Aeroflex Industries Limited — Q3 FY26

Aeroflex Industries Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=Q6x-54zjGF0 Published: 3 months ago

0:01 1 second Ladies and gentlemen, good day and welcome to Aeroflex Industries Limited Q3 FI26 earnings conference call. As a 0:10 10 seconds reminder, all participant lines will be in the listenon only mode and there will be an opportunity for you to ask questions after [clears throat] the 0:17 17 seconds presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing 0:24 24 seconds star 10 on your touchstone phone. Please note that this call is being recorded. I will now hand the conference over to Mr. 0:33 33 seconds Asad Daud, managing director for their opening remarks. Thank you. And over to you, sir. Thank you so much. 0:42 42 seconds Uh good morning everyone. I welcome you all to Aeroflex Industries Limited Q3 0:49 49 seconds FI26 earnings call. Joining us today are members of our senior management team along with representatives from 0:56 56 seconds strategic growth advisors uh who are invested relation partner. 1:02 1 minute, 2 seconds Uh I hope that you have had the opportunity to review our financial results and the invest presentation which is available on the stock exchange and also on the company's website. 1:13 1 minute, 13 seconds I'm pleased to report that uh uh in the last quarter which is Q3 FI26 it was uh 1:20 1 minute, 20 seconds another strong quarter for us uh which was marked by our highest ever quarterly revenue our highest ever ITA and PAT. 1:30 1 minute, 30 seconds This performance was driven by uh our continued focus on value added products 1:37 1 minute, 37 seconds and our expansion into high new and high growth applications which includes products for data centers and AI infrastructure. 1:45 1 minute, 45 seconds uh despite the tariff related uh uh headwinds our our quarterly export 1:52 1 minute, 52 seconds business grew 30% on a y-on basis which reflects a strong customer stickiness and our execution capabilities. 2:01 2 minutes, 1 second Overall uh we delivered an an AITA margin of 23 and a half% which reflects 2:09 2 minutes, 9 seconds the scalability of our business and also the benefits from an improved product mix. 2:16 2 minutes, 16 seconds We added 1 million mters of hose capacity in uh in this month uh which 2:23 2 minutes, 23 seconds takes our total installed capacity to 17.5 million m perm. 2:29 2 minutes, 29 seconds The balance 2.5 million meters will be commissioned in a phase manner and is expected to be completed by Q2 of the next financial year. 2:38 2 minutes, 38 seconds During the quarter, we achieved several important operational and strategic milestones. A key strategic highlight for the quarter was our entry into the 2:47 2 minutes, 47 seconds high performance liquid cooling solutions for data centers. We completed the first commercial dispatch of the advanced flow control components and 2:56 2 minutes, 56 seconds skid assemblies for the liquid cooling application. 3:00 3 minutes And to support the rising demand that we are witnessing, we are expanding our uh skid assembly uh skid assembly capacity 3:09 3 minutes, 9 seconds to 15,000 units perom and the same is expected to be completed by June 2026. 3:17 3 minutes, 17 seconds This expansion is fully aligned with the the growing opportunities that we see in in the global data center and the the AI 3:26 3 minutes, 26 seconds infrastructure space to strengthen our skid uh assembly operations. We are also setting up a new 3:34 3 minutes, 34 seconds plant at Chaken in Puna. This facility will uh act as a supportive unit to to 3:42 3 minutes, 42 seconds augment the production capacity at our existing plants. 3:46 3 minutes, 46 seconds Uh also we continue to uh to strengthen the the production of our assemblies section 3:54 3 minutes, 54 seconds and during the quarter we we added six new assembly stations thereby uh increasing the total number of assembly stations to 46. 4:05 4 minutes, 5 seconds As part of our ongoing focus towards efficient capital allocation and based on the updated market assessment and the 4:13 4 minutes, 13 seconds phased demand the visibility and also on uh on optimization of our internal resources and capital we have decided to 4:21 4 minutes, 21 seconds rationalize the capital expenditure for the miniature metal bellows project from the earlier planned outlay of rupees 23 crores to rupees 10 12 crores. 4:32 4 minutes, 32 seconds Accordingly, the proposed installed capacity for this particular project would be revised from 240,000 pieces perom to about 60,000 pieces peranom. 4:43 4 minutes, 43 seconds And this would be sufficient to meet the near-term demand for the miniature metal bellows while it also allows us to scale 4:52 4 minutes, 52 seconds up in a phase manner as the volume increases. The lower upfront investment also helps us to reduce the project 5:00 5 minutes gestation risk and also enables faster payback. The balanced funds will be utilized towards other ongoing expansion 5:09 5 minutes, 9 seconds the projects where we feel we have the demand visibility and also our execution timelines would become stronger. 5:17 5 minutes, 17 seconds The ongoing investments in uh the process automation which includes both robotic and and automated welding 5:25 5 minutes, 25 seconds stations and an analing plant are progressing as planned and with a targeted completion by the end of this calendar year. 5:33 5 minutes, 33 seconds These initiatives are aimed at improving the throughput and also enhancing consistency and helping us to penetrate 5:42 5 minutes, 42 seconds into mission critical uh business segments. 5:48 5 minutes, 48 seconds uh our subsidiary high generated revenues of 8 and a half cr rupes in this quarter as compared to 5:56 5 minutes, 56 seconds approximately 2.9 cr in the same quarter in the previous year and we expect high contribution to continue scaling over the next few quarters. 6:08 6 minutes, 8 seconds Now to talk about our financial performance in Q3 our total uh income stood at 121 crores which is a growth of 6:18 6 minutes, 18 seconds 21% on a y and y basis oura stood at 28 12 crores which is 28% on a growth on a 6:27 6 minutes, 27 seconds y and y basis and our iita margin stood at 23.6%. 6:33 6 minutes, 33 seconds Our PAT stood at 16 and a half crores which grew at 8% on a Y on Y basis with 6:41 6 minutes, 41 seconds a margin uh with a PAT margin of 13 1.5%. 6:45 6 minutes, 45 seconds Our cash fat increased to 22.75 crores which reflects a strong cash generation and operating performance. 6:56 6 minutes, 56 seconds For the 9 month our total income stood at 317 crores. Our riba was 70 7:04 7 minutes, 4 seconds 70 and a half crores with a margin of 22.2%. 7:10 7 minutes, 10 seconds Our pat stood at almost 38 crores with a margin of approximately 12%. 7:17 7 minutes, 17 seconds And uh on a 9-month basis our contribution of the value added the products which includes the assemblies 7:25 7 minutes, 25 seconds fittings bellows and skid uh and skid assemblies. now contribute 54% of our total sales. 7:34 7 minutes, 34 seconds The outlook for the remaining quarter of this financial year is very good. We are supported by our healthy order book, 7:42 7 minutes, 42 seconds strong customer relationships and increasing penetration in global data center and AI infrastructure market. 7:49 7 minutes, 49 seconds With a strong cash generative business model with our deep engineering capabilities and a high focus on value 7:57 7 minutes, 57 seconds added solutions and products, uh we are poised to to sustain a growth momentum 8:04 8 minutes, 4 seconds and deliver long-term share value to our shareholders. 8:10 8 minutes, 10 seconds Uh thank you everyone for joining today's earning call and we will now open the floor up for questions. Thanks a lot. 8:19 8 minutes, 19 seconds Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone 8:28 8 minutes, 28 seconds telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a 8:36 8 minutes, 36 seconds question. Ladies and gentlemen, we will wait for a moment while the question Q assembles 9:10 9 minutes, 10 seconds the First question is from the line of Raman KV from Sequin Investment. Please proceed. 9:17 9 minutes, 17 seconds Uh hello sir, can you hear me? 9:20 9 minutes, 20 seconds Yes, I can hear sir. Uh congratulation on good set of numbers. I have few questions. My first 9:27 9 minutes, 27 seconds question is with respect to the liquid cooling skid system. uh as we have a exclusive agreement with a uh US-based 9:35 9 minutes, 35 seconds company I think um uh I just want to understand two things uh are we going to 9:42 9 minutes, 42 seconds pay some royalty to use their uh how do I say uh royalty to them or is it like a revenue 9:50 9 minutes, 50 seconds share model between the both of uh the company and uh on the unit economics if you can explain the unit economics of 9:58 9 minutes, 58 seconds this uh liquid cooling skate stuff that would be helpful. 10:04 10 minutes, 4 seconds So in this there is no uh royalty or uh you know that we pay to them. It it's 10:10 10 minutes, 10 seconds the normal uh buyer seller uh you know transaction. Uh although we have signed 10:17 10 minutes, 17 seconds uh an agreement with them uh for exclusivity of you know for the next uh 5 years. 10:25 10 minutes, 25 seconds Uh this is for just the India market. uh it it does not include the overseas market. 10:33 10 minutes, 33 seconds Uh and also it it's uh uh in terms of the uh so so that is answer to your first question with regards to your 10:41 10 minutes, 41 seconds second question. Um in terms of the unit uh economics so it works on a uh so we 10:48 10 minutes, 48 seconds you know receive the orders from them you know and then we accordingly manufacture the products and uh and then 10:56 10 minutes, 56 seconds supply to them. So that's how the entire uh uh you know the business model works. 11:04 11 minutes, 4 seconds Uh so I just want to understand that now now I I think you have around the cap capacity with respect to this is 2,000 11:11 11 minutes, 11 seconds cases and you're expanding it to 15,000 cases cases. 11:18 11 minutes, 18 seconds Yeah. And uh assemblies. Yeah. 11:20 11 minutes, 20 seconds Yeah. Assemblies. Yeah. And uh uh the capex for this was around 100 crores. 11:25 11 minutes, 25 seconds And you said uh you can do 300 to 350 crores of revenue at peak utilization if uh this is my understanding. So if my 11:34 11 minutes, 34 seconds understanding is right your per piece realization is around three lakhs. 11:38 11 minutes, 38 seconds The capex is less than the capex is less than 100 you know crores just clarify that. 11:46 11 minutes, 46 seconds Okay understood sir. So when I come to the realization your realization is around three lakhs per piece correct at peak utilization. 11:56 11 minutes, 56 seconds Yeah. Is my understanding correct? 11:58 11 minutes, 58 seconds Assuming that's assuming an 80% uh capacity utilization. Yeah. 12:04 12 minutes, 4 seconds Yeah. Now I just want to understand let's say there is a data center that we have that needs to be constructed. Let's say it's a 100 crores worth of data 12:13 12 minutes, 13 seconds center project. How much out of that will be your uh liquid cooling systems kit? I just want to understand the total 12:20 12 minutes, 20 seconds addressable market for with respect to this particular business. 12:26 12 minutes, 26 seconds So uh obviously it depends a lot on the uh you know on the on the entire layout 12:33 12 minutes, 33 seconds of the project where it is being you know built or what is the megawatt of the project how many floors and how much is the space you know because ultimately 12:42 12 minutes, 42 seconds liquid cooling also depends on how much megawatt is being you know uh you know 12:48 12 minutes, 48 seconds put on a particular uh you know on a particular uh piece of land you If I may say so 12:56 12 minutes, 56 seconds also it varies from you know operator to operator. So for example uh data center built by X uh you know would have a 13:03 13 minutes, 3 seconds different uh uh design for liquid cooling as compared to a data center built by say Y or or a data center built by you know zed because each one you 13:12 13 minutes, 12 seconds know wants to have their own proprietary uh uh technology for this particular uh you know uh this particular uh investment. 13:22 13 minutes, 22 seconds Ras to I can tell you about the global market size for liquid uh you know liquid cooling right now the global 13:29 13 minutes, 29 seconds market size as it stands currently it's about almost close to 3 billion uh right and uh it it is it is growing at an est 13:39 13 minutes, 39 seconds of about 33% on on u you know every year I'm talking about the international market right 13:46 13 minutes, 46 seconds [clears throat] now that uh is uh is poised to increase to about 21 billion 13:53 13 minutes, 53 seconds over the next 6 to 7 years, right? Uh so that is the the market size of the total 14:01 14 minutes, 1 second liquid cooling. So so then you can actually divide that by the data center market. So you so you'll get an idea about how much is the liquid cooling 14:10 14 minutes, 10 seconds market as compared to the total uh data center market. 14:14 14 minutes, 14 seconds Understood sir. And sir uh with respect to high air what's our current capacity utilization and are we planning to have 14:21 14 minutes, 21 seconds any uh further capex with respect to this? 14:26 14 minutes, 26 seconds Yeah. So at H highair so uh uh HDER actually works on uh CNC machine. Uh so 14:34 14 minutes, 34 seconds most of the products at uh at H Highare are are so we are all in the in the process of 14:42 14 minutes, 42 seconds uh increasing our capacity in H Highare as well. Uh the same uh is is poised to be announced very soon. uh right now we 14:51 14 minutes, 51 seconds are working at uh so in terms of the the capacity uh in terms of number of pieces if I can say the as per the number of 14:59 14 minutes, 59 seconds pieces we are running at about 70 odd% capacity utilization uh but obviously we plan to uh add a few more machines and a 15:08 15 minutes, 8 seconds and a few more new machines uh which will help us to increase our capacity on our existing machines as well. So uh uh 15:16 15 minutes, 16 seconds you know with that we expect uh H highair to grow o over the next uh year or so. So hide capex is planned soon. 15:25 15 minutes, 25 seconds I'll we'll be able to share the numbers uh in due course of time and so uh initially uh in previous calls 15:34 15 minutes, 34 seconds you mentioned that high air at your optimum capacity can do 45 to 50 crores of annual revenue. Is my understanding correct? 15:42 15 minutes, 42 seconds Yes that's correct. 15:44 15 minutes, 44 seconds Okay. And so my final question is with respect to export what percentage of your total revenue is exports and if you can bifocate the export like where it 15:53 15 minutes, 53 seconds comes from how much is USA how much is EU and will the current FTA signing with EU and UK will beneficial will be 16:01 16 minutes, 1 second beneficiary for you in terms of growing your export order. 16:06 16 minutes, 6 seconds So uh right now about 74% of our total business uh you know comes from export 16:14 16 minutes, 14 seconds and uh you know out of that almost 90% 85 to 95% comes from the EU and uh the 16:22 16 minutes, 22 seconds uh you know USA. So if I talk about EU and and USA combined they they contribute around 85% of our overall 16:29 16 minutes, 29 seconds export business. Now definitely with the with the the FDA which is which was 16:36 16 minutes, 36 seconds announced a couple of days back uh definitely we are going to see o over the oh you know over the next couple of 16:43 16 minutes, 43 seconds years higher traction coming in you know from the EU sector if you see in this 16:50 16 minutes, 50 seconds quarter itself our total exports have grown by about 30%. you know out of that EU was a major contributor in that. So 16:59 16 minutes, 59 seconds uh obviously uh in the last quarter there was no FDA but we strongly feel that uh you know with this FTA being you 17:07 17 minutes, 7 seconds know signed and obviously it'll it will come in into uh you know into operations in the next few quarters we definitely 17:15 17 minutes, 15 seconds feel that uh it's going to be a big uh you know a big boost for us also considering that the fact that it will 17:22 17 minutes, 22 seconds also make our products even more competitive in the EU market uh especially in terms of competition from 17:31 17 minutes, 31 seconds players or manufacturers based out of Turkey who are getting you know uh duty-free material to be exported to EU. So that would be very beneficial to us as well. 17:42 17 minutes, 42 seconds So yes definitely with the EU you know would be the I would say the uh the strong growth area for us uh in the near future. 17:53 17 minutes, 53 seconds Understood sir. So just a followup 85 to 90% can you just give a split with respect to only EU and only USA if possible. 18:04 18 minutes, 4 seconds So uh the EU right now is about 30% and the USA is about 55%. 18:16 18 minutes, 16 seconds Thank you sir. I'll join back end of you. Thank you so much. 18:21 18 minutes, 21 seconds Thank you. The next question is from the line of Virat Parak from Kelian. Please proceed. 18:28 18 minutes, 28 seconds Good morning s audible. Yes. 18:32 18 minutes, 32 seconds Yeah. Uh so just my first question as a follow up on the previous participant. 18:35 18 minutes, 35 seconds Um I mean uh you know more than the quarterly revenue I'm interested in the 9 monthly revenue. um exports has kind 18:44 18 minutes, 44 seconds of been weak this uh 9 months financial year ended and primarily we've seen growth from the domestic market. Correct me if I'm wrong. 18:52 18 minutes, 52 seconds Yeah. 18:53 18 minutes, 53 seconds Right. And that so yeah 18 go. 18:58 18 minutes, 58 seconds So so in that if I look at Europe and America I feel Europe has been flat. I think it was 59 cr last year versus 60 cr this year in terms of 9 months. 19:08 19 minutes, 8 seconds America was 129 cr last year and 136 cr this year approximately a 5% kind of a growth which is approximately 55 60% of 19:16 19 minutes, 16 seconds our business. So uh I just if you could just share some highlights in terms of I mean last quarter we spoke that you know 19:23 19 minutes, 23 seconds not a single customers canceled the orders uh probably they are deferring them. So uh are we supposed to be a spillover in Q4? Is Q4 supposed to be 19:32 19 minutes, 32 seconds very strong for us or is it more is a lot of more pessimism in the American market? uh in for the entire year. So 19:39 19 minutes, 39 seconds just wanted to understand your thoughts of what the ongo situation there. 19:44 19 minutes, 44 seconds Yeah. Okay. So thank you so much for the question. So just wanted to to you know to update to 19:51 19 minutes, 51 seconds you if you see our Q1 result right uh we had a very I would say a very bad Q1 19:58 19 minutes, 58 seconds number. So you know uh because of that you see that our 9 months numbers are still don't appear as good as what they 20:07 20 minutes, 7 seconds are. It's because of a of a very I would say a very bad Q1. uh that's why if you 20:15 20 minutes, 15 seconds see the growth even after 30% of growth in in these particular markets on a 9 month basis our growth is still uh in 20:23 20 minutes, 23 seconds the single digit you know but obviously things uh you know nowadays change on every quarter to quarter right 20:31 20 minutes, 31 seconds now we seeing that there's strong demand that we seeing from uh you know from the export market obviously in the US market 20:41 20 minutes, 41 seconds like I mentioned we did not have any order cancellations and now we are starting to receive uh you know repeat 20:47 20 minutes, 47 seconds orders coming on from our existing you know customers. The only issue that we are facing in terms of the tariffs is obviously you know getting new customers 20:56 20 minutes, 56 seconds and and new OEMs on board you know which is taking a lot more time because of these tariffs but our existing customers 21:05 21 minutes, 5 seconds are continues to place you know order to us because uh right now they don't have any alternate uh supplier uh with 21:14 21 minutes, 14 seconds regards to the EU like I mentioned also in the in a couple 21:21 21 minutes, 21 seconds of my previous uh earnings call I you know uh uh you know we felt that the EU would be a strong market for us in the 21:29 21 minutes, 29 seconds near future and that is what we are seeing uh in um uh in the EU market that 21:36 21 minutes, 36 seconds over the next I think a few quarters we expect the business from EU to to increase. Obviously this this FDA once 21:44 21 minutes, 44 seconds it is implemented uh you know would definitely be a booster for us uh uh in terms of our business to the to the EU. 21:53 21 minutes, 53 seconds Yes. 21:53 21 minutes, 53 seconds [clears throat] 21:54 21 minutes, 54 seconds domestic market in o over the nine months uh has you know has grown and the international market has grown lesser than that but I would say that uh the 22:03 22 minutes, 3 seconds kind of uh disruptions that we had in the international market were nowhere near as compared to you know uh you know 22:11 22 minutes, 11 seconds uh as in the kind of disruption that we had when in international market was much more as compared to the domestic market where we did not have anything. 22:19 22 minutes, 19 seconds So you would also have to see the uh the growth in terms of the challenges that we have been facing. But I would say 22:26 22 minutes, 26 seconds despite that I think the last quarter has been you know extremely good for us and uh you know we expect the same to 22:33 22 minutes, 33 seconds happen in uh in this in the current quarter which is ongoing and also in the next financial year as well. 22:41 22 minutes, 41 seconds So just a followup before I ask my second question. Uh domestic as you rightly said we've been doing well. Can you highlight a certain areas where 22:49 22 minutes, 49 seconds we've done well? Have we you know are we competing with whom? What are we doing? 22:55 22 minutes, 55 seconds Are we gaining new customers? Are we gaining more wallet share with an existing customer? If you and you and earlier you used to give some kind of a 23:02 23 minutes, 2 seconds end user industry mix and I think for this quarter it's not been given. So uh just wanted to request that if you could you know just uh stay a bit consistent 23:11 23 minutes, 11 seconds with the disclosure so that it's easier for us to track the performance as well and if you could just highlight in domestic where are we doing well in the end user industry mix like where are we 23:19 23 minutes, 19 seconds seeing more traction more growth because that's been a phenomenal uh 9 months for us in the domestic market. 23:26 23 minutes, 26 seconds Yeah. So in the domestic market we have seen the two major industries that have seen a significant uptake. One is the uh 23:35 23 minutes, 35 seconds the steel industry that we have seen uh good demand that coming in and we have seen it from the ports and terminal uh 23:43 23 minutes, 43 seconds industry uh you know where we have seen significant uh you know uptake in in orders from various ports and terminals 23:51 23 minutes, 51 seconds uh you know for our various products. So these are the two industries in the domestic sector. There are smaller you 23:58 23 minutes, 58 seconds know industries you know with regards to construction and and uh uh and and food and all but the most uh the most 24:06 24 minutes, 6 seconds prominent ones are uh the ports and terminals and and steel and with uh and specifically with uh you know talking 24:14 24 minutes, 14 seconds about air. So over there we are seeing a very a very good traction coming in from the railways industry. So, so these are 24:22 24 minutes, 22 seconds the three major industries where we are seeing strong traction coming in. 24:28 24 minutes, 28 seconds So, I asked if we have you know gain new customers or increased wallet and existing customers in domestic market. 24:36 24 minutes, 36 seconds Both so like I mentioned so we already had customers in the steel industry and ports and terminals. So we have we have gained more business from them. Uh and 24:45 24 minutes, 45 seconds second we have also uh entered into new ports where we we did not have a presence earlier. Uh in terms of the 24:53 24 minutes, 53 seconds steel industry there's no major new customer but then major new customers have come in in ports and terminals and in the chemical industry. 25:04 25 minutes, 4 seconds Got it sir. So my second question is uh just a bit on the uh the planned pipeline of capex which we've have uh y 25:12 25 minutes, 12 seconds if you could firstly just uh bifocate the capex that we've done in this financial year up till date in Moses in 25:19 25 minutes, 19 seconds bellows in uh the the liquid data cooling solutions and versus the cash we have on the books including the amount 25:28 25 minutes, 28 seconds that we recently raised. uh also uh if you could just help me understand the kind of capacity utilization we are on 25:35 25 minutes, 35 seconds especially in the you know uh hoses side and uh at what level are we seeing because I think we are very confident on 25:43 25 minutes, 43 seconds that demand growing strongly so how are we you know seeing that growth forward 25:50 25 minutes, 50 seconds uh in the domestic and the export market at whatever capacity utilization we're envisaging to be in the next two quarters or the next financial year and 25:58 25 minutes, 58 seconds just the last question would be uh on the liquid cooling solutions. If I understand correctly, we are using 26:05 26 minutes, 5 seconds bellows uh capacity as a feed stock to it's a mixture like a skil is a mixture of multiple components as if I'm correct 26:13 26 minutes, 13 seconds to understand it. Uh I uh what kind of margins are we going to see because I think bellows were supposed to drive our 26:22 26 minutes, 22 seconds margins upward being a niche product. So just given like kind of a three lakh rupee average uh you know uh revenue per 26:30 26 minutes, 30 seconds piece what kind of margins do we see uh uh you know given the exclusivity we have with the US platform 26:39 26 minutes, 39 seconds okay first of all break it up your cash there were a lot there were a lot of questions yeah so I would like to 26:46 26 minutes, 46 seconds I think I'll just do on the cash and the capacity and the post unit economics yeah so uh ju just to update we uh we 26:55 26 minutes, 55 seconds have not yet received the funds from the preferential allotment because uh we received the in principle approval from stock exchanges in this week itself. So 27:02 27 minutes, 2 seconds most likely uh in the in the upcoming week we would be uh you know allotting uh you know as in receiving the money 27:11 27 minutes, 11 seconds and and allotting or getting the fund from the preferential allotment. So uh that is to clarify on on one point. Uh 27:19 27 minutes, 19 seconds second point with regards to the total capex that we have done across the entire uh spectrum uh in in this 9 27:28 27 minutes, 28 seconds months which is uh you know in this in the current financial year is approximately 36 cr rupes that is spread across various uh you know the the whole 27:37 27 minutes, 37 seconds business the [clears throat] liquid the cooling obviously the uh the investment in the liquid the cooling uh the major 27:45 27 minutes, 45 seconds investment in the liquid the cooling would start now because initially what We did that like you mentioned is we utilized some of the machines from the 27:52 27 minutes, 52 seconds Bellow's plant and then we uh you know we bought some some of the the other machines to kickstart the project in the 28:00 28 minutes first phase and now since we are expanding uh or or planning a bigger expansion in capacity they want to now 28:07 28 minutes, 7 seconds invest significantly uh uh in the uh in the liquid cooling space. Uh so that was that in terms of 28:16 28 minutes, 16 seconds obviously uh anything else that I missed out from your question. 28:21 28 minutes, 21 seconds Uh so what is the cash in hand right now as on date? 28:26 28 minutes, 26 seconds As of 31st of December it was approximately about uh 20 cr rupees as a cash balance in bank. 28:34 28 minutes, 34 seconds So in your presentation you've written assemblies you've added some six assembly stations. So I said you said I think 9 months you said you run 36 cr. 28:41 28 minutes, 41 seconds Can you bifocate into hoses, bellows, assemblies and cooling solution? 28:47 28 minutes, 47 seconds Okay, so uh in terms of you know assembly is part of the hoses because that's just one part of the uh the 28:54 28 minutes, 54 seconds project. So I'll just give you the broad numbers approximately uh till 31st of December 29:02 29 minutes, 2 seconds we have uh we've invested approximately 9 crores for the liquid cooling. 29:07 29 minutes, 7 seconds These all data are as of 31st of December. uh for the uh the bellows it is around five k uh this is for the nine 29:16 29 minutes, 16 seconds months I'm talking about and for the the hoses and for assemblies and for assembly stations and the building all 29:23 29 minutes, 23 seconds of that is about 22 crores this is for the 9 months right and for the next uh months what 29:32 29 minutes, 32 seconds was the planned k tax amount so first obviously the remaining tax to be done for the the hoses uh division. 29:42 29 minutes, 42 seconds Then we uh as we have we had announced in last month that we are uh going to increase capacity for skid assemblies. 29:52 29 minutes, 52 seconds uh the capex would go into that and the third one would be for the analing plant along with the automated and robotic 30:01 30 minutes, 1 second assemblies that is required uh you know along with the analing plant for a specific uh you know projects that we have you know from a couple of our 30:09 30 minutes, 9 seconds customers so what would be the amounts those amounts have already been uh uh 30:17 30 minutes, 17 seconds you know given in the last board meeting so I would suggest you to you could refer to that because the overall uh 30:25 30 minutes, 25 seconds capex including working capital and all that we have planned is around 90 97 crores that includes working capital 30:35 30 minutes, 35 seconds uh just wanted to understand what would be the peak debt with all the capex being done next year peak debt 30:42 30 minutes, 42 seconds yeah I I'm assuming that we have taken part of no there is no debt we have not taken any debt no as data I know I'm saying that right 30:51 30 minutes, 51 seconds now we have raised the money fund capex post that we will be uh taking a little bit of internal acruise and some part of 30:58 30 minutes, 58 seconds debt to do the second line of capex for the uh liquid data cooling solutions. So you just want to understand what would be our debt number 31:06 31 minutes, 6 seconds as of now. As of as of now we we don't plan to raise on uh we don't plan to raise any debt as of now. In case we 31:15 31 minutes, 15 seconds require in the future for any short term I think that would be decided you know at at that time but as of now we we don't plan to take on any debt. 31:25 31 minutes, 25 seconds Got it. So this last question uh in terms of the unity economics for the liquid data cooling solutions what would be the margin profile for this? 31:33 31 minutes, 33 seconds So u uh you know I think I'll mention this probably in my last earnings call as well since right now we are dealing with or as in we have a exclusive 31:42 31 minutes, 42 seconds contract with uh this US customer. it's uh uh it will not be possible for me to give you a specific number of of margin 31:50 31 minutes, 50 seconds on this business obviously due to uh you know confidence charity reasons but uh uh along with this particular business I 31:59 31 minutes, 59 seconds think we expect our our overall margins to remain uh as expected uh or uh you 32:06 32 minutes, 6 seconds know as we mentioned in the range of uh 23 to 25% over the next couple of years 32:14 32 minutes, 14 seconds you know you know because right now it's you know it's uh you know this particular business is you know dedicated for one 32:22 32 minutes, 22 seconds customer so you know I hope you understand that it's it's not possible for me to to openly share the margins on a play forum 32:31 32 minutes, 31 seconds sure sir thank you so much I'll have a few more questions I'll get back into you thank you so much no worries thank you the next question is from the 32:40 32 minutes, 40 seconds line of shring raju Ram The next question is from the line of Prates from Lucky Investment. Please proceed. 32:50 32 minutes, 50 seconds Yeah. Hi. Uh just from a slightly longer uh horizon perspective. So now at what 32:58 32 minutes, 58 seconds uh sales level is your metal mellow uh quarterly sales level or annual sales 33:05 33 minutes, 5 seconds level in FI26 and utilization and for the capacity that you have put uh when do you see in which year do you 33:13 33 minutes, 13 seconds see the peak utilization and the peak revenue on the current capacity? 33:18 33 minutes, 18 seconds Same way on the on the skid the liquid skid assembly side this 15,000 unit and 33:25 33 minutes, 25 seconds this 350 cr of revenue which is the year or the quarter where we start seeing the peak utilization of this uh piece. 33:36 33 minutes, 36 seconds Okay. So the metal bellows right now is at an annual run rate of 12 kores as of 33:43 33 minutes, 43 seconds now. uh we expect uh this to to increase to about uh 36 kores the run rate in the 33:52 33 minutes, 52 seconds next uh uh in the next few quarters. Uh obviously uh being very honest it is a 33:58 33 minutes, 58 seconds little behind uh our schedule. We we expected it to be much faster and I think I just mentioned before a couple 34:07 34 minutes, 7 seconds of you know questions back in terms of the US market right. 34:11 34 minutes, 11 seconds uh we expected a big business to come of metal bellows from the US market but because of this the tariff that is being 34:18 34 minutes, 18 seconds slightly uh you know the timelines have slightly you know gone up uh you know but we we also participated in an 34:26 34 minutes, 26 seconds exhibition recently and we saw a very good lead generation from that so we expect the bellow's business to uh to 34:34 34 minutes, 34 seconds achieve a run rate of uh 36 crores over the next few quarters uh with regards to the peak utilization. I think uh we 34:42 34 minutes, 42 seconds expect the the bellows plant to to achieve the peak utilization in about two two years time from now. Uh 34:51 34 minutes, 51 seconds peak is 100 crores right? Yeah 100 crores actually 85 85 85 90 35:00 35 minutes so two years which means it will go in FI28 or FI 29 basically uh FI 20 35:10 35 minutes, 10 seconds I think it will be by the end of FI28 and start of FI 29. So I'm writing F29 for safety purpose metal value then uh 35:18 35 minutes, 18 seconds the liquid cooling liquid cooling so uh with the capex that 35:25 35 minutes, 25 seconds we have planned uh and uh we should expect the liquid cooling peak utilization should be achieved in I 35:33 35 minutes, 33 seconds would say 2 and a half years two to two and a half years so peak of about 350 crores 35:40 35 minutes, 40 seconds in FYI 29 again yeah 29 And what are the margins in liquid 35:47 35 minutes, 47 seconds cooling and margins in bellow GP and the operating I just I just I just uh spoke regarding 35:53 35 minutes, 53 seconds the margins for liquid cooling. Uh I mentioned that uh not possible for me to share because we are right now dealing 36:01 36 minutes, 1 second with just one customer. So on a public forum I cannot share the exact margin. 36:06 36 minutes, 6 seconds Okay. But directionally are they directionally are they better or inferior to the to the existing margins that you have in hoses? 36:15 36 minutes, 15 seconds It's no. So in terms of the hoses they are better than the the margin in the hoses. They are almost in line with the margins that we have of assemblies. 36:25 36 minutes, 25 seconds The margins are better than hoses and in line with assemblies. Okay. Yeah. Okay. Done sir. 36:32 36 minutes, 32 seconds And lastly on the hoses side now uh you have a capacity on ground uh uh you know and then you had these challenges 36:41 36 minutes, 41 seconds I don't think that the the international challenges have rectified in terms of the tariff and etc. So how do you see 36:49 36 minutes, 49 seconds the growth in the assembly side the hoses side? 36:54 36 minutes, 54 seconds So uh so when I talk about hoses so I you know I you know we have to talk about both hoses and hose assemblies because they 37:01 37 minutes, 1 second correct hose. Yeah correct hose and hose assembly. 37:04 37 minutes, 4 seconds Yeah. So you know uh if you see this the last quarter was you know we had uh very good sales in the international market. 37:13 37 minutes, 13 seconds uh uh you know and if you see over a 9 months yes over a 9 months the sale might be and the growth might be single 37:20 37 minutes, 20 seconds digit but obviously there were uh the Q1 like I mentioned was you know very modest for us and hence the overall 37:27 37 minutes, 27 seconds numbers look not as strong as you know what they actually are so uh in terms of the outlook so I think with the with 37:36 37 minutes, 36 seconds this FT I think uh I think we'll see increased business coming in from the EU because uh over the last three three 37:44 37 minutes, 44 seconds years almost I think we had more or less uh you know flat sales or or you know barely minimum you know growth in sales 37:53 37 minutes, 53 seconds from the EU you know from the EU region but I think over the next one year I think and hopefully with this FDA uh you 38:01 38 minutes, 1 second know being implemented very soon we'll see higher business coming in from the EU market US uh market from the existing 38:11 38 minutes, 11 seconds customer you know point is strong but obviously like I mentioned with the new customers there are still some challenges with especially with regards 38:19 38 minutes, 19 seconds to these tariffs uh hoping that you know if the tariffs also get resolved soon we'll see a significant uptake also you 38:28 38 minutes, 28 seconds know coming in from the US market which continues to remain our biggest market uh you know still 38:38 38 minutes, 38 seconds thank you very much thank you so Thank you participants. 38:50 38 minutes, 50 seconds Please limit your questions to two per participant. 38:54 38 minutes, 54 seconds The next question is from the line of Shringa Raju Ram from Omiti Holdings. Please proceed. 39:01 39 minutes, 1 second Hello sir, am I audible? Yes, you're audible. 39:06 39 minutes, 6 seconds Sir, I have two questions. Fourth regarding our liquid cooling secondary fluid network solutions. One, if our if 39:15 39 minutes, 15 seconds our SFN systems are not available, would customers need to redesign their entire cooling systems or can they substitute 39:25 39 minutes, 25 seconds components without major changes? And the second question is can the SM liquid cooling solutions and technologies be 39:33 39 minutes, 33 seconds adapted beyond data centers? For example, electric vehicle engine cooling or 39:40 39 minutes, 40 seconds semiconductor directive chip cooling etc shall be like that sir. 39:48 39 minutes, 48 seconds So if if I have understood your your question correctly first question is if uh is SFN components are not there then 39:57 39 minutes, 57 seconds will the liquid cooling work? Is is that correct? The first question the first. 40:01 40 minutes, 1 second No sir, no sir. If our systems are not not available, can the customer 40:08 40 minutes, 8 seconds uh have to redefine their entire cooling system or simply can they substitute our 40:16 40 minutes, 16 seconds components with with the property products. 40:21 40 minutes, 21 seconds So as of now there is so uh you know as of now we are one of the uh the first 40:27 40 minutes, 27 seconds movers in this space in in India in terms of um the components. So uh as of now if we are not providing the system 40:36 40 minutes, 36 seconds or or there is uh you know delayed from our end the only option available to the customers would be to to import it. So 40:44 40 minutes, 44 seconds as of now there is you know the customer does not have much option. And what was the second question that you said 40:53 40 minutes, 53 seconds sir? Can these technologies assessment be adapted beyond data centers for example to electric vehicle engine 41:00 41 minutes cooling or semiconductor current chip coolings some other other applications. 41:08 41 minutes, 8 seconds So, so what we are providing is basically you know uh a cooling uh you know or a flow solution you know uh 41:17 41 minutes, 17 seconds ultimately it is used for you know cooling right now it is used for you know cooling data centers but actually it can be used for cooling any other you 41:26 41 minutes, 26 seconds know kind of uh you know system or or any other you know kind of uh uh application because ultimately it's a 41:34 41 minutes, 34 seconds flow control. So you can actually change the design of the flow control and instead of say you know cooling data centers you know you can cool tomorrow 41:43 41 minutes, 43 seconds say uh a large machinery or or say a semiconductor plant or you know so uh the adaptability of and specifically the 41:52 41 minutes, 52 seconds machines that we have or you know that we have already installed and are also in the pipeline to install they are uh 42:01 42 minutes, 1 second not specifically meant to you know for you know just for data centers. So I'm just saying tomorrow if just for uh you 42:08 42 minutes, 8 seconds know if just for any reason the entire data center you know industry collapses we can still you use our machines to 42:16 42 minutes, 16 seconds manufacture the flow controls for you know for you know for other HVAC uh uh you know industries. 42:24 42 minutes, 24 seconds Okay fine sir thank you so much. Thank you so much. Thank you. Thank you. 42:32 42 minutes, 32 seconds The next question is from the line of Nikon Banushali from Koshwell. Please proceed. 42:39 42 minutes, 39 seconds Hi uh thank you for the opportunity. So uh just I wanted to go over through the 42:46 42 minutes, 46 seconds peak revenues from each division. We have the current uh uh four to five divisions right. First is a hose and 42:53 42 minutes, 53 seconds assembly business. Then there's metal bellows, there's miniature metal bellows, liquid cooling and then there's high air. So peak revenues from each of 43:02 43 minutes, 2 seconds the division if you could uh give me the numbers. 43:07 43 minutes, 7 seconds Yeah. Okay. So uh with regards to the liquid the cooling I think already it was just a couple of questions back 300 crores 43:15 43 minutes, 15 seconds 300. Yeah. 300 to 350 kores at uh utilization uh at the peak utilization. 43:22 43 minutes, 22 seconds uh in terms of the the the hose and the assemblies business, the hose and the hose assemblies business uh at the peak 43:31 43 minutes, 31 seconds utilization of capacity of 20 million we would reach uh and and you know considering if 70% of the sales you know 43:40 43 minutes, 40 seconds comes from the assemblies uh you know we're expecting a a turnover of between 650 to 675 43:48 43 minutes, 48 seconds and uh in terms of the bellows uh as I said already around 85 crores at peak utilization 43:56 43 minutes, 56 seconds and hide as of the capacity right now it's about 45 crores based on the 44:03 44 minutes, 3 seconds current capacity is both miniature as well right 44:11 44 minutes, 11 seconds yeah miniature so as I mentioned in my speech we are redeploying some of the the capital from miniature metal pillows 44:19 44 minutes, 19 seconds to the other you know project so miniature metal bellows right now. Yeah. 44:23 44 minutes, 23 seconds The peak utilization would be about 8 9 crores. Okay. 44:31 44 minutes, 31 seconds All right. I'm overall if you see it would be somewhere about uh close to uh you know slight I 44:40 44 minutes, 40 seconds think more than thousand you know kes over the next uh you know 3 years that we expect to generate. 44:50 44 minutes, 50 seconds Right. Yeah, that's that that was the question. Yeah, thank you sir. Thank you so much. Thank you. 44:57 44 minutes, 57 seconds Thank you. The next question is from the line of V from NBS analytical advisors. Please proceed. 45:06 45 minutes, 6 seconds Yeah, thanks for the opportunity. Uh I'm audible. 45:10 45 minutes, 10 seconds Yes, you're able. So um first question is on the liquid cooling adoption given that many of the leaders industry use 45:17 45 minutes, 17 seconds air cooling um what makes you confident that liquid cooling will feel cool despite being more expensive out 45:25 45 minutes, 25 seconds specifically what are the key trigger that will drive the shift so that's my question uh so sorry uh if I've heard you 45:34 45 minutes, 34 seconds correctly you saying that um what makes the shift from air cooling to liquid cooling am I right correct correct 45:41 45 minutes, 41 seconds Yeah. Okay. So, a lot of the the old data centers or the data centers which were up and running for many years, right? They were in the traditional air 45:50 45 minutes, 50 seconds cooling system. Now, the uh the reason for them being on the air cooling is because the capacity of those data 45:58 45 minutes, 58 seconds centers were you know were actually very small and liquid cooling as a tech technology was not developed uh I would 46:05 46 minutes, 5 seconds say you know four five years back. Now with liquid cooling and also with the chip capacities you know increasing. So 46:13 46 minutes, 13 seconds we have chips we can compute much more power. So and if the chips are using much more power they need much more you know cooling and uh at a faster pace. 46:24 46 minutes, 24 seconds Hence if if you do through air cooling the cost uh the running and the recurring uh cost of air cooling is 46:31 46 minutes, 31 seconds huge. uh and obviously for any data center uh especially at a large scale to be viable the recurring cost has to be 46:39 46 minutes, 39 seconds lesser. So hence obviously the technology of liquid cooling has uh uh you know has evolved uh you know or was 46:48 46 minutes, 48 seconds uh uh you know was invented and now for all the new data centers that are coming up 46:56 46 minutes, 56 seconds 99% of them are coming up with the liquid cooling only in some form or the other. Uh and the reason is because the 47:04 47 minutes, 4 seconds liquid the cooling the initial investment is you know is higher but the recurring cost is significantly lower. 47:14 47 minutes, 14 seconds Okay. So hope I was able to answer your question. Yeah. uh and we all sing in the lines. 47:21 47 minutes, 21 seconds My next question is uh what is the life cycle of this uh typical uh run of this liquid cooling solution uh when it is 47:29 47 minutes, 29 seconds deployed in a data center and uh what drives this replacement demand 47:37 47 minutes, 37 seconds uh you know obviously uh in terms of the life cycle I think it can stay for at least minimum you know 47:44 47 minutes, 44 seconds four to five years without much uh you know without much repairs but obviously If there are you know some component or 47:54 47 minutes, 54 seconds or or some part of the system you know which is you know which gets damaged or which needs uh you know you know which needs to be changed I think uh that can 48:03 48 minutes, 3 seconds be changed you know you know easily with the current liquid cooling system that we're developing uh you know say for 48:10 48 minutes, 10 seconds example if a part of the line uh there is some damage you know we have built the system in such a way that we can 48:18 48 minutes, 18 seconds actually bypass uh that particular you know line for a short period of time replace the part and then you know again 48:25 48 minutes, 25 seconds bring it on the line. So the replacement is is uh you know we have descended in a way that the replacement becomes very quick. 48:35 48 minutes, 35 seconds Okay. So the replacement demand is we request you to join the question 48:42 48 minutes, 42 seconds queue for your follow-up questions as there are other participants waiting for their turn. 48:47 48 minutes, 47 seconds Okay this is a followup only. uh that by its I'm actually not able to hear you. I'm 48:57 48 minutes, 57 seconds sorry. You said I think 49:03 49 minutes, 3 seconds by technology last I'm I'm I'm so sorry. I think there's 49:12 49 minutes, 12 seconds some some noise from the back so that the voice is not I'm really sorry I'm not able to hear you. I'm sorry. 49:19 49 minutes, 19 seconds Welcome. Thank you. The next question. 49:30 49 minutes, 30 seconds Let me take the next one. 49:31 49 minutes, 31 seconds The next question is from the line of Ashar Kapalia from Frontwave Research. Please proceed. 49:37 49 minutes, 37 seconds Well, thank you for the opportunity and congrats on good side of numbers. I was just going through the investor presentation of last quarter versus 49:45 49 minutes, 45 seconds current quarter. And if I look at our capacity addition plans, there's a delay across all our categories like hoses, 49:52 49 minutes, 52 seconds assemblies as well as billows. And specifically for billows, if I look at metal billows, the capacity addition plan was 1 by 20 to three lakh units. 50:01 50 minutes, 1 second And for miniature billows, it was like 2,000 units. Now that has been caged significantly to 60,000 units and for 50:09 50 minutes, 9 seconds metal it's 1 lakh 20,000 units. So just wanted to understand this significant curtailment it looks like. So just 50:17 50 minutes, 17 seconds wanted to wrap my head around this. So what's what's the particular reason behind it? 50:23 50 minutes, 23 seconds Yeah. So uh it's basically so to to clarify on a few points. First is the uh expansion of uh metal bellows from one 50:32 50 minutes, 32 seconds lakh 20 to three lakh was part of the phase 2. uh if you see in the last presentation the phase two was 50:40 50 minutes, 40 seconds uh as informed in my you know previous you know calls also that we would only start work on phase two once phase one 50:46 50 minutes, 46 seconds is is you know you know up to an an optimum capacity utilization so that 50:53 50 minutes, 53 seconds that wasn't anyways planned for a later time first of all that second of all as I mentioned in my speech as well we uh 51:02 51 minutes, 2 seconds you know we have uh reduced our capital expens expenditure uh uh in in minimum metal bellows from uh about 23 and a2 51:11 51 minutes, 11 seconds crores to sorry about from 23 crores to about 10 and a half crores. Obviously with that reduction there will obviously 51:18 51 minutes, 18 seconds be reduction in the capacity and the reason is that we feel that right now we want to so as per the demand that we are 51:26 51 minutes, 26 seconds seeing from the international market for miniature metal bellows we feel that the first phase it's better for us to deploy 51:33 51 minutes, 33 seconds lesser you know capital get the ball rolling and then over a period of time uh you know as we see demand picking up 51:40 51 minutes, 40 seconds then uh you know putting in more capital. So the idea of uh the the idea 51:47 51 minutes, 47 seconds of for us is that we we want to deploy our capital uh you know we have seen over the past 3 to four months that we 51:54 51 minutes, 54 seconds want to deploy now our capital to the area where we feel that we can we are seeing a significant demand coming in 52:01 52 minutes, 1 second and we want to uh redeploy our capital to those areas where we we are seeing the demand as of right now uh as 52:08 52 minutes, 8 seconds compared to investing in in capital where we see you know demand coming in maybe one or two is down the line. So that is the you know the the the 52:17 52 minutes, 17 seconds strategy that we have and it also helps us to uh in a faster payback. It also helps us to to you know to make money 52:26 52 minutes, 26 seconds faster. So so that's the the business uh you know call that uh you know we have taken understood that that's really helpful. 52:35 52 minutes, 35 seconds Thank you and all the very well. Thank you. Thank you so much. 52:40 52 minutes, 40 seconds Thank you. The next question is from the line of Vanayak from Exponent tribe. Please proceed. 52:48 52 minutes, 48 seconds Uh hi sir I thank you for the opportunity. Um so I just wanted to ask your uh liquid cooling solutions u uh in 52:56 52 minutes, 56 seconds the previous call you mentioned that they are part of the domestic revenue and not the exporter. 53:02 53 minutes, 2 seconds Yes. So just wanted to ask uh uh are you are you export are you exporting these 53:08 53 minutes, 8 seconds uh SK uh skid assemblies uh firstly to uh your customer and then they are bringing it back like assembling all the 53:17 53 minutes, 17 seconds stuff and then bringing it back or like are you just providing them in the country itself? 53:23 53 minutes, 23 seconds No, no, so we are not exporting any liquid assembly uh sorry uh you know skid assemblies uh you know all the skid 53:30 53 minutes, 30 seconds assemblies that we are manufacturing or the orders that we have received for the skid assemblies is for the the India market only right now as of now there is 53:39 53 minutes, 39 seconds no uh there is no export and uh the you know it is just for the uh the India 53:46 53 minutes, 46 seconds market uh as I speak right now maybe 6 months down the line we may start with exports But as of now there is nothing 53:55 53 minutes, 55 seconds but as in there is no export of skit assembly. 53:58 53 minutes, 58 seconds Okay. So you're supplying your customer domestically and not domestically. Yeah. Domestically. Yes. Yeah. 54:04 54 minutes, 4 seconds And and so what is the visibility we have like current visibility in the liquid cool next uh like for the next one year two years if you could give an idea about that. 54:16 54 minutes, 16 seconds Well, next one two years is obviously uh we had doing the capex for the uh you know for the skid assemblies based on 54:25 54 minutes, 25 seconds what uh you know visibility that we have been given by our our partner uh you know and and accordingly we are 54:33 54 minutes, 33 seconds deploying the the capex for that. If you see if you talk about the the immediate few you know the immediate business. So 54:40 54 minutes, 40 seconds right now we have a pipeline of about uh 45 crores uh that we already have which is 54:50 54 minutes, 50 seconds you know uh planned for dispatches as per the schedule given by our partner. 54:55 54 minutes, 55 seconds So that is the immediate plan that we have but yes uh our entire capex for the skit assemblies is based on the the the 55:04 55 minutes, 4 seconds projections and the discussions that we have had with our partners. So uh it's it's you know it's it's it's it's based 55:12 55 minutes, 12 seconds on or we are actually doing the capex based on the demand or you know forecast that has been given by our partner 55:21 55 minutes, 21 seconds and and so that like the the 352 number and the peach utilization when do you expect that uh to uh to to be done? 55:33 55 minutes, 33 seconds 29 FI 29 like I mentioned earlier. Sure. Thank you. Thank you. 55:42 55 minutes, 42 seconds Thank you. The next question is from the line of Ni Tari from Adroid Financial. Please proceed. 56:02 56 minutes, 2 seconds Hello. Hello. Hello. Ma'am, you're not audible. 56:13 56 minutes, 13 seconds Uh can you just speak up a bit? 56:15 56 minutes, 15 seconds [clears throat] 56:19 56 minutes, 19 seconds Yeah. U but uh you can go ahead with your question. I'll let you know if I'm if I'm not able to hear you. 56:31 56 minutes, 31 seconds So uh so for now I have got my all answers which has been raised by the other companies. So for now my question 56:38 56 minutes, 38 seconds is so uh are there any plans plans to target the individual market beyond the US and current export 56:45 56 minutes, 45 seconds where we can diversify other demands and also I had one question that was yeah sorry 56:54 56 minutes, 54 seconds so you saying diversify beyond the US is that correct? Yeah, beyond the US. Yeah. 56:59 56 minutes, 59 seconds So that we could diversify our demand for the product. Okay. Okay. Yeah. 57:06 57 minutes, 6 seconds And also go ahead with your second question and then I'll answer. 57:17 57 minutes, 17 seconds Yeah. So my second question is like stainless steel like as a key raw material. uh how are you managing raw 57:24 57 minutes, 24 seconds material price reliability and its impact on margin because it's quite high right okay 57:32 57 minutes, 32 seconds all right so uh to answer your first question so diversifying the risk beyond us so uh uh if you see in this financial 57:40 57 minutes, 40 seconds year specifically we have focused or lost a lot uh I'm sorry on on the domestic market and that we have also 57:47 57 minutes, 47 seconds seen in terms of the numbers also if you see the the liquid cooling the skid assemblys right. So uh right 57:55 57 minutes, 55 seconds now the the entire plan is you know for the you know you know for the sales in the India market. So that also kind of 58:04 58 minutes, 4 seconds derisks ourselves from the you know from the risk of USA. But uh you know saying that despite I think USA is right now 58:13 58 minutes, 13 seconds our biggest market you know as of today uh it continues to be so uh we are 58:19 58 minutes, 19 seconds focusing on Europe also because Europe especially now with this uh you know uh you know with this uh FDA being in you 58:28 58 minutes, 28 seconds know uh being announced and you know it would soon come into force as well. I think we'll see a lot of business coming 58:35 58 minutes, 35 seconds in from the EU uh as well. So that is one part of delisting ourselves from you 58:42 58 minutes, 42 seconds know from USA. With regards to raw material so u specifically in case of our uh uh you know our orders we do you 58:51 58 minutes, 51 seconds know we do backto-back raw metal planning. We do long-term contracts with our uh uh uh with our suppliers 59:01 59 minutes, 1 second specifically for our major raw materials uh you know which is uh the stain uh in in terms of the hoses it's uh the 59:09 59 minutes, 9 seconds stainless steel wire and the stainless steel coil. So we do back to back but obviously uh if there is significant 59:17 59 minutes, 17 seconds volatility in the in the raw metal prices then it it it affects the margin slightly but I think right now we've not 59:25 59 minutes, 25 seconds seen it as yet. Uh the volatility was there a couple of years back when there was significant uptake and then obviously a significant downward trend 59:34 59 minutes, 34 seconds in the raw metal prices but over the last couple of years I think it's more or less stable with minor fluctuations. 59:42 59 minutes, 42 seconds So yeah you have a good retention of orders from us. So still we don't have a good 59:50 59 minutes, 50 seconds retention but you're not getting new orders from them. So will that impact your margin like 27 because our penetration is high. 1:00:03 1 hour, 3 seconds Sorry I didn't I didn't get your question. Can you just repeat your question again? So uh my question is they have shown that we are not getting 1:00:12 1 hour, 12 seconds new orders from but our retention is good right? 1:00:18 1 hour, 18 seconds So I mentioned that uh you I mentioned that we are you know getting the repeat business from our existing customers uh 1:00:25 1 hour, 25 seconds the new customers. Yes, we we're facing some delays in in in in onboarding new customers obviously you know because of 1:00:34 1 hour, 34 seconds uh the you know the situation of the tariffs because 1:00:45 1 hour, 45 seconds next quarter of the next I have the patient of the older 1:00:55 1 hour, 55 seconds hello Miss Nibi Yeah, we are unable to hear your I was not able to hear the question. Yeah. 1:01:03 1 hour, 1 minute, 3 seconds Yeah. Ma'am, can you please join the line again? 1:01:06 1 hour, 1 minute, 6 seconds There is some disturbance uh uh you know. Yeah. At your back end. So, you know, because of that we're not able to hear your question correctly. So, that's why. 1:01:17 1 hour, 1 minute, 17 seconds Thank you. The next question is from the line of Arjun from Long Equity. Please proceed. 1:01:24 1 hour, 1 minute, 24 seconds Uh hi. Um uh thank you for this opportunity and um amazing results um given the fact that we have a a tariff 1:01:33 1 hour, 1 minute, 33 seconds of 50%. Uh and uh we took a price hit of 8%. So um how do you see in this 1:01:41 1 hour, 1 minute, 41 seconds backdrop our margins for the next one or two quarters like Q4 and Q1 of next year? 1:01:48 1 hour, 1 minute, 48 seconds So uh you know uh I would still maintain that we we look at our margins from a long-term perspective right uh a couple 1:01:58 1 hour, 1 minute, 58 seconds of years back our margin was around 21 uh 20 to 21%. 1:02:04 1 hour, 2 minutes, 4 seconds That we our aim is over the next couple of years to to have our margins at up to 25%. 1:02:12 1 hour, 2 minutes, 12 seconds Right? uh you know obviously some quarters would be good, some quarters might not be good as you would have seen 1:02:18 1 hour, 2 minutes, 18 seconds from a Q1 was you know not so good and Q3 is you know I would I would still say 1:02:26 1 hour, 2 minutes, 26 seconds Q3 is good I would not say very good but I think you know Q3 is good uh you know we expect the margins to continue to 1:02:33 1 hour, 2 minutes, 33 seconds grow in the next uh you know quarters and in the next year so the target would be to achieve a margin and a bit the margin of 25% over the couple of years. 1:02:44 1 hour, 2 minutes, 44 seconds So, no, I'm I'm just like a little curious here and I would appreciate if you elaborate this more. Uh, even with the tariff impact, you're saying that we would still maintain a margin of 22 23%. 1:02:55 1 hour, 2 minutes, 55 seconds Am I um and with the 8% price hit am I uh hearing it right? 1:03:01 1 hour, 3 minutes, 1 second Yeah. So, so, so what happened is uh you know when we gave a discount to our customers right we also worked internally with our you know with our 1:03:09 1 hour, 3 minutes, 9 seconds engineering team with our production team with you know with our uh you know R&D team uh and to uh to also optimize 1:03:17 1 hour, 3 minutes, 17 seconds you know on our costs because uh you know the reason is that uh in terms of you know when we you know you know give 1:03:26 1 hour, 3 minutes, 26 seconds out the discount to our customers we also need to work internally how to ensure that this discount don't directly does not impact our our bottom line uh 1:03:35 1 hour, 3 minutes, 35 seconds you know you know immediately. So we you know we worked internally with our teams to optimize our cost. We also worked 1:03:41 1 hour, 3 minutes, 41 seconds with our vendors right to you know to to ask them to to bear also some of the cost uh or some of the price that we had 1:03:50 1 hour, 3 minutes, 50 seconds passed on right so it was a joint effort from the the entire team and also from our supply chain partners to help us 1:03:58 1 hour, 3 minutes, 58 seconds that to reduce the impact of uh uh you know to reduce the impact of the discount that we had given uh and uh you 1:04:07 1 hour, 4 minutes, 7 seconds know hopefully the tariffs would go away soon and our our margins would be much better. But yeah uh you know uh the 1:04:15 1 hour, 4 minutes, 15 seconds reduction in in in the in the price you know sometimes actually makes you more agile right because uh then you work 1:04:23 1 hour, 4 minutes, 23 seconds doubly hard to to optimize your cost and to optimize your supply chain as well. 1:04:30 1 hour, 4 minutes, 30 seconds Now this is fantastic because um what I can infer from this is that if when things get normalized and we hope they 1:04:37 1 hour, 4 minutes, 37 seconds get very soon um we could actually see um 400 500 basis points increase of margins right in in that case because 1:04:44 1 hour, 4 minutes, 44 seconds one we have done an internal engineering to make ourselves more efficient and two we have an external environment support. 1:04:53 1 hour, 4 minutes, 53 seconds Yeah. So uh I would not be able to you know give you the exact number but yes definitely if uh uh if the tariffs go 1:05:01 1 hour, 5 minutes, 1 second you know go away our margins would be much higher than what it is right now. Okay. 1:05:06 1 hour, 5 minutes, 6 seconds You not be able to give a specific number obviously. 1:05:09 1 hour, 5 minutes, 9 seconds No no I appreciate it. I and I totally get the sensitivity of it. um just from a different angle because we are an exclusive player to one of the biggest 1:05:18 1 hour, 5 minutes, 18 seconds um uh US uh multinational company and um and I'm sure they they've been uh they 1:05:25 1 hour, 5 minutes, 25 seconds have a huge Asia Asia pack segment uh uh in which they're functioning. How big would India would be for the in the 1:05:34 1 hour, 5 minutes, 34 seconds whole AP pack for them? I mean just to understand how big the size could be. 1:05:41 1 hour, 5 minutes, 41 seconds Oh for the liquid cooling or for for their for the liquid cooling for for the 1:05:47 1 hour, 5 minutes, 47 seconds liquid cooling. Uh I I'm assuming they would this this this this kind of an effort by this multinational companies 1:05:55 1 hour, 5 minutes, 55 seconds made across APAC. So how big is India for them in the liquid cooling in the whole AP pack? 1:06:02 1 hour, 6 minutes, 2 seconds Well, it's difficult for me to answer on their behalf because I don't know their AP pack numbers. I don't know their exact India numbers. So, how big is 1:06:11 1 hour, 6 minutes, 11 seconds liquid cooling as compared to their APAC? Uh difficult to give you a number. 1:06:16 1 hour, 6 minutes, 16 seconds But what I can say is that their their India team is is working as like literally day and night with us. uh you 1:06:24 1 hour, 6 minutes, 24 seconds know to to obviously it was first to to you know to start the first uh dispatches and and now to increase the 1:06:33 1 hour, 6 minutes, 33 seconds capacity. So uh I think they want to make you know India as the you know as the second hub uh you know for their you 1:06:42 1 hour, 6 minutes, 42 seconds know worldwide supply. So right now the Indian team is obviously focused on the supplies to in India but whatever discussion that we have had they their 1:06:50 1 hour, 6 minutes, 50 seconds ultimate long-term goal is to make the the India uh entity as a global supplier 1:06:56 1 hour, 6 minutes, 56 seconds for you know skate assemblies o over the next uh you know I would say say 3 to 1:07:03 1 hour, 7 minutes, 3 seconds four years time. So uh specifically on numbers I would not have because this 1:07:11 1 hour, 7 minutes, 11 seconds company is a multi-billion dollar company. I don't know their AP pack numbers and obviously they're into uh they are into a huge number of 1:07:19 1 hour, 7 minutes, 19 seconds businesses. So liquid cooling is a part of their overall business. They are into multiple multiple different businesses. 1:07:25 1 hour, 7 minutes, 25 seconds So uh exact numbers I'm afraid I would not have it. 1:07:29 1 hour, 7 minutes, 29 seconds No true I I I totally get that part. And one last question from my it could be very uh specific question. If you see 1:07:37 1 hour, 7 minutes, 37 seconds the break up, I see us your your there's a significant traction in your assembly segment for the 9 months. We have crossed close to 52%. How do you see 1:07:45 1 hour, 7 minutes, 45 seconds this traction going forward? I think this session is is is only going to increase. I think the assembly is part 1:07:53 1 hour, 7 minutes, 53 seconds of our overall uh you know sales is is only going to increase because the entire focus of the of the company for 1:08:00 1 hour, 8 minutes us for the entire team is to increase the sales of assemblies because that's the that's the future you know that we see so when I talk about assemblies 1:08:08 1 hour, 8 minutes, 8 seconds right uh I'm not talking so so you know when I talk about assemblies I'm just leaving the skid assemblies you know 1:08:16 1 hour, 8 minutes, 16 seconds aside for the time being in assemblies the the main raw material is basically hose and bread. So for us if we increase 1:08:23 1 hour, 8 minutes, 23 seconds the sales of assemblies we are actually increasing our production of of host bread also because ultimately host bread 1:08:31 1 hour, 8 minutes, 31 seconds is a part of the assembly. So the focus is for the entire team is to to increase the sales of the assemblies. 1:08:38 1 hour, 8 minutes, 38 seconds W this is if I can just squeeze one last question. um you said that it's not a it's not a um the what you have done for 1:08:47 1 hour, 8 minutes, 47 seconds the liquid coolins can be also used in other sectors which I'm trying to say that it is the change in design in the hose and if I understand it very 1:08:55 1 hour, 8 minutes, 55 seconds superficially so what stops other players to come into it if if if it is just a change of a 1:09:02 1 hour, 9 minutes, 2 seconds design or is there something which makes us more stickier to the client. 1:09:08 1 hour, 9 minutes, 8 seconds Oh, so so first of all whatever uh the the design of the the the skid assemblies that we have developed 1:09:16 1 hour, 9 minutes, 16 seconds jointly with our partner. So it's uh you know a partner has worked with us uh and we have worked with them to jointly 1:09:24 1 hour, 9 minutes, 24 seconds develop this entire system right. So the uh the uh the expertise you know you 1:09:31 1 hour, 9 minutes, 31 seconds know lie in the design in the R&D and in the you know and in the engineering and then obviously on the shop floor level 1:09:39 1 hour, 9 minutes, 39 seconds the expertise uh lies in conversion of the design into an actual uh you know finished product which will be you know 1:09:46 1 hour, 9 minutes, 46 seconds utilized uh you know at the at the customer's end. So see uh uh you know I 1:09:54 1 hour, 9 minutes, 54 seconds would say it is You know anyone can you know can start any business at any time right that 1:10:02 1 hour, 10 minutes, 2 seconds never stops anybody right the only so so the thing is first of all you need to have the expertise to do that second of 1:10:09 1 hour, 10 minutes, 9 seconds all you need to have that kind of a customer uh you know also to you know say for example if tomorrow say I'm just 1:10:17 1 hour, 10 minutes, 17 seconds giving example randomly say if Amazon is is having data center or if some some other company is is is setting up its 1:10:26 1 hour, 10 minutes, 26 seconds the data center, right? So, you need to have those kind of customers also with you so that you can actually, you know, give them that solution. So, your your 1:10:34 1 hour, 10 minutes, 34 seconds access to those, you know, you know, customers is also very important. And third is you need to have so we have 1:10:41 1 hour, 10 minutes, 41 seconds built this this engineering and this uh the the skills of the entire flow control over a period of the last 15 20 1:10:49 1 hour, 10 minutes, 49 seconds years. So we we know what exactly are the uh you know are the issues that you'll face you know when you are 1:10:57 1 hour, 10 minutes, 57 seconds controlling the flow of any kind of a liquid in an entire cooling systems because uh uh you know we have a few 1:11:06 1 hour, 11 minutes, 6 seconds proprietary you know software that we have uh you know uh that we work with where it it shows you the uh the uh you 1:11:16 1 hour, 11 minutes, 16 seconds know the simulation actually shows that in case of uh in case of the flow being uh you know being increased at this 1:11:24 1 hour, 11 minutes, 24 seconds particular level you'll actually have uh uh you know breakage or damage in this particular area. So these kind of 1:11:31 1 hour, 11 minutes, 31 seconds expertise and skills they are developed over a period of time. It is difficult for you know anyone to replicate uh in a 1:11:39 1 hour, 11 minutes, 39 seconds very short period of time. Uh you know so that's why you'll see that uh that's the mode that we have in this business right now. 1:11:50 1 hour, 11 minutes, 50 seconds Thank you ladies and gentlemen. Due to time constraint we take that as the last question. I now hand the conference over to the management for the closing comments. Over to you sir. 1:12:01 1 hour, 12 minutes, 1 second Uh thank you so much uh everyone for uh your questions. If I think there were a couple of people who I was not able to 1:12:09 1 hour, 12 minutes, 9 seconds to hear their questions. So I would request them uh to you know probably send their questions to uh the SGA team 1:12:17 1 hour, 12 minutes, 17 seconds and we'll you know arrange to reply to you at the earliest and if I'm not able to answer anyone else's question as 1:12:25 1 hour, 12 minutes, 25 seconds well. So just request you to get in touch uh with SGA and you know we could answer your queries or we could schedule 1:12:33 1 hour, 12 minutes, 33 seconds a meeting as well. So thank you so much everyone. 1:12:40 1 hour, 12 minutes, 40 seconds Thank you on behalf of Aeroflex Industries Limited. That concludes this conference. Thank you for joining us and you may now disconnect your lines.