Action Construction Equipment Ltd Management Discussions

V INDUSTRY STRUCTURE AND DEVELOPMENTS

• GLOBAL ECONOMY OVERVIEW

The global economy in FY 2025-26 is showing signs of a cautious recovery, supported by lower inflation, stable job markets, gradual improvement in financial conditions. However, ongoing challenges such as geopolitical tensions and global financial uncertainties continue to weigh on growth. According to International Monetary Fund (IMF), global GDP is expected to grow by 2.8% in 2025, with a slight increase to 3.0% in 2026, down from 3.1% in 2024. This moderate pace reflects the impact of high interest rates, shifting supply chains, and climate-related disruptions. Emerging markets are expected to lead global growth, with a projected expansion of 4.2% in 2025, well above the 1.7% growth forecast for advanced economies. India continues to stand out with strong domestic demand, solid economic fundamentals, and rising infrastructure spending. Inflation is gradually declining, with global inflation ease to 4.5% in 2025 from 5.9% in 2024. This decline is mainly due to tighter monetary policies and more stable commodity prices, especially in developed countries. However, some developing economies may still face inflation risks of currency fluctuations and regional tensions. In the US Eurozone, growth is likely to remain subdued, between 1.5% and 2%, as high interest rates continue to limit both investment and consumer spending. While the overall outlook has improved, key risks remain. Uncertainty around US trade tariffs and ongoing geopolitical conflicts could continue to disrupt global trade, particularly in manufacturing, technology, and commodity sectors. These challenges, along with currency volatility and shifting investment patterns, may slow down the pace of recovery. Additionally, climate-related events and the restructuring of global supply chains are affecting production costs and investment in several regions. While the global economy is gradually recovering, the outlook for FY 2025-26 remains cautiously optimistic. Strength in markets, easing inflation, and robust growth in emerging markets offer positive signals. However, continued uncertainties, particularly around trade and geopolitics, highlight the need for businesses to remain flexible and focused on risk management.

Indian Economy Overview

Indias economic performance in 2024 firmly reinforced its position as the fastest-growing major economy in the world, despite a challenging global backdrop. The countrys strong growth was supported by robust domestic demand, higher public investment, easing inflation, and continued implementation structural reforms. Even with global trade tensions and supply chain disruptions, India maintained macroeconomic stability and progressed on key reform agendas, particularly in labour regulations, digital governance, and clean energy transitions. Looking ahead, India remains one of the most resilient and high-performing economies in 2025. The International Monetary Fund (IMF) has projected GDP growth at 6.2% for the year. Growth is being driven primarily by strong domestic consumption, rising urban incomes, and a recovery in private sector investments. Rural demand continues to be steady, supported by favourable agricultural output and government support measures aimed at improving rural welfare. Inflation is expected to stay within the Reserve Bank of Indias (RBI) target range of 4-6%, with the Monetary Policy Committee forecasting inflation to moderate to around 4% in FY 2025 This decline is attributed to stabilising food prices and monetary policy. The government remains committed to fiscal consolidation, with the FY 2024-25 fiscal deficit reported at of GDP and a further reduction targeted at 4.4% in the current year. Importantly, this fiscal strategy continues to support levels of capital expenditure, especially in infrastructure and welfare, without compromising financial discipline. Indias external sector performance has also improved. The current account deficit has narrowed, foreign exchange reserves remain healthy, and FDI inflows increased to USD 81.04 billion in FY 2024-25-up 14% from the previous year-reflecting investor confidence. However, global uncertainties, trade shifts, and geopolitical tensions remain areas of concern. Indias economic outlook for FY 2026 remains strong, with growth underpinned by domestic resilience, reform momentum, and a growing role in global supply chains, positioning the country as of a key contributor to global economic growth.

Construction Equipments Industry

The Indian construction equipment industry in FY2025 experienced a notable deceleration compared to the previous years robust performance. After recording a remarkable 26% growth in sales in FY24, reaching 135,650 units, the industrys growth rate slowed to just 3% in FY25, with total equipment sales rising modestly to 140,191 units. This slowdown can largely be attributed to the impact of election-restrictions, which led to delays in project approvals and implementation of new investments, as well as payment issues faced by contractors. The introduction of the Construction Equipment Vehicle (CEV) Stage V emission norms from January 2025 also contributed to a temporary slowdown, particularly the final quarter of the fiscalyear.

Despite these challenges, the sector demonstrated resilience, with export demand providing a significant boost. Exports surged by 10% in FY25, partially offsetting the growth in the domestic market, which expanded by just 2.7%. Moving forward, the industry performance is expected to be driven by ongoing government initiatives such as National Infrastructure Pipeline, PM Gati Shakti Plan, and continued investments in infrastructure projects including roads, airports, railways, and metros. These factors have reinforced Indias position as the worlds third-largest construction equipment market.

Looking ahead, industry leaders and associations remain optimistic about a return to double-digit growth in FY26, the pace of project execution is expected to pick up with anticipated easing of regulatory and financing constraints. sector is poised for further expansion, driven by sustained government focus on infrastructure development, the adoption of sustainable and digital solutions, and the competitiveness of Indian-manufactured equipment. challenges such as high capital costs and environmental compliance persist, the long-term outlook for the construction equipment industry remains positive, with robust demand expected from both domestic and export markets as continues its infrastructure-led growth trajectory.

Indian Crane Market

The

The Indian crane market in 2025 is experiencing steady growth, underpinned by the countrys ongoing infrastructure development, rapid urbanization, and expansion in sectors such as construction, mining, logistics, and manufacturing. market size has reached a value of USD 3.6 billion in 2024 and is projected to grow at a compound annual growth rate (CAGR) of 4.4% during 2025-2033, ultimately reaching USD 5.4 billion by 2033. This expansion is driven by large-scale government initiatives like the Bharatmala Project and Smart Cities which continue to fuel demand for cranes across a variety of applications.

Mobile cranes dominate the market, accounting for the largest share, followed by fixed, marine, and port cranes. The construction sector remains the primary end-user, contributing to approximately 70-75% of total demand, with the remainder coming from mining, industrial, and logistics applications. market is also witnessing a notable shift toward technologically advanced cranes, including electric, hybrid, and autonomous models, as sustainability, efficiency, and safety become increasingly important for project execution. The autonomous crane segment, in particular, is poised for rapid growth, with a projected CAGR of 7.2% through 2035, driven by investments in automation, AI-powered load management, and remote operation capabilities. Despite the positive outlook, the industry continues to face challenges such as fluctuating raw material prices and potential shortage of skilled labour. The competitive remains intense, with both global and domestic manufacturers focusing on product innovation, strengthening after-sales service, and forming strategic partnerships to gain market share. Demand is expected to remain strong in metropolitan areas and industrial hubs, driven by the concentration of infrastructure development and industrial activity in these regions.

Overall, the Indian crane markets long-term prospects remain optimistic, reflecting the nations sustained infrastructure-led growth, technological advancement, and industrial expansion.

Material Handling Equipment Industry

The material handling equipment industry in India is experiencing robust growth in 2025, propelled by rapid industrialization, expanding manufacturing activities, a surge in e-commerce logistics. The market reached an estimated value of USD 10.57 billion in 2024 and is projected to more than double to USD 22.48 billion by 2033, reflecting strong compound annual growth rate (CAGR) of 8.08% over the period. This expansion is supported by government initiatives such as the Production-Linked Incentive (PLI) scheme and “Make in India” campaign, which are driving investments in advanced automation and efficient warehousing across industries. The warehousing and distribution segment continues to be the largest contributor, fuelled by the increasing focuson need for technologically upgraded handling systems in sectors like food and beverages, automotive, healthcare, and especially e-commerce, where rapid order fulfilment and streamlined logistics are critical.

Within the Indian market, cranes and lifting equipment represent the largest segment, accounting for over a third of total revenue, underscoring their essential role in manufacturing, construction, and infrastructure projects. Despite this positive outlook, the industry faces challenges such as fluctuating raw material prices and the need for skilled labour to operate advanced systems. However, the overall prospects remain highly favourable, as Indias push toward infrastructure development, digital transformation, and supply chain optimization continues to drive demand for both standard customized material handling solutions. The markets growth trajectory is further reinforced by the entry of global players and increasing investments in technology-driven equipment, positioning India as a key market in the global material handling equipment landscape.

Agriculture Equipment Industry

The Indian agriculture equipment industry is experiencing robust growth in 2025, driven by accelerating trends in farm mechanization, labour shortages, rising rural incomes, and supportive government policies. The market size is estimated at USD 18.15 billion (approximately INR 1.23 trillion) in 2025, and is projected to reach INR 2.69 trillion by 2033, reflecting a strong compound annual growth rate (CAGR) of about 8.6% over the forecast period. This expansion is underpinned by the increasing adoption of mechanical equipment for a wide range of farming operations, including tillage, sowing, irrigation, protection, and threshing, as more farmers transition traditional animate sources to modern machinery.

A significant factor fuelling this growth is the persistent labour shortage in rural areas, which has been intensified by migration to urban centres and government rural employment schemes. This has led to a greater reliance on mechanized solutions to maintain productivity. Additionally, the ease of financing through banks and microfinance institutions, along with government incentives such as subsidies and low import duties, has made agricultural machinery more accessible to farmers across the country. Rising rural incomes, increased agricultural productivity, and the emergence of contract farming are further enabling farmers to invest in advanced equipment and technology.

Tractors remain the dominant segment in the Indian agricultural equipment market, representing the largest share of sales, followed by trailers, harvesters, planting equipment, irrigation and crop processing equipment, sprayers, and hay and forage equipment. The market is also witnessing growing interest in technologically advanced and efficient machinery, which helps reduce labour requirements and improves operational efficiency.

Despite the strong growth trajectory, the industry still faces challenges such as relatively low penetration of mechanized equipment in certain regions, fluctuating commodity prices, and the need for ongoing training and support for farmers adopting new technologies. Nonetheless, the outlook for the Indian agriculture equipment industry remains highly positive, supported by ongoing mechanization, favourable policy frameworks, and the increasing integration of advanced technologies into farming practices.

The Indian infrastructure sector in 2025 continues to be a cornerstone of the countrys economic development, though it has witnessed a moderation in growth compared to the previous year. The market is currently valued at approximately USD

190.7 billion and is projected to expand at an 8.0% compound annual growth rate (CAGR), reaching USD 280.6 billion by 2030. This growth, while robust, reflects a slightly tempered pace relative to earlier projections, with the slowdown attributed factors such as delays in land acquisition, regulatory clearances, and commodity cost volatility. Despite these challenges, the governments commitment to infrastructure remains strong, as evidenced by the Union Budget 2025-26, which allocated INR 11.21 lakh crore for infrastructure-a record outlay aimed at sustaining momentum toward the Viksit Bharat @ 2047 vision.

Transportation infrastructure continues to dominate the sector, accounting for 38% of the market share in 2024, with expressway mileage surpassing 55,000 km and significant additions to and metro networks. Flagship initiatives like Bharatmala, Shakti, and the National Logistics Policy are driving integration, last-mile connectivity, and private investment in logistics parks and allied services. The Smart Cities Mission is also reshaping urban centers, particularly in tier-2 cities, investing in digital-ready roads, metro-feeder links, and climate-resilient public spaces, which has catalysed a notable increase in commercial real estate investment.

Utilities, including renewable energy, smart grids, and water supply, represent the second-largest segment, with ongoing investments in hybrid solar-wind parks, city gas pipelines, and advanced water management systems. Social infrastructure is also advancing, with hospitals and educational campuses increasingly adopting prefabricated construction to reduce completion times. However, the sectors growth is not without headwinds; Indias core infrastructure sectors posted a slower growth of 3.8% in March 2025, compared to 6.3% a year earlier, and the cumulative growth for FY 2024-25 stood at 4.4%, down from 7.6% in the previous fiscal. This moderation was primarily due to weaker output in crude oil and natural gas, though segments like steel, cement, and electricity continued to expand.

Looking ahead, the sectors outlook remains optimistic, driven by rapid urbanization, rising population, and sustained government focus on infrastructure-led growth. Private investment is playing an increasingly important role, supported by public-private partnership frameworks and innovative financing models, with private capitals share expected to grow at a 9.7% CAGR. As India strives to become a $5 trillion economy and achieve developed nation status by 2047, infrastructure development particularly in transport, energy, and urban services-will remain a critical enabler of inclusive and sustainable economic progress.

real Estate

The Indian real estate sector in 2025 is undergoing a period of dynamic transformation, marked by robust growth, evolving market trends, and a strong outlook for the coming years. The market was valued at approximately USD 482 billion in 2024 and is projected to reach USD 1,184 billion by 2033, reflecting a healthy compound annual growth rate (CAGR) 10.5% during 2025 2033. Residential real estate continues dominate the sector, with a projected market volume of $40.20 trillion in 2025, underscoring sustained demand for housing across urban centers and tier-2 cities. This surge is fuelled rapid urbanization, population growth, and rising disposable incomes, as well as supportive government initiatives such the Pradhan Mantri Awas Yojana (PMAY) and the Smart Cities Mission.

Commercial real estate is also witnessing significant momentum, with gross office leasing in major cities record highs and retail space expansion set to add 41 million sq. ft. across the top seven cities between 2024 and 2028 The demand for data centers is rising sharply, with projections indicating a year-on-year increase of approximately 40% in total data center stock for 2025. The sector is further bolstered by increased private equity and foreign institutional investments, with private equity inflows rising from $3.4 billion in 2022 to $4.2 billion in 2023 and total foreign institutional investments reaching $26.6 billion between 2017 and 2022.

Despite these positive trends, the sector faces challenges such as a projected urban housing deficit of 10 million units and a need for an additional 25 million affordable housing units 2030 to accommodate the growing urban population. There was also a notable decline in residential sales in the first quarter of 2025, with a 28% year-on-year drop in the top seven cities, highlighting the sectors sensitivity to market cycles and interest rate fluctuations.

Looking ahead, the Indian real estate sector is expected to remain a key driver of economic growth, employment generation, and urban development. The convergence of technology, sustainability, and policy reforms is reshaping the industry, while stable interest rates and a favourable investment climate continue to support growth across residential, commercial, and industrial segments. As the sector advances toward its projected market size of $1 trillion by 2030, it is poised to play an increasingly pivotal role in Indias economic landscape.

Logistics and Warehousing

The Indian logistics and warehousing sector in 2025 is experiencing robust growth, driven by strong demand from e-commerce, third-party logistics (3PL) providers, and the manufacturing sector, along with significant supply additions by institutional investor-backed developers. The Indian logistics . market reached a size of USD 427.73 billion in 2024 and is expected to grow at a compound annual growth rate (CAGR) of 6.50% between 2025 and 2034, reaching nearly USD 802.91 billion by 2034. While transportation services remain the largest segment, warehousing and distribution services are the fastest-growing, reflecting the rising demand for modern storage and handling solutions.

The sector has witnessed a remarkable surge in both supply and leasing activity. In the first quarter of 2025 alone, new industrial and logistics supply grew by 57% year-on-year to 12.4 million sq. ft., with key hubs such as Mumbai, Bengaluru, and Chennai accounting for the majority of new stock. Leasing activity also saw a substantial 40% year-on-year increase, reaching 12.1 million sq. ft. across the top eight cities, led by strong commitments from 3PL, e-commerce, engineering and manufacturing, automotive, and FMCG sectors. This momentum is expected to continue throughout 2025, underpinned by the infusion of high-quality, Grade A warehousing assets and the expansion of institutional capital into tier I and select tier cities.

Government policy and budgetary support are further accelerating the sectors transformation. The Union Budget 2025-26 introduced strategic reforms aimed at enhancing logistics efficiency, reducing costs, and strengthening position as a global trade hub. Digital transformation is a key theme, with the rollout of the Bharat Trade Net (BTN) platform to streamline trade documentation and facilitate seamless import-export transactions, alongside widespread adoption of AI-driven warehouse management and real-time tracking systems.

Third-party logistics (3PL) continues to be the dominant model, as companies increasingly outsource supply chain management to specialized providers for greater efficiency and scalability The growth of domestic manufacturing, fuelled by initiatives like the Production Linked Incentive (PLI) scheme and “Make in India,” is also driving demand for logistics and warehousing services, particularly for the transportation of raw materials distribution of finished goods.

Despite the sectors strong outlook, challenges remain in the form of infrastructure bottlenecks, fluctuating input costs, the need for skilled labor to manage advanced, automated systems. Nevertheless, the Indian logistics and warehousing sector is well-positioned for sustained expansion, supported by ongoing digitalization, policy reforms, and the continued rise e-commerce and organized retail.

Indias Union Budget 2025-26 and the countrys long-term infrastructure and industrial vision present a strong growth environment for the company as a leading manufacturer of cranes and construction equipment. The record capital expenditure outlay of 11.21 lakh crore in FY26 underscores the governments commitment to infrastructure-driven development. Significant investments across highways, expressways, metro projects, smart cities, and urban transit systems are expected to fuel demand for construction machinery such as earthmoving equipment and cranes. Continued momentum under national programs like the National Infrastructure Pipeline, Bharatmala Pariyojana, and Smart Cities Mission is likely to support sustained demand . for modern and efficient construction equipment across sectors.

The expansion of metro rail networks and urban infrastructure in Tier 2 and Tier 3 cities is creating opportunities for specialized and compact equipment tailored to space-constrained urban settings. Increased construction activity under affordable housing schemes, and such as the Pradhan Mantri Awas Yojana and ongoing smart city initiatives, is expected to drive the need for innovative, space-efficient machinery.

Indias manufacturing sector is poised to reach a market size of $1.4 trillion by 2025, driven by the Production Linked Incentive schemes and an upswing in industrial capital expenditure. This trend supports rising demand for heavy machinery, industrial cranes, and material handling systems across factories, industrial units, and logistics hubs.

Growth in capital goods and auto component industries, aided by policy support and duty exemptions, further enhances prospects for construction and material handling equipment.

In agriculture, increasing rural prosperity, labour shortages, access to financing, and government subsidies are supporting the steady growth of the agricultural equipment market. Programs like the “Prime Minister Dhan-Dhaanya Krishi Yojana” and broader rural development initiatives are expected to accelerate mechanization across farming practices. This shift is likely to increase demand for tractors and harvesters etc.

Indias logistics and warehousing industry is experiencing rapid transformation, with the market projected to grow at a strong pace, led by the expansion of e-commerce, third-party logistics, and the FMCG sector. Development of multimodal logistics parks, new cargo terminals under PM Gati Shakti, and digitalization of supply chains through national logistics platforms are driving demand for advanced - material handling and warehousing solutions. Automation-ready equipment, IoT-enabled cranes, and integrated logistics support systems are increasingly relevant in this evolving environment.

The pre-owned equipment segment is also gaining traction, driven by increasing interest in cost-effective and quality-certified machinery. Strategic collaborations and innovative trade-in models are reshaping this space, offering new avenues for customer engagement and market penetration. Sustainability, automation, and digital transformation are becoming key pillars of growth in the construction equipment industry. The integration of technologies such as predictive maintenance and green energy solutions is influencing product design, operations, and customer expectations. Focus areas such as eco-friendly machinery, energy efficiency, and smart equipment systems are aligning with broader regulatory shifts and the markets transition toward responsible and data-driven infrastructure development.

These multi-sector trends offer a robust and diversified opportunity landscape for the company in FY26 and beyond, across infrastructure, manufacturing, agriculture, logistics, and sustainability-driven innovation.

v Threats

A slowdown in the Indian economy, triggered by adverse macroeconomic or global factors such as trade barriers, tariff war, freight crises and geopolitical tensions, could negatively impact infrastructure and manufacturing sectors, thereby affecting the Companys growth prospects. Inefficient construction project management, including inadequate planning, scheduling, or resource allocation, may result in project delays, cost overruns, and legal or financial complications. Shortages of skilled workforce and delays in land acquisition or environmental clearances can further exacerbate these risks.

The availability of project financing remains a concern as banks and financial institutions continue to exercise due to high non-performing assets and stricter regulatory norms. This can lead to reduced funding for infrastructure projects and impact the Companys order inflows. Volatility in raw material prices, particularly steel and other key inputs, can lead to margin pressures. Sharp increases in input costs may raise the cost of goods sold and adversely affect profitability.

Increasingly stringent environmental regulations, such as the introduction of Stage V emission norms and carbon tax proposals, may raise compliance costs and slow down project execution, potentially impacting the Companys growth trajectory.

Fluctuations in demand for construction and agricultural equipment, influenced by factors such as monsoon variability, government policy changes, and the growing preference for equipment rentals over purchases, can lead to unpredictability in the Companys operations. Intensifying competition from both established international players and agile domestic companies, including those offering advanced electric or autonomous equipment, may lead to pricing pressures and erosion of market share

. v risks AND Concern

ACE has established a risk management framework to effectively identify, assess, monitor, and mitigate potential risks that could impact its operations. The Risk Management Committee, in collaboration with senior management, prioritizes key risks based on severity and likelihood, developing comprehensive mitigation strategies. At the Board level, ACE has implemented a comprehensive risk management policy that proactively identifies and mitigates significant risks. By evaluating risks based on their likelihood, the Company can devise effective mitigation strategies in advance, ensuring readiness for unforeseen challenges. This structured approach empowers ACE to navigate uncertainties with agility. The internal control system is supported by internal audits and management reviews, reinforced by clear policies and procedures that uphold accountability and reliability in financial reporting.

Some of the risks that are potentially significant in nature and need constant monitoring are listed below:

Global economic and geopolitical environment: We may face a turbulent outlook of global challenges, including economic swings, trade tensions, protectionism, wars, terrorism, humanitarian crises, pandemics and climate-related disruptions. Given the global nature of where we sell our finished products and buy our commodities, the risk landscape is complex, significant and wide-ranging, particularly in relation to the challenging and changing tariff environment. Global tariffs could disrupt automotive supply chains, overall trade dynamics, increase raw material costs and cause recessionary risks.

Risk management initiative: We continue to closely monitor, assess and implement mitigation plans in consideration of the turbulent geopolitical and economic landscape. This work is underpinned by foresight intelligence and scenario planning to look further ahead and build resilience to alternative futures. Our diverse global customer base gives us the flexibility to react to regional changes in demand by adjusting our sales mix into other markets. We continue to monitor and assess the global tariff environments to manage their ramifications as effectively as possible, and take mitigating actions such as enforcing cost discipline, pricing actions.

Brand positioning, innovation and rapid technology change:

Staying competitive in the dynamic construction equipment market is increasingly challenging due to intensified competition from existing OEMs and new disruptive entrants. Technology in the industry is also evolving rapidly, particularly with respect to autonomy, connectivity and electrification. Our ability to succeed in the future relies on staying abreast of evolving automotive trends, meeting changing customer demands through timely innovation and maintaining product competitiveness and quality.

Risk management initiative: Our brands continue support our position in the market with smart product interventions and timely refreshes with stylish designs, safety and technology features, our brand perception has increased over the years. The Company has been investing in R&D and it is upgrading its products continuously.

Supply chain disruptions and commodity price

Our ability to supply components, in time, to our manufacturing operations is of paramount importance in achieving production schedules and meeting demand. Commodity price fluctuations, being a major of overall costs, might impact the cost competitiveness overall profitability, the volatile nature of the regulatory landscape (Tariffs) could also result in significant direct indirect impacts to suppliers and disruption to logistics increase production costs and lead times.

Risk management initiative: Maintaining continuous focus on cost optimisation initiatives to lower fixed enhance variable cost efficiency. Exploring suppliers and emphasising localisation efforts. Implementing thorough financial due diligence for all new suppliers.

Improving power security and infrastructure consistently. Deploying a management team that ensures sustainable low-cost production, operational excellence, and access to essential raw materials.

people capability and capacity: To deliver strategic and operational plans an organisation needs a workforce core and critical skills in both current and emerging areas and a culture underpinned by a safe, secure and inclusive environment that enables people to do their best work every day. The safety, wellbeing and engagement of our employees is paramount and needs to be maintained in the face of a challenging external environment.

Risk management initiative: An essential part of our strategy is to cultivate an agile and capable organisation and through changes in our work methods and introducing a new business purpose and supporting behaviours. We remain dedicated to fostering an environment that drives exceptional business performance.

Distribution channels, Dealer network and customer service delivery: Our goal is to ensure every customer experiences a seamless and consistent hassle-free journey, delighting them at every interaction. Dealer partners a crucial role in reflecting our brand strategy and effectively communicating our values through trained capable representatives. This approach aims to successfully appeal to new and existing customers, driving high customer satisfaction and retention levels in both sales and Availability of parts is necessary to ensure a seamless customer experience.

Risk management initiative: Market demand is monitored constantly to optimise vehicle and parts and accessory deliveries for our Dealer and customers. Dealership systems and tools are being enhanced, supporting sales, service and technician representatives to deliver a seamless and consistent hassle-free customer experience.

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.

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

Information Security and IT systems: The Companys increased reliance on digital technologies brings exposure to cyber-attacks that may affect business operations. compliance to stringent IT legislations and regulations lead to imposition of penalties and adverse impact on Companys reputation.

Risk management initiative: 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.

Occupational, Health and Safety Risks in Operations:

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

Risk management initiative: Ensuring compliance with local and international health and safety laws, regulations, standards Emphasising safety training and enforcing the use of protective gear such as safety shoes, helmets, gloves, and masks in shops and plants Conducting regular safety meetings to review protocols, discuss fatal or near-miss incidents, and resolve concerns Maintaining robust security through check-posts, entry passes or identity cards, and an access control system.

regulatory risk: The business may be impacted due to and non-compliance or delay in compliance with regulatory approvals or altered legislations may also have an adverse impact on the Company.

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Risk management initiative: We are dedicated to adhering to the laws and regulations in all countries where we conduct business. Our specialist teams diligently monitor legal and regulatory developments, establish detailed standards, and ensure awareness and compliance with these standards.

v Internal Control SYSTEMS AND Their ADEQUACY

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, provide a reasonable assurance over reliability in financial reporting, ensure appropriate authorization of transactions, safeguarding the assets of Company and prevent misuse/ losses and legal compliances. The Company has instituted robust internal control systems and best in-class processes commensurate with its size and scale of operations. These comprise: Well-formulated policies and procedures that facilitate effective business operations with governance major activities.

The Company effectively exerts financial control the annual budgeting process and monitors it through monthly reviews of all operating and service functions. A state-of-the-art ERP system to record data for accounting, consolidation and management and connect locations for efficient exchange of information. The Company conducts audits based on stringent standards to review the design effectiveness of internal systems and procedures to manage risks, ensure monitoring control, comply with relevant policies and procedures, and recommend improvement measures.

The Audit Committee of the Board of Directors regularly reviews the adequacy and effectiveness of internal systems. It monitors the implementation of internal audit recommendations.

Timely and accurate financial reporting in accordance applicable accounting standards; Optimum utilization and safety of assets;

Compliance with applicable laws, regulations, listing applications and management policies; and An effective management information system and of other systems.

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

v FINANCIAL performance review

Financial statements have been prepared in accordance with Ind AS as per the Companies (Indian Accounting Standards) Rules, 2015 as amended and notified Section 133 of Companies Act, 2013 (“the Act”) and other relevant provisions of the Act. all The key highlights of financial performance of standalone business are as under:

YTD Consolidated Financial performance

(Rs in crores)

Particulars	FY-25	FY-24	Y-O-Y (%)
Total Income	3427.40	2,990.90	14.59
Total Expenses	2821.30	2,510.55	12.38
EBITDA	606.10	480.35	26.18
EBITDA Margin (%)	17.68	16.06	16.2 BpS
Depreciation	28.30	23.24	21.74
Finance Cost	28.70	23.17	23.84
pBT	549.10	433.94	26.5
Tax	139.90	105.74	32.4
Profit after Tax	409.20	328.20	24.68
pAT Margin (%)	11.94	10.97	9.7 BpS
EpS (Diluted INr)	34.37	27.56	24.71

SEGMENT WISE OR PRODUCT WISE PERFORMANCE

During the financial year ended March 31, 2025, Action Construction Equipment Limited revised its reportable segment structure. Until March 31, 2024, the Company reported four distinct segments: Cranes, Construction Equipment, Agriculture Equipment, and Material Handling Equipment. Based on an internal reorganization and benchmarking with industry peers, in line with internal reporting provided to the CODM, management has now presented two segments titled

“Cranes, Material Handling and Construction Equipment,” and “Agriculture Equipment”. Accordingly, the corresponding items of segment information for earlier periods have been restated.

MATERIAL DEVELOPMENTS IN HUMAN RELATIONS/ INDUSTRIAL RELATIONS

The Companys Human Resources Department (HRD) is committed to promoting a safe, collaborative and positive work environment that encourages strong relationships between workers and staff. The HRDs core principle is that employees at all levels play a crucial role in achieving the Companys objectives.

The Company has adopted guiding pillars to build a resilient, adaptive, and inclusive workplace where every team member is valued and uplifted. The Company focuses on taking various initiatives to make its workplace more engaging, collaborative, and fulfilling. A gamut of celebrations comprising Diwali, New Year and Holi enabled employees and their families to unite, fostering enduring relationships. The Company aims to empower its employees with user friendly tools and ensure a digitally integrated and agile infrastructure. ACE is becoming more responsive to market changes, customer needs and internal dynamics, enhancing its way of working. This way, the Company stays well-equipped to navigate emerging challenges and opportunities. The Company is committed to an open-door policy and effective communication channels to maintain positive industrial relations. The Company addresses employee concerns through regular forums initiating dialogue and fostering a transparent and collaborative workplace. The Company has created a comprehensive diversity & equity, to equal rights and respect for all individuals, regardless of gender, ethnicity, race, religion, marital status, or disability. ACE catalyses innovation, creativity, and collaboration by embracing varied perspectives. A diverse and inclusive workplace is a source of strength and essential for achieving the Companys business objectives.

The Number of permanent employees on the rolls of the Company as on March 31, 2025 are 1492.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS:

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

S.	Particulars	FY	FY	%
N.		2025	2024	Change
1.	Debtors Turnover (Times)	15.2	17.37	-12.35%
2.	Inventory Turnover (Times)	4.27	4.18	2.12%
3.	Interest Coverage Ratio	20.01	19.72	1.47%
	(Times)
4.	Current Ratio (Times)	1.21	1.36	-11.15%
5.	Debt Equity Ratio (Times)	0.009	0.003	206.60%
6.	Operating Profit Margin (%)	14.22%	13.06%	8.88%
7.	Net Profit Margin (%)	12.16%	11.25%	8.06%
8.	Return on Net worth (%)	28.66%	30.78%	-6.90%

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

Reason of Change:

Changes in Debt Equity Ratio is primarly due to change in total equity on account of profit earned and increase in borrowings. Note: Ratios as required under schedule III of the Companies Act, 2013 are also given in note no. 46 of the standalone financial statement.

RISK MANAGEMENT AND GOVERNANCE

Risk is an integral and unavoidable component of business and your company is committed to managing risk in a proactive manner. Though risks cannot be completely eliminated; an effective risk management plan ensures that risks are reduced, avoided, retained or shared. The company recognizes that effective risk management is crucial to its continued profitability and long-term sustainability of its business. Given the challenging and dynamic environment of your Companys operations, strategies for mitigating the inherent risks in accomplishing the ambitious plans for your Company is imperative. The Key business risks identified by your Company are given in Risk and Concern section of this report. The risk horizon considered includes long term strategic risks, short to medium risks as well as single events. The risks are analyzed considering likelihood and impact as a basis of determining their management.

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 control system forms the 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 timely addressing key business challenges and leveraging of business opportunities.

DISCLAIMER

Certain statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be “forward looking statements” within the meaning of applicable securities laws and regulations. Actual results could differ from those expressed or implied. Important 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, tax regimes, 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