Action Construction Equipment Limited (ACE) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Q4 FY '20 Earnings Conference Call of Action Construction Equipment Limited, hosted by Emkay Global Financial Services. We have with us today, Mr. Sorab Agarwal, Executive Director; and Mr. Rajan Luthra, Chief Financial Officer. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Anas Dadarkar from Emkay Global. Thank you, and over to you, sir.

Good evening, everyone. I would like to welcome the management and thank them for giving us this opportunity. I would now hand over the call to the management for the opening remarks. Over to you, sir.

Yes. Good evening, everybody. All of us are currently reeling under the ill effects of COVID-19, which has caused unprecedented disruptions in personal as well as business and economic setups. Overall, the business setup and business quantum had started improving since January of 2020, and we were looking at our biggest single quarter sales in quarter 4 of FY '20. But unfortunately and with sudden lockdown in the second half of March, all of us were caught unawares, and we lost close to about INR 65 crores of revenue for the month of March, additional revenue which we could have done easily, which was about 20% of our revenue -- which could have been about 20% of our revenue for March quarter. Even in this tough situation, we were able to grow our revenue for quarter 4 of the last year by 5.6% on a quarter-on-quarter basis and 1.9% on year-on-year basis. On a whole year basis, our revenue last year has declined by 13.9% as compared to FY '19, as overall economic activity was a little sluggish throughout most of last year. Even on a falling revenue base, owing to the market conditions, we have been able to marginally improve our EBITDA margins to 8.3% as compared to 8% on year-on-year basis. And similarly, our profit after tax stands at 4.6% for the last year as compared to 4.2% for financial year '19. Post lockdown, we were able to start our partial operations in the last week of April. And we were able to function at about 35% revenue levels for the month of May, and June looks to be slightly better than May as the country unlocks. For the current quarter, we expect overall sales to be at around 30%, 32%, this is for the quarter, of the last year's average sales, as most of the country remained in lockdown through most of April and, obviously, parts of May. In the interim, we have taken all possible liquidity preservation and cost control measures to minimize the effect of COVID and lockdown on the performance of the company. We have been able to reduce our breakeven levels from 70% of last year's average revenue to around 55% level currently, which will help us wade through these trying times. Going forward, we expect revenue levels to reach around 50%, 55% in quarter 2, around 70% in quarter 3 and hopefully, things should normalize to normal pre-COVID levels in quarter 4, provided no further disruption takes place. We have undertaken all possible measures to remain in the black on a full year basis for financial year '21 and still continue to work on the same. Yes. That's it. I think we can start the Q&A session.

[Operator Instructions] The first question is from the line of [ Rajiv Maheshwari from Raj Investments. ]

Considering the environment, the result was quite good because, as you told, you lost around INR 65 crores of revenue. So -- and maybe in that case, the revenue would have gone in terms of around INR 370-odd crores. But still okay, things were not in our hands, so that's the way it is. So I have a couple of questions. This INR 65 crore of revenue should have been, again, carried forward to the month of maybe next quarter when the operations started sometime in April? Or we have lost some part of sales on that account?

See, apart from this INR 65 crores, there were a lot of other pending orders, which would have been executed in due course of April. But unfortunately, I would say that quite a part of the order book has gone into abeyance because people are undecided with respect to their current and future activity levels. So I would say that at least 40%, 50% of the order book has got -- gone into abeyance, delayed and some part of it canceled also. And -- but yes, in the interim, there are already some fresh order bookings have started well in the month of May and June. Obviously, it is -- the demand scenario is nowhere near what it was pre-COVID levels. And -- but yes, that's the true fact. But yes, out of that INR 65 crores, I would say that at least 50%, 60% of the business is getting executed, would have already happened in May or would be continuing well into June.

Okay. So the rest maybe people are postponing it as of now or maybe canceling it. And because in these uncertain times, lots of issues would have been there even on their side. But the second part is how is the condition of this COVID and all in terms of the factory campus or in the Faridabad area in and around? And is it impacting the labor supply as such, labor supply in terms of the factory as well as labor supply in terms of the contractors and infrastructure companies, which are using our product as of now?

Yes. You see, we were lucky enough, and I think we were one of the first construction equipment companies to start functioning. We got our approvals on 23rd of April, and we started functioning in a small way on 24th. We have put all possible checks and balances in place in order to avoid any spread of COVID within the premises outside. And in Faridabad, especially where we are located, Faridabad and Palwal, COVID instances were very less, very limited to maybe only 150, 200 till about 8, 10 days back. But unfortunately, about 150-odd cases have started happening in the recent past. So obviously, the COVID scenario is increasing as soon as -- most of the things have gone into -- gone -- come out of the lockdown in the last 15, 20 days. So yes, the spread is definitely increasing. But till date, we really don't have a problem on the labor front, rather with such reduced quantum of work, there was actually no need for a lot of workers. So about -- during this lockdown period, about 15%, 20% of the workforce did vanish. And obviously, we are also not interested in getting them back because we don't need them. On the contrary, about 10%, 15% of the workforce, we have the temporary contractual workforce which we engage through contractors. So we have actually laid off about 10%, 15% of them in the last 1, 1.5 months. As of now the situation is okay, yes. But if it worsens again, then obviously it is anybody's guess what will happen.

That's in nobody's hands. And the second part is, how is the status in terms of the -- the people whom you supply in terms of the labor shortage those guys are facing? Or how is it...

There are 2 things happening. Definitely, there is labor shortage, especially in the cities. So for all the projects which were happening within the city limits, there is definitely a labor shortage because most of the labor is migrant labor, and a lot of them have moved away or have still not returned to the sites. So obviously, I would say 30%, 40% of the sites are finding it difficult or it's not viable to carry on operations, if there is no productivity at the site. So yes, that problem exists as of now. And I think it will be -- it will take another 15 days to 1 month for that problem to smoothen out. But on the sidelines of this problem, another thing that we have noticed with respect to the biggest of the construction companies or contractors that the work generally slows down in the monsoon time. So that is July till mid of August. So some of the companies, with respect to some of their projects where they have had labor issue, they have principally decided not to restart or have shut down their sites and will start only sometime in middle of August. So by that time, the labor problem would also finish and the monsoon would have also passed by. So that is also an approach taken by some of the companies for some of their sites.

So basically if everything is in place, the work will start at full swing?

Yes. So hopefully, August or September, construction activity should get back to full swing or at least 90%, 95% levels.

That's fair enough. Out of curiosity, I just wanted to know suppose there is a supply shortage of labor in the sites and all, so does it not indirectly mean that more -- the dependence would be more on the equipment rather than the labor, because anyway the labor supply is short, so how do you see that as maybe a prospect going forward?

In a small way, especially with respect to earthmoving machines and all, yes, it will definitely add to the need for more equipment, but especially smaller equipment like splits gear loaders or smaller machines, which can actually contribute to labors or labors' job. But finally, there are so many jobs and things which practically people have to do, whether it is -- including operating the machine, so -- and obviously. So the -- I would say that at 90%, 95% of the places, the replacement would not be there. Because as it is, the construction sector is getting mechanized and the mechanization is always cheaper than -- and more efficient way of doing work than actually using labor. So wherever mechanization is or was possible was happening in our country in the last 5, 10 years. So there would be a very small impact, I would say, because of that.

Okay. [Foreign Language] That's fair enough. That's all from my side. Just a quick update. In last con call, you had mentioned some government order from some neighboring country of around INR 70-odd crores. So what is the status? Is it done or stuck up or...

Unfortunately into abeyance. I mean the status is not clear. We have received a small part of that order. I'll be very frank. But the main order is still in abeyance. So we really do not know the status.

That's because of COVID or some commercial negotiation or something like that?

Apparently because of COVID.

[Operator Instructions] Next question is from the line of Anas Dadarkar.

Can you hear me?

Yes.

Yes. Yes.

Sir, I just wanted to know what is the outlook of the -- for the agri segment. Because even though the infrastructure and the other industrial segment will be down, the outlook for the tractors and harvesters should be -- should not be that much impacted.

Yes, I totally agree with you. And we have seen that effect in the month of May and going into June. So hopefully, in the agri segment, we should be looking at, at least, a 10% to 15% growth in this year.

Next question is from the line of [ Keshav Reddy, ] a retail investor.

Congratulations on a good set of numbers in the tough times. And sir, I would like to know the portion of the agri segment, agri equipments in the total net sales this quarter and the year, sir?

I think for the whole of last year, it was all of around 13%. That was the contribution of agri last year in our total segment result. And in this quarter, I think -- just a second, it will definitely increase to about 17%, 18%.

Okay. And any plans related to the equipment of agri segment, sir? Like in the pipeline yet to launch or any plans for future?

I mean, see, we are already doing tractors from 25 horsepower to 90 horsepower, including 4-wheel drive versions. We have already started the wheeled harvester apart from the track harvester combine. So I think the product portfolio, which we wanted to create is already there itself that we need to further penetrate into the market.

[Operator Instructions] Next question is from the line of [ L V Shetty from PhillipCapital. ]

Am I audible?

Yes, yes, you are.

Sir, I wanted to have the numbers for the equipments that you sold for the quarter, like the Pick-n-Carry that you give out every quarter?

Luthra sir?

Yes, I will give. In this quarter, we have done 1,251 in the cranes, Pick-n-Carry cranes; mobile tower cranes is 12; fixed tower crane is 49; 2 numbers for crawler cranes; tractors is 370; backhoe loaders 139; forklift 233; compactors 21; 5 graders; 5 truck mounted cranes; 49 harvesters; 86 rotavators; and 5 piling rigs. Hello?

Okay, sir. And sir, one more thing I wanted to ask for you, sir. As a construction equipment because construction is subdued because of this COVID situation, when do you exactly see things returning to normalcy across India?

That is with respect to construction?

Yes, sir. Yes, sir, because that would drive your construction equipment sales.

Yes. I think over the next 1 to 2 months most of the labor problems should get settled. And sometime around, like I mentioned earlier, August, September, construction activity should be back to whatever closest possible normalcy, I would say, 90%, 95% by August, September. But definitely, end June onwards, July onwards, it will start to improve -- further, it will start to improve. But it should come to near normalcy sometime in early September.

Next question is from the line of Mahendra Jain from Way2Wealth.

Sir, I just want to understand how is the unorganized market in this crane business. And in the next few years, how -- I mean within each market of unorganized peer, like that if there is any possibility or how -- I mean, in short, how we can grow or our top line will grow in the next few years, next 2 or 3 years?

There are -- yes. In the crane segment, there are 2, 3 unorganized players. There used to be many. Over the last 25 years, there are at least 30, 40 small unorganized and 5, 6 big players, which have come in and walked out of the crane business. And as of now, there are 2, 3 small players. 1 or 2 of them are very, very small. So I think they will perish in this time owing -- would have perished or would be on the verge of perishing. And for 1 player, which is -- which still does some basic numbers, I'm sure they are going to find the going very difficult with this type of revenue. As it is, they were losing money. So I really don't know how they will be able to continue.

Okay. Means, whenever opportunity will come, definitely, we will grow like proportionally?

Yes. Even in this time, we are working hard to increase our market share. And -- I mean, it's a joke, but in the month of April, we still sold 31 cranes. So for the first time, we had 100% market share because everybody else was not working. It's a joke.

Sir, what is the export planning like we were going on for export and all these things? So how it settled...

I think we were very bullish, and we were wanting that our revenue would have reached about 8%, 9% from exports. But unfortunately, export markets also got hit and started to get hit a little earlier even before India went into lockdown. So I think last year, we were able to close again at about 6%, which was similar to the year before, exporter contribution to our total revenue. But yes, we are very much focused. And I think we should be in a position to take it to about 8% level in this year, if not more.

Sir, which countries we are like planning to export, Gulf -- is it in Gulf?

Mainly, we are working in the Gulf area, Middle East Asia and African continent. We have also started exporting to some countries in South America. And very recently, we have also started some work in Mexico, apart from the SAARC Nations, leaving out Pakistan.

Sir, and I think in last 2 con call, as you informed [Foreign Language] we are not doing any government business, but indirectly, we are getting orders through some players. So is it like 30%? I think in the last con call, you mentioned...

No, we do some government business. I think it is 2%, 3% of our revenue.

Yes. That is direct...

That's direct. We really don't have any intermediatory for this. We quote for government tenders and requirement directly and through the Jan portal and do our business. But indirect business is that, obviously, the government does all the infrastructure, investment and development and the contractors. So that is totally indirect route of infrastructure investment, and we supplying to the contractors and the rental company. But we -- whatever small amount of business comes from government, we do directly. Rather for the last so many years, we have been trying to work on various different defense projects for their material handling requirements. And we have executed 2, 3 sizable orders in the last 3 years. And still we are working on some defense projects for some special cranes, which we have -- which are being tailor-made for the defense requirement. Even as of now, that is happening.

Okay. Sir, how much, I mean, percentage of demand we are getting from road construction or something like that? Or real estate and road construction, what is the ratio, can you just...

Very difficult to quantify, but I would say that 10%, 15% of our business would indirectly being contributed through the road industry, 10% to 15%.

And from real estate, sir? Housing?

Real estate, again, contributes about 7% to 8% to our revenue.

Okay. Okay. So we are totally -- I mean, derisked to model like. We're not dependent, I mean, only one real estate or local...

I hope so. We are derisked.

Sir, from where you are expecting major demand coming in next, I mean 2, 3 quarters from which side?

What I see that infrastructure will fall in place the fastest. And about 60%, 65% of our business comes from infrastructure activity. So that part of business should normalize by end of quarter 2. About 20%, 25% of our business comes directly, indirectly from hardcore industrial companies or manufacturing companies. They buy a lot of material handling and cranes for their in-house use. So that part of the business, I think, will take at least 6, 8, 9 months, maybe even more to come back to any sort of normal level. So that part of business will remain in pain. And I expect that only sometime in quarter 4 or quarter 1 next year, this 20%, 25% of our business will try to fall back -- start to fall back in place. And like I said, approximately 15% is agri. So that should be in place even as of now. So hopefully, by end of, let's say, sometime in the second quarter, we should be looking at about, let's say, 60-plus -- about 70%, 75% of our business falling back in place. And for the balance, 25%, about 30%, 40% will remain. So hopefully, we should be at 70%, 80% levels in quarter 3.

Okay. Okay. Sir, do we see any CapEx in next 2 years, any planning or something like that, closely something like that?

No, no chance. We are already working at 15%, 20%, 25% utilization levels. That has what has come down to. And we are still happy that we are able to produce something, although a lot of inventories were available with us because the lockdown happened abruptly in the second half of March. So in this current month, we are still producing something. So many of our peers are producing only 2%, 3%, not even that. So -- because they have -- they also have inventories available. So -- but I think the actual churning of the cycle and actual production for most of the companies will start from July onwards, even with the low demand because the inventories would have sort of moved out and be liquidated by that time. So I'm sure whether it is our industry, whether it is commercial vehicle or whether it is automotive, the production level and the factory utilization levels in July will definitely start to improve.

[Operator Instructions] Next question is from the line of [ Nirav Shah from Prabhudas Lilladher. ]

Yes. Sir, just 2 questions. When you look at in terms of our inventory levels, and you just mentioned that we had good amount of inventory levels on the file. Could you quantify that number in terms of inventory, what was the inventory and how much we have included over the last 2, 2.5 months? And whether we have received all the payments as well?

See, what has happened because the business switch was turned off abruptly around 20th, 21st because Faridabad went into lockdown 1 or 2 days prior than the national lockdown. So our -- generally in the last 1 or 2 years, our inventory levels were somewhere around INR 200 crores. And we are bloated with about INR 270 crores when -- end of March. So obviously, about -- I would say that about -- and obviously, with the new normal of business being lower as compared to our normal levels, so I would say that INR 70 crores inventory correction had to happen, has to happen with respect to finished inventories and extra WIP or stores available with us. And to adjust to the new normal cycle of reduced business, we'll have to shove off another INR 30 crores, INR 40 crores of inventory. So we feel that by September-October, October-November, our inventory levels from about INR 270 crores will come down to around INR 170 crores. And we will be able to free about INR 100 crores into the system.

Okay. And this INR 100 crores of liquidation will be more towards which sector, infra and agri? Or it is infra...

It will be all across the plant because we've already started working on inventory control. And we have put a target of INR 170 crores for ourselves by October, if not September. And I'm sure it will happen. So that will free that much liquidity into the company over the next 3, 4 months. And the second part of your question with respect to debtors, so obviously, which was hovering around approximately INR 145 crores, INR 150 crores. So I'm sure by September or October, our debtor levels will also be around maybe INR 60 crores, INR 70 crores, INR 70 crores plus/minus. So I would say about INR 70 crores, INR 80 crores would be freed from that side also.

Fair enough, sir. And in terms of demand, in terms of domestic market, have you started seeing that some amount of at least inquiry levels have picked up? And whether -- anticipating whether the pricing is lower, higher or maybe flat in terms of both -- in terms of inquiry levels and in terms of conversion?

Obviously, the inquiry and conversion is nowhere close to what it was before COVID. And as of now, I would say it is at about 40%, 45% level. But yes, in the month of May and in the month of June, inquiries and orders have started to happen, obviously, at a much slower pace. And with respect to price and price realization, there is no way under this circumstance, we can reduce any price because, as it is, we are suffering from losses due to -- you can very well imagine, and what is the exact word, it is skipping my mind. Operating leverage has worked in the other direction.

Agree. Completely agree, sir. It's really tough time.

It is impossible for us to reduce any prices. And we are not doing -- we will not be selling on prices.

Okay. Fair enough, sir. That is very, very, very true. Just to understand this further, if I may. In the month of May and June, you just mentioned that there was some pickup, which has been [ illustrated ] in terms of conversion. So could you quantify that number, whether it is INR 50 crore, INR 100 crore kind of number? And the orders which you had in the past, are you reconfirming them with the clients and still clients are liable to pick the order or not? These are the 3 questions.

See, I would say that the orders which were pending once we stopped working, so about 70%, 80% -- 70% of those orders are approximately alive. It is just that they are getting delayed. Obviously, some part of it, I can't quantify right now, we would have executed in May. Some part of it will get executed in July. And for example, even in the current month, we would be getting orders to the tune of around -- approximately plus/minus INR 50 crores. And last month, again, we were able to manage orders somewhere in the tune of INR 30 crores, INR 35 crores, which is approximately correlated to the amount of revenue we will be doing in the month also.

Okay. Fair enough, sir. And lastly -- yes, sorry, sir. Go ahead.

No problem. No problem. Go ahead, please.

No, no, sir, you were saying something, I'm listening.

The thought has -- I have forgotten the thought.

No problem. No problem, sir. Sir, lastly, on sectors where you are seeing good amount of -- some -- not good but some amount of pickup which is happening, infra, we agree, but anything specific road, water, railways, power changing or power...

Obviously, roads is one of the key because there has been a lot of focus in our country in the -- on roads, especially in the last 2, 3, 4 years. But apart from that, I would say that metro construction happening within the cities. But unfortunately, we are plagued with the problem of labor. Otherwise, the traction in the metro construction and within the city limits construction would have been much more and faster. But that will only normalize in the next 1 or 2 months because they are actually troubled by the labor issues.

That we agree that there has been labor issues. But when you talk to them and you understand them, they are of the opinion that at least 60%, 70% of the work has started. The efficiency levels are close to around 60% for most of them. So...

Today morning only, we had -- because now the modus operandi of interacting with customers has started, so we were having a video conference with one of our very old and very big and very renowned construction company of India. And now they're doing a lot of work within Mumbai also. So unfortunately, as they have some sites of metro where they're working in Bombay and Pune as well. Unfortunately, at 4 locations, they got 4 COVID cases within their sites, although smaller metro sites. So different types of things are happening. I mean it will happen, it will go slow. So normalization will take time, but definitely things have started improving and moving.

[Operator Instructions] Next question is from the line of Ajay Kumar from ICICI Bank.

So sir, now we are in mid of June now, sir just wanted to understand for Q1 and Q2 of this year, if we compare the revenue with the first 2 quarters of last fiscal year, how that numbers will come like? And overall, the revenue for this year? This is the first question, sir. And second thing, you are saying that you will not increase the prices. So will the price of raw material turn in your favor, maybe a reduction in raw material prices? Can you please...

See, like I said, that this month -- this quarter, we will be doing about 30%, 35% -- 30% of our normal revenue. So that means in this quarter, our business will be down by approximately 70%. That is quarter 1. But in quarter 2, we are looking that we would be able to do what we foresee is about 50%, 55% of the business. So quarter 2 will be down approximately 50%. And thereafter, I think quarter 3 should be 20%, 30% down and quarter 4 should be normal. But as per the -- CRISIL has also done a survey and study on construction equipment as well as infra and construction side. As per CRISIL, they feel that quarter 3 should be near normal, maybe 5%, 10% here and there. And quarter 4, they are expecting a growth of 15%, 20% actually. But obviously, we are discounting that because it is uncertain times. So we do not want to be caught unawares that we are planning for a little extra revenue and growth. And so we have budgeted in the worst-case scenario that overall our business in this year can go down by 40%. I'm using the word, "can go down." So whether it goes to 40%, 45% or it might -- it goes down only 25%, that time will tell. But in the interim, what we have done, that keeping in mind that our business -- our revenue will go down by at least 40%, we have reversed all our fixed and variable costs and ensured that our breakeven level which was at 70% level, we have brought it to 55% level. Is that right Luthra, sir, 55% level?

That's right, sir. That's right.

So I think we are looking at a business drop of 40%. That means we will be doing 60% business. And our breakeven level, we have brought at 55% level already. So hopefully, even in the worst-case scenario, we will remain in black. We will remain in profit. Yes, it will be miniscule profit, if we talk of PBT, PAT level, but yes at EBITDA level from 8%, 8.5%, it will drop to maybe 4.5%, 5%. This is the first part of your question. The second side was, see, obviously, in a market like this, there is no scope to increase prices. Rather, there will be tremendous pressure, which already is on us to reduce the prices. And we have principally decided that we are not going to reduce prices and sell because it is impossible to survive with reduced business and further reducing prices. There will be some benefit available to us in due course, maybe on account of steel, which is about 60% of our raw material input. So we might -- already the steel prices pre-COVID and post-COVID now are down by about 5%, 6%. So that will translate into 1.5%, 2% benefit in the raw material cost. I'm sure this benefit we will start to enjoy some time in July, August. Because as of now, there were so many inventories we were carrying, so -- and generally, there is a 1- or 2-month lag. So the inventory which were at higher steel prices, obviously, will get liquidated by June, July and 1 or 2 months lag. So hopefully, end of quarter 2 or early quarter 3, the 1% or 2% benefit, with respect to raw material or maybe more, time will tell, will start to reflect, but I would say primarily from quarter 3 onwards.

Next question is from the line of [ Rajiv Maheshwari from Raj Investment. ]

Just wanted a quick update on the -- how is the supply chain like in terms of domestic raw materials as well as any part of products which we are procuring maybe from countries like China and on? So is it still close to normal? Or you are facing still difficulties in getting those things, once the stock gets replenished?

See, most of everything has opened up and things have started to work. Yes, there is, I would say, 5%, 10% problem here and there. And -- but I'm sure over a period of time, it will get normalized. And luckily for us, leaving out some few critical components, for most of the supply, we do have -- we generally never work on a single vendor policy. So we do have 2, 3 options for most of the supplies. Yes, there are a few specific 10%, 20% of critical components, which are supplier-specific. But then again, these are the bigger companies and bigger setups. So as of now, we are really not facing a problem. We did face a little in the month of May because especially companies in Bombay, Pune were not opening. The supply chain was an issue because the company is working from there. If you are not functioning, how you can supply. But I think most of that will normalize within June. I really don't see a problem on that front as of now.

And in terms of any products being imported, maybe from countries like China or some other countries, that's near normal?

We had started doing piling rigs from China. And last year, we sold some units.

That was [indiscernible].

We did have some orders in the month of February, March, and China was under a strict lockdown end of January till nearly most of February. So as soon as they opened, we rushed in and exported a lot of machines, which we are -- which are lying unutilized right now as our inventory. So as of now, I don't see a problem because most of the imports, some part of it maybe from China or from other parts of the world, when we realized that countries are closing down outside. We never expected we will close down so abruptly. But we did -- that is also one of the reasons our import inventory is inflated by about INR 20 crores, INR 30 crores from -- in April and May because of extra imports we did carry out, thinking that there might be trouble in the forthcoming months. So as of now, there is really no problem.

So we are comfortable from that front?

Yes. We are okay in that...

And just a quick update. This time, the construction equipment segment has really done very well after so many quarters. So is this -- the construction equipment market expanding? Or maybe we are now getting into the mode which you are expecting and we are eating up the market share of the already existing players, who are the big players in this area?

See, I think it is a mix of both. Definitely, quarter 4 was better for construction equipment and the economy on the whole. It was very unfortunate the way things stopped in the month of March. So obviously, there is some impact of that. And our market share in the construction equipment segment is very miniscule and there is a tremendous scope of growth. So whatever hard work we have been doing in the last 1 or 2, 2.5 years to put this back in place, that has also started to play along. And as a matter of fact, even in the current year, even in the subdued scenario, we are still looking at growth in our company from 2 segments: so one of them is agri where we think 10%, 15% growth from current levels should be possible easily; and the second is construction equipment segment, where we see 5%, 10% growth from last year's numbers should be possible even in this scenario.

Yes. So it's just heartening say at least the construction equipment because you guys have put tremendous amount of focus in this, but the results finally came in, so that was the good part.

Yes. Yes. And I'm sure this will continue to improve. I'm saying 5%, 10%, but my heart tells me, it can be much more than that. It's just totally depends on how much we are able to capitalize.

Because normally, you are more from the pessimistic side, you play safe. And if things are good, it's always better to tell people that okay, we exceeded the expectation.

But it's not only about telling, it is by basic nature of -- my own nature and the company's nature. We plan for the worst and try to do the best.

That's always the best part. So that at least people are aware that things may not turn up. And if turns up, it's fine from the company side...

That is what we have done also with respect to the company. We have worked on our fixed cost and variable cost, planned for the worst that the revenue can go down to 50%, 55% also.

Yes. Anything can happen in fact, yes.

And that's how we have reworked so that our breakeven level comes to 50%, 55%. And then we will do our best. So if you are able to do 70% revenue, it will be profit. If you are able to do 60%, barely breakeven. But at least the way the intention in this year is to stay in the black.

Important thing is stay in the black and survive maybe the next 6 months. So after that, anyway the benefit -- and how is the liquidity position like in terms of the working capital front and all those steps in the normal panels for you?

See, there is definitely a little stress because obviously the inventories are high and 1, 1.5 months was pure lockdown. So the debtor collection was also very weak. And the debtors were also high when we closed because the month had not finished. So all the collection had not happened, which was to happen in March. But yes, as soon as we opened in May and June, our collections have started flowing in. And obviously, with the sale increasing, let's say, 30%, 35% last month and 50%, 55%, so the inventory liquidation is happening. So temporarily, I would feel that between June, July, August, there will be a temporary stress creation in the system and our short-term utilization of our bank CC limits and all might go up. But eventually, by September, October or latest by November, everything will fall in place because about INR 150 crores will get freed into the system from inventory and debtors. So that will compensate for the stress, which has been created as of now. There's definitely stress, but yes, not something which is not bearable. I mean it is totally in control.

Maybe in terms of there may be some pricing but you can still manage it. That's how things would work? [Foreign Language]

Because obviously, our unused limits in the banks and all, because see being a prudent company, we also want to pay our creditors in time. Yes, it will get delayed by 1 or 2 or 3 months here and there because 1.5, 2 months country was in lockdown. So everybody should imagine and expect a 2-month delay in a normal cycle. But obviously, at some point in time, we want to bring it back. So putting everything together, I think by September, October or latest by November, when the entire inventory effect will come into play, the debtors effect will come into play and the creditors will be reduced to the minimum level, situation will come back to normalcy. And bank utilizations will also come back to normalcy. I think that in October, November, we should be at similar levels as March.

That's great. And hope you carry on with the good work which you have been doing.

Even I hope so. We need a lot of encouragement.

No, no, definitely, it will happen. Seeing the way you guys have managed till now, you have survived the toughest part. So maybe next 2, 3 months, I hope that things do fall in place.

I hope so, sir. I hope so, not only for us, for the whole country, I think it is a miserable situation to be in, I mean, joblessness which has been created, it is not [indiscernible] by any standards.

Let's hope we pass this time also. And again, the glorious times come back.

They will definitely come back. Same time next year, we will be enjoying.

Okay. And that's good for us people like us, the shareholders.

Let's hope so, sir.

[Operator Instructions] Next question is from the line of [ Chander Bhatia from CFR Management. ]

Congratulations to the management team. Sir, congratulations for the good set of numbers in spite of such a tough time. I had 3 questions. 2 have already been answered. The one question is about the new Bharat Stage launch, which are supposed to be implemented from October 2020. So how the company is planning to launch new products as per the new norm? And if you can give some color on that?

See, obviously, our company and most of our peers, everybody was working towards proto development, which was more or less complete by February, March. April, May, June, the ARAI and iCAT CMVR approval testing was to take place. Because before March, these approval agencies were totally busy for testing the automobiles and commercial vehicles because they were moving from BS-IV to BS-VI. So they could have only given us time in April, May, June, when these testing and approvals would have happened and subsequently, the inventory adjustment. And from 1st of October, BS-IV sales would have happened. But because of COVID, the testing agencies and approval agencies have also been shut down and proto work and testing work even within the manufacturers' premises has been affected. So definitely, the entire cycle has been delayed. And we are still on track in terms of that. Like I said, most of our protos are ready or nearing finishing. And we are still -- we'll be trying and working hard to get them approved in time. But in the meantime, as most of the industry was suffering, so ICEMA, our association for the Indian Construction Equipment Manufacturers Association made a request to the Ministry of Road Transport and Highways, and 5, 6 of the senior members, we did have a video conference meeting with Mr. Gadkari also. This was about say 20 days back. And he has been kind enough to give us a 6-month leverage, a 6-month extension owing to the COVID scenario. The official notification has not come out. Obviously, the notification part takes time. So -- but we are expecting to receive it over the next 1 or 2 or 3 weeks. But in principle, it has been agreed to extend the deadline by 6 months.

Okay. So this likely to be implemented from April 2021?

Yes. That is what it is.

[Operator Instructions] Next question is from the line of Anas Dadarkar.

Sir, I just wanted to know how are you firing in the backhoe loader. And associated with that I also want to know what was the total market size for this backhoe loader in this year gone by, that is FY '20? And how much did you sell for the full year?

See, we sold practically, I think, was somewhere close to about 250, 260 units. Market size, exact numbers, I won't have as of now because the data has not been circulated amongst ourselves because of this COVID and everything. It stopped midway. But it should be to the tune of somewhere around 28,000, 30,000, if not more. And this year, I'm sure our numbers will double up or more than that, although we are projecting only 10%, 15% growth. And not only backhoe loaders but even for our rollers and graders, I'm sure we should be able to do much better than 10%, 15%. Everything seems to be on track. We have also started exporting some machines. So hopefully, if everything goes well -- April was a wash out because everything was closed. We did some reasonable numbers in May. In June, again, we are looking at reasonable numbers. If everything goes well, we should be somewhere around 500, 600 units at least by end of this year, hopefully, maybe a little plus here and there, I really can't say. And we should be in a positon to maybe nearly double our road machinery numbers also in this year.

As there are no further questions, I will now hand the conference over to the management for closing comments.

Yes. So I think it is a very tough time that most of everybody is going through. Because I mean -- the survival of 2 things. One is your own self, your family, your friends and everybody around you and everybody has to be safe and be aware of COVID. And simultaneously also financially, people have to stay alive. So they have to struggle, toil and make sure that the individuals as well as organizations are able to wade through this tough time. So these are very trying times. I'm sure, unprecedented, at least in our lifetimes. So hopefully, we are doing whatever best we can by reducing our cost, expenses, taking extra precaution for COVID and trying to go forward in this trying times. And we hope we are successful and I would wish safety and good health to everybody who's on the line here. Thank you.

Thank you, everybody.

Thank you very much. On behalf of Emkay Global Financial Services Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.