Alicon Castalloy Limited — Q3 FY26

Alicon Castalloy Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=vrZ68MGBwQo Published: 2 months ago

0:00 Ladies and gentlemen, good day and welcome to Alicon Castalo Limited Q3 and 9M F526 earnings conference call. As a 0:09 9 seconds reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance 0:17 17 seconds during the conference call, please signal an operator by pressing star and zero on your touchstone phone. Please note that this conference is being 0:25 25 seconds recorded. I now hand the conference over to Mr. Samayang Kwaswani from CDR India. Thank you and over to you Saswan. 0:33 33 seconds Thank you Renju. Good morning everyone and thank you for joining us on Alicon Castello Limited Q3 and 9 months FI26 0:41 41 seconds earnings conference call. We have with us on the call today Mr. Vimal Gupta group CFO and Mr. Manish Kapoor group COO. 0:50 50 seconds Mr. Viml Gupta will present an overview of the operating and financial performance for the quarter. Mr. Manish Kapoor will then take us through 0:58 58 seconds developments in global markets, insights on domestic business trends and updates on key strategic initiatives. 1:05 1 minute, 5 seconds Before we begin, I would like to point out that some of the statements made in today's call may be forward-looking in nature and a disclaimer to this effect has been included in the earnings 1:13 1 minute, 13 seconds documents that have been shared with all of you earlier. I would now like to hand the floor over to Mr. Viml Gupta, our group CFO. Over to you, sir. 1:25 1 minute, 25 seconds Thank you ma'am. Good morning everyone and welcome to Alicon Castelli quarter 3 and 9 months for financial year 26 1:32 1 minute, 32 seconds earning conference call. Thank you for joining us today. The domestic automotive market witnessed encouraging developments during the quarter. The GST 1:41 1 minute, 41 seconds rate rationalization announced in September provided a meaningful uplift to customers sentiment resulting in 1:48 1 minute, 48 seconds improved activity across the automotive ecosystem in quarter 3. As you would have noted from publicly available in 1:57 1 minute, 57 seconds this industry data, domestic vehicle sales recorded strong double-digit growth during the quarter. The momentum has started into increased customer 2:05 2 minutes, 5 seconds inquiries from production schedules and improved order visibility across segments. 2:11 2 minutes, 11 seconds Increasingly, several domestic OEM customers have indicated that demand remains robust robust with the key 2:18 2 minutes, 18 seconds constraint to further ramp up now stemming from supply side challenges challenges. 2:27 2 minutes, 27 seconds Most notably constrained semiconductor availability and ongoing difficulties related to imports of rare earth magnets 2:35 2 minutes, 35 seconds rather than end market demand. On the global front, volatility and uncertaintity arising from tariff 2:42 2 minutes, 42 seconds related actions weighed on sentiments and volumes from international customers. In addition, the December quarter is typically seasonally softer 2:51 2 minutes, 51 seconds for global markets as production schedules tend to taper towards the calendar year end. As a result, the quarter remain muted for our global operations. 3:02 3 minutes, 2 seconds That said for financial year 26 has also seen some positive and constructive developments on the external front. The 3:09 3 minutes, 9 seconds signing of the India U EU trade agreement in January followed by the announcement of framework for an India 3:17 3 minutes, 17 seconds US trade agreement in early February brings light at the end of the tunnel and we can anticipate increased momentum 3:25 3 minutes, 25 seconds now that the overhang is lifted. 3:31 3 minutes, 31 seconds In Europe, we see a more constructive medium-term outlook emerging. The evolving free trade agreement framework 3:38 3 minutes, 38 seconds together with Alon Castell's established footprint and long-standing customer relationship in the EU region 3:46 3 minutes, 46 seconds positions us well to benefit from any incremental sourcing realignment over time. In parallel, global OEMs are 3:53 3 minutes, 53 seconds increasingly evaluating India as a competitive and reliable manufacturing and export hub. 4:00 4 minutes This structural shift is supportive for Indian component suppliers with strong engineering capabilities, quality 4:06 4 minutes, 6 seconds execution and scale attributes that are central to Alicon's operational model. 4:13 4 minutes, 13 seconds With respect to the United States, we continue to closely track ongoing developments depending on the pace of progress from discussions to a more 4:21 4 minutes, 21 seconds formalized framework. We we believe there could be constructive movement over the coming quarters while the 4:28 4 minutes, 28 seconds impact in quarter 4 is expected to remain limited. We anticipate a more meaningful normalization as we move into financial year 27. 4:39 4 minutes, 39 seconds China is also showing early sign of improvement. Recent indications of increased engagement between India and China have led to cautious options and 4:48 4 minutes, 48 seconds restrictions on the supply of rare earth materials and semiconductors to India may ease ease over time. 4:55 4 minutes, 55 seconds Even as we monitor these developments, we are proactively working with our customers to accelerate localization initiatives and increase value added 5:03 5 minutes, 3 seconds manufacturing. These efforts are closely aligned with our long-term strategy of enhancing self-reliance, improving 5:11 5 minutes, 11 seconds supply chain resilience, and expanding our value added content. 5:16 5 minutes, 16 seconds Turning to our financial performance, we are pleased to report a stable performance of quarter 3 FY26 despite 5:25 5 minutes, 25 seconds significant industry headwinds and the fact that the December quarter is typically seasonally softer for global operations. The resilience demonstrated 5:34 5 minutes, 34 seconds during the quarter reflects steady operational execution across our manufacturing footprint supported by our 5:41 5 minutes, 41 seconds diversified exposure across end use user segments and popular technologies. This 5:49 5 minutes, 49 seconds diversification has enabled Alicon customer to consistently deliver scale with revenue exceeding 400 cr in nine of the last 10 quarters. 5:59 5 minutes, 59 seconds For quarter 3 FY 26, Alicon Clell reported a revenue of 430 crores representing yearon-year growth of 10% compared to 393 crores in quarter 325. 6:11 6 minutes, 11 seconds It is important to note that the base quarter includes certain one-time projects that were not part of the current year's oper operating plan. 6:20 6 minutes, 20 seconds During the quarter, a UK based OEM customer experienced a cyber security incident that disrupted production for 6:28 6 minutes, 28 seconds nearly five weeks during which we were requested to temporarily pause supplies. 6:33 6 minutes, 33 seconds In addition, our US commercial vehicle customer continued to face demand headwinds with some customers indicating volume decline of approximately 25 to 6:42 6 minutes, 42 seconds 26% in specific product categories. Our European operations were also impacted by few customer specific issues 6:50 6 minutes, 50 seconds including supply disruption linked to a tier one supplier serving the same UK customer affected by the cyber incident 6:58 6 minutes, 58 seconds as well as challenges at certain OEM customers in the region. These factors swayed on volumes during the quarter and 7:07 7 minutes, 7 seconds assisting for these specific and largely nonrecurring challenges. The underlying topline performance would have been stronger and comfortably in the 7:15 7 minutes, 15 seconds double-digit growth range reflecting the resilence and poor business and improving momentum in other markets. 7:23 7 minutes, 23 seconds On a sequential basis, revenue in quarter 3 FY26 were marginally higher than 429 cr reported in quarter 2 of 7:32 7 minutes, 32 seconds FY26 making the fourth consecutive quarter of sequential growth. This reflects a steady recovery followed following the 7:40 7 minutes, 40 seconds disruption experienced in our global business during the October October December period last year. 7:48 7 minutes, 48 seconds On the margin front, gross margin improved by 138 basis points yearon year to 47.2% driven by favorable product mix 7:56 7 minutes, 56 seconds and operating reage. On a quarteronquarter basis, gross margin moderated by 170 basis points from 48.9% 8:04 8 minutes, 4 seconds to in quarter 26, reflecting changes in product mix and volatility in certain input cost during 8:11 8 minutes, 11 seconds the quarter. Our newer plant and recent automation investments are currently in the scaling phase and as volumes ramp up 8:19 8 minutes, 19 seconds further, we expect improved fixed cost absorption to support margins over the medium. 8:26 8 minutes, 26 seconds In Q3 FY 26, ITA increased by 34% yearonear to 47.2 cr driven by operating 8:33 8 minutes, 33 seconds leverage and improved product mix and a lower base in the corresponding quarter last year which had been impacted by 8:42 8 minutes, 42 seconds certain one of items on a sequential basis stood at 47 cr in quarter 3 FY 26 compared to 55 cr in quarter 2 FY 26. 8:54 8 minutes, 54 seconds The sequential moderation in ITA was largely attributable to higher employee cost due to the selective hiring undertaken 9:02 9 minutes, 2 seconds to support future growth initiatives. In addition, the quarter includes certain transition related cost associated with the ongoing management succession at 9:09 9 minutes, 9 seconds Algon cast alloy along with writeoffs relating to few non-material assets. 9:14 9 minutes, 14 seconds Consequently, a beta margin in quarter 3 of 26 to that 10.9% compared to 12.9% in a in quarter 2 of 26 9:23 9 minutes, 23 seconds on year-on-year basis PBT before exceptional items was 11 cr a 10-fold increase from 1.1 cr in quarter 3 of 9:30 9 minutes, 30 seconds last year which was an unusually low base due to oneoffs. Our continued investments in few machineries, tooling 9:39 9 minutes, 39 seconds and automation in line with our technology and capacity expansion road map have led to increase in depreciation by 17% yearon year and 3% quarter on 9:48 9 minutes, 48 seconds quarter. Finance cost declined sequentially benefiting from improved working capital discipline and balance sheet management. As a result, profit 9:56 9 minutes, 56 seconds before tax pre exceptional declined by 44% to 11 cr in quarter 3 FY26 compared to 19 crores in quarter 2 FY 26. 10:07 10 minutes, 7 seconds During the quarter, we recognized an exceptional item of 5 crores relating to implementation of the new labor code. 10:14 10 minutes, 14 seconds After accounting of this impact profit after tax for quarter 3 FY26 to that 3.3 cr representing a yearon-year increase 10:22 10 minutes, 22 seconds of 322 compared to8 cr in quarter 3 of FY25 on aial basis profit after tax declined 10:31 10 minutes, 31 seconds by 76% from 14 cr in quarter 2 a 26 to 3.3 cr in quarter 3 of a 26. This 10:40 10 minutes, 40 seconds movement primarily reflects the combined impact of the exceptional charge recognized during the quarter. higher employee related costs. The 10:47 10 minutes, 47 seconds normalization of margin rel relative to the previous quarter for the 9 months ended FY26 total income stood at 1278 10:56 10 minutes, 56 seconds crores with AIA of 153 crlating into an AITA margin of 11.9% profit after tax 11:03 11 minutes, 3 seconds for the period stood at 11 crores reflecting the resilence of the business amid heightened external volatility. 11:11 11 minutes, 11 seconds Capital expenditure during quarter 3 26 amounting to 28 cr taking cumulative capex for the 9 months period to 92 cr. 11:20 11 minutes, 20 seconds We remain on track to achieve full year capex in the range of 125 to 130 cr with investment focused on automation capacity enhancement and readiness for 11:29 11 minutes, 29 seconds upcoming programs. In parallel, we continue to invest in R&D, digital process controls and 11:36 11 minutes, 36 seconds productivity initiatives to stren long-term competitiveness and enhance margin resilience. 11:43 11 minutes, 43 seconds Coming to order wins and business outlook, our strategic focus continues to be on the adding higher value products particularly across the 11:51 11 minutes, 51 seconds passenger vehicles PV the commercial vehicles CV segments. During the period, Algon class seller secured orders for 11:58 11 minutes, 58 seconds four new parts from four different customers. Of these three parts pertain to the internal combustion engine IC 12:06 12 minutes, 6 seconds business while one part has been secured under the carbon neutral vertical. One of the order wins relates to our global 12:14 12 minutes, 14 seconds business with the remaining three catering to the domestic customers. From an end market perspective, three of the 12:22 12 minutes, 22 seconds four parts are for the CV segment while one part cutters to the PV segment. 12:27 12 minutes, 27 seconds These wins are aligned with our focus on more complex higher value added components and reinforce our strategic 12:33 12 minutes, 33 seconds emphasis on deepening our presence in PV and CV segments while maintaining balance across domestic and global customers. 12:44 12 minutes, 44 seconds During the quarter, Alicon Castell has secured new business from two of India's most prominent homegrown OEMs for 12:51 12 minutes, 51 seconds critical components on their commercial vehicle platforms. Development activities for these programs are already underway with series production scheduled to commence in FY27. 13:04 13 minutes, 4 seconds We believe that consistent and reliable execution on these CV programs will further strengthen our strategic relationships with these customers and 13:12 13 minutes, 12 seconds could create opportunities to expand supplies into their passenger vehicle portfolio as well where both OEMs are enjoying strong market positions. 13:24 13 minutes, 24 seconds Further during the quarter we secured an additional order for a commercial vehicle application with supplies to be made to a prominent tier one supplier 13:33 13 minutes, 33 seconds that is part of one one of India's largest and most diversified industrial groups. This win further reinforce our 13:41 13 minutes, 41 seconds growing relevance within the domestic CV ecosystem. 13:46 13 minutes, 46 seconds On the global front, Alicon Castell have won a higher value add higher value parts from a premium German automo OEM. 13:53 13 minutes, 53 seconds The program entails the supply of an EXL housing for one of the OEM's latest platforms with deliveries planned to be to its European manufacturing facility. 14:04 14 minutes, 4 seconds This is technologically advanced and value accurative program and association with a premium global customer is expected to have positive spillover 14:13 14 minutes, 13 seconds benefits in terms of creditability, capability recognition and further business opportunities. 14:19 14 minutes, 19 seconds In addition of these new wins, our existing passenger vehicle programs continues to progress well. We currently supply cylinder heads to two of the 14:28 14 minutes, 28 seconds largest Japanese OEMs in India. One of these customers have has recently ramped up production of a cylinder head of its 14:36 14 minutes, 36 seconds 1.5 L engine platform. With market preferences having clearly shifted towards SUVs and this engine finding 14:44 14 minutes, 44 seconds application in larger passenger vehicles, we have seen a strong increase in volume for this program. Another leading Japanese OEM in India with 14:53 14 minutes, 53 seconds successful hybrid vehicle portfolio continues to perform well. We enjoy 100% share of business for the cylinder heads 15:01 15 minutes, 1 second used in its hybrid vehicles which has translated into robust growth. In addition, the audience has been witnessing healthy growth in exports 15:09 15 minutes, 9 seconds providing further head room for volume expansion over time. 15:17 15 minutes, 17 seconds As a result of these developments, the PV business recorded healthy growth of 12% yearonear and CV business has 15:24 15 minutes, 24 seconds delivered growth of 17 13% yearon year in quarter 3 contributing meaningfully to overall growth. Before I close, I 15:32 15 minutes, 32 seconds would like to share a brief update on our ESG journey. Elicon Castella has been awarded a committed certification by Ecoises. 15:40 15 minutes, 40 seconds This reading places Alicon among the top 35 companies globally assessed by EcoAdis and reflects our solid 15:48 15 minutes, 48 seconds commitment to corporate social responsibilities across key pillars including environmental stewardship, labor and human rights, ethics and 15:57 15 minutes, 57 seconds sustainable procurement. This recognition underscores the progress we have made in embeding sustainability in 16:04 16 minutes, 4 seconds our into our operations while also providing a clear road map for further strengthening our ESG practices over 16:11 16 minutes, 11 seconds time. Overall while sports market for autocillary products remains temporarily subdued 16:20 16 minutes, 20 seconds domestic automotive industry is exhibiting clear sign of strengths. OM's exports from India continues to gain 16:28 16 minutes, 28 seconds seal uh sexual traction and Europe offers incremental opportunities under the evolving trade framework supported by 16:37 16 minutes, 37 seconds the healthy order book of approximately 9,100 cr strong customer relationship and disciplined execution. Alikasa 16:44 16 minutes, 44 seconds remains confident in sustaining its growth trajectory and delivering long-term value creation. With that, I will now hand over the call to Mr. 16:53 16 minutes, 53 seconds Manish Shapur for the operational highlights. Good morning everyone. 16:58 16 minutes, 58 seconds Uh let me begin with a brief overview of the industry environment during the quarter. In Q3 FY26, the global 17:06 17 minutes, 6 seconds automotive industry witnessed moderate degrowth of around 1% on a year-on-year basis. Within this, the market in North 17:13 17 minutes, 13 seconds America was lower by 2% yearon year and UK was lower by 19% yearon year. 17:19 17 minutes, 19 seconds It would be important to note that our two largest markets for exports are North America and UK and both have witnessed the degrowth in quarter 3. 17:28 17 minutes, 28 seconds Thus, some of the key segments that Alicon addresses in the global markets have actually degrone this quarter. 17:34 17 minutes, 34 seconds In contrast to this, the Indian auto industry delivered a stronger performance. As per ECMAR, domestic production volumes excluding tractors 17:42 17 minutes, 42 seconds grew by approximately 16.4% 4% on a year-on-year basis, supported by improved affordability and policy-led 17:49 17 minutes, 49 seconds measures that stimulated demand across segments. The domestic two-heer segment registering growth of approximately 15% 17:57 17 minutes, 57 seconds yearonear. The implementation of GST 2.0 improved affordability and boosted household disposable income while a 18:05 18 minutes, 5 seconds strong festive season and multiple reproate cut supported financing conditions. Although both rural and urban markets participated in the 18:14 18 minutes, 14 seconds recovery, the momentum has been led largely by urban demand reflected in stronger scooter growth relative to motorcycles. 18:23 18 minutes, 23 seconds The commercial vehicle segment grew by about 17.5% yearonear supported by improving freight activity GST reforms 18:32 18 minutes, 32 seconds and broader macro measures that have strengthened overall consumption levels resulting in higher intracity logistics requirements and fleet replacement 18:41 18 minutes, 41 seconds demand. The ear marking of funds in the union budget for the PM's E drive and E 18:48 18 minutes, 48 seconds bus deployment programs boards well for this segment. 18:53 18 minutes, 53 seconds In the passenger vehicle segment, volumes increased by approximately 19% year-on-year basis. Improved 19:01 19 minutes, 1 second affordability following GST rationalization, direct cash relief, direct tax relief measures, successive report cuts by the RBI and renewed 19:10 19 minutes, 10 seconds consumer confidence, collectively supported demand during the quarter. 19:14 19 minutes, 14 seconds Further in the latest budget the government significantly increased the allocation to the PLI scheme for auto sector signaling continued emphasis on scaling domestic automotive production. 19:26 19 minutes, 26 seconds Overall Q3 FY26 represented a materially improving landscape for the domestic auto industry 19:33 19 minutes, 33 seconds with broad-based strength across segments. Against this backdrop, Alicon reported revenue growth of 10% on a 19:40 19 minutes, 40 seconds year-on-year basis. However, our performance reflects certain company specific spectrums. The best quarter included some one-time projects which 19:49 19 minutes, 49 seconds were not part of the current year's operating plan. We had a higher proportion of supplies to commercial vehicle focused OEMs in Europe and 19:57 19 minutes, 57 seconds United States. Segments that are facing relatively greater stress in the current environment. At the same time, volumes 20:04 20 minutes, 4 seconds to our domestic two-wheeler customers increase sharply during the quarter in line with broader market trends. As a result, while our standalone domestic 20:13 20 minutes, 13 seconds business delivering strong double-digit growth, this was partly offset by lower volumes in certain higher value added parts and seasonally softer trends in 20:22 20 minutes, 22 seconds our European operation. Consequently, our overall growth trajectory does not fully mirror the strength seen in the domestic automotive market. This shift 20:31 20 minutes, 31 seconds in the business mix has also had an impact on profitability. The shift in product mix during the quarter with a 20:38 20 minutes, 38 seconds reduced contribution from the higher value CV components is reflected in the gross margin and the beta margin too. 20:45 20 minutes, 45 seconds Revenues for Q3 stood at rupees 430 cr reflecting sequential growth of 0.4% 20:52 20 minutes, 52 seconds over Q2 and marking the fourth consecutive quarter of revenue improvement alongside enhanced 21:00 21 minutes profitability. Alicon has delivered revenues above the rupees 400 cr run rate in nine of the last 10 quarters 21:07 21 minutes, 7 seconds demonstrating improved stability and execution despite external volatility. 21:14 21 minutes, 14 seconds Our domestic business benefited meaningfully from volume ramp up with key customers in the passenger vehicle and two-heer segments. The contribution 21:22 21 minutes, 22 seconds from the two-heer segment increased further during Q3 FY26 supported by new programs, additions and higher share of 21:29 21 minutes, 29 seconds business with existing OEMs. As a result, the two-wheeler business grew by 13% on a year-on-year basis, strengthening our position in this 21:38 21 minutes, 38 seconds segment. From an operational standpoint, the quarter was marked by continued efforts to stabilize and enhance throughput across our plants. Given 21:46 21 minutes, 46 seconds uneven demand patterns in certain ex export geographies, we work closely with our domestic customers to maintain 21:53 21 minutes, 53 seconds healthy production levels while simultaneously improving overall equipment efficiency through tighter process discipline and better manpower 22:01 22 minutes, 1 second planning. Our digital process controls are now active across the majority of the lines and we are already seeing tangible gains in cycle time efficiency, scrap rate reduction and machine uptime. 22:14 22 minutes, 14 seconds These improvements are beginning to translate into stronger operational leverage. We should support margins in 22:20 22 minutes, 20 seconds the coming quarters. We are progressing well on our automation roadmap with new robotic cells commissioned at our Pune 22:29 22 minutes, 29 seconds facilities. These initiatives are enhancing process consistency, reducing manual intervention, and improving 22:36 22 minutes, 36 seconds worker safety. Aligned with our long-term vision of building a truly smart foundry organization. 22:44 22 minutes, 44 seconds In parallel, we are increasing the use of data analytics and IoT based monitoring to predict machine health and 22:50 22 minutes, 50 seconds optimize energy consumption. To further elevate our casting capabilities, we have onboarded a team of German experts 22:58 22 minutes, 58 seconds with deep technical experience. Their focus is on refining casting practices, improving the yields, enhancing 23:05 23 minutes, 5 seconds throughput, optimizing capacity utilization and driving cost efficiencies. The objective is to benchmark our operations to global 23:12 23 minutes, 12 seconds standards and further strengthen our competitive positioning. Our sustainability initiatives also continue to deliver measurable results with the 23:21 23 minutes, 21 seconds successful induction of solar power generation across our facilities in India and Europe. Nearly 50% to 50 5% of 23:28 23 minutes, 28 seconds our total electricity requirements are now being met through solar energy reinforcing both cost efficiency and environmental responsibility. 23:38 23 minutes, 38 seconds Mr. Viml Gupta already spoke about the commitment certification from EcoDIS. 23:43 23 minutes, 43 seconds Overall our focus remains on disciplined execution, continuous efficiency improvement and calibrated diversification. The combination of new 23:52 23 minutes, 52 seconds program wins, technology-led productivity gains and expanding participation across sectors positions as well to drive sustainable revenue 24:01 24 minutes, 1 second growth and margin enhancement going forward. With that, we have covered the key business and operational highlights for Q3 and 9month FY26. 24:11 24 minutes, 11 seconds We will now open the floor for questions, my colleagues, and I will be happy to address any queries you may have. Thank you. 24:20 24 minutes, 20 seconds Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on touched on telephone. If you 24:29 24 minutes, 29 seconds wish to remove yourself from the question Q, you may press star and two. 24:32 24 minutes, 32 seconds Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question Q is moves. 24:42 24 minutes, 42 seconds The first question comes from the line of Ji Singh with Ahan Capital Markets Limited. Please go ahead. 24:50 24 minutes, 50 seconds Thank you for the opportunity sir. Uh few uh I have a few question. Uh so largely I wanted to understand domestic 24:57 24 minutes, 57 seconds revenue which is still uh 81% of mix. So how much increment growth can be driven without increasing global exposure that 25:06 25 minutes, 6 seconds we are having around 19%. And another on the uh plant that are operational around 75% 25:14 25 minutes, 14 seconds utilization. So what revenue potential exit at a 85 to 90% utilization without 25:20 25 minutes, 20 seconds any major capex ji uh yes sir 25:28 25 minutes, 28 seconds in aex utilization you can cannot directly correlate uh with the revenues with the capacity utilization here 25:36 25 minutes, 36 seconds because uh some machine some capacities are directly uh those are the common use but Even we are 25:45 25 minutes, 45 seconds having the orders but the existing capacities we cannot utilize. So we have to put additional capacity as you know 25:52 25 minutes, 52 seconds that Alicon is now uh going for the more complex part bigger parts. So for that we need bigger machines and the 26:01 26 minutes, 1 second high-tech machines are required and for the maintenance of the quality also we need. So when we say that key okay uh 26:10 26 minutes, 10 seconds capex utilization from 75 to 85% 10% increase so that cannot directly you can cannot convert with the 10% increase in 26:18 26 minutes, 18 seconds the revenues so we need further capexis continuous capacities for the new products but definitely with the existing if you go with the our old 26:25 26 minutes, 25 seconds systems old existing facilities so easily we can even 150 200 uh re uh this 26:32 26 minutes, 32 seconds revenue we can generate 200 cr from their existing facilities but depending deps on the completely depends on the product. 26:43 26 minutes, 43 seconds Okay, underscore sir. And sir, on the domestic revenue side, no main is the domestic revenue we're talking about. 26:54 26 minutes, 54 seconds Yeah, that is 81% of mix. So how much incremental growth we are talking about going forward without global exposure? 27:04 27 minutes, 4 seconds Without which exposure global global exposure yes sir yeah without global uh that we are 27:12 27 minutes, 12 seconds expecting in this quarter uh you're talking about the quarter four so approximately uh we can say uh 10 to 12% further improvement in the quarter four. 27:25 27 minutes, 25 seconds Okay sir, understood. And lot of uh our peer and industry player they are uh diversific they doing diversification 27:34 27 minutes, 34 seconds more on the non-o side which is still currently for us 4%. So are we seeing are we are we planning any more 27:42 27 minutes, 42 seconds diversification or any strategic priority further to reduce cyclicity in the other business 27:53 27 minutes, 53 seconds like uh we already in discussion for the this our project of DAR that is one but you know that this uh defense side or 28:02 28 minutes, 2 seconds railway side it needs more time so this project is started but it will take time to convert it to the revenue on that 28:10 28 minutes, 10 seconds side but definitely we are also started looking for the new product profiles maybe some different additional 28:17 28 minutes, 17 seconds processes we can think to add and maybe Manish would like to add more please 28:24 28 minutes, 24 seconds uh hi joti uh basically this dar vertical is right now in a very nent stage but yes it carries a lot of 28:31 28 minutes, 31 seconds potential in future and it requires very tighter process control traceability higher certification standards Compared 28:38 28 minutes, 38 seconds to traditional automotive programs, various RFQS uh right now floated they are in the initial stage and somewhere 28:47 28 minutes, 47 seconds to middle stage of discussions and we have a uh clear dedicated now technical teams and leadership team and we are 28:55 28 minutes, 55 seconds strengthening our quality frameworks and upgrading our validation capabilities to meet these requirements. 29:05 29 minutes, 5 seconds Okay, sure. Thank you so much sir. 29:11 29 minutes, 11 seconds Thank you. A reminder to all the participants that you may press star and one to ask a question. Next question 29:18 29 minutes, 18 seconds comes from the line of Yash from Chushi Finance. Please go ahead. Uh hi, good afternoon to the management. 29:25 29 minutes, 25 seconds I have a few questions I'd like to ask. 29:27 29 minutes, 27 seconds Uh one is what will be the impact of uh this recent India US trade deal uh for Alicon going forward? 29:37 29 minutes, 37 seconds This you're talking about the India India US deals. So yes you know that uh after having the uh new 29:47 29 minutes, 47 seconds tariff those were imposed. So in the couple of quarters we were seeing there almost uh study there was no inquiries 29:54 29 minutes, 54 seconds everything stopped maybe only the existing business we were doing. So new new development but after this at least 30:01 30 minutes, 1 second movement have seen that uh now some inquiries have started. So let's see that maybe in the coming quarter we will 30:08 30 minutes, 8 seconds see a major movement but definitely big opportunities are there in US for Alicon and definitely we will go for that. 30:20 30 minutes, 20 seconds Correct. Correct. And uh my next question is uh so a subsidiary has shown uh loss in Q3. Is there any reason for this? 30:31 30 minutes, 31 seconds in the loss in Q3 that if you see the numbers one is that there is a decline in the sales 30:38 30 minutes, 38 seconds and uh on other side the sales mix is also there because you know one big part we were supplying to one OEM that is 30:47 30 minutes, 47 seconds tier ones customer and that tier one is supplying to the uh this UK based OEM. 30:55 30 minutes, 55 seconds So due to the cyber attack all these were stopped and there were no supplies the sale has a major impact and where we were having the good margins. Another 31:02 31 minutes, 2 seconds side one time some additional manpower cost you if you review those that the increase in the manpower cost that is the one time cost we have to take. So 31:10 31 minutes, 10 seconds that was the major reason there and another side that uh even decrease in the sales the manufacturing cost has not gone down due to the fixed cost there. 31:20 31 minutes, 20 seconds to those two three reasons are there that is the uh that's why our European entity is in the loss in quarter three 31:27 31 minutes, 27 seconds but we are expecting at least some uh positive in quarter 4 31:35 31 minutes, 35 seconds understood. Thank you. My next question is so the unexecuted order book for new parts is around uh 8,000 crores by FI29. 31:44 31 minutes, 44 seconds So that means the exit revenue for FI29 will be close to 3,5 crores. Is that correct? Um, basically could you help us 31:52 31 minutes, 52 seconds understand the annual revenue ramp up profile? 31:58 31 minutes, 58 seconds Yes. Yeah. I think you have a good calculation that based on this 9,000 order book definitely as per our 32:06 32 minutes, 6 seconds calculation. So the exit will be around 3,500 K by 29. 32:11 32 minutes, 11 seconds So that is uh because you know there are two two mix one is that uh the execution of the new order book as well as the end 32:19 32 minutes, 19 seconds of the existing products. So both are happening and uh year on year there is a execution of the new order book is 32:27 32 minutes, 27 seconds happening and maybe uh till quarter two maybe in the last quarter we have expended approximately 700 we have utilized and this quarter also around 32:35 32 minutes, 35 seconds 150 utilization has happened. So overall around we can say 8,900 roads we have utilized out of this order book and uh 32:43 32 minutes, 43 seconds in this quarter also like I have explained in my uh speech that uh uh we have got the new orders from uh four uh 32:52 32 minutes, 52 seconds four new parts we have added and one is a global OEM there is a very big global OEM that they have entered into the EV segment and given the order for first 33:00 33 minutes order for the EXL the big part that we are going to execute from the euro. So approximately till 29 in because uh now 33:10 33 minutes, 10 seconds the development will happen the supplies will start from 27 and uh the there will be addition in next uh till 29 will be 33:17 33 minutes, 17 seconds around 300 to 350 K from these new orders. So then uh approximately 8,5 33:24 33 minutes, 24 seconds uh 8,500 crores will be the balance after utilization of our 850 or 900 crores uh that has happened till now 33:32 33 minutes, 32 seconds quarter three. So and year on year this acceleration this uh growth will happen for the iteration of the exist this new order book. 33:43 33 minutes, 43 seconds Got it. Understood. Understood. Thank you. My next question is uh in the presentation has mentioned certain oneoff the write offs as well as 33:52 33 minutes, 52 seconds management transaction cost. What is the impact of this exactly? 33:58 33 minutes, 58 seconds Uh yes uh mainly uh I just tell you uh there one is that because now in auditings uh this uh they do the testing 34:06 34 minutes, 6 seconds of impairments. So approximately 1 and a2 cr uh that cost has happened where we have there is impairment of some assets 34:14 34 minutes, 14 seconds has happened. Then uh the manpower cost uh there is the impact of because you know when we are going for the uh 34:22 34 minutes, 22 seconds because our targets are big that you are already mentioning that our exit rate is 3,500 cr by 29. So for and now uh more 34:32 34 minutes, 32 seconds global players are coming in. So we have started the investment in the manpower. 34:38 34 minutes, 38 seconds So the uh in this year especially in the last uh in quarter two uh in quarter two it was started in quarter three now we 34:46 34 minutes, 46 seconds have seen the uh impacts also are coming up. So mainly like we have hired the CHRO CO then our some technical heads 34:56 34 minutes, 56 seconds machining heads like many people senior level hiring has happened. So that will help us to execution of the new order 35:02 35 minutes, 2 seconds book. So and there is a al so there is some parallel uh management is also there. So approximately if you compare 35:10 35 minutes, 10 seconds with the last quarter so around 2 crores additional cost has happened in quarter three and overall so you can see for full year we're expecting there is a impact of around 10 crores. 35:24 35 minutes, 24 seconds Okay. Okay. Thank you so much. That's all from Thank you. A reminder to all the 35:33 35 minutes, 33 seconds participants that you may press star and one to ask a question. Next question comes from the line of Dwanga 35:40 35 minutes, 40 seconds All West Investment Managers Private Limited. Please go ahead. 35:45 35 minutes, 45 seconds Yeah. Hi. Uh good afternoon sir. Uh sir uh my first question uh this quarter uh we have seen some kind of you know 35:53 35 minutes, 53 seconds impact in the margin. So that is a uh related to a product mix and what kind of margin we are uh you know anticipate 36:02 36 minutes, 2 seconds looking forward I I I want to have some kind of you know margin band yeah in this quarter there uh especially 36:11 36 minutes, 11 seconds you have seen that uh first uh impact has come in the gross margins by around 1.67% that we have compared with the quarter 36:19 36 minutes, 19 seconds 2. So in 1.67% 6 7% uh if you see the metal prices have started going up. So 36:28 36 minutes, 28 seconds around 6 to 7 cr additional cost has happened maybe it is being uh paid by the customer but it is sitting in the 36:36 36 minutes, 36 seconds revenues as well as 100% as a cost. So the impact is around 67% has come and the sales mix because uh some sales down 36:44 36 minutes, 44 seconds we have seen from the like customers like Statelantes, JLR uh Toyota Motors. 36:51 36 minutes, 51 seconds So that has made impact of around 1% in gross margins. So that is the one part on the on the I beta side when we are 36:59 36 minutes, 59 seconds talking about. So there is a decline by 2% from the compared to the last quarter. So 2% mainly this this is one of the uh gross margin as well as 37:07 37 minutes, 7 seconds increasing the cost like I've explained uh the asset impairment higher uh manpower cost and as you know that GLR 37:16 37 minutes, 16 seconds uh the first major project of EXL for the EV that uh we have executed and that is the start of a complex part in Alicon 37:25 37 minutes, 25 seconds maybe uh the project from the customer side is now delayed and full utilization is not happening but we have to run the 37:32 37 minutes, 32 seconds uh plant for to maintain the momentum in the production as well as to control the uh rejection side. So uh we are not able 37:41 37 minutes, 41 seconds to recover uh the cost fully. So some losses are still happening in this project. So when after when we will have 37:48 37 minutes, 48 seconds the full capacity utilization that maybe hopefully they are going to launch this uh in month of uh June or July or August 37:57 37 minutes, 57 seconds and 26. So then it will be uh this project will be on complete ramp up. 38:05 38 minutes, 5 seconds So sir uh you know moving forward yeah I I understood uh because the challenges we uh faced and you know that has impacted the margin. So my you know 38:14 38 minutes, 14 seconds uh you know related question to that moving forward the way we are doing you know some kind of you know tech enabling robotics and you know efficiency 38:22 38 minutes, 22 seconds utilization kind of thing. So you know uh that is going to have a some kind of you know positive impact in a market. So what kind of trajectory we can 38:30 38 minutes, 30 seconds anticipate as far as margin guidance are concerned going forward. 38:36 38 minutes, 36 seconds So margin guidance like uh this quarter three was not good and uh maybe uh if 38:42 38 minutes, 42 seconds you see that uh in the quarter two or uh it was around 12.9% uh the margins we 38:52 38 minutes, 52 seconds were having in quarter four we are also expecting between 12 and a half to 13% margins. 38:58 38 minutes, 58 seconds So then overall at least around uh 12 to 12.5% uh margins we will close for this 39:04 39 minutes, 4 seconds full year and definitely because our aim is to at least now like uh on the turnover side earlier challenges were 39:12 39 minutes, 12 seconds like like that how to cross the 400 cr the next challenge we are taking the how to cross the 500 cr. So same way on the beta margin side our first target is to 39:21 39 minutes, 21 seconds how to cross the 13% and to reach the level of 14%. So that maybe in the next meeting we will be able to give more 39:28 39 minutes, 28 seconds clear answer when we will complete our budgeting activity. 39:33 39 minutes, 33 seconds Okay. Uh so my next questions the way we have a outstanding order book that is to be executed by FYI 29 around 8,500 K. So 39:44 39 minutes, 44 seconds sir uh moving forward we are we are you know making some kind of you know new product also we are introducing and we have also made some kind of you know new 39:52 39 minutes, 52 seconds OEM also been uh you know now uh you know coming out we have made some kind of tire so you know uh what would be the order info guidance that you expect you 40:01 40 minutes, 1 second know in a FY 27 or 28 kind of thing will the order book remain somewhere close to you know 8,500 to 9,000 K what kind of 40:10 40 minutes, 10 seconds addition is going to be So actually you see that the major 40:17 40 minutes, 17 seconds because now in the last two three quarters due to this US because like I explained to Ji also uh we had a uh 40:27 40 minutes, 27 seconds issue of that there were no inquiries from the US side in the last two three quarters. So that started and we have a 40:34 40 minutes, 34 seconds big market there. So hopefully that uh this uh order book will start growing maybe from the next year. So when we 40:42 40 minutes, 42 seconds will finalize some businesses already those were in discussion with the customers we were doing that but due to this tariff issue those every activity 40:50 40 minutes, 50 seconds was stopped but again now those will be started after the signing of this uh agreement. 40:58 40 minutes, 58 seconds Okay. So moving forward because of the you know this uh deal between EU and US you are anticipating that in FY27 you 41:06 41 minutes, 6 seconds are going to have a further ordering flow and you will make some more clarity in a Q4 related to that. Am I right sir? 41:13 41 minutes, 13 seconds Yes sure. Right. Right. Exactly. Okay. Thank you sir. 41:21 41 minutes, 21 seconds Thank you. A reminder to all the participants that you may press star and one to ask a question. 41:36 41 minutes, 36 seconds Once again a reminder to all the participants that remar and one to ask a question. 41:52 41 minutes, 52 seconds Ladies and gentlemen, as there are no further questions, we have reached the end of question and answer session. I would now like to hand the conference 41:59 41 minutes, 59 seconds over to the management for closing comments. 42:06 42 minutes, 6 seconds Thank you for your continued inon class. We witness the improved momentum in the domestic market during quarter 3 42:14 42 minutes, 14 seconds and expect this momentum to s sustain going forward. In global markets, early sign of improvements are beginning of to emerge in the operating environment. 42:25 42 minutes, 25 seconds Importantly, progress on trade agreements with key markets such as EU and the United States provides a more constructive medium-term outlook and is 42:34 42 minutes, 34 seconds expected to translate into improved opportunities and volumes for supplies to customers in these regions. We will 42:42 42 minutes, 42 seconds continue to closely monitor global developments and remain agile in our responses while staying firmly focused 42:50 42 minutes, 50 seconds on our long-term strategic priorities of diversification, technology, leadership, and operational excellence. Thank you once again for your time and 42:58 42 minutes, 58 seconds participation. We look forward to engaging with you again in the next quarter. Thank you very much. Thank you. 43:06 43 minutes, 6 seconds Thank you. On behalf of Alicon Castell Limited, that concludes this conference. Thank you for joining us.