Thank you, sir, for the opening remarks. We will now open the floor for the Q&A session. Participants who wish to ask a question are requested to use the raise hand feature. We will take the first question from Mr. Rahul Gupta.

Sir, in Q4 the crane profitability was impacted by higher steel costs and the transition to the new emission norms that you mentioned. Has this cost increase now been fully passed on to the customer, or should we expect the margin to normalize from Q2?

I think from Q2 it will be maintained, because demand in Q2 is looking promising, it is better. It has taken almost three quarters to stabilize things, because the change was big, from Trem III to Trem V emission norms. From this quarter onwards, because demand has increased, I think everything can be passed on to the customers.

Okay. Sir, my second question is: as you mentioned in the last call, tower crane deliveries would start from Q2 FY27 and you already had a small, single -digit order book. How is the order pipeline now? You have said commercial production will start in November, so on what basis was the Q2 FY27 timeline given in the last call?

Because the machine is already tested and we have started manufacturing the fabricated components in -house. Some components we are getting from outside, the way other companies also import them from other countries. Once those components are received, I think w e will finish the first lot of 10 machines. We expect to complete these 10 machines within this quarter, subject to receipt of the few components we are expecting from outside.

Okay. So, sir, when will you receive the machinery?

Almost all the machines are ready. Once the flooring work is completed, we expect to start receiving the machinery in the month of October. I think the machines will start coming in October and we will be able to install them in October.

The guidance is from the existing plant only. We are expecting overall growth of 20–25%, tractors and cranes put together. From the new plant, we have considered some numbers in Q4 only, basically.

Okay. And sir, what are the key reasons that our tractor capacity utilization is not moving up?

If you see the last three quarters, the tractor business is growing reas onably well, almost 35%-plus. Growth will not come suddenly, because the dealer network has to be created and that takes a little time. Making a dealer is a slightly complex process, because he has to give service also and should be equipped for it. Our pr oduct is one where the customer is taking a decision for 10 years. So this process takes a little time, but things have already started moving over the last three to four quarters. Every quarter, we are making good growth.

Okay. And sir, our crane dealer count is still stagnant at 25. Is there any addition or not?

We will definitely add dealers once the capacity is in place, because sometimes, if we get more orders and are not able to supply, it does not send a good message in the market. Simultaneously, we are in search and we are looking for dealers. First, we are fully loading the existing dealers. New dealers will definitely be added, and we are also replacing some dealers, because now we are prepared for the new production plant to be operational. In that situation, we have to keep more performing dealers. Earlier, our thinking was not to replace a dealer, because we were not prepared to supply them enough quantity. Now we are prepared, and so we are replacing those dealers also, in both tractors and cranes.

Sir, under the new emission norms, Action Construction and Mahindra in the tractor segment have started taking price hikes. Have you taken any price hike or not?

In cranes, the price hike is there. In tractors, the emission norms came one or two years back and the industry has already taken that. We will also take it in line with the industry only. If the industry goes for a price hike, then everybody increases. It depends on the input cost.

Okay, sir. Thank you. That is it from my side.

Thank you, sir. We will move on to the next question from Mr. Sandesh Kumar.

Sir, my question is on the crane segment. Our YoY growth is kind of flat, whereas our peer ACE has done more than 20% growth. Also, our crane dealers are stagnant at around 25, the same as in the DRHP days. After the capex, our capacity will be around 1,200 plus 3,600, almost 5,000 units. Without dealer expansion, especially in South India, how are we planning to absorb this massive capacity? Do we have a plan for the number of dealers by the end of this financial year, especially in South India?

Shubham, would you like to explain this?

Yes, sir. Our crane sales are flat mostly because we are working at full capacity in the plant. So whatever the sales were last year, this year we were only able to match them, because we were at almost the same capacity. But we are de-bottlenecking further, and this quarter we are expecting reasonable growth. On the dealers, as sir explained earlier, we are appointing certain new dealers and shutting down some old ones which were not able to deliver and perform as per the new plant and the company's expectations. Some area allocations have been revised, and we have a good plan which we will start executing once commercial production starts from the new factory. We have a roadmap to appoint approximately 60 -plus dealers to cover the whole country, and once the new plant starts delivering, I think we are on track to reach there.

So you are saying that with 60 dealers we can absorb all these 5,000 units, am I right?

From day one, we will not run at full capacity. It will go phase-wise. This roadmap is the bare minimum dealership required to cover the full country. As we open new areas and new markets, and if the potential increases in certain places, then we may have to further break that dealership into two or three parts, depending on the volume.

When can we expect the 60 dealers? By the end of this year, or next year?

Sir, it is not only about appointing a dealer; it has to be a good dealer also, who is aligned with the company's expectations and is able to deliver. If it is just about appointing dealers, we can appoint them, but we need to find the right partner who can perform as per the expectations of the company. So it will take some time, it can take maybe a year to a year and a half to reach that level, but we are on track.

Sir, with respect to crane growth, you said we are running at full capacity. But we have some capacity available at the tractor unit which we are utilizing, right? You h ave also guided for 15–20% growth in cranes. To achieve this 15–20% growth, we would have to use the existing capacity only, right?

Let me reply to that. Last year, when the emission norm change came, sales were a little affecte d in the following months. But now that phase is already cleared, and the acceptability of the new emission norms has set in the market. Seeing the numbers for July and August, and the kind of response we are getting, growth will start coming. The first quarter was flat, and therefore we are expecting around 15–20% growth. Over the last three quarters, because of the emission norms, sales remained a little sluggish. Whatever capacity we had to enhance in the existing plant, we have already done. As far as t ractors are concerned, tractors have a different line, so expanding capacity in tractors is not an issue; it is not interlinked with the crane line. Some area of the tractor unit is being used for fabrication here and there, and that will continue till the new plant starts.

So till the new plant starts, we can still do 15 –20% growth with our existing capacity, right?

Yes, yes.

Sir, with respect to capex, we still have around ₹45 crore deposited in ba nks. Can we utilize this ₹45 crore within Q3, so that we can start commercialization by January at least?

On the machines, if we need 10 machines to produce 5,000 cranes, then instead of buying all 10 immediately, we may buy 6 m achines or 8 machines. So it will take a little more time, but for our production it will be sufficient. All the machines that are sufficient, we are going to buy, and almost all of those machines are ready. We may utilize the funds fully if the supplier a sks for an increase; if he is not asking for an increase, we may defer it for three more months. By March, we will consume everything.

Okay, sir. That is it from my side. Thank you.

Thank you, sir. We will move on to the next question from Mr. Shiv Shaant.

Could you give us some perspective on the target penetration of Barota Finance within Indo Farm's tractor sales?

Singla ji, you will be able to explain a little. I think it is around 20% to 25%.

Around 20%, sir.

Around 20%. We are financing around 20% of new Indo Farm tractors. The balance is refinancing of old tractors of all brands, because inventory gets piled up with our dealers and channel partners. When they sell tractors under the exchange scheme, they take back tractors of any brand. So in old tractors we finance all brands, but in new tractors we finance only Indo Farm.

Okay. One more question from my side. Given the company's focus on increasing utilization, at what approximate volume level does the tractor business start generating meaningful operating leverage?

The tractor business is a profitable business at this level also. This year, in tractors, we are expecting growth of around 25% to 30% year on year.

Okay. Thank you.

We have a few questions in the Q&A tab. I would request Mr. Omkar to please unmute and ask his question. In the meantime, we will take the question from Mr. Manas.

Sir, can you give a timeframe by which we can see production starting at the new facility that we are working on?

I have already given the expected time. We are planning to start commercial production in November this year.

Okay, and this is for tower cranes too? Are tower cranes included?

Yes. For tower cranes, we are trying to build up some numbers in the old factory as well, so that it starts moving and we start selling some numbers in the market. But the real production line will start in the new factory only.

From the old factory, these numbers will continue, and the new factory will add on top. In the first year, we will take around 30% capacity utilization of the new plant, and we will increase it from there.

Okay, so 30% utilization of the new capacity?

The new capacity is 3,600 cranes, yes.

Okay, sir. Thank you so much. That is all from my side.

Thank you, sir. We will move on to the next question from Ms. Angira Patel.

The crane dealer count has been stagnant at 25-plus for three consecutive quarters, against a stated target of 50-plus. How many crane dealers were added in Q1, and what is the gating factor, given that production capacity is about to more than double?

Ma'am, first, the capacity is not going to that level immediately. We are already making and selling around 1,000-plus cranes here through these dealers. Gradually, the new plant's total capacity will be 3,600 numbers, but utilizing it will take a little time. In the first quarter of operations it may be around 30%, in the next quarter maybe 35–40%, and it will grow gradually. On average, it may be 40 –45% in the next financial year, FY28, when we would have to sell around 1,500 to 1,800 numbers in that first year, and then more the year after. To sell those numbers, we would need around 20 to 25 dealers. Also, ma'am, we can increase the capacity of the existing dealers, because if they bring a bigger order, which we could not supply promptly earlier, these dealers are also not working at peak capacity. So there is space available there too. These 25 dealers can be appointed within about six months to a year once the new plant starts. Adding dealers is not a big issue; we on ly have to match it with production and then add the channel.

We also have a follow-up question from Mr. Manas.

Sir, just one last question. Can you give the EBITDA margin guidance for FY27? For last year I think it was around 14.6%, so what would it look like for FY27?

Roughly around 12.5% to 13%.

Sir, Mr. Manas is asking at the consolidated level.

At the consolidated level it will be higher. I am telling you the standalone number.

So at the consolidated level?

Sir, at the consolidated level it moves along similar lines only, sir.

Similar to last year.

Okay, 14% to 15%.

Yes.

Okay. Thank you so much, sir.

We have a few questions in the Q&A tab. The first one is: how many units did we sell in Q1 FY27 in both segments, crane and tractor?

Singla ji, do you have the numbers handy with you?

We will take the next question from Ms. Ashiya Sahani.

My question is, could you please share the tractor and crane volumes sold during Q1 FY27, along with the YoY growth in volumes?

Ma'am, we will share these numbers. We can take this over email. Singla ji, will you share these numbers later on, if they are not in hand now?

I will send the details to you.

We will share these numbers with you, ma'am.

Okay, sir. I also have another question. The tractor business continues to have significant available capacity. What is the current utilization level?

Ma'am, in tractors the current utilization is around 35–40%. But many of the crane components are also made in -house, so it depends on how you look at it. Assembly capacity may be running at only 30–35%. However, in the machine shop we have added many more crane components in -house, and there we are utilizing almost 80% to 85% of the capacity. Some shops are less utilized, but the majority of the investment is in the machine shop, and that is almost fully utilized, at around 80% to 85%.

Okay. Also, sir, what would the capacity be by the end of FY27?

In tractors?

Yes.

Ma'am, we are not increasing the tractor capacity. We have almost 12,000 numbers of capacity, which we are not increasing now. Enough capacity is available for the growth.

Okay, sir. Thank you.

The next question is: how do you see volume growth in tractors and in cranes, and what edge do we have over our competitors, meaning what is it in our offering that makes customers switch in tractors? Essentially, they are asking about our USP and how we are different from our competitors.

Anshul, for tractors you can share the information, because Anshul is responsible for tractor sales.

Yes, sir. To explain about tractors: first and foremost, we have one of the largest tractor ranges in the country. We manufacture tractors from 16 horsepower up to 100 horsepower, with the 100 horsepower currently under testing. The complete range is available in four -wheel drive also. Since a lot of our production is done in -house, we are slightly more competitive than our competitors, and we have slightly more room for customization as per market needs, again because of the back ward integration we have done in our plant. Currently, we have every feature that the Indian tractor customer requires, so we are at par with every major tractor player in the country. Our bouquet of products, our power and our fuel mileage have always bee n our USPs. The company is currently going through mass demonstrations of these product features at the village level, to make sure that our USPs reach the customer. So we have a good product, and we have sold over 1 lakh tractors since the company's inception. It is now just about reaching more and more markets.

Mr. Yogesh would like to ask his question himself. Sir, please unmute yourself and ask the question.

Sir, my question is, obviously we have a better product, bu t in terms of how we market and how we service, what makes the difference? At the end of the day, it is a consistent business year over year, and that is how we continue to grow. You rightly mentioned that we have better power in the tractor, plus the customization we can do. But in terms of scale -up, sir, how do we do that, and what is stopping us today? One is financing, I completely agree, and dealership I agree. Apart from these two things, do you think these are the only two things stopping tractor growth?

A tractor is a product where the decision is taken by the customer looking at 10 years of service. He has to see how large the tractor population is, and whether his neighbours are having a different brand, because buyers a re influenced by the neighbourhood. When we appoint a dealer, every brand has to struggle a little in the beginning. But it is not impossible, and the way we have started growing at 35 –40% quarter on quarter is a good sign. We have broken those barriers, because we are offering a better product at competitive pricing, and now the big bottleneck of retail financing is also being supported by us. These are the three things. But it will not change immediately; we cannot suddenly start making 12,000 tractors and be able to sell them, because the channel has to be created and the buyer has to come into the market. If we appoint a dealer, he does not suddenly start selling many tractors. In every village he gives one tractor, two tractors; selling the first one or two tractors is a little difficult, then the feedback goes around, the neighbourhood checks, we demonstrate, and those kinds of things take a little time. But the way is clear. Over the last four quarters, after the IPO, we also got some money into our NBFC, and now things are moving in the right direction.

Okay. Just one more question on this. If we take it two years back, what was your expectation for today, and are you happy with your performance?

On tractor growth, we are happy, we are okay. This growth should continue, and in fact further momentum should be given, because we have already started working on the dealer network and on exports also. Exports will certainly support us in the long term. On cranes, a s udden issue came, the change in emission norms from Term III to Term V. Almost all the players in construction equipment saw their numbers affected, and we were with them only. That was the reason. From this quarter onwards, we are expecting crane growth to also come, and tractors are already growing.

Over three to five years in the tractor business, we are very sure that 30% -plus growth will continue. As far as cranes are concerned, the old plant capacity of 1,000 to 1,200 will continue, and the new plant will be 3,600, which is a big plant. There, in three years, we are expecting to utilize capacity to the tune of around 70%, maybe a little more. So 70% to 80% is what we can try for. The balance depends on market conditions and everything. But we are hopeful that in the next three years we will be operating at more than 70%, around 70% to 80% of that capacity.

Okay. And sir, in cranes, whom do you think is your closest competitor?

There are two competitors, both are Faridabad-based. One is Escorts Construction. They are not really a big competitor for us, basically, because they are selling their product at a slight premium. There is one more competitor where we are selling at a similar kind of pricing; there, he is our only real competitor.

Okay. So, sir, I am not asking for any target or guidance, but based on our discussion, can we assume 20–25% volume growth over the next three to five years?

You can calculate, but the volume will come from the new plant. The existing crane plant will not give much addition, whereas the tractor plant will give 30% to 35%-plus growth, which is what we are expecting, assessing the current market situation.

Basically, in tractors we make more than 50% in-house, so there will be big operating leverage in tractors if utilization crosses 60–70%, and profitability should improve, right?

Even with lower numbers, we have always remained profitable. Definitely, when the numbers increase, the fixed cost remains the same and only the variable cost increases. So, definitely, the EBITDA and everything will improve.

Okay. Thank you very much, sir, and all the best.

Thank you, sir. We have a follow-up question from Mr. Omkar. Please unmute yourself and ask the question.

Thank you for the opportunity. As we are coming up with large capacity in cranes, how much are we spending on sales and marketing? Are we spending enough to scale up both brands, Indo Farm and Indo Power?

As far as cranes are concerned, once the new plant starts, we are adding more manpower so that we will be able to spread into other areas where we are not present at this moment. We are working in only about 20% to 25% of the area; the balance area is vacant. Our machine has been tested and tried across the country, because if you are selling a machine to a north-based contractor, he is doing construction and taking contracts across the country. So the machine is known and popular, but we have to create the sales and service network. Sales we can do directly also, but service becomes very important. Therefore, a new team is being appointed. Also, when we tell the existing network that enough machines are available in the plant for sale, they are definitely going to add on and increase the business. Sometimes we are concerned that if we get a bulk order from some part of the country, we cannot execute it because of our capacity constraint. Now we are fully prepared. The kind of product we have created is very well accepted in the market, and in some parts of the market where we are present, we are having a major market share.

Okay. And how much price hike have we taken in our crane segment, how much has commodity cost impacted our business, and how much are we able to pass on?

Almost with this quarter, Q2, I think we will be abl e to recover that cost, whichever increase was there, because the demand is now better. Only if demand increases can one take that price advantage on the input cost.

Okay. Our peers have taken multiple price hikes, so can we also expect a p rice hike in our segment?

Yes, some price hike we have taken in the past also, and a further price hike will be taken in the coming months.

Yes, sir. Thank you, that is from my side.

Thank you, sir. With that, we have closed all the questions. I would request the management team to please share their closing remarks.

On behalf of the Indo Farm family, I would just like to thank everyone for their fruit ful insights, feedback and questions. We look forward to the next call, and hopefully, on whatever has been discussed, you will see a positive trend for the company. Thank you so much.

Thank you, everyone.

On behalf of Finportal, I would like to express our sincere gratitude to the management team of Indo Farm Equipment Limited for taking the time to share the company's performance, initiatives and outlook. We also thank all the participants for such an eng aging session. If any question remains unanswered, please feel free to reach out to us on the mail IDs given in your chat box. A recording of this call will be made available in due course. Thank you once again for joining. You may now disconnect. End of Transcript