action construction equipment ltd share price Management discussions

NDUST I rYST rUCTUrEAND DEVELO pMENTS

GLOBAL ECONOMY OVErVIEW

A combination of shocks including soaring inflation, geo political tensions, supply chain disruptions, climatic disasters and covid 19 related upheavals in China impacted the global growth in 2022. Inflationary pressures across countries skyrocketed in 2022 owing to rising energy and food prices, supply chain disruption and rebounding global demand. As a result, central bankers around the world began raising interest rates with a synchronicity not seen in the recent past. Between March 2022, and May 2023 the US Fed raised the fed funds rate by 500 basis points and the interest rate thus went up from 0.25% at the start of monetary tightening cycle to 5.25% as on date which is it highest level in last two decades. World economic activity than expected in H2 of 2022 however the global economic reflecting outlookfor2023hasdeteriorated monetary tightening especially in advanced economies and the continuing It is believed that the global peaked in early 2023 and weak demand could continue to lead to further deceleration. Moderating global oil prices and declining input cost could contain inflationary pressure though rising food prices could weigh on core inflation causing it to remain sticky. As per the latest IMF estimates,the global economy is projected to grow at 2.9% in 2023 and 3.1 % in 2024. In 2022, Middle East and Central Asia have been the highest contributor to the global real GDP, while emerging markets like India and China are expected to be the highest contributors in 2024. Euro area is estimated to grow at 1.6% in 2024, whereas United States and Latin America are expected to grow at 1.0% and 2.1% https://www.imf.org/en/Publications/WEO https://www.imf.org/en/Publications/WEO/Issues/2022/10/11/ world-economic-outlook-october-2022 https://www.imf.org/en/Blogs/Articles/2022/01/25/blog-a-disrupted-global-recovery

INDIAN ECONOMY OVErVIEW

Spurred by private consumption and investment, the economy grew strongly in fiscal 2022, albeit more slowly than a year earlier. Rising food and fuel prices pushed inflation up beyond the central banks target. Growth is expected to moderate slightly in 2023 and rise in 2024, buoyed again by private consumption and investment as the global economy improves. Actions taken by the government and RBI, underpinned by softening global commodity prices has Linked Incentive (PLI) led retail inflation to 4.7% in April 2023. Accordingly, RBI has indicated a pause in further interest rate hike in its last policy meet. Inflation should be on a downward trend as global price pressures moderate. pressure has already As per IMF, Indias will be the fasted growing major economy in 2023 with expected GDP growth of 6.1% in 2023 and 6.8% in 2024, driven by rising public and private capex and resilient domestic demand. For the first half of FY23, the Industrial Sectors overall Gross Value Added (GVA) increased by 3.7%, above the 2.8% average growth seen in the first half of the previous decade.

In 2023, nearly 15% of the worlds growth is forecasted to come from India. These growth projections based on the economys resilience, which can be observed in how quickly private consumption rebounded, amid rising governments capital expenditure, digital penetration and . policy reforms. India will also be able to maintain a growth-interest rate differential owing to the governments policy of capital expenditure led growth, which will result in a sustainable debt to GDP over the long term.

The Indian government in its FY24 budget allocated a record high of 10 lakh crore towards capital expenditure. The central government has ramped up capex spending to 3.3% of GDP from a pre-pandemic average of 1.7%.Structural reforms undertaken by the Indian policymakers in recent years and higher allocation towards capital expenditure capex should help Indias gross domestic product (GDP) to register a CAGR of around 6.6% between FY23 and FY30, the strongest growth phase since FY10.

In order to connect India to international supply chains, the Production were created with an expected investment of 4 lakh crore during FY22 27.to come down from 7% in August 2022

As per the Indian Brand Equity Foundation (IBEF) In FY22, investments under PLI programmes totalled INR 47,500 crore, which reached 106% of the years set to PLI initiatives, India registered production/sales worth INR 3.85 lakh crore and the creation of 3 lakh jobs in 2022 The Indian economy has also begun to prosper from more formalisation, greater financial inclusion, and economic possibilities brought forth by technologically driven economic reforms. https://www.ibef.org/economy/indian-economy-overview https://www.livemint.com/news/india/indian-economy-to-contribute-15-of-global-growth-in-2023-imf-md-kristalina-georgieva-11677062849103.html

CONSTrUCTION EQUIpMENTS INDUSTrY

Indias construction equipment industry turned in its best performance with 26% year-on-year growth in FY23 as sales crossed the one lakh unit mark driven by demand from Infra construction and railways. The Equipment Market was valued at USD 7.9 Bn in 2023, and it is estimated to reach a value of USD 12.4 Bn in 2029, growing a CAGR of 8.9 percent over the forecast period. on The Indian Construction the rapid growth of infrastructure and construction the the country. Construction country has gone up by about 25% approximately in the last year. It has been supported by rising public & private capex, FDI reforms in construction Infrastructure and Real estate projects has led to the overall surge in demand for construction Indian Construction (ICEMA) has been lobbying for PLI scheme for manufacturing of Construction Equipment. The Production (PLI) scheme, if granted, may attract an estimated USD 4 of domestic and foreign investment in the near term. This is likely to boost USD 3 Bn in additional exports from the country, save USD 2.9 Bn in forex savings through import substitutions nearly 3.2 million people by 2030. infrastructure advancement Government and improvement in financing from companies (NBFCs) are boosting equipment in India. https://timesofindia.indiatimes. construction-equipment-sales-grow-26-to-cross-1-lakh-units/ and industrial sector in the articleshow/99913723.cms?from=mdr https://www.constructionworld.in/heavy-construction- projects, the equipment/construction-equipment-ind.-grows-by-25--in-fy2023/40153 https://www.autocarpro.in/news/pli-scheme-for-construction-Construction equipment-likely-to-attract-us$4-billion-of-domestic-and investments-in-near-term-states-icema-114873

Indian Crane Market Size

The crane market in India began expanding post-2016, as various state governments and central government sector in initiated critical infrastructure projects in Railways, Airports, Smart cities, Roads and highways and Real Estate.

The Indian crane market was valued at USD 1.02Bn in sector,execution ofhighvalue 2023, and it is expected to reach USD 1.25Bn by 2027 by registering a CAGR of over 5.3% during the forecast in India. period (2023 - 2027). Manufacturers Association India has planned massive investments into infrastructure over the next 5-10 years. An estimate suggests that this Linked Incentives planned investment itself would generate a construction equipment (CE) demand of around USD180-200 Bn at the present rate of equipment infiltration. The key drivers for pick and carry crane segment are the construction and industrial andgenerateemployment sectors. Within the construction sector, the key demand driver is urban infrastructure while that of industrial applications is steel and power industries. Other cranes include slew cranes, banking financial crawler cranes and tower cranes. These are advanced the demandforconstruction value, more sophisticated cranes than pick-n-carry cranes and are usually used for heavier duty work. com/business/india-business/Demand for other cranes is driven primarily by the construction mining sectors. With the increasing average scale of rate infrastructure and construction of slew and tower cranes is likely to exceed the average growth rate of the overall cranes segment.

• The emerging trend of crane rental services across the country is propelling the market. Additionally, the significant growth in the Indian real estate sector is providing a boost to the product demand. https://www.mordorintelligence.com/industry-reports/india-crane-market https://www.openpr.com/news/2893185/crane-market-size-in-india-2023-industry-share-price-research

MATErIAL HANDLING

Manufacturing segment dominated the Indian material handling equipment market and is expected to continue its dominance for the next few years. Make in India initiative coupled with emerging China +1 strategy will boost the growth of the manufacturing sector over the next decade.

Warehousing is another sector which drives the demand for material handling equipments.As a result of increasingTotal warehousing requirement in India is expected to grow at a CAGR of 7.5 % for the next 5 years driven by growth in e-commerce and consumption. Estimates suggest Investment in the warehouse has the potential to generate IRRs in the range of 15%-20% which is very lucrative for attracting in this space.

Pick and Carry crane held 30% share followed by forklift and slew cranes. The forklift is estimated to grow at high CAGR among product types. The flexibility and speed forklift offer make them ideal for repetitive material handling tasks especially in restricted areas like warehouses and yards. According to the report, "India Forklift Market Outlook, 2027-28" the market is anticipated to grow with more than 18% CAGR for 2022-2028. The Forklift Market is flourishing to the advancements in the e-commerce industry, increasing infrastructure development investments, and rising usage of electric forklift

construction sector. Many government focusing on bolstering the current infrastructure in order to promote overall economic development. Industries like automobile, logistics, chemicals, pharma etc are growing enormously in the Indian economy and thus they are contributing majorly https://www.marketwatch.com/press-release/india-material-handling-equipment-market-is-expected-to-reach-by-2027-at-a-cagr-of-98-during-the-forecast-period-2023-04-12?mod=search_headline https://www.researchandmarkets.com/reports/4394826/india-forklift-market-outlook-2027-28

AGrICULTUrE EQUIpMENT

Over the last few years, there has been a considerable progress in agriculture mechanization. A significant proportion farmers in the country have already started moving from using animate sources to mechanical equipments to power their farming activities. mechanization trends, the agricultural equipment market has witnessed strong growth in the past few years. This market is currently being driven by several factors such as easy availability of credit, government incentives, increasing agricultural productivity, emergence of contract farming, growth capital increasing rural incomes, etc.

India is one of the largest markets for tractors in the world as they form most of the machinery usage in India. India continues to be a very profitable market for tractors. The country produces a massive volume of tractors and also exports tractors globally. Looking forward, IMARC Group expects the market to reach USD22.5Bn by 2028, exhibiting a growth rate (CAGR) of 10.5% from 2023-2028.

India has a very high trade surplus in farm machinery, but the decomposition shows that it is dominated by tractors. Trade in non-tractor farm machinery forms less than one per cent of total merchandise trade. Although India is both exporting trucksareexpected todrivemarketexpansion. and importing non-tractor farm machinery, exports form a are relatively small proportion of total farm machinery exports (though it has been increasing over the years) and imports form a relatively high proportion of total farm machinery imports (though the share has varied over the years).https://www.mordorintelligence.com/industry-reports/ india-agricultural-machinery-market https://www.marketresearch.com/IMARC-v3797/Indian-Agricultural-Equipment-Trends-Share-33910663 https://www.ncaer.org/wp-content/uploads/2023/04/ Policy-Brief-on-Farm-Mechanisation-2023-1.pdf OUTLOOk

INfrASTrUCTUrE

Infrastructure sector is a key driver for the Indian economy. The sector is highly responsible for propelling Indias overall development and enjoys intense focus from

Government for initiating policies that would ensure time-bound creation of world class infrastructure in the country. Infrastructure sector includes power, bridges, dams, roads, and urban infrastructure development. In other words, the infrastructure sector acts as a catalyst for Indias economic growth as it drives the growth of the allied sectors like townships, housing, built-up infrastructure and construction development projects. Indias high growth imperative in 2023 and beyond will significantly be driven by major strides in key sectors with infrastructure development being a critical force aiding the progress. In order to meet Indias aim of reaching a USD 5 Tn economy by 2025, infrastructure development is the need of the hour. The governments focus on building infrastructure of the future has been evident given the slew of initiatives launched recently. The USD 1.3 Tn national master plan for infrastructure, Gati Shakti and Smart Cities has been a forerunner to bring about systemic and effective reforms in the sector, and has already shown a significant headway. The government has launched the National Infrastructure Pipeline (NIP) combined with other initiatives such as ‘Make in India and the production-linked incentives (PLI) scheme to augment the growth of infrastructure sector. Historically, more than 80% of the countrys infrastructure spending has gone toward funding for transportation, electricity, and water & irrigation. Investments in building and upgrading physical infrastructure, especially in synergy with the ease of doing business initiatives, remain pivotal to increase efficiency and costs.

Few of the recent government initiatives and investments in the infrastructure sector are as follows:

c Capital investment outlay for infrastructure is being increased by 33% to 10 lakh crore (USD 122 Bn), which would be 3.3% of GDP and almost three times the outlay in 2019-20.

Infrastructure Finance Secretariat is being established to enhance opportunities for private investment in infrastructure that will assist all stakeholders for more private investment in infrastructure, including railways, roads, urban infrastructure, and power.

100 critical transport infrastructure projects, for last and first mile connectivity for ports, coal, steel, fertilizer, and food grains sectors have been identified and will be taken up on priority with investment of 75,000 crore (USD 9 Bn), including 15,000 crore (USD 1.8 bn) from private sources.

An Urban Infrastructure Development Fund (UIDF) will be established through use of priority sector lending shortfall, which will be managed by the NationalHousing Bank, and will be used by public agencies to create urban infrastructure in Tier 2 and Tier 3 cities https://www.ibef.org/industry/infrastructure-sector-india

rOADS

India has the second-largest road network in the world, spanning a total of 6.3 million kilometres (kms). This road network transports 64.5% of all goods in the country and 90% of Indias total passenger traffic uses the road network to commute. Road transportation has gradually increased over the years with improvement in connectivity cities, towns, and villages in the country.

Highway construction in India between FY16-FY21. Despite pandemic and lockdown, India has constructed 10,457 km of highways in FY22. Under the Union Budget 2023-24, the Government of India has allocated 2.7 lakh crore (US$ 33 billion) to the Ministry of Road Transport and Highways. In FY23 (until December), the Ministry of Road Transport and Highways constructed 6,318 kms. national 100% Foreign Direct Investment (FDI) is allowed under the automatic route in the road and highways sector, subject to applicable laws and regulation. Some of the recent Government initiatives are as follows:Under the Union Budget 2023-24, the Government of India has allocated 2.7 lakh crore (USD 33 Bn) to the Ministry of Road Transport and Highways.

In March 2023, NHAI has invited bid to help in developing Wayside Amenities at more than 600 locations on National Highways and Expressways by FY25.The government also aims to construct 23 new national highways by 2025.

The roads sector is likely to account for 18% capital expenditure over FY 2019-25.

https://www.ibef.org/industry/roads-india

rEALESTATE

The real estate market in India has shown resilience and stability despite the impact of the COVID-19 pandemic. Home prices have stabilized with a rebound in housing sales and a decline in unsold inventories. The increase in rent price ratios in major metros has also shown promising growth potential in the rental market. REITs have experienced positive returns, and there is renewed interest from foreign funds in private equity real estate investments in India. Overall, the future performance of the real estate market in India looks promising despite global uncertainties. Indias real estate sector has seen a three-fold increase in foreign institutional inflows, amounting to USD 26.6 Bn between 2017 and 2022. Foreign investments accounted for 81% of total investmentsLinkedreal Incentive (PLI) scheme estate during the period, driven by investor-friendly FDI policies, increased transparency in deals, and higher investment limits. Institutional investments remained strong in Q1 2023, with a 37% YoY increase to USD 1.7 Bn, led by the office sector.

Real estate sector in India is expected to reach USD 1 Tn in market size by 2030, up from USD 250 billion in 2022 and contribute 13% to the countrys GDP by 2025. Indian real estate is expected to attract a substantial amount of FDI in the next two years with USD 8 billion capital infusion by FY22. The Private Equity Investments in Indias real estate sector, stood at USD 3.4 Bn in 2022.

Indian residential real estate market is witnessing a surge in at 17% new launches as the appetite for home ownership remains CAGR strong. It is expected that this sector will incur more nonresident Indian (NRI) investment, both in the short term and the long term. Bengaluru is expected to be the most favoured property investment destination for NRIs, followed by Ahmedabad, Pune, Chennai, Goa, Delhi and Dehradun.

The residential housing is expected to get further boost by central governments schemes on affordable housing under Pradhan Mantri Awas Yojana (PMAY).

Some of the major investments and developments in this sector are as follows:

In the Union Budget 2023-24, the Finance Ministry has announced a commitment of 79,000 crore (USD 9.6 Bn) for PM Awas Yojana, which represents a 66% increase compared to the last year.

In order to revive around 1,600 stalled housing projects across top cities in the country, the Union Cabinet has approved the setting up of 25,000 crore (USD 3.6Bn) alternative investment fund (AIF). https://www.ibef.org/industry/real-estate-india

Warehousing and logistics.

The warehousing, industrial, and logistics (WIL) sectors are projected to be crucial for attaining Indias vision of being a USD 5 Tn economy by FY25. The warehouse and logistics industry has benefited the most from the COVID-19 epidemic, increasing its share from 2% in 2020 to 20% in 2022. With increased demand and supply throughout the years, the Indian warehousing industry is gaining traction.

The expansion of this industry is likely to be aided by a robust economy, government efforts to improve infrastructure, and a favourable business environment. Increasing consumerism and a huge consumer base are fostering the growth of retail and e-commerce in India. Demand for warehouse alternatives and logistics services has increased as a result relocating their manufacturing focus ofinternational to India. The Production increasing domestic production demand for industrial space and warehousing.

The Indian warehousing market is predicted to reach

USD 35Bn, expanding at a CAGR of 15.6% from 2022 to 2027. Modern warehouse facilities and technology-driven solutions have changed the warehousing sector in India in recent years.

The logistics sector in India was valued at USD 270Bn in 2022, and the same is expected to reach at USD 380 Bn by 2025, at a healthy 15% + CAGR. Moreover, the government is planning to reduce the logistics and supply chain cost in India from 13-14% to 10% of the GDP as per industry standards. The warehousing and logistics industry in India is a dynamic and rapidly growing sector that is expected to play an increasingly important role in the countrys economy. Despite some challenges, the sector is well-positioned for long-term growth and presents exciting businesses.https://www.ibef.org/blogs/warehousing-and-logistics-sector-in-india OppOrTUNITIES

The Indian Construction Equipment (CE) industry has witnessed a steady growth in last couple of years despite economic volatilityobserved due to the Covid-19 pandemic and Ukraine war in this period. However, with the Governments renewed focus on infrastructure development, the demand outlook for the construction equipment industry remains several Government schemes and projects including the expansion of national highway network to 2 lakh km by 2025 already underway. In addition to this, river linking projects, last mile delivery of drinking water under Nal Se Jal scheme, Pradhan Mantri Awas Vikas Yojna, the railway network expansion and modernization, airports upgradation, mining and quarrying amongst others will create opportunities for all segments of construction equipment years. The outlook for the CE industry therefore remains positive. Some of the exciting addressed include:

India is one of the fastest growing economies in the world. The past few years have seen an unprecedented focus on infrastructure development in India, with concrete steps being taken to promote it. The infrastructure sector, owing to its forward and backward linkages to other sectors of the economy, continues to be the focus area of the government. The infrastructure sector has been recognized as a key driver for achieving the governments goal of a USD 5 trillion economy by 2024-25;India will likely have faster infrastructure growth due to the government prioritizing infrastructure for overall economic development which will help ACE to grow faster;Electrification is gaining traction and that puts ACE in a great position to take advantage of this opportunity. The recent launch of the Fully electric mobile crane can help propel them in this space;India is one of the major players in the agriculture sector worldwide and it is the primary source of livelihood for 55% of Indias population.

India holds the record for second-largest agricultural land in the world. This sector is heavily dependent on agricultural equipment. The potential robust growth in this sector is deemed to benefit ACE; opportunities for investors andThere has been a significant increase in the spending by the government to the tune of INR 10 lakh crore. Additionally, the government has also introduced several PLI and other financial incentives for the infrastructure sector which will boost the development in the sector which should have a positive impact on ACE;The ongoing boom in both new projects in the commercial and residential real estate sector continues to be a strong driver of growth in the CE industry, also Indian Construction grow 3x in the next 10 years on account of the rising with investments in infrastructure development which will help ACEtogrowsignificantly;Tie-ups with leading foreign companies which facilitate proposed the availability of latest technology and machines from around the world could make its R&D stronger manifold.

THrEATS:Due to inadequate construction project management, project risks might result in financial and legal to growover thenext 5 difficulties, as well as disproportionate availability of workforce. Poor scheduling, planning, or inefficient opportunities resource allocation are just a few examples of how uneven project management can lead to risks that increase delays and increase costs for businesses;

Growth in the Indian economy could be badly impacted by a slowdown brought on by unfavourable macroeconomic and internationaltrends. The slowdown in the economy may hurt the infrastructure and manufacturing sectors which in turn can cause a slowdown in the Companys growth;The risk of raw material price volatility translating into margin pressure due to a sharp rise in raw material prices, increase the cost of goods sold and affect the profitability of the industry;Banks play the most vital role in financing the projects, however, due to reasons like restricted balance sheet size, absence of willingness to lend to infrastructure sectors and drastically increasing non-performing assets may lead to decrease in funding projects;Fluctuations in the demand of construction equipments can affect the Companys operations;Emergence of new foreign and domestic companies can cause the Company to face stiff competition;

Environmental issues and strict laws may hinder the strong growth of the Company;

rISkSAN DCONCE rN

The Company operates in an environment which is affected by various risks, some of which are identifiable and controllable. Some others are unexpected and cannot be controlled. Under these conditions, proper identification and management of risks is very important in determining the ability of the organization to sustain value creation for its stakeholders.

The impact of the key risks, which are potentially significant are listed below has been by the management. Your Company recognizes that every business has its inherent risks and the Company has been taking proactive approach to identify and mitigate them on a continuous basis. Some of the risks that are potentially significant in below: tives have been undertaken

fluctuations in commodity prices: Prices and demand for the products may remain volatile/uncertain and could be influenced by economic conditions, natural disasters, weather, pandemics, political instability, and so on. Volatility in commodity prices and demand may adversely affect our earnings and cash flow.al environment, as well as

Mitigation: Continue to work on mitigating the inflationary impact through ‘Commodity Risk Management, cost re-engineering and value engineering there is a fall in prices of commodities and achieve material cost reduction.

Supply Chain: Disruption in supply chain would lead to disruptionin operationsimpactingour profitability and therefore sustainability. Our projects may face challenges around sourcing of raw materials for manufacturing.

Mitigation: to Strong management team continues work towards sustainable low cost of production, key raw material operational

ccupational, linkage. Continuousfocus

optimisationprojects cost to bring down fixed costs and optimise Development of alternate suppliers and enhanced focus on localisation.

ation:

nformation security and it systems: The Companys increased reliance on digital technologies brings exposure to cyber-attacks that may affect business operations. Non-compliance to stringent IT legislations and regulations may lead to imposition of penalties and . adverseimpactontheCompanysreputation

Mitigation: We have IT center and Enterprise Resource Planning (ERP) integrating all business divisions, Data Loss Prevention strategy implemented across all IT assets. Adoption of strong IT security measures. Implementation of policies and procedures to ensure integrity of cyber security interventions.

d channels, retailer network and customer service delivery: To achieve customer delight, every customer must receive a seamless and consistently our hassle-free experience. Our retailer partners reflect effectivcommunicate brandstrategyandvision,and our values through trained and capable representatives. Skilled frontline salespersons tailor their responses to appeal to both new and existing customers and are crucial to driving high customer.

Mitigation: Significant steps have been taken to through improve dealer profitability and financial channels have been simplifiedto enhance the customer online experience. Retailer systems and tools have been enhanced, supporting retailer sales, service and and needconstantmonitoringarelisted technician representatives and helping them deliver a seamless and consistent customer experience. Several the past other few years to aid seamless sales and improve after sales experience.

Global economic and geopolitical environment: We are exposed to changes in the global economic and external factors, including but not limited to trade tensions, protectionism, wars, terrorism, natural disasters, humanitarian challenges and pandemics that may adversely impact our business. In the recent past, we have been witnessing increased geopolitical tensions globally.

Mitigation: We continue assess global developments, implementing mitigation to maintain a plans as necessary and we continue balanced sales profileacross our key sales regions. Our diverse global customer base gives us the flexibility to react to regional changes in demand by adjusting our sales mix.

health and safety risks in operations:

Company may face accidents involving moving machinery, on-site transport, forklifts, blast etc. variable costs.

Our health and safety guidelines ensure compliance with local and international laws, regulations and standards. The primary focus is protecting employees and communities from harm and operations from business interruptions. Safety training, mandatory usage of safety gadgets such as safety shoes, helmets, hand gloves, masks on shop meetings are held for review of safety aspect, fatal accidents/near miss accidents, if any.

technology innovation: The Company manufactures different construction technological up gradation . provide a reasonable assurance over

Mitigation: The Company hasbeeninvesting , ensure appropriateR&D anditisupgradingitsproductscontinuously. of transactions

,financial risk: Foreign exchange rate fluctuation changes in interest rate may likely to impact profitability

Mitigation: Prudent hedging strategies and appropriate mix of financingof authority and a comprehensive Management a well-

structured ompetitive intensity: andKeeping

financialmind the high growth potential all OEMs, homegrown as well as MNCs, have presence across all segments. Today, deeply entrenched in the Indian market with local development centres, a strong local supplier base and good channel penetration

Mitigation: The Company has a strong in house R&D division which is continuously adopting all the products to meet the latest technological needs. With the aim to remain competitive in the market and sustain leadership position, our Company continues in new product development, technology upgradations and increasing channel reach, while focussing on delivering customer centric products, services and brand building.

regulatory risk: The business may be impacted due to non-compliance or delay in compliance with regulatory approvals or altered legislations impact on the Company. Continuous monitoring of the evolving regulations, impact assessment, implementation of statutory compliance, internal audit and external legal review. Liaisoning with regulatory bodies and industry associations to bring systematic changes for the of industries.

• Talent Management : Failure to create and implement a succession plan for key positions and failure to retain high performers could impact business operations and growth.

Mitigation: Developing talent pool through learning and career development programmes, critical positions readiness, Monitoring of retention for key/critical and high performers, analyse root cause for with action plans.

INTErNAL CONTrOL SYSTEMS AND THEIr ADEQUACY .

Regular safety

Your Company has in place adequate internal control system and procedures commensurate with its size and nature of operations.Internal control systems comprising of policies and procedures are designed to ensure sound management of your Companys operations, reliability financial authorization safeguarding the assets of the Company and prevent misuse/ losses and legal and compliances.

The internal control system includes a well-defined delegation mitigate Information System coupled with quarterly reviews of operational budgeting process with regular monitoring of expenses and Internal audit. The Company has a proper and adequate system of internal controls, commensurate with its size and business operations to ensure the following:Timely and accurate financial reporting in accordance with applicable accounting standards;

Optimum utilization and safety of assets;Compliance with applicable laws, regulations, listing applications and management policies; andAn effective management information system and reviews of other systems.

Systems and procedures are periodically reviewed to keep pace with the growing size and complexity of your Companys operations.

fINANCIAL pErfOrMANCE rEVIEW may also have an adverse

Financial statements have been prepared in accordance with Ind AS as per the Companies (Indian Accounting Standards) Rules, 2015 as amended and 133 of the Companies Act, 2013 ("the Act") and other relevant provisions of the Act. financial performance of standalone Thekeyhighlightsof business are as under:Total revenue from operations increased to 2157.99 crores as against 1630.34 crores in the previous year- an increase of 32.36%.

Earnings before Interest, Depreciation, Amortization, Exceptional Items & Tax for the current year is 247.06 crores against 163.11 crores in the previous year-an increase of 51.47%. withmapping of successors and theirProfit before Tax (PBT) and Profit after Tax (PAT) for the current year are 219.16 crores and 161.20 crores respectively against 138.34 crores and 105.91 crores in the previous year - increase of 58.42% and 52.20% respectively.

Earnings per share is Rs.13.54 for the year under review.

SEGMENT WISEO r prODUCTWISE pErfOrMANCE

Your Company operates mainly in four segments i.e. Cranes, Construction Equipment, Material Handling Agri Equipment. The Company has a balanced approach to the Cranes, Construction Equipment, Material Handling and Agri Equipment, which helps us in capitalizing on our strengths in all four segments and to respond to market .

• The Cranes division revenues increased by 38.39% to 1527.85 crores in the year ended March 31,

as against 1104.01 crores in the year ended March 31, 2022. EBIT increased by 52.56% to 195.08 crores in the year ended March 31, 2023 as against 127.87 crores in year ended March 31, 2022. revenues increasedConstruction by 41.55% to 249.46 crores in the year ended March 31, 2023 as against 176.24 crores in the year ended March 31, 2022. EBIT increased by 150.64% to 23.51 crores in the year ended March 31, 2023 as against 9.38 crores in the year ended March 31, 2022.

Material Handling revenues increased by 11.23% to 169.14 crores in the year ended March 31, 2023 as against 152.06 crores in the year ended March 31, 2022. EBIT increased by 14.56% to crores in the year ended March 31, 2023 as against 18.20 crores in the year ended March 31?

• Agri Equipment revenues increased by 6.82% to 211.54 crores in the year ended March 31, 2023 as against 198.03 crores in the year ended March 31, 2022. EBIT decreased by 57.00% to 5.41 crores in the year ended March 31, 2023 as against 12.58 crores in year ended March 31, 2022

MATErIAL DEVELOpMENTS IN HUMAN rELATIONS/ INDUSTrIAL rELATIONS

Hiring and retaining top talent through fairness, transparency, and respect is core to the Companys human resource development policy. The Company culture is to align employee aspirations with business goals for mutual benefit.

The Company believes that its HR policies should be dynamic and therefore takes adequate steps to review and realign them to ensure that they address changing workforce trends, best practices, help your organization achieve its evolvingobjectives.

The Company is focused on its people strategy to create a high performing work culture and fosters a culture that is performance oriented, promotes rewards for results and helps its people grow. Your Company recognizes that the employees of the Company are the pillars of its success and growth. The focus is on development of employees at professional and personal levels using a pioneering, integrated approach to all its employees. The Number of permanent employees on the rolls of the Company as on March 31, 2023 are 1209. The year under review witnessed a very positive Industrial Relations scenario across all manufacturing locations for the ConstructionEquipment and Agri Equipment Sectors. The Companys focus continues towards propagating proactive and employee centric practices. The sustained towards building a transformational work culture resulted in zero productionloss in the FY2022-23 and helped create a collaborative, healthy and productive

DETAILS Of SIGNIfICANT CHANGES IN kEY fINANCIAL rATIOS:

Details of changes in key financial ratios are given herein below:-

Particulars	fY	fY	%
	2023	2022	Change
1. Debtors Turnover (Times)	12.03	7.87	52.73%
2. Inventory Turnover (Times)	4.09	3.92	4.46%
3. Interest Coverage Ratio(Times)	22.40	15.56	43.96%
4. Current Ratio(Times)	1.36	1.38	-2.03%
5. Debt Equity Ratio(Times)	0.01	0.04	-80.92%
6. Operating Profit	10.42%	9.34%	11.56%
7. Net Profit Margin (%)	7.47%	6.50%	14.98%
8. Return on Net worth (%)	19.37%	16.57%	16.93%

Note: Positive % change indicates improvement of the return and negative % change indicates deterioration reason of Change:

Debtor turnover has improved due to faster realisation of trade receivables.

Inventory turnover has improved due to better management of inventories.

Interest Coverage Ratiohas improved due to lower finance cost resulting mainly from lower bank borrowing and better margins.and legislative requirements

Current ratio is more or less similar

Improvement in debt equity ratio is on account of reduction of short

Note : ratios as required by schedule iii to the companies act, 2013 are also given as note no. 44 in the standalone Financial statement.

rISk MANAGEMENT AND GOVErNANCE

Risk is an intergral and unavoidable component of business and your Company is committed to managing risk in proactive manner. Though risks cannot be completely eliminated; an effectiveriskmanagementplanensuresthat er from those expressed or implied. risks are reduced, avoided, retained or shared. The Company recognizes that effective risk management is crucial to its continued profitability and long-sustainability of its business. tax regimes, Given the challenging and dynamic environment of your strategies mitigatingthe for Companys operations, inherent risks in accomplishing the ambitious plans for your Company is imperative. The Key business risks your Company are given in Risk and Concern sectionof this report. The risk horizon considered includes long term strategic risks, short to medium risks as well as single events.

The Company is committed to adopt good corporate governance, which promotes the long-term interests of all stakeholders, creates self-accountability across its management and helps built trust in the Company. A robust internal financial backbone of our risk management and governance. In line with our commitment to provide sustainable returns to our stakeholders, your Company has formalized clearly defined systems to manage its risks within acceptable limits by using risk mitigating techniques and have framed policies for timelyaddressing key business challenges and leveraging of business opportunities. the year.

DISCLAIMEr Certain statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates,expectationsor predictionsmay be "forward looking statements" within the meaning of applicable securitieslaws andregulations.Actual results could factors that could make a difference to the Companys operations include raw material availability and prices, cyclical demand and pricing in the Companys principal markets, changes in Government regulations, economic developments within India and the countries in which the Company conducts business and other incidental factors.

For and on behalf of the Board of

action construction equipment limited

Sd/-

Vijay Agarwal

Chairman & Managing Director

din: 00057634