Action Const. Equipment, Sorab Agarwal - Executive Director
Our success lies in our dedication to meeting customer needs, not only through our products, but also through our operational systems, support and services.
ACE is gearing up for Excon 23 to showcase its latest innovations, engage with industry leaders, and reinforce its position as a trailblazer in the field. Renowned for its Mobile and Tower Cranes, the company prioritizes sustainability with electric solutions and is also exploring hydrogen cell technology. What sets us apart is our customer-centric approach that permeates every aspect of our business. From incorporating AI, automation, to robotics, we’re continuously pushing the boundaries to enhance productivity and efficiency, ensuring that our customers get the best solutions tailored to their needs. Despite industry challenges, ACE is optimistic of growing its order book in the coming years.
Navigating growth in the construction industryIn the current scenario, various segments within the construction industry and related sectors, are experiencing considerable growth. The bullish trend has been prevalent across different industry segments, indicating a positive trajectory for the current year. Looking ahead, Q4 is expected to maintain this momentum. However, there might be a slight slowdown in Q1 & 2 due to factors such as the implementation of a code of conduct and the initiation of fresh projects and allocations, which might result in a temporary decrease in activity. The specifics will become clearer with time.
Possible delay in transition to BS5 standardsRegarding the transition to BS5 standards, there is an anticipation of increased costs across the board, including maintenance and other areas. Efforts are underway by industry bodies such as ICEMA, which is in talks with the concerned ministry to delay implementation by six months to a year – not only due to the cost implications but also because the industry is not fully prepared for the updated emissions standards. There have been delays in certifications and manufacturing processes for the new engines. If our demand is accepted by the government, there might be a deferment in the implementation of the new regulations.
A potential delay due to the transition to BS5 standards could affect the lean period expected in the upcoming financial year, particularly in Q1 and 2, during which, projects in the pipeline might get postponed. However, considering the extensive order books of many leading contractors – both large and small – it’s evident that the volume of projects surpasses their current capacity for execution.
Most contractors already have a significant amount of ongoing work, and it is anticipated that they will get additional projects by December or January. This might help counter the potential impact, as they already have a substantial amount of work and ongoing execution.
Extending sustainability efforts beyond own operationsProductivity, cost consciousness, and maintaining high-quality standards are essential prerequisites for a successful business and for expanding internationally. At ACE, we’ve made significant strides in this direction. As a listed company and a key player in the construction equipment sector, we take our Environmental, Social, and Governance (ESG) responsibilities seriously.
We’re dedicated to environmentally sustainable practices, and within our facilities, wherever feasible, we are actively engaged in adopting green initiatives. Over the last 4-6 years, around 70-80% of our power production and consumption is derived from solar energy. We have implemented water harvesting systems and introduced the first electric crane – all of which marks our commitment to extending sustainability efforts beyond our own operations. Moreover, we’re proud to introduce the first electric construction equipment made in India, further promoting sustainable practices within the industry.
I believe that the top 500 to 1000 companies in this country, whether in manufacturing or construction, are increasingly focused on their approach towards ESG factors, emphasizing sustainability and the environment. Ever since we introduced the crane, we have piqued the interest of almost all the major companies, which are more concerned about sustainability rather than simply discussing the price. Once they realize that investing extra can lead to cost recovery within 2 to 3 years, they will begin to perceive it as a highly eco-friendly and green solution.
A customer-centric approachFor any company, construction site, or end-customer utilizing these machines, ensuring the right product specifications, technical reliability, ease of operation, cost-effectiveness, and control are crucial elements. The success of any customer relies on not only the right price of the product but also on robust service support. It’s about providing the appropriate product with the necessary technical aspects, reliability, and operational convenience while maintaining cost-effectiveness and ensuring adequate support to meet the needs and expectations of the customers.
All these aspects are being fully taken care of. Most of the machines that we have developed, including India’s first electric construction equipment, along with our recently introduced aerial work platform range, (which no one manufactures in India), constitute a part of our entire product portfolio.
All our crane types: mobile, truck, tower, and the most recent versions, alongside our construction equipment such as backhoe loaders, road machinery, forklift, warehousing, and agricultural machines, are indigenously developed and designed with the support of our in-house R&D facility. The products are tailored to address the genuine requirements and challenges faced by customers, reflecting our customer-centric approach.
Electric products a more sustainable alternativeEthanol and biofuels present a short-term solution for construction equipment, particularly due to the challenge of biofuel availability in diverse work locations. While feasible in urban areas, its application in varied construction sites remains a significant obstacle. In the short to medium term, I believe electric solutions offer a more sustainable alternative.
We are the first in the country to introduce India’s first electric construction equipment, exemplified by our electric crane. We’ve also been manufacturing electric forklifts for the past 10 to 12 years and are now expanding our electric product line. Our focus is on developing products where we can replace internal combustion engines with electric or battery-powered options. Moreover, we are also looking into hydrogen technology, keeping in mind the advancements in this field.
Higher cost and payback time of electric machinesElectric machines are undoubtedly 50 to 100% more expensive compared to their diesel counterparts. The initial ownership cost might be higher, but the operating cost of electric vehicles is substantially lower since they operate on electricity. As we develop and evolve these machines, we keep in mind that the fuel savings should enable customers to recoup their initial investment. Typically, the payback period for the additional upfront cost is around 3 to 4 years, as the running costs are significantly lower due to the absence of diesel expenses.
Our first equipment in this series is a 15-ton crane for which, our projected payback period for the additional cost is estimated to be 2.5 years, which is even less than our targeted duration of three to four years. Within the Indian construction equipment domain, or in the end-user space, our equipment, specifically cranes, cater not only to the construction industry but also to the manufacturing industry. This is due to the necessity for cranes in their pick and carry operations and for lifting and shifting purposes.
Hydrogen cell technology a predominant choice in the futureLooking ahead, hydrogen emerges as the ultimate long-term answer for all machinery. Its minimal pollution and capacity to enhance environmental sustainability positions it as a key contributor to greener practices globally.
The advancement of hydrogen fuel cell technology, in tandem with commercially viable hydrogen, which we anticipate will be available within the next 2-4 years, is poised to be the definitive solution for most commercial vehicles worldwide. In the short to medium term, electric solutions might dominate for the next 5 to 10 years, paving the way for hydrogen as the predominant choice in the future.
Most engine manufacturers are already globally involved in upgrading their technology to adapt to hydrogen, including those in India. We are anticipating that in the next two to four years, our ecosystem will align with the hydrogen technology and availability of engines that comply with hydrogen requirements. Consequently, we will make a strategic move towards hydrogen technology as our ecosystem develops.
Leveraging AI, automation, and robotics to enhance productivity, efficiency, and overall performanceAutomation, artificial intelligence, and robotics, or any sophisticated electronics, play a crucial role in manufacturing and are expected to have an increasing impact in machines. We are also implementing high, mid, and low-level automation through Special Purpose Machines (SPMs) and robotics in our manufacturing processes.
Electronics and automation are pivotal for ensuring safety and proper functioning. We have integrated these aspects of automation into most of our machines. While Artificial Intelligence is also a consideration, particularly in operations, I believe it will take some more years, at least in the construction equipment industry, since most of the machines are operator-driven, and site conditions vary extensively. Achieving automation and implementing Artificial Intelligence will take some time to become prominent in the construction industry.
Building a Strong Brand and Global ExpansionWhen a company, its products, and services are deemed reliable and dependable, they come to be perceived as a strong brand. This is where our primary focus lies; the real work is done when users of our machines find them reliable, the company and its personnel dependable, and when we efficiently address problems, and actively work to prevent issues. In addition to surface-level activities such as exhibitions, advertisements, promotions, and social media, we utilize every possible tool available to strengthen our brand. Today, I am proud to declare that we have been India’s No. 1 crane brand for nearly 2 decacdes.
In India, we currently operate from more than 100 locations, particularly focusing on cranes. We continuously adapt to the evolving needs and requirements of our machine population. For instance, in the case of the bullet train project, we’ve established two to three new locations near the periphery of the bullet train line. Our expansion strategy is customer-centric, dependent on marketing strategies, and caters to service requirements. Wherever there is a demand for infrastructure, we proactively establish our presence. As demand for our products increases in specific areas, be it a region or a city, we promptly set up infrastructure to support the activities in those locations.
Over the past 2-3 years, we’ve intensified our focus on exports, expanding our reach to some extent. We’ve entered new countries and are presently operating in approximately 35 countries where we regularly dispatch our machines. Since we have been seeding our machines in these countries, we anticipate a rise in demand, brand recognition, customer recall, resale, and a surge in repeat business, contributing to the expansion of our global footprint.
India among preferred destinations for exportsIn recent years, exports have emerged as a significant opportunity for a majority of the manufacturing industry of India. This trend is primarily due to the globally recognized strategy known as the “China plus one” approach whereby countries that traditionally imported goods from China are seeking alternatives. They aim is to diversify their supply chains by seeking substitutes for their imports from different countries. India is among the preferred destinations for this diversification. The present government has a strong focus on increasing India’s exports to rectify the trade imbalance and capitalize on the shifting global trade landscape.
The potential for exports is immense, and we have already begun exploring these opportunities within our company. Over the last two to three years, our export revenue, which used to be around 1-2%, has shown a substantial increase to 7-8%. We aim to further increase this to 15-20% in the next two to three years by building upon this revenue base.
Investing in Capacity Expansion for wider reachOver the past year, specifically the last 6 to 8 months, we’ve aggressively focused on expansion. We are significantly enhancing capacities for different products in our range by 50-100%. Most of these increased capacities will become operational within Q 4 of this year and the first quarter of next year. We’re establishing both greenfield and brownfield facilities, with minimal capital expenditure and maximum projected output.
We have used the surplus land in our 100-acre Industrial Park to set up a greenfield factory, which is expected to be operational by December 2023, but the majority of our expansions involve brownfield initiatives. Within our Industrial Park, we have six more manufacturing facilities, for which we have reserved ample space and provisions for expansion when required. These expansions modify existing manufacturing facilities to meet the demands, with a capacity increase of 50-100% across various product categories.