. Refer to their website and press releases for details.
Their Products #
Complete Product Portfolio with Categories #
ACE offers a wide range of construction and material handling equipment, including:
- Cranes: Pick-n-Carry Cranes, Tower Cranes, Truck Mounted Cranes, Crawler Cranes
- Mobile/Tower Cranes
- Earthmoving Equipment: Backhoe Loaders, Wheel Loaders, Compactors
- Road Construction Equipment
- Agricultural Equipment: Tractors, Harvesters
- Forklifts & Warehousing Equipment
Flagship or Signature Product Lines #
ACE is well-known for its Pick-n-Carry cranes, which have a strong presence in the Indian market.
Key Technological Innovations or Patents #
ACE focuses on incorporating technology to enhance equipment performance, safety, and efficiency. They develop proprietary designs for their equipment.
Manufacturing Facilities and Production Capacity #
ACE has multiple manufacturing facilities in India, allowing for continuous supply of equipment.
Quality Certifications and Standards #
ACE follows ISO 9001:2015 for their Quality Management System.
Unique Selling Propositions or Technological Advantages #
ACE’s USP includes a wide product range, cost-effectiveness, and a strong service network, especially in the pick-n-carry crane segment.
Recent Product Launches or R&D Initiatives #
Refer to the official website for the latest product releases and R&D activities.
Primary Customers #
Target Industries and Sectors #
ACE’s primary customers are in the:
- Construction
- Infrastructure
- Mining
- Logistics
- Agriculture
- Industrial sectors
Geographic Markets (Domestic vs. International) #
ACE has a strong presence in the Indian domestic market and exports to countries in Africa, the Middle East, and South Asia.
Major Client Segments (Agricultural, Industrial, Residential, etc.) #
ACE serves a diverse range of clients, including:
- Infrastructure developers
- Construction companies
- Mining companies
- Agricultural businesses
- Logistics providers
- Government organizations
Distribution Network and Sales Channels #
ACE has an extensive distribution network across India, including dealerships, service centers, and direct sales offices.
Major Competitors #
Direct Competitors in India and Globally #
Key competitors include:
- Indian Competitors: Escorts Group, TIL Limited, Sany India
- Global Competitors: Liebherr, Manitowoc, Zoomlion, XCMG
Competitive Advantages and Disadvantages #
- Advantages: Strong brand recognition in certain segments (e.g., pick-n-carry cranes), cost-competitiveness, established distribution network in India.
- Disadvantages: Smaller scale compared to global giants, potentially less advanced technology in some product lines.
How They Differentiate from Competitors #
ACE differentiates itself by offering a cost-effective alternative with a wide range of products tailored to the Indian market. They focus on providing strong service support and building long-term relationships with customers.
Future Outlook #
Expansion Plans or Growth Strategy #
ACE’s expansion plans may include:
- Expanding its product portfolio with newer technologies.
- Strengthening its presence in international markets.
- Increasing investments in R&D to develop innovative products.
- Further developing its after-sales service network.
Sustainability Initiatives or ESG Commitments #
ACE is focusing on environmental conservation and is implementing ESG initiatives.
Action Construction Equipment Limited - Financial Analysis Report (FY 2023-24) #
Key Financial Metrics: 2-Year Trend Analysis (FY24 vs. FY23) #
Consolidated Performance #
- Total Income: Increased by 35.86% from ₹2,200.80 Crores in FY23 to ₹2,990.90 Crores in FY24.
- EBITDA: Increased by 83.31% Y-o-Y to ₹480 Crores.
- EBITDA Margin: Expanded by 415 basis points from 11.91% in FY23 to 16.06% in FY24.
- Profit After Tax (PAT): Increased by 89.72% Y-o-Y to ₹328 Crores.
- PAT Margin: Improved by 311 basis points from 7.86% in FY23 to 10.97% in FY24.
- Earnings Per Share (EPS): Increased by 91.26% Y-o-Y.
Standalone Key Financial Ratios (FY24 vs. FY23 Change) #
- Debtors Turnover: Improved by 44.38%.
- Inventory Turnover: Improved by 2.13%.
- Interest Coverage Ratio: Deteriorated by 11.96%.
- Current Ratio: Marginally improved by 0.13%.
- Debt Equity Ratio: Improved significantly (decreased) by 65.17%.
- Operating Profit Margin (%): Increased by 3.41% (from 9.60% to 13.06%).
- Net Profit Margin (%): Increased by 50.65% (from 7.47% to 11.25%).
- Return on Net Worth (%): Increased by 58.90% (from 19.37% to 30.78%).
Business Segment Performance (Standalone Basis, FY24 vs. FY23) #
Cranes #
- Revenue: Increased by 37.75% to ₹2,104.59 Crores.
- EBIT: Increased by 75.80% to ₹342.96 Crores.
Construction Equipment #
- Revenue: Increased by 54.82% to ₹386.21 Crores.
- EBIT: Increased significantly by 110.93% to ₹49.59 Crores.
Material Handling #
- Revenue: Increased by 8.60% to ₹183.69 Crores.
- EBIT: Increased by 16.31% to ₹24.25 Crores.
Agri Equipment #
- Revenue: Increased by 12.06% to ₹237.05 Crores.
- EBIT: Increased by 64.88% to ₹8.92 Crores.
Detailed Analysis #
## Action Construction Equipment Limited - Financial Analysis (FY2023-24)
### Balance Sheet Analysis
#### Comparative Analysis of Assets, Liabilities, and Equity (Consolidated)
**(₹ in Crores)**
| Balance Sheet Item | As at Mar 31, 2024 | As at Mar 31, 2023 | YoY Change (%) |
|---------------------------|--------------------|--------------------|----------------|
| **ASSETS** | | | |
| **Non-Current Assets** | | | |
| Property, Plant & Equipment | 55.96 | 47.21 | 18.53% |
| Capital Work-in-Progress | 4.36 | 2.44 | 78.69% |
| Investment Property | 1.71 | 1.74 | -1.72% |
| Right-of-Use Assets | 1.16 | 0.52 | 123.08% |
| Intangible Assets | 0.19 | 0.20 | -5.00% |
| Financial Assets: | | | |
| - Investments | 22.45 | 13.67 | 64.23% |
| - Other Financial Assets | 1.84 | 3.88 | -52.58% |
| Other Tax Assets (Net) | 0.41 | 0.18 | 127.78% |
| Deferred Tax Assets | - | 0.38 | -100.00% |
| Other Non-Current Assets | 3.35 | 0.40 | 737.50% |
| **Total Non-Current Assets**| **89.64** | **68.86** | **30.18%** |
| **Current Assets** | | | |
| Inventories | 55.02 | 41.81 | 31.60% |
| Financial Assets: | | | |
| - Investments | 36.09 |
Financial Analysis of Action Construction Equipment Limited (ACE) - FY 2023-24 #
Overall Financial Performance (Consolidated FY 2023-24 vs FY 2022-23) #
Action Construction Equipment Limited (ACE) demonstrated robust financial performance in FY 2023-24. Key highlights include:
- Total income surged by 35.86% to ₹2,990.90 Crores from ₹2,200.80 Crores.
- EBITDA witnessed a significant increase of 83.31%, reaching ₹480 Crores, with EBITDA margins expanding by 415 basis points to 16.06% from 11.91%.
- Profit After Tax (PAT) grew by an impressive 89.72% to ₹328 Crores, and PAT margins improved by 311 basis points to 10.97% from 7.86%.
- Diluted EPS also saw a substantial rise of 91.26%.
This performance was driven by volume and value growth across all segments.
Segment Performance (Standalone FY 2023-24 vs FY 2022-23) #
- Cranes:
- Revenue increased by 37.75% to ₹2,104.59 Crores.
- EBIT grew by 75.80% to ₹342.96 Crores.
- This segment remains the largest contributor to revenue and profitability.
- Construction Equipment:
- Revenue rose by 54.82% to ₹386.21 Crores.
- EBIT increased significantly by 110.93% to ₹49.59 Crores, indicating strong demand and improved operational leverage.
- Material Handling:
- Revenue grew by 8.60% to ₹183.69 Crores.
- EBIT increased by 16.31% to ₹24.25 Crores.
- Agri Equipment:
- Revenue saw an increase of 12.06% to ₹237.05 Crores.
- EBIT grew by 64.88% to ₹8.92 Crores, reflecting a positive turn in this segment.
Key Financial Ratios Analysis (Standalone) #
- Debtors Turnover: Improved by 44.38%, indicating faster realization of trade receivables and better working capital management.
- Inventory Turnover: Marginal improvement of 2.13%, suggesting efficient inventory management.
- Interest Coverage Ratio: Deteriorated by 11.96%. Finance costs also rose by 125.17% (consolidated), indicating higher borrowing or interest rates impacting coverage.
- Current Ratio: Marginal improvement by 0.13%, reflecting stable liquidity management.
- Debt Equity Ratio: Significantly improved (reduced) by 65.17%, primarily due to a reduction in short-term borrowings. This strengthens the balance sheet and reduces financial risk.
- Net Profit Margin: Increased by 50.65% (from 7.47% to 11.25%), showcasing enhanced profitability.
- Return on Net Worth: Increased by 58.90% (from 19.37% to 30.78%), demonstrating improved efficiency in generating profits from shareholders’ equity.
Risk Profile Analysis #
The following risk analysis is based on information provided by the company and categorized into standard risk categories.
1. Strategic Risks #
1.1. Economic Slowdown & Geopolitical Environment #
- Severity: High
- Likelihood: Medium
- Trend: Stable to Increasing
- Mitigation: Diversified product mix, focus on export markets, monitoring global developments, balanced sales profile across regions, agility to adjust sales mix and product features.
- Control Effectiveness: Moderate to High
- Potential Financial Impact: Reduced revenue, lower profit margins, delayed projects.
1.2. Competitive Intensity #
- Severity: High
- Likelihood: High
- Trend: Increasing
- Mitigation: Strong in-house R&D, continuous product development and technology upgrades, increasing channel reach, customer-centric products and services, brand building.
- Control Effectiveness: High
- Potential Financial Impact: Loss of market share, pressure on pricing and margins.
1.3. Technology Innovation #
- Severity: Medium
- Likelihood: High
- Trend: Increasing
- Mitigation: Investment in R&D, continuous product upgrades.
- Control Effectiveness: High
- Potential Financial Impact: Product obsolescence if not addressed, loss of competitive edge.
2. Operational Risks #
2.1. Supply Chain Disruption & Raw Material Price Volatility #
- Severity: High
- Likelihood: Medium to High
- Trend: Stable to Slightly Decreasing
- Mitigation: Sustainable low-cost production efforts, operational excellence, securing key raw material linkage, cost optimization projects, development of alternate suppliers, enhanced localization, supplier financing access.
- Control Effectiveness: Moderate to High
- Potential Financial Impact: Increased cost of goods sold, production delays, reduced profit margins.
2.2. Inadequate Project Management & Workforce Availability #
- Severity: Medium
- Likelihood: Medium
- Trend: Stable
- Mitigation: Robust internal control systems, ERP, process reviews, focus on skilled workforce.
- Control Effectiveness: Moderate
- Potential Financial Impact: Project overruns, penalties, reputational damage.
2.3. Fluctuations in Demand for Construction Equipment #
- Severity: Medium
- Likelihood: Medium
- Trend: Stable
- Mitigation: Diversified product portfolio, agility in catering to various industries, focus on export markets.
- Control Effectiveness: High
- Potential Financial Impact: Underutilization of capacity, inventory build-up, revenue volatility.
2.4. Distribution Channels, Retailer Network, Customer Service Delivery #
- Severity: Medium
- Likelihood: Medium
- Trend: Stable
- Mitigation: Improving dealer profitability and financial health, simplifying online channels, enhancing retailer systems and tools, initiatives for seamless sales and after-sales experience.
- Control Effectiveness: Moderate to High
- Potential Financial Impact: Reduced sales, loss of customer loyalty, increased service costs.
2.5. Occupational, Health and Safety (OHS) Risks #
- Severity: High
- Likelihood: Low to Medium
- Trend: Stable
- Mitigation: Compliance with laws/standards, safety training, mandatory PPE, regular safety meetings, review of incidents.
- Control Effectiveness: High
- Potential Financial Impact: Regulatory fines, operational downtime, compensation claims, reputational damage.
Financial Analysis: Action Construction Equipment Limited (FY 2023-24) #
Overall Financial Performance (Consolidated FY 2023-24) #
Action Construction Equipment Limited (ACE) reported robust financial performance for the fiscal year 2023-24.
- Total Income: Increased by 35.86% to ₹2,990.90 Crores from ₹2,200.80 Crores in FY23.
- EBITDA: Surged by 83.31% to ₹480 Crores (FY24) from figures in FY23 (derived: ₹261.85 Crores based on the 83.31% growth from ₹480 Crores and FY23 EBITDA margin of 11.91% on income of ₹2,200.80 Crores).
- EBITDA Margin: Improved significantly by 415 Bps to 16.06% from 11.91% in FY23.
- Profit After Tax (PAT): Grew by 89.72% to ₹328 Crores (FY24) from figures in FY23 (derived: ₹172.88 Crores).
- PAT Margin: Increased by 311 Bps to 10.97% from 7.86% in FY23.
- Diluted EPS: Witnessed a growth of 91.26%.
The company achieved its highest-ever revenue, profit, and profit margins, indicating strong operational efficiency and market demand.
Segment Performance (Standalone FY 2023-24) #
All operating segments demonstrated positive revenue and EBIT growth:
Cranes Division #
- Revenue: Increased by 37.75% to ₹2,104.59 Crores from ₹1,527.83 Crores in FY23.
- EBIT: Increased by 75.80% to ₹342.96 Crores from ₹195.08 Crores in FY23.
Construction Equipment Division #
- Revenue: Increased by 54.82% to ₹386.21 Crores from ₹249.46 Crores in FY23.
- EBIT: Increased by 110.93% to ₹49.59 Crores from ₹23.51 Crores in FY23.
Material Handling Division #
- Revenue: Increased by 8.60% to ₹183.69 Crores from ₹169.14 Crores in FY23.
- EBIT: Increased by 16.31% to ₹24.25 Crores from ₹20.85 Crores in FY23.
Agri Equipment Division #
- Revenue: Increased by 12.06% to ₹237.05 Crores from ₹211.54 Crores in FY23.
- EBIT: Increased by 64.88% to ₹8.92 Crores from ₹5.41 Crores in FY23.
The Cranes and Construction Equipment divisions were significant contributors to both revenue and EBIT growth.
Key Financial Ratios & Liquidity (Standalone FY 2023-24) #
- Debtors Turnover: Improved by 44.38%, indicating faster realization of trade receivables.
- Inventory Turnover: Improved by 2.13%, reflecting better inventory management.
Financial Analysis Report: Action Construction Equipment Limited (FY 2023-24) #
Auditor’s Opinion and Qualifications #
The Independent Auditor, B S R & Co. LLP, issued an unmodified opinion on both the standalone and consolidated financial statements for the year ended March 31, 2024. This signifies that the financial statements present a true and fair view in conformity with Indian Accounting Standards (Ind AS) and the Companies Act, 2013.
Standalone Financial Statements #
The auditor’s report includes an “Other Matter” paragraph stating that their opinion, insofar as it relates to the amounts and disclosures for Action Construction Equipment Limited Employees Welfare Trust, is based solely on the report of another independent auditor.
Consolidated Financial Statements #
The auditor’s report includes an “Other Matter” paragraph indicating reliance on reports of other independent auditors for one subsidiary and one employee welfare trust. Additionally, the financial statements of two subsidiaries, whose financial information is deemed not material to the Group, were unaudited and based on management-certified information.
No qualifications were made on the financial statements themselves. However, under “Report on Other Legal and Regulatory Requirements” (Rule 11(g) of Companies (Audit and Auditors) Rules, 2014), the auditor noted for both standalone and consolidated reports that while the company uses accounting software, the feature of recording an audit trail (edit log) facility has not been enabled. This is a compliance deficiency.
Key Audit Matters (KAMs) #
For both standalone and consolidated statements, “Revenue recognition relating to sale of products” was identified as a Key Audit Matter due to the inherent risk of misstatement and its significance as a key performance indicator.
Key Accounting Policies and Changes #
The financial statements are prepared under the historical cost basis, except for certain financial assets, liabilities, and plan assets measured at fair value, in accordance with Ind AS. Key accounting policies consistently applied include:
- Revenue Recognition: Revenue from product sales is recognized upon transfer of control to customers. Revenue from services is recognized as rendered.
- Inventories: Valued at the lower of cost (weighted average) and net realizable value.
- Property, Plant, and Equipment (PPE): Measured at cost less accumulated depreciation and impairment. Depreciation is on a straight-line basis over estimated useful lives.
- Intangible Assets: Recorded at cost less accumulated amortization (straight-line) and impairment.
- Financial Instruments: Classified and measured at amortized cost, Fair Value Through Other Comprehensive Income (FVOCI), or Fair Value Through Profit or Loss (FVTPL) based on business model and cash flow characteristics. Expected Credit Loss (ECL) model is applied for impairment.
- Leases: Right-of-use assets and lease liabilities are recognized for leases, with exemptions for short-term and low-value leases.
- Impairment: Non-financial assets are reviewed for impairment indicators at each reporting date. Financial assets are assessed for ECL.
- Employee Benefits: Include short-term benefits, defined contribution plans, defined benefit plans (actuarially valued), and share-based payments (fair valued at grant date).
- Income Tax: Current tax is based on taxable income; deferred tax is recognized on temporary differences.
Changes in Accounting Policies #
No material changes in accounting policies were reported for FY 2023-24. The company applied existing policies consistently. Notes to the financial statements (Standalone: 1.2.v; Consolidated: 1.3.v) indicate that the Ministry of Corporate Affairs (MCA) did not notify any new standards or amendments applicable to the company/group for FY 2023-24.
Internal Control Effectiveness #
Management’s Assertion #
The Board’s Report and Management Discussion & Analysis (MD&A) state that the company has adequate internal control systems and procedures commensurate with its size and operations, designed to ensure reliability in financial reporting, safeguarding of assets, and legal compliance. The Directors’ Responsibility Statement confirms adequate internal financial controls are in place and operating effectively.
Auditor’s Assessment #
The Independent Auditor’s Report on Internal Financial Controls (Annexure B to the main audit report) opines that the company has, in all material respects, adequate internal financial controls with reference to financial statements, and such controls were operating effectively as at March 31, 2024.
Identified Weakness #
A significant control deficiency was highlighted by the auditors: the accounting software used by the company did not have the audit trail (edit log) facility enabled. This impacts the verifiability and integrity of accounting records and is a non-compliance with Rule 3(1) of Companies (Accounts) Rules, 2014 and Rule 11(g) of the Companies (Audit and Auditors) Rules, 2014.
Regulatory Compliance Status #
Secretarial Audit #
The Secretarial Audit Report (Form MR-3) for FY 2023-24, issued by Vasisht & Associates, Company Secretaries, states that the company has complied with applicable statutory provisions (Companies Act, SCRA, Depositories Act, FEMA, SEBI Regulations, specific labour and environmental laws) and has proper Board processes and compliance mechanisms. The report contains no qualifications, reservations, or adverse remarks.
Secretarial Compliance Report #
The Annual Secretarial Compliance Report further confirms compliance with all applicable SEBI Regulations and circulars/guidelines.
Corporate Governance #
The Corporate Governance Report details compliance with SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The company has affirmed compliance with its Code of Conduct.
Audit Trail Non-Compliance #
As noted above, the failure to enable the audit trail (edit log) feature in the accounting software represents a non-compliance with specific provisions of the Companies (Accounts) Rules, 2014 and Companies (Audit and Auditors) Rules, 2014. This is a regulatory lapse requiring remediation.
Statutory Dues #
The auditor’s report (CARO) indicates that undisputed statutory dues have generally been regularly deposited, though some delays were noted for Income-Tax. Disputed statutory dues primarily relate to GST, Income Tax, Excise Duty, and VAT, pending at various appellate forums.
Legal Proceedings and their Potential Impact #
Contingent Liabilities #
Note 34 to the Standalone Financial Statements and Note 35 to the Consolidated Financial Statements detail claims against the company not acknowledged as debts. These primarily consist of:
- Tax-related matters: Disputes concerning Income Tax (disallowances of deductions/expenses), Central Excise (classification disputes, CENVAT credit), Service Tax (export of services rules), Goods and Services Tax (transition of input tax credit), and West Bengal Value Added Tax (rate/classification disputes). The total disputed tax amount is approximately ₹367.80 lakhs (Standalone) and ₹374.78 lakhs (Consolidated).
- Other matters: Claims related to employees/ex-employees and customers amounting to ₹100 lakhs (Standalone) and ₹1,088.37 lakhs (Consolidated).
Management and Auditor Assessment #
The company management and auditors state that pending resolution, it is not practicable to estimate the timings of cash outflows, and they do not expect the outcome of these proceedings to have a materially adverse effect on the company’s/group’s financial position.
Significant Orders #
The Board’s Report states there were no significant and material orders passed by regulators, courts, or tribunals impacting the going concern status and company’s operations in the future.
Related Party Transactions (RPTs) #
All transactions with related parties during FY 2023-24 are reported to have been conducted on an arm’s length basis and in the ordinary course of business. These transactions were approved by the Audit Committee. Form AOC-2 (Annexure V to Board’s Report) confirms that no contracts or arrangements were entered into with related parties that were not at arm’s length, and no material RPTs (as defined by SEBI LODR and the company’s policy) were entered into.