Sorab Agarwal-Executive Director, Action Construction Equipment

What kind of management practices have you followed in your company to take it to the mid-cap level?
Every aspect of management is very important but we feel that it eventually boils down to man management. Good HR practices implies that the people who are working in your company need to be satisfied with their job, their surrounding and should have a culture of doing their best and improve thereon. Therefore I think man management is our key focus. Apart from this, our focus has also been on making the right product, manufacturing at the right price and providing good after-sales service and support. Only such factors can help a company succeed in such a competitive market. All this together has driven us to reach where we are.

What has been the contribution of technology?
Technology has helped us in several ways. For instance, we have been continuously working to upgrade our machines to provide better functions and performance parameters so as to meet the requirements of our customers. Each time a customer buys a machine from us, he gets a technologically superior machine capable of more functions. Apart from this, mechanisation has been an ongoing process in this industry and in our company and this has helped us to increase our production and sales. On the heavy machine front, for example, earlier we were working on normal drilling and boring machines but now all this has been converted into machine centers and CNC units with a lot of automation. In 2010 we implemented an Oracle 9i platform for enterprise resource planning. Initially we had technical glitches but now it has been fully streamlined. This has brought in many benefits in terms of inventory and WIP control.

What are your aspirations for further diversification both in new verticals and horizontals?
So far we have been growing organically and we are a debt-free company. In time to come we might leverage that since we are now planning to grow inorganically too. In 1995 we started as a purely mobile crane company with just one or two products but over the past 15 years we have developed a wide gamut of all types of mobile cranes. Further, the last seven years have also seen us entering into the manufacturing of road making machinery, tractors, forklifts, etc. We have been adding new products every year. Considering that the absorption cycle for new products in the industry is of two years, some of our products introduced a couple of years ago will now start to post results. Our current expansion plan includes focusing on the construction equipment segment. In the future we want to move into equipment for heavy load application equipment. This is because a number of big projects like power plants and oil refineries are coming up. Inorganically we are planning to acquire a couple of companies, one within India and one outside, which will add to our product portfolio as well as topline and bottomline.

What about exports?
For the past five to seven years we have been fully engaged in catering to the growing demand of the Indian market. Our overseas revenue is just about 2-3 per cent, predominantly from the Middle East and South Africa.

What type of challenges do you face in the logistics sector?
Over the past one and a half years, logistics as a cost factor of transportation has gone haywire. The upward spiral in the prices of diesel and trucks has led to an increase in transportation cost by 30-35 per cent. A bigger challenge is that of implementing the GST (goods and service tax) because most of the equipment that we make are inspected by the RTO and pose problems while crossing the state borders.

What kind of expectations do you have from the government?
In India there are 28 states and seven union territories. Selling inter-state is a very big problem because there are different tax rates. This is a big pain factor that we have to face on a daily basis because our supplies are held at the borders for long periods of time. So it very important to have a unified tax regime. Hopefully, GST will help resolve the issue.

Are there any other risks that you foresee in this sector?
The main risk, as mentioned earlier, is to retain good talent. So far we have been able to do that and hope to continue doing so. The other risk lies in the increasing appreciation of the rupee against the US dollar because exports out of India will become less competitive and imports will become cheaper.