Action Construction Equipment Limited (ACE) Q2 FY23 Earnings Concall Transcript

Action Construction Equipment Limited (NSE:ACE) Q2 FY23 Earnings Concall dated Nov. 10, 2022

Corporate Participants:

Sorab Agarwal — Executive Director

Rajan Luthra — Chief Financial Officer

Analysts:

Amar Kedia — Ambit Capital — Analyst

Abhishek — Jaguar Nemetschek — Analyst

Chinmay Kabra — Emkay Global — Analyst

Chinmay Kabra — MK Global — Analyst

Himanshu Upadhyay — O3 Capital — Analyst

Asha Sundarka — Nivishay — Analyst

Suhrid Deorah — Paladin Capital. — Analyst

Akshay Kotari — Envision Capital — Analyst

Kushal Chute — Individual Investor — Analyst

Aman Shah — GT Investments — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to Action Construction Equipment Limited 2Q FY ’23 Results Conference Call hosted by Ambit Capital. [Operator Instructions] Please note that this conference is being recorded. I now had the conference over to Mr. Amar Kedia from Ambit Capital. Thank you, and over to you, sir.

Amar Kedia — Ambit Capital — Analyst

Thanks, Ajith. Good afternoon, everyone. On behalf of Ambit Capital, I welcome you all to the 2Q FY ’23 results con call for Action Construction Equipment. Representing the company today we have Mr. Sorab Agarwal, Executive Director; Mr. Vyom Agarwal, Senior Vice President; and Mr. Rajan Luthra, CFO of the company. I now invite the management for the — a brief opening remark, following which we will open the floor for Q&A. Over to you, sir.

Sorab Agarwal — Executive Director

Yes. Good afternoon, everybody, and welcome to this earnings conference call for discussing the results for the last quarter and half year ended 30th September, ’22. Along with me in today’s earning call, we have our CFO, Mr. Rajan Luthra; and our Head of Investor Relations, Mr. Vyom Agarwal. I hope that all of you have had an opportunity to look at the company’s financial statements and the earnings presentation which had been circulated and uploaded at the stock exchanges. In the last quarter, we have appointed KPMG as our statutory auditors of the company in place of M/s BRAN & Associates who had successfully completed this tenure of five consecutive years and quarter 2, FY ’23 marks KMPG’s first reviewed quarter for the company. To briefly you on the standalone financial performance of the second quarter of financial year ’23. The operational revenues grew by 36% on a year-on-year basis, so approximately INR491 crores with an EBITDA margin of 10.7%. The EBITDA during the quarter increased to INR52.56 crores at the rate of 10.7% in comparison to INR36.33 crores at 10.1% on a yearly basis, which is a growth of around 45%. The PBT grew by 56% and PAT grew by 55% year-on-year to INR46.55 crores and INR35.66 crores respectively.

While the PBT and PAT margins stood at 9.5% and 7.3%. On a sequential basis, the operational revenue was more or less flat. However, EBITDA grew by 15%, PBT grew by 17.8%, and PAT grew by 23.6% as compared to quarter one FY ’23 with a margin expansion of 1.5% during the quarter. It is important to note that despite the challenging times and erratic inflationary scenario, the company achieved its highest ever revenues, EBITDA, PBT and PAT margins for the second quarter due to sustained focus on cost efficiency and customer-centric approach. In the quarter gone by, we continued strong performance in our identified segments. In the crane segment with our dominant market leadership position, we registered revenue of INR356.88 crores with margins of 12.81%. On a year-on-your basis, the crane segment registered a robust revenue growth of 48%. Similarly, we were able to achieve 36% growth in our construction equipment segment with minor increase in our EBITDA margins. In metal handling segments, the revenue fell short by 5%. However, the margins were sustained above 10%. And in agri segment the revenue grew by 6%. Also, we would like to state that in the quarter gone by the markets were a little subdued due to excessive and for prolong monsoons and showed signs of revival in the second half of September owing to festive demand.

We believe that going forward the demand scenario should remain strong aided by government’s unwavering focus on urban infra and rural development. In the last quarter, we have also received good export orders, which will start reflecting in our numbers from quarter three onwards. Further, for first half of FY ’22 — FY ’23, we have been able to grow our revenues by 45% to INR990 crores. On the half-yearly basis EBITDA grew by 43.9% to INR98.3 crores. PBT grew 53.2% and PAT grew 52.3% to INR86 crores and INR42.35 crores respectively. In the first half, the margin profile stood at 9.9% at EBITDA levels, 8.7% at PBT level, and 8.5% at PAT levels. Our consistent strong performance is reflective of our strategic clarity, sense of our brand, our capabilities, talented people, and the ability to run the business. We have a clear and compelling strategy and with our positioning in infra, manufacturing and agriculture sector, underpinned by strong operational excellence and our distinctive qualities, capabilities, will enable us to drive growth forward and create a purpose-led future-fit organization. On the operational side, while they had been some easing of commodity prices and supply chain pressures, inflation still continues to be a significant challenge for the industry. Except for mild steel which has seen some meaningful correction from its peak, most of the other commodities remain volatile and elevated. So, in summary, while the operating environment has improved, it has remained challenging. Further, if commodities were to remain where they are today, we expect the price versus cost gap to narrow further, leading to a sequential improvement in gross margins in December quarter.

Further in the last quarter, we have already started to set up a new manufacturing facility for bigger cranes. That is truck cranes, crawler cranes, and rough terrain cranes. The new plant is expected to commence commercial production by March end ’23, and will increase our capacity to manufacture bigger cranes by approximately 4x. As we aspire to grow in the bigger crains market with infrastructure growth in the country. This new plant will simultaneously enable us to release capacity for forklift and tower crane business by about 40% to 50% each since currently the activities are in a combined plant and by shifting to a new plant we will unlock the capacity of these two segments as well. Looking ahead, we remain optimistic about the medium- to long-term prospects of the company and believe that our building blocks are firmly in place for sustainable growth in all the four segments where we operate, leading to expansion in top line, bottom line, and margins of the company. Further, we would like to revise our earlier guidance and expect a growth of 25% plus in crane segment for the current year and 30% to 35% growth in construction equipment, segment. Material handling and agri segments are expected to grow at around 15% during this year. On the whole, we are looking at least a 25% increase in our top line for the current year with expansion in our EBITDA margins as compared to last year. With this, I would like to open the call for question-and-answer session. Thank you.

Questions and Answers:

Operator

[Operator Instructions] The first question comes from the line of Abhishek from Jago Niveshak.

Abhishek — Jaguar Nemetschek — Analyst

Sir, I have only twp questions. First being the missile system or the multiple purpose tractors for defense of the army, which you have recently started developing, does the economics work over there? Why that question came because most of us don’t like when we supply directly to the government as there has always been an issue for the payment clearance. So can you give some picture on this B2G contract, what you have been getting recently?

Sorab Agarwal — Executive Director

See, I don’t think we have any issues on the payment front. It is directly from the Ministry, and things are, as of now, going smooth, we already started executing that order. Yes, on the margin front there is a slight pressure because when it was quoted and some time between them and now, definitely commodity and inflation pressure has played us. So the margins are a little squeezed, but it’s not a — on the whole we do not clearly have — see any commercial problem with this particular order.

Abhishek — Jaguar Nemetschek — Analyst

Okay. Okay, great. The other one is, as you’re supplying the defense equipment through another company like maybe TATA or L&T. So in that case, aren’t we leaving some margins on the table for them or these are the — like these are simply small parts which they need to complete their equipments?

Sorab Agarwal — Executive Director

See, basically this is frame is a part of a missile handling system and which also includes six by six or eight by eight special vehicles. It’s a special chassis, not like normal commercial vehicles, coupled with some other arrangements. So it is a part of that. So we are definitely taking our part of the margin. And how much we have left for them is for them to decide.

Abhishek — Jaguar Nemetschek — Analyst

Okay. Okay. Sure, sure, sure. And just one last follow up. Do we have any preferred banking channel partner, like partners or an in-house finance solution for these people like who are coming to you as a client, or we are leaving it for them to decide which one they want to go for?

Rajan Luthra — Chief Financial Officer

See, we are working with all the possible NBFCs you can think of who are into equipment finance. And obviously the biggest of them being HDFC, ICICI and [Indecipherable] et cetera. I mean, we work with everybody, whether it is [Indecipherable], whatever name comes to your mind. So if there is many customer ask us to support, then obviously we take them to our ED finances. Otherwise most of the customers are wise enough and they want to choose and negotiate on their own with the finance company for their interest needs.

Operator

Next question comes from the line of Chinmay Kabra from Emkay Global.

Chinmay Kabra — Emkay Global — Analyst

So what has been the market, crane market, how has it grown over the Y-on-Y versus this quarter?

Sorab Agarwal — Executive Director

Are you talking about the crane market?

Chinmay Kabra — MK Global — Analyst

Yes, sir.

Sorab Agarwal — Executive Director

It is evident in our results. We’ve been able to, on a quarterly basis, year-on-year, we’ve grown by about 47%, 48%. Quarter-on-quarter, it has been flattish because generally quarter two is pretty subdued because of monsoons and this time the monsoons were a little extended again. So quarter-on-quarter, it was flattish. Otherwise, more or less been able to grow around 47%, 48% year-on-year. And I can give you an idea how we have grown 47% or 48%, about 28%, 30% because of volumes, approximately about 10-odd percent due to pricing, price increase, and another 10-odd percent on account of product mix, were in the higher end or the more expensive or the bigger models have been chose by the client. So the market is shifting or migrating a little towards the bigger models.

Chinmay Kabra — Emkay Global — Analyst

Okay. So on this bigger model, there is this facility that we are booking for the bigger cranes, what — how much CapEx will be required for this, sir?

Sorab Agarwal — Executive Director

See, again, what I was talking about was more about [Indecipherable] cranes. This facility is primarily for cranes which are about 40 tonnes. So 40 tonnes and bigger, which are truck cranes, crawler cranes and also rough terrain cranes, where we are currently present in truck cranes as well as crawler cranes, and we are increasing our capacity by around 4x. So instead of 40, 50 cranes, we will be capable of making 180, 200 cranes once this facility becomes functional. And CapEx on this site is about INR30 crores, INR35 crores for activaty, leaving out cost of land because we already have land available with us. And some land available with us. And eventually create at least INR300 crores, INR400 crores revenue size, which can easily be expanded to INR500 crores, INR600 crores eventually, from this facility.

Operator

The next question comes from the line of Himanshu Upadhyay from O3 Capital.

Himanshu Upadhyay — O3 Capital — Analyst

Congrats on good set of number. I have a question on this material handling. The volume has degrown quite significantly. We have been able to raise prices and maintain the revenue and profitability. But what is the outlook from here on, means the commodity prices have gone down, what we understand. Can the focus will again move back to getting volume for both material handling and agriculture equipment? Or you think you would like to keep the prices at what they are, both these two segments?

Sorab Agarwal — Executive Director

And in the material handling segment, our revenues on year-on-year as well as quarter-on-second has come down about 5%, 6%. But I think it’s just a temporary phase. Market was definitely a little subdued on account of our order booking, but things have again started looking up. And I think this fact was further aggravated because of overall pricing increase. And we also did have a little bit of some production [Indecipherable] with respect to the quantity we wanted to produce. But on the while, things are on track. And hopefully, by the end of the year, we should again see a 15% growth in this segment as well. And yes, there was a little, let’s say, rebound [Indecipherable] pricing increase we wanted it. But now things have settled in. And like I said, by the end of the year, we should be close to [Indecipherable] growth rate as well in metal handling. And something similar with agri here. There has been [Indecipherable] because of commodities but now things have started cooling off. So hopefully in quarter three as well as quarter four, which are generally our bigger quarters, so the pricing pressure will also be let off, a little bit of operating leverage will also come into play. And here, again, I think we are looking at actually 15% growth in our top line, coupled with normalizing our EBITDA margin to earlier levels.

Himanshu Upadhyay — O3 Capital — Analyst

The growth, what we are expecting, do we expect it to cross the last year’s volume…

Sorab Agarwal — Executive Director

Yes, 100%.

Himanshu Upadhyay — O3 Capital — Analyst

In both these two segments?

Sorab Agarwal — Executive Director

Yes, yes, 100%.

Himanshu Upadhyay — O3 Capital — Analyst

And then one thing, on the cranes side, what we are seeing is increased activity on the residential and buildings side, okay?

Sorab Agarwal — Executive Director

Yes, we are.

Himanshu Upadhyay — O3 Capital — Analyst

And, yes, real state. And even in tier two, tier three cities, the construction is becoming more and more vertical, okay. So what is the sense you are getting on the tower cranes side? And how is the competition evolving? And what growth you are seeing in that segment? And can it be a significant large growth for us over next two, three years as the real state starts improving? So some thoughts on that. And earlier, we had a limited product but high market share. So are we thinking of increasing our product’s height and the capacity to increase the weightage on that product?

Sorab Agarwal — Executive Director

First I’ll answer the first part of your question. Yes, it has been 9, 10 months we have been seeing heightened activity with respect to real estate segment which primarily employs a lot of tower trains because building are, construction is more like vertical now, land has become so expensive. And if we compare our H1 numbers of this year on a year-on-year basis. So I can see that we have increased our numbers also by approximately 45%, 50% in this segment. So hopefully, it is here to stay. And we — the tower cranes we are doing, which we are manufacturing in India are already up to 16 tonne capacity, which are very well suited even for precast construction. But in some construction sites, you also require a 20, 25 tonne crane where the precast sections are very heavy. So that model currently is under development with us.

So hopefully, in the first half of next year we will also have a 20, 25 tonne model. And we do not want to go bigger than that at this concept because that is 99% or even more of the Indian market. Given the numbers for 20, 25 tonnes are very limited, but we want to be present in that market and manufacturing [Indecipherable]. Apart from that, our heights are quite suitable for the buildings, rather we have — we are giving cranes up to 250, 260 meters height already in the country, which are some of the highest heights in the country. And apart from that, in this portfolio, we also have a self-erecting, we call it a mobile tower crane. So wherein we are working at 24 meters and 36 meter height. So there again, maybe in the next year, we’ll introduce a new model, 40, 42 meter height with slightly better reaches and grip capacity to cater to the gap between self-erecting tower cranes and the normal fit tower cranes fitted to that gap. And so that the product line will become seamless for the future. And yes, real estate definitely seems to be growing. New fresh construction is definitely picking up and picking up very fast.

Himanshu Upadhyay — O3 Capital — Analyst

And lastly, on the backhoe loaders, okay, and the construction equipment, are we seeing — how is the market developing? Means is — are people reducing the prices because of now commodity inflation going down? And what would be our strategy from here on to gain market share in that side of the business, which is the larger market opportunity for us?

Sorab Agarwal — Executive Director

Yes, in the construction equipment segment, we have been able to attain growth both on quarter-on-quarter and especially on a yearly basis, by about 35%. Prices, I don’t see people or competitors reducing any prices because the way commodity had increased, especially in the first half of Q1 of the current year and then normalize. So it is still similar to the levels more or less at which it was in the last year. So nobody was able to take price correction enough to cover up for that increase. So I don’t see selling prices pulling off, but as of they can only increase a little. And we are very confident and hopeful and all the hard work that we have been doing has started to pay off. So hopefully, this year, we should be to do a 30%, 35% increase in our construction equipment portfolio, maybe backhoe even more than that in terms of numbers also.

Operator

Next question comes from the line of Asha Sundarka from Nivishay.

Asha Sundarka — Nivishay — Analyst

My question is with respect to the cranes business. So what is the product-wise breakup in volume terms?

Sorab Agarwal — Executive Director

Product-wise breakup in volume terms. Luthra, sir, can we just get give the — you want it for the quarter or the first half?

Asha Sundarka — Nivishay — Analyst

For the first half.

Sorab Agarwal — Executive Director

For the first half.

Rajan Luthra — Chief Financial Officer

In second.

Asha Sundarka — Nivishay — Analyst

And quarter also, sir. And quarter also, sir.

Sorab Agarwal — Executive Director

So you want it on quarter or half yearly basis.

Asha Sundarka — Nivishay — Analyst

Quarter, quarter, sir, quarter.

Rajan Luthra — Chief Financial Officer

Quarter-on-quarter [Indecipherable]. Mobile tower crane we have done 25 and fixed tower crane 65 [Indecipherable].

Sorab Agarwal — Executive Director

And crawler cranes also

Rajan Luthra — Chief Financial Officer

[Indecipherable] we have done 20 numbers.

Sorab Agarwal — Executive Director

And crawler cranes also we have done about 16 numbers.

Rajan Luthra — Chief Financial Officer

16 numbers.

Asha Sundarka — Nivishay — Analyst

Okay. So and for H1 also, sir, if you could give the numbers.

Rajan Luthra — Chief Financial Officer

H1, for current year, full this year we have done [Indecipherable] 2,787 [Indecipherable] mobile tower crane 42, fixed tower crane 141, crawler crane 18 numbers and truck-mounted crane 38 numbers.

Asha Sundarka — Nivishay — Analyst

Okay, sir. And the second question is, like 60% of your input cost is steel, right, which is inclusive of both the in-house as well as the assembling part. So how much of this 60% is only for the in-house part, that is one. And second, in steel also, there are lot of types. So can you just name those types and percentage of each that is used in the fabrications part?

Sorab Agarwal — Executive Director

The breakup of 60% in-house and outside will be slightly difficult, but I would say approximately 50-50, approximately. And what was the second part of your question?

Asha Sundarka — Nivishay — Analyst

Second is that steel has also a lot of types. So can you name those types in the raw material part, for the fabricated

Sorab Agarwal — Executive Director

The most prevalent what we are using is for all our structural which is MS, mild steel, it’s 250 and 350 and 410 grades. This is the [Indecipherable]. We also use up to 700 as well as 900, but that is in very lesser quantity for especially for bigger cranes. But this is with respect to the flat products. We also use a lot of long products, that is angle, channels, square pipes, they are again in 250, 350 and 410 grades. Which is a standard, become different. And then apart from that, we use all types of alloy steel, whether EN8, EN19 and a lot of other different alloys for our forgings and a lot of pig irons which was into our castings.

Asha Sundarka — Nivishay — Analyst

And sir, breakup between the flat and long steel?

Sorab Agarwal — Executive Director

That I don’t think we will have an answer immediately available at this forum, but we can definitely get back to you. Luthra, sir.

Asha Sundarka — Nivishay — Analyst

Okay. And if you could also tell the prices of these types, if you could give.

Sorab Agarwal — Executive Director

Yes, here I would just like to add, flat steel has definitely corrected [Indecipherable] but long steel has not connected, the way it is [Indecipherable] it has only corrected half of what [Indecipherable] first quarter this year. And alloys [Indecipherable] castings have reduced [Indecipherable] lesser in terms of [Indecipherable]. But Luthra, sir, long steel and flat have break up and [Indecipherable] so maximum use material of every category if you can give price.

Rajan Luthra — Chief Financial Officer

So we will have to work it out. So we will come back to that.

Asha Sundarka — Nivishay — Analyst

Okay. And, sir, prices, if you could give.

Sorab Agarwal — Executive Director

If you could simply drop an e-mail regarding this on our concerned e-mail ID, we will revert back to your address.

Asha Sundarka — Nivishay — Analyst

And sir, are you looking for any price hikes further in one or two quarters?

Sorab Agarwal — Executive Director

I think we should be increasing our price from 1st of January because as a standard trend we have been doing that for the past four, five years. So because, see apart from this hyperinflation thing and then a little cooling of that we have seen. Still other inflationary pressures are very much there. So we will definitely need some price correct. So in all probability we should be doing it in first week of January.

Operator

Next question comes from the line of Suhrid Deorah from Paladin Capital.

Suhrid Deorah — Paladin Capital. — Analyst

My understanding from the previous quarter was that a lot of buyers were postponing purchase decisions, waiting for the commodity prices to cool off and therefore for equipment prices to cool off, and that sort of ties in with the fact that volumes are a bit flat. So now that your prices are — and look like prices have gone up, which has led to revenue growth, but is it not the case that for these buyers to seal their purchase decisions you have to start dropping prices?

Sorab Agarwal — Executive Director

Yes, I think buying generally on the whole has come back, to be very frank with you, end of September

Suhrid Deorah — Paladin Capital. — Analyst

Sorry, could you maybe repeat that? You said what has come back?

Sorab Agarwal — Executive Director

The buying has come back.

Suhrid Deorah — Paladin Capital. — Analyst

Buying has come back, okay.

Sorab Agarwal — Executive Director

Buying as a sentiment has definitely come back and it generally happens around the festive time for that. So things that way seem to be in place. And I think more or less people have firmed up or come to terms with the fact that things have become expensive. And so I think it is not a problem anymore [Indecipherable].

Suhrid Deorah — Paladin Capital. — Analyst

So these price levels and — should sustain, and then margins will sustain or improve as the volumes grow in the subsequent quarters.

Sorab Agarwal — Executive Director

I would say that 1%, 1.5% further margin expansion is possible on account of whatever commodity has currently cooled off. So I think we should be expecting it within this quarter, most of it further. And obviously along with further increase in numbers and our revenue, operating leverage will definitely kick in, and that will further help us [Indecipherable] our margin.

Suhrid Deorah — Paladin Capital. — Analyst

Okay. And the guidance that you gave, could I just clarify, you said it’s 25% growth on cranes, 30% plus on construction equipment and 15% each on the last two segments, is that correct?

Sorab Agarwal — Executive Director

On the whole company basis.

Suhrid Deorah — Paladin Capital. — Analyst

Sorry?

Sorab Agarwal — Executive Director

25% on the whole company basis.

Suhrid Deorah — Paladin Capital. — Analyst

And this is volume growth or overall growth.

Sorab Agarwal — Executive Director

This is revenue growth I was talking about.

Suhrid Deorah — Paladin Capital. — Analyst

On our volume — because the price hike itself has been substantial if I look at the year-on-year comparison. So what would the revenue growth be — volume growth be?

Sorab Agarwal — Executive Director

See, 25% growth is there going to be total. I would say that on account of pricing, it will be 8% to 10%. And balance would be more with respect to numbers and maybe a slight change in product mix [Indecipherable].

Operator

Next question comes from the line of Akshay Kothari from Envision Capital.

Akshay Kotari — Envision Capital — Analyst

Yes, sir, Just wanted to know, sir, working capital has been pertaining to inventories and [Indecipherable] other financial [Indecipherable]. So any specific reason? And what was there in other financial assets?

Sorab Agarwal — Executive Director

See, definitely our working in quantum as well as number of days is a slightly less as compared to end of last financial year. [Indecipherable] INR109 crores and about 39 days. Currently it is at about INR210 crores with 56 days. Primarily on account of our inventories which have increased about INR70 crores, INR80 crores in the last [Indecipherable]. And it was a conscious decision because we were expecting good sales in the month of October because of festive season. And festive season came a little early. Generally it is in November. So inventories go up in October and already become recently okay by December. So that’s why you see slightly elevated inventories in September. And hopefully, by end of this quarter and finally by end of the financial year we would be at similar levels. Our targeted working capital of around 39 to 40 days.

Akshay Kotari — Envision Capital — Analyst

Sir, on the debtors front and also on the other financial asset, what is actually going into that?

Sorab Agarwal — Executive Director

See, on the debtors front we are I think doing pretty fine. We are at about 32 days receivables as of now. And if you look on a year-on-year basis, from 46 days we have improved it to 32 days. That is well in control. Our creditors are also — reasonable, rather we have been very good [Indecipherable] in the recent past. Our creditor days have only reduced. But yes, the main construct is inventory which will be taken care of in this quarter and subsequently in the next quarter.

Akshay Kotari — Envision Capital — Analyst

Sir, I wanted to know what is also going in other financial, INR18 crores of increase [Indecipherable].

Sorab Agarwal — Executive Director

Let me clarify, we have got certain asset which we give on lease. So that have classified as financial assets. We have got certain assets which we give on rent that has been classified as financial assets.

Akshay Kotari — Envision Capital — Analyst

Okay. So there has been an investment in rental assets?

Sorab Agarwal — Executive Director

Yes.

Akshay Kotari — Envision Capital — Analyst

Okay, these are cranes specifically or some corporate assets?

Sorab Agarwal — Executive Director

These are basically crawler cranes and one or two piling rigs.

Akshay Kotari — Envision Capital — Analyst

Okay. And sir there area

Sorab Agarwal — Executive Director

And the rental division, Luthra, sir?

Rajan Luthra — Chief Financial Officer

Which?

Sorab Agarwal — Executive Director

In the rental activity.

Rajan Luthra — Chief Financial Officer

So these are basically the [Indecipherable].

Sorab Agarwal — Executive Director

[Indecipherable].

Rajan Luthra — Chief Financial Officer

That is financial lease because that is a financial lease so it has been classified as financial asset.

Akshay Kotari — Envision Capital — Analyst

Okay. And sir, investments have increased to around INR22 crores. So — and I was just checking the [Indecipherable] also, the investments are in the public market. So any specific ration because QIP money raised so any plans to deploy it? And your view on it?

Sorab Agarwal — Executive Director

Yes. We have all the plans to deploy that money. That’s why [Indecipherable] we have spent very small portion of it already [Indecipherable] on one or two quarters back. And we are still under negotiation for the slightly bigger inorganic growth targets we were looking at. And the process is delaying as their expectations are only going up and up. So we are in a Catch 22 right now with respect to the [Indecipherable].

Akshay Kotari — Envision Capital — Analyst

Okay. And sir, on investments have increased to around INR222 crores. So — and I was just taking also the investments are in the public market. So any specific rationale because QIP money is any plans to deploy it and your view on it?

Sorab Agarwal — Executive Director

Yes. We have all the plans to deploy that money. That’s why [Indecipherable] we have spent very small portion of it already [Indecipherable] on one or two quarters back. And we are still under negotiation for the slightly bigger inorganic growth targets we were looking at. And the process is delaying as their expectations are only going up and up. So we are in a Catch 22 right now with respect to the [Indecipherable].

Operator

Next question comes from the line of Asha Sundarka from Nivishay.

Asha Sundarka — Nivishay — Analyst

So one question, can you give me the number of dealers segment-wise for the last three years?

Sorab Agarwal — Executive Director

Number of dealers?

Asha Sundarka — Nivishay — Analyst

Segment-wise.

Sorab Agarwal — Executive Director

Segment-wise is very difficult. I don’t think we have that data as of now. But segment-wise number of dealers, we can definitely provide you, that is small — drop a small e-mail and — Luthra, sir?

Rajan Luthra — Chief Financial Officer

Yes, I will provide her once we get that. For the last three years they are asking, segment. So I will get it done.

Operator

Next question comes from the line of Kushal Chute, an individual investor.

Kushal Chute — Individual Investor — Analyst

Congratulations again on the great set of numbers. Sir, I think you answered my question earlier as well but just wanted to know on inorganic acquisition which we were planning, so as you mentioned last time we were looking to close this by year-end. But as you told that it may take some time. So are you looking to raise additional fund for that? I mean, is this a valuation challenge in that? And secondly, on the African expansion, can you just give color on the same?

Sorab Agarwal — Executive Director

With respect to our inorganic growth prospects, we are stuck on valuation with respect to one of the opportunities that we were — we have really explored that in quite some time. And another one we gave up eventually because we did not see value in that business. Apart from that, there is one opportunity for backward integration. So that thing is happening. Unfortunately, that company has currently gone into liquidation, is gone into [Indecipherable] so that process will take its own time. We are going to be an active bidder there. I cannot disclose any more detail than this. And with respect to our upcoming venture in Ghana, so that seems to be on track. So we are expecting our advances in the month of November itself. And hopefully, some activity will start on that in the next quarter. And there’s been plan to finish it within FY ’24 with respect to setting up of the manufacturing [Indecipherable] and of the facilities. So that recurring revenue can start coming from FY ’25 onwards.

Operator

[Operator Instructions] Next question comes from the line of Aman Shah from Jeetay Investments.

Aman Shah — GT Investments — Analyst

Congrats on good set of results. Sir, I just have like our guidance of growth of 25% for this year. In H1 we have done around 45% growth. So H2 means like somewhere around 10% growth, is that because of maybe high days of last year? Or it’s just a conservative side that we are guiding now, 25% growth?

Sorab Agarwal — Executive Director

See, A, It is conservative, I’ll be very fair. And B, definitely we have to keep in mind that last year Q1 was pretty subdued on account of COVID. So that is also the reason that first half you are seeing 45% growth because in this — in term of FY ’22 it was pretty subdued because of COVID. Because we really see the COVID wave was on. That has also affected growth. And definitely will be much more than 25%. And that only time will come once it happens because we do not want to commit something which we might not end up doing, but it seems evident that we shall be able to grow faster than..

Aman Shah — GT Investments — Analyst

Sure, sure. But the buying outlook from the customer side is strong as I can read from your comments.

Sorab Agarwal — Executive Director

Yes. Yes. The buying outlook has become strong again. The number of inquiries, the number of conversions, everything has started to increase again. And we are on a strong foothold. Our export was lacking in the first half. So we have received some very good orders for execution to our channels abroad. And hopefully, even the exports we’ll be able to do much better in the second half. And we should be able to cross INR100 crores in revenue at least in exports as well.

Aman Shah — GT Investments — Analyst

Okay. Okay. Sir, the second question was on construction equipment. What would be in this 146 units that we sold in this quarter, how much would be backhoe loaders?

Sorab Agarwal — Executive Director

Construction equipment in this quarter, yes, 131 are backhoe loaders in this. No, sorry, sorry, sorry. Yes, approximately that much, yes, backhoe loaders.

Aman Shah — GT Investments — Analyst

Okay. Sir, in last Q1 you said there is some rental — it’s a lot of sales of backhoe loader happened for rental income. In a way the rental proportion is high and that is not to the level which can increase good demand for backhoe loaders. One is, where do you think industry growth has been in Q1 or in Q2 for backhoe loaders. And second is, what do you think should be our quarterly numbers of backhoe loaders? Where do you think — we should see this in the next two, three years’ time?

Sorab Agarwal — Executive Director

We definitely post BS IV and all this inflation happening. Backhoe loader market overall has gone down in the last 1, 1.5 years, especially post April ’21 onwards. But if we talk quarter-on-quarter, like yearly basis or quarter 2, I think the numbers are more or less stable because the market had already started going down in the last year. So it is maintaining a similar pace. But yes, our numbers definitely need to improve quite a lot. So in the first half, we have done close to about 234 units. But we are very confident by the end of the year this should be upwards of 700 units. And going forward, I think we are looking at at least 250, 300 units every quarter maybe from next year onwards.

Operator

Next question comes from the line of Chinmay Kabra from Emkay Global.

Chinmay Kabra — MK Global — Analyst

So I just wanted to know, sir, what is the onetime exceptional item of INR20 crores which is forming part of other income?

Sorab Agarwal — Executive Director

Which was reported last quarter?

Chinmay Kabra — Emkay Global — Analyst

Which was reported last quarter, yes, sir. If you could just mention that.

Sorab Agarwal — Executive Director

It was somewhere around INR19 crores.

Chinmay Kabra — MK Global — Analyst

Exactly, sir, INR19.76 crores.

Sorab Agarwal — Executive Director

See, that was land and building which was there with us in the one year in our [Indecipherable] which was disposed off. So that was that one-time exception, sum of around, close to INR19 crores.

Chinmay Kabra — MK Global — Analyst

All right. And another thing, sir, you just recently brought up the financial asset which is forming part of your balance sheet. Just wanted to know if you could elaborate in terms of what is the nature of the asset which is involved under it?

Sorab Agarwal — Executive Director

Luthra, sir, this is that same financial lease?

Rajan Luthra — Chief Financial Officer

Yes, that’s right, sir.

Sorab Agarwal — Executive Director

Basically, these are crawler cranes and one or two piling rigs, which have been given on lease basis to customers. [Indecipherable] good return for the company.

Chinmay Kabra — MK Global — Analyst

And on an accounting perspective, why isn’t [Indecipherable] under ROU asset, sir, like in the financial lease, just wanted to know.

Sorab Agarwal — Executive Director

So let me clarify, there are two things on is ROU and on a financial asset. ROU assets are basically those assets which are — which we’ve taken on rent as per accounting standard that [Indecipherable] but these are different assets. So financial assets are owned by us only.

Operator

Next question comes from the line of Asha Sundarka from Nivishay

Asha Sundarka — Nivishay — Analyst

I have two more questions to ask. One is you have increased the growth estimates in crane segment from 20% to 25%. So where are you getting these orders from? That is number one. And second is that you said you were receiving export orders as well. So is these — are these orders from the defense segment only or from the other segments as well?

Sorab Agarwal — Executive Director

See, the crane orders are all across those. Cranes are used everywhere, in infrastructure, in construction, in real estate and also in manufacturing as well as logistics. So cranes orders are spread all across. And I think everything is going good as of now. And with respect to the export orders, they are more to do with tractors as well as some agri. Sorry, some agri and construction equipment. So they are from the African continent and also from the Latin American countries, which are going to be executed.

Asha Sundarka — Nivishay — Analyst

So, sir, in the defense segment or in the other segments like crane

Sorab Agarwal — Executive Director

No, they are all — nothing to the defense segment, they are all from general, private sectors, these countries, in these countries. And for defense, we are supplying only in India.

Operator

[Operator Instructions] Since there is no more questions we have reached the end of question-and-answer session. I would now like to hand the conference over to the management for closing comments.

Sorab Agarwal — Executive Director

Yes, thank you. So I think we have been doing reasonably well in tough times. And hopefully, going forward, the global recession here does not take off the steam from Indian economy. But what I hear and understand is that Indian economy is visibly insulated to these things. And we are on track to expand our revenue by at least about 25% in this year, if not more. We are confident it can be more. And our EBITDA margins are further in for expansion on account of cooling off of commodity prices and further coupled with increase in our revenues. So hopefully there are good and better times ahead of us. And like you just mentioned, we are setting up a new plant to manufacture bigger cranes in India of higher capacity. So all of that will [Indecipherable] well for us for our future growth and hope to continue to do the same. Thank you.

Operator

Thank you. On behalf of Ambit Capital, that concludes this conference. Thank you for joining us. You may now disconnect your lines.

Sorab Agarwal — Executive Director

Thank you, everybody.