In an interview with CNBC-TV18’s Sonia Shenoy, Sorab Agarwal, ED, Action Construction Equipment spoke about the financial performance of the company in the quarter gone by and the road ahead.
Agarwal is confident of the company’s profit margins staying at 5-5.5 percent EBITDA levels. In addition, he sees an incremental rise in its revenues hereon.
Below is the verbatim transcript of the interview:
Q: Can you take us through your crane segment which has seen a good improvement this quarter. What is the outlook like going ahead, will this Rs 100 crore revenue run rate be sustainable in the crane segment?
A: I am very sure that the revenue run rate will be sustainable. Over the next six-eight months, we could be looking at incremental increase in the numbers because if you just look at 2010-2011 numbers, we are still working at 40-45 percent utilisation of the numbers as compared to that time. So yes definitely good times are bound to come and all things seem to be progressing in that direction as of now.
Q: Overall, for FY15 what could be the revenues that the company will clock in as well as the kind of margins?
A: Already we are well into November so I feel that the revenues are more or less going to be flattish may be some 3-4 percent here and there. With reference to the profit margins, I think we should be able to bring in close to about 5.5 percent EBITDA level.
Q: You have seen a drop in the agri equipment segment and we are hearing that from a lot of tractor makers as well. How long do you think it will take for you to return to the double digit growth in the agri segment? When will the turn around come about?
A: In agri, we are relatively a small player as of now; we just started three-four years back. Somehow in the last six-eight months we were facing a particular problem with respect to financing by NBFCs etc for our tractors but most of those hurdles are over now. So we are comparatively a smaller player so the market size is not a problem for us and in the last two three months again we have started taking off. So the tractor numbers are going to be much better than what we did last year.
Q: What about material handling and construction equipments, when do you expect to turn profitable at the EBIT level?
A: Currently we are not even breaking even in that business but six-eight months down the line as soon as the numbers and the volumes start to increase, we should be able to hit the breakeven level over the next six-eight months.
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