Azad Engineering Limited — Q2 FY26

Azad Engineering Ltd Q2 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=IbqKPz7N-t8 Published: 6 months ago

0:01 1 second Ladies and gentlemen, good day and welcome to the Azad Engineering Limited Q2 H1 FY26 earnings conference calls. As 0:09 9 seconds a 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 0:18 18 seconds concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on a touchstone phone. Please note this conference is being recorded. 0:30 30 seconds Before we begin, a brief disclaimer. 0:33 33 seconds This conference call may contain forward-looking statements about the company which are based on the beliefs, opinion and expectations of the company 0:41 41 seconds as on date of this call. The statements are not the guarantees of the future performance and involve risk and 0:48 48 seconds uncertainties that are difficult to predict. I now hand the conference over to Mr. Rakkesh Chad, chairman and chief 0:57 57 seconds executive officer. Thank you and over to you sir. 1:02 1 minute, 2 seconds Thank you. Good morning and seasons green to everyone. Welcome and thank you 1:09 1 minute, 9 seconds for joining us today for the Q2 and H1 FI26 earnings call. On this call we 1:16 1 minute, 16 seconds joined by Mr. Murrishna managing director, Mr. Mr. Waning, oldtime director, Mr. Ronach Jaju, CFO and SCA, our investor relations advisor. 1:29 1 minute, 29 seconds The results are present uh results and presentations are uploaded on the stock exchange and on the company's website. I 1:36 1 minute, 36 seconds hope everybody had a chance to look at it. 1:41 1 minute, 41 seconds In Q2 NH1 FI26, our performance has been financially assertive and strategically 1:48 1 minute, 48 seconds positive driven by robust order inflows and progress on our plan capex setting a 1:55 1 minute, 55 seconds strong foundation for sustained growth and long-term value creation. 2:00 2 minutes Financially, this has been our best ever quarterly and halfly performance with 2:06 2 minutes, 6 seconds Q2526 revenues reaching to INR 143 crores up year on year by 28.1%. 2:17 2 minutes, 17 seconds Our reported AITA margins improved by 35.7%. In Q 525 to 36%. 2:26 2 minutes, 26 seconds in favor of 526 while the back margin increased from 18.9% to 23.1% during the same period last year. 2:40 2 minutes, 40 seconds Looking at our half daily performance, we reported a revenue of INR 220 277 2:46 2 minutes, 46 seconds crores in H1 FI26 compared to INR 210 crores in H1 FI25. 2:54 2 minutes, 54 seconds Reported AI margins was 36% while back margin was 22.7%. 3:00 3 minutes On the business front, we are steadily advancing with our capex plants. We recently inaugurated 3:08 3 minutes, 8 seconds one of a new lean manufacturing facility for seammens at our develop plant. This state-of-the-art facility will support 3:16 3 minutes, 16 seconds and supply of highly engineered complex stationary parts along with critical components of assemblies and assemblies 3:22 3 minutes, 22 seconds for advanced gas industrial and thermal flow turbine engines. 3:28 3 minutes, 28 seconds Through this expansion, we aim to meet CMS Energy's global demand in the power generation and essential industrial sectors. 3:38 3 minutes, 38 seconds With this we now have three dedicated units innovated at the new side. 3:45 3 minutes, 45 seconds Our brand expansion is underpinned by a robust order book reflecting the deep trust our customers place in us and 3:53 3 minutes, 53 seconds therefore the consistent value we deliver through precision engineering innovation. 3:59 3 minutes, 59 seconds Looking ahead, we see opportunities emerging within the engineers engine manufacturing ecosystem as a key part of 4:06 4 minutes, 6 seconds the global supply chain serving major engine manufacturers. 4:11 4 minutes, 11 seconds We are well positioned to capitalize on the government's force for indigenization 4:18 4 minutes, 18 seconds particularly through co-production and co-development programs for engines powering the other platforms 4:25 4 minutes, 25 seconds with production at our new facilities steadily ramping up. We anticipate a significantly stronger performance in 4:33 4 minutes, 33 seconds the second half of the 526 and remain confident in achieving as projected 25 to 30% topline growth for the year. 4:44 4 minutes, 44 seconds Now I hand over the call to Mr. Moni Raju our managing director. 4:54 4 minutes, 54 seconds Thank you Mr. Rakkesh Chopdar. 4:57 4 minutes, 57 seconds Over the years, our strength in engineering, innovation, and advanced manufacturing processes has enabled us 5:05 5 minutes, 5 seconds to build deep and longlasting partnerships with our key customers. 5:10 5 minutes, 10 seconds These partnerships have transformed into repeat business, long-term contracts, and strong revenue visibility, 5:18 5 minutes, 18 seconds reflecting the confidence of our customers place in Azad's capabilities. 5:24 5 minutes, 24 seconds Our success is deeply rooted in the trust and collaboration we share with our OEM partners. 5:34 5 minutes, 34 seconds This quarter, we achieved several important milestones. 5:39 5 minutes, 39 seconds First with Mitsubishi, we received the phase two of the contract to supply highly engineered 5:46 5 minutes, 46 seconds complex rotating and stationary air pulse for advanced gas and to thermal power turbine engines. 5:56 5 minutes, 56 seconds With this expansion, the combined contract value with MHI now stands at rupees 1,387 crores. 6:07 6 minutes, 7 seconds a strong testament to our technical excellence, our growing strategic relationship with the company. 6:16 6 minutes, 16 seconds Second, we inaugurated a dedicated facility for our client as pointed out by Mr. Chao. 6:26 6 minutes, 26 seconds Third, among others, we signed a memorandum of understanding with saffron 6:33 6 minutes, 33 seconds aircraft engines, making our first long-term collaboration with this global leader. This agreement 6:41 6 minutes, 41 seconds sets the framework for cooperation in developing critical rotating engine components for strategic defense platforms. 6:51 6 minutes, 51 seconds This is an important step forward in strengthening India's aerospace ecosystem and reinforcing our position 6:59 6 minutes, 59 seconds as a trusted partner in global supply chains. 7:05 7 minutes, 5 seconds Our longstanding client relationships, deep industry insight, and expanding 7:12 7 minutes, 12 seconds manufacturing capabilities continue to drive both repeat business and new orders. 7:20 7 minutes, 20 seconds With that I now hand the call over to Mr. Vishnu Malani our fulltime director to discuss. 7:30 7 minutes, 30 seconds Thank you. Thank you Mr. Moji Krishna uh for the update. 7:34 7 minutes, 34 seconds Good day everyone. My name is Vishnu Malpi and I will share some operational insights and business insights about the 7:42 7 minutes, 42 seconds recent quarter. This quarter has been a defining one for us. We've delivered our highest ever halfearly and quarterly 7:52 7 minutes, 52 seconds performance setting new benchmarks not just in growth but profitability and execution excellence as well. Our focus 8:01 8 minutes, 1 second remains very very clear. We want to build a future ready aad across all business segments that we are operating 8:09 8 minutes, 9 seconds in energy, aerospace and defense and oil and gas. Each one of our segments is 8:16 8 minutes, 16 seconds seeing strong tailwinds and Azad is positioned not just to participate but to lead our journey in these sectors. In 8:25 8 minutes, 25 seconds energy like Mr. Muri Krishna mentioned about the recent contracts that we've signed with our global OEMs. We continue 8:34 8 minutes, 34 seconds to strengthen our partnerships and scale our capabilities to meet rising demand in aerospace and defense. Along with the 8:42 8 minutes, 42 seconds upper initiative, we recently signed an MOU with Saffron which also gives the business you know opportunity to grow on 8:51 8 minutes, 51 seconds the engine manufacturing side and affirms our credibility on the global stage and in oil our precision 8:59 8 minutes, 59 seconds components and qualifications continue to play a vital role for our growth of the future. Now I will take a moment to 9:07 9 minutes, 7 seconds zoom into our standalone segment wise business performance. The energy and oil and gas segment contributed 117 crores 9:16 9 minutes, 16 seconds in quarter 2 of FI26 accounting to accounting for 81% of our overall revenues on a half yearly basis. 9:26 9 minutes, 26 seconds The revenue of energy and oil and gas reported an 81.5% increase from H1 FI25 9:34 9 minutes, 34 seconds with a strong order book from major OEMs Mitsubishi G Seamans. We remain optimistic about the growth of the 9:42 9 minutes, 42 seconds segment for the longer term. Turning to our aerospace and defense segment, this segment contributed 16.9% of our 9:49 9 minutes, 49 seconds revenues for Q2 FI26 at INR 24 approximately representing a 34% 9:56 9 minutes, 56 seconds year-on-year growth. Our half yearly performance reported an increase of about 30% as compared to H1 of FI25. We 10:05 10 minutes, 5 seconds anticipate healthy sustained growth in the segment in the years ahead. I'm also pleased to share that as BTC Private 10:13 10 minutes, 13 seconds Limited, our subsidiary has achieved NATCAP accreditition for quotings. This prestigious certification validates our commitment to meet the aerospace and 10:22 10 minutes, 22 seconds defense industry's most stringent quality standards and positions Azad and its subsidiaries on the qualified manufacturers list. We're gearing up to 10:31 10 minutes, 31 seconds capture opportunities across our business segments by setting a strong foundation for the next phase of innovation with our upcoming center of excellence. 10:42 10 minutes, 42 seconds We are investing in technology, talent and capacity, the foundations that will define the next phase of ADAT's journey. 10:51 10 minutes, 51 seconds Azad's story is one of precision, performance and purpose and we are just getting started. Thank you. I will now hand the call to Mr. Ron Jaju our chief 11:00 11 minutes financial officer to talk about financial performance in detail. Thank you 11:09 11 minutes, 9 seconds Vishnu. We are pleased to present the outstanding performance for quarter to 11:16 11 minutes, 16 seconds XY 26 and first half of FYI 26 making a record break through quarter and H1. Let 11:24 11 minutes, 24 seconds me take you through the quarterly highlights for quarter 2 FI26. 11:29 11 minutes, 29 seconds On revenue side, we have achieved the highest ever quarterly revenue of 142.67 11:35 11 minutes, 35 seconds cr reflecting a robust market demand and successful execution of our growth road map 11:44 11 minutes, 44 seconds on AIA and AITA margin side. AITA stood at 51.36 cr with AITA margin of 36.02. 11:52 11 minutes, 52 seconds The margin state indicate effective cost control and many operational extensions. 12:00 12 minutes Taking it deep into the cost dynamics, raw material consumption has reduced during this particular quarter because 12:07 12 minutes, 7 seconds of onboarding of domestic supplier and enhancing our supply chain excellence. 12:12 12 minutes, 12 seconds Employee cost experience a slight dist by ongoing expansion efforts and the strengthening of our management team. 12:21 12 minutes, 21 seconds Other income increase mainly due to interest income on fixed deposit from the unspent QIP funds contributing positively to the bottom line. 12:31 12 minutes, 31 seconds Profitability net profit is stored at 33 crores showcasing a 57% increase compared to 12:40 12 minutes, 40 seconds compared to rupees 21 cr in quarter 2 emphasis or improved operational efficiency and revenue growth. 12:49 12 minutes, 49 seconds Let me take you through half yearly numbers in H1 FI26 revenue growth. The revenue 12:57 12 minutes, 57 seconds from operation rose to 277 cr making a 32.1% increase over the fi h1 fi25 13:06 13 minutes, 6 seconds profitability announcement aida margin it has improved to 36 13:12 13 minutes, 12 seconds to 36% from 34.71% in actual fi 25 d even by better cost 13:19 13 minutes, 19 seconds management and optimized prevention that group a remarkable 65% underscoring 13:26 13 minutes, 26 seconds our financial resource health and capability to scale on the working capital side receivable and inventory 13:34 13 minutes, 34 seconds level are in line with FI25 based on annualized data. 13:40 13 minutes, 40 seconds Let me take you through our last discussion on working up capital initiative 13:48 13 minutes, 48 seconds on our supply chain side. We are progressing well on establishing a robust supply chain to facilitate raw material sourcing via distribution network. 13:58 13 minutes, 58 seconds The initiative a to resolve the minimum order quantity challenge improve procurement agility and ensure timely 14:06 14 minutes, 6 seconds agricity of raw materials with lower volume cycle. This should be start from quarter four of this particular year and 14:13 14 minutes, 13 seconds we will update more once it move during the quarter 36. 14:19 14 minutes, 19 seconds This is all from my side now and would like to open the floor for question and answers. Thanks a lot. 14:26 14 minutes, 26 seconds Thank you so much. 14:28 14 minutes, 28 seconds We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone. If you wish to 14:37 14 minutes, 37 seconds remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, 14:45 14 minutes, 45 seconds we'll wait for a moment while the question queue assembles. 15:05 15 minutes, 5 seconds The first question is from the line of Ahmed Bakshad from Goldman. Please go ahead. 15:12 15 minutes, 12 seconds Yeah. Hi. Uh good morning everyone and uh thanks for the opportunity. So first of all congratulations for a good set of numbers and sustained good performance. 15:22 15 minutes, 22 seconds A couple of questions from my side. The first one is on if I look at the gross margin so consumption expenses as a 15:30 15 minutes, 30 seconds percentage of revenue have been going down quarter on quarter year on year. In prepared remarks you have mentioned that due to the efficient cost I mean the 15:38 15 minutes, 38 seconds negotiations and domestic suppliers this has gone down. So just wanted to understand a uh if you can explain a 15:47 15 minutes, 47 seconds little bit more on domestic sourcing and uh price negotiation also uh how much of it is sustainable I mean uh whether we 15:55 15 minutes, 55 seconds will see it further going down or uh this is pretty much at the level that we are seeing now. Uh so that is my first question. 16:05 16 minutes, 5 seconds Right. So, uh thank you AJ for the question. Uh the response to this question is uh this is our efforts to 16:12 16 minutes, 12 seconds indigenize the supply chain. So if you look at our working capital cycle you know we have been constantly working because most of the raw material gets 16:20 16 minutes, 20 seconds imported uh across our vertical. So there was an attempt that we were trying to do to work with our customers to 16:27 16 minutes, 27 seconds indigenize raw material supply chain in India. And over the last few years we've been able to do that. uh with energy. So 16:34 16 minutes, 34 seconds we've gotten we've gotten u you know Sunflag and Starwire approved for a few grades qualified for a few grades and this that you uh this reduction that you 16:43 16 minutes, 43 seconds see is primarily a result of this. So we have uh you know this will only ensure us that we have a better control on the supply chain and this should you know sustain for us. 16:55 16 minutes, 55 seconds Okay, just to follow up on this now since we are also seeing uh some of the companies coming up with aerospace grade 17:02 17 minutes, 2 seconds titanium uh and they are also getting qualified or in the process of getting qualified with the same set of 17:10 17 minutes, 10 seconds suppliers. So do we expect that in aerospace as well you know due to the indigenous procurement we can see this further coming down in future? 17:20 17 minutes, 20 seconds Hello Mij good morning. Yeah. 17:25 17 minutes, 25 seconds Yeah. So, uh, uh, the question on the super, right? Uh, this is something 17:32 17 minutes, 32 seconds quite tricky. Uh, unless and otherwise our OEMs agree to, you know, uh, take 17:38 17 minutes, 38 seconds that uh, uh, task of qualifying the supplier. We we would love to buy the material domestic, you know, but we are 17:47 17 minutes, 47 seconds bound to to go through the process. the OEM we should have a clearance from our OEM that we we can buy the material from 17:54 17 minutes, 54 seconds the local uh you know the indigenous material. So we are in talks with our OEM so that we can propose uh these 18:03 18 minutes, 3 seconds Indian mills and then we can see that we look forward to it. We have full support we would like to support that. 18:11 18 minutes, 11 seconds Great. Uh the second one is essentially on staff again a big step I would say. 18:17 18 minutes, 17 seconds So does it mean that now we are qualified with all the sorry I mean we have a MOU stroke contract with almost all the global manufacturers because I 18:26 18 minutes, 26 seconds believe only Saffron was missing from that list that you had. Um so uh what does it mean for us you know in terms of 18:34 18 minutes, 34 seconds domestic ecosystem if you look at it saffron is getting quite active procuring material for most league 1A 18:41 18 minutes, 41 seconds league 1B engines also saffran is one of the front runners for AMA engine program. So how do you see how do we see 18:50 18 minutes, 50 seconds this going forward uh with Saffran and uh the part B of the question is that with AMA now getting uh now getting in 18:59 18 minutes, 59 seconds traction uh do you see our part getting supplied over there? I mean basically your involvement in the domestic uh Indian ecosystem. 19:08 19 minutes, 8 seconds Okay. So um on the Saffron yes this is the first relationship 19:14 19 minutes, 14 seconds with Saffron and uh as as everyone is aware Abiji that Azar is specialized in 19:22 19 minutes, 22 seconds you know the finish of the engines the rotating stationary components and uh if you try to say getting uh uh the 19:32 19 minutes, 32 seconds recognition from these large OEMs so the the first OEM that we could breaking was the Rolls-Royce We we we got into both 19:40 19 minutes, 40 seconds commercial as well as the defense engine programs and that thing we initiated the discussion initially we had an 19:47 19 minutes, 47 seconds assessment we signed then we uh technical assessment happen and then we got into the contract. So this is a basic step which everyone has to follow. 19:57 19 minutes, 57 seconds So with Saffron uh this is the second step you know the assessment is done and MO is signed and definitely this is one of big breakthrough which is going to 20:06 20 minutes, 6 seconds get ultimately turn into a contract right that's there's one more OEM which which we expecting very soon 20:15 20 minutes, 15 seconds uh you know pattern which you would like to get into as you rightly said all the major OEMs we should we should have it 20:22 20 minutes, 22 seconds very shortly okay and the involvement in the domestic engine ecosystem. 20:31 20 minutes, 31 seconds Ah sorry. Yeah. So yes, you're right. Uh we are we are in discussions with uh couple of OEMs for sure for particularly 20:39 20 minutes, 39 seconds the project you mentioned and uh we are having very advanced discussions which we are very hopeful you know uh to get 20:47 20 minutes, 47 seconds into uh we already engaged with them to be honest with you. We already start engaged with them. Um and I think the 20:57 20 minutes, 57 seconds the way it will go because it's not really sure it's the engineer AMA has gone to Saffron or Rolls-Royce or we not sure and uh either ways all the OEMs are 21:06 21 minutes, 6 seconds with us doesn't matter wherever it goes for for our perspective for AMA whether it's Safran or Rolls-Royce or anyone 21:13 21 minutes, 13 seconds else you know we are there in the race with all the fours you great that's nice to know uh just to 21:21 21 minutes, 21 seconds follow up on this This Afghan MOU you mentioned that assessment has now happened. So typically uh how much time it will take for you to get the final contract? 21:34 21 minutes, 34 seconds Very soon Mitri very soon u not only with Saffran other also uh you will you will you will come know very soon about 21:42 21 minutes, 42 seconds more details as this is a defense application program. So I I cannot speak much on this. 21:49 21 minutes, 49 seconds No no appreciate that. Uh thank you so much and all the best. Yeah, thank you J. 21:57 21 minutes, 57 seconds Thank you. The next question is from the line of Jay Johan from Three Netra Asset Managers. Please go ahead. 22:06 22 minutes, 6 seconds Good morning and thank you for the opportunity. I'm audible. Yes. Yes sir. 22:14 22 minutes, 14 seconds Um so sir I have a a question regarding the growth casity and the number of the new facilities like in the FI24 earnings 22:21 22 minutes, 21 seconds calls management are guided that FI26 would be a big shift and an inflection point for revenue growth and more recent more recently in the Q4 FI25 and Q1 FI26 22:31 22 minutes, 31 seconds calls the commentary has shifted you know to describe in FI20 years of stabilization consolidation um so with the ramp up being and with 22:39 22 minutes, 39 seconds the ramp up been challenging and shift expected after this stabiliz session is complete. So could you help us reconcile this change? 22:46 22 minutes, 46 seconds Yeah Jay uh I think we are very consistent in the guidance what we giving and we are very consistent in the achievements what what we're achieving 22:55 22 minutes, 55 seconds uh what versus the guidance and if you see the last not one two you can see many quarters you know and the guidance 23:03 23 minutes, 3 seconds versus the achievements are are definitely matching now coming to the growth trajectory it's just December 23 23:11 23 minutes, 11 seconds is is we have done the the IPO and technically It's been hardly uh 17 18 months we have 23:20 23 minutes, 20 seconds the fund and and the amount of what been happening on on trying to build this facilities. Okay. The facilities which 23:29 23 minutes, 29 seconds we are building are massive. They are not uh something small like we had five machine 10 machine or 50 machines. That 23:36 23 minutes, 36 seconds facilities coming what we are to be honest is 10x what we added. So if we we if we try to just build the 23:44 23 minutes, 44 seconds infrastructure of a 500 to 600,000 uh square ft that itself takes not less in 23:52 23 minutes, 52 seconds if you we go super speed not less than two to three years but we appreciate I appreciate my team which is parly taking 24:00 24 minutes care of the existing growth parly taking care of the machines and programming partly taking care of the constructions of the facilities and this is a huge 24:08 24 minutes, 8 seconds amount of work which happens And if I talk about the timeline, I think the team has done a great job in such a short time. They integrated three 24:16 24 minutes, 16 seconds facilities and and stabilizing them getting the machines inside arranging the manpower and we are not talking 24:23 24 minutes, 23 seconds about two-digit things. We're all talking three-digit. If you talk about manpower or square feet or the construction or the machines and 24:31 24 minutes, 31 seconds everything is an important stuff where we have to find the logistics, the five access machines, the training program and it's not it's a big marathon task 24:39 24 minutes, 39 seconds which is happening. So in this context we we would say we are struggling at the moment you know to to manage the growth 24:46 24 minutes, 46 seconds to manage the facilities to manage the customers to manage the contract quite a job. That's the reason we mentioned that the team is doing a great great great 24:54 24 minutes, 54 seconds job. So the civilization needs all these activities as these are all takes all it doesn't continue all long once for all 25:02 25 minutes, 2 seconds the factories will be done once for all the machines will come and then we finish up and then we go ahead with the 25:08 25 minutes, 8 seconds productions and then we call okay we now sir makes sense so is it fair to say 25:15 25 minutes, 15 seconds that full nonlinear growth impact uh from the new capacity is now more of an FI27 story uh with FI26 being focused on 25:24 25 minutes, 24 seconds you commissioning of this new dedicated lean practice. 25:27 25 minutes, 27 seconds Yeah. Yeah. So J this is this is not again this this is a parallel activity going on. Whatever value ad creation happens, it's just it's just supporting 25:36 25 minutes, 36 seconds it's just supporting the the stresses which is being made within the team where we all are working you know 24/7 25:43 25 minutes, 43 seconds to stabilize the new facility to stabilize the existing growth to stabilize the existing facility here right so everything is going in parallel 25:52 25 minutes, 52 seconds that's a beautiful planning happen in a such a short time I request you to please visit us and then you can imagine the amount of work being done and it is 26:01 26 minutes, 1 second it is substantially Great. We are building one of the world's best best factory you know the most innovation center you can see highly techno you 26:10 26 minutes, 10 seconds know you will see some great technology in under the roof built in such a short time which is really really remarkable. 26:16 26 minutes, 16 seconds So I request you to please visit our new facility you'll have an idea what I'm speaking sure sir we'll definitely try to set it 26:24 26 minutes, 24 seconds up after this call. Um and sir um I have one more question on uh the contracts part. So you have mentioned the margins 26:31 26 minutes, 31 seconds are largely stable due to long-term contracts and fix pricing with customers but there you have some exposure like to high value alloys and foreign exchange 26:38 26 minutes, 38 seconds fluctuations. So uh how does the comp uh company mitigate this raw material price volat volatility and currency risk and 26:46 26 minutes, 46 seconds is there any clauses or hedging mechanisms in place to protect? 26:52 26 minutes, 52 seconds True. So if you notice Azad's uh exports are 95 94 95%. And so hence we are put 27:02 27 minutes, 2 seconds the we have a natural hedge okay the inflows and outflows a natural hedge and it's been years it's been years we have 27:11 27 minutes, 11 seconds been working in this and 90% plus was always a revenue was exports right from inception. So today we can say 93.9 27:20 27 minutes, 20 seconds to be precise is exports. So the risk of that factory is always covered and it is covered. 27:28 27 minutes, 28 seconds So s this is for foreign exchange successions but for you know the succation the raw material prices. So do we have any clauses for the same? 27:37 27 minutes, 37 seconds No we have yes we have we have we have so uh as I mentioned uh to Amitio also you know he was the last question that 27:44 27 minutes, 44 seconds we have uh approved sources from the our OEM. So we are only supposed to buy raw material from their approved sources. So 27:51 27 minutes, 51 seconds when the price agreement happens it is a triparty price agreement right so we have no choice we have to go to the only supplier they they send us correct so 28:00 28 minutes they can dictate terms so what what we show is okay this is say example $10 or $1 28:07 28 minutes, 7 seconds kilo price is fixed and the contracts are long-term and we we we see a five years 7 years contract so what we do is 28:15 28 minutes, 15 seconds we have a cap of 5% fluctuation a 5% fluctuation we Write them. We tell them 28:22 28 minutes, 22 seconds aad's going to bear the 5% absorb 5% fluctuations plus or minus we'll do it 28:30 28 minutes, 30 seconds above that either you increase the price or ask your supplier to reduce the price. So that's also covered. 28:37 28 minutes, 37 seconds Understood sir. Understood. Uh and sir also u like uh since you have long-term contracts with global OEMs u uh do these 28:47 28 minutes, 47 seconds contracts include any termination or cancellation clauses? is we invest a lot in our capex and we have a huge risk there. So is there any safeguard or locking mechanisms? 28:57 28 minutes, 57 seconds Every contract has that every contract has zero that we can we can cancel. So if you don't perform definitely you can 29:04 29 minutes, 4 seconds they can cancel the contract right yeah so so these are very standard contracts which are which are favoring 29:12 29 minutes, 12 seconds both of them. It's a win- situation for both and you're talking about the large OEMs. They're not they're not some some some companies which we see every day. 29:20 29 minutes, 20 seconds Okay. We we if you see our customer base, they're like very reputated companies, right? So so they honor and we also honor what what we do and it's 29:28 29 minutes, 28 seconds been it's not new to us now, right? So we have some so we have some history with with every OE and they have their own histories. 29:38 29 minutes, 38 seconds Understood. Understood sir. And so one on the product side um we are mostly in the in the uh compressor air we would 29:46 29 minutes, 46 seconds say right uh in the compress not exactly we started with we started with that now we have expanded our portfolio in and around the entire 29:55 29 minutes, 55 seconds engine so compressor combustion exhaust they're everywhere um so 30:02 30 minutes, 2 seconds because I think we are not in single crystal blades right which are in the stage one of the no no not yet not yet. Not not yet. Not yet. Not yet. 30:12 30 minutes, 12 seconds Understood. Sir, that's it from my sir. 30:14 30 minutes, 14 seconds Thank you for answering all my questions. Thanks. Sh. Thank you. 30:23 30 minutes, 23 seconds If you wish to ask the question and one on the touchstone telephone. 30:29 30 minutes, 29 seconds Ladies and gentlemen, to to ensure the management can address questions from all participants, please limit your inquiries to two per person. If you have a followup and he rejoin the queue. 30:42 30 minutes, 42 seconds The next question is from the line of Vanas Singh from ICICI security. Please go ahead. 30:50 30 minutes, 50 seconds Good morning sir. Thank you for the opportunity and congratulation on a good set of number. So now that we have now three dedicated plan to our three 30:58 30 minutes, 58 seconds biggest clients, I just wanted to address how much more business opportunities we can actually get from them considering our existing production 31:08 31 minutes, 8 seconds portfolio and as well as we need to increase the approval process 31:15 31 minutes, 15 seconds for the moment that to get the business higher from that on a steady state and business perspective I'm talking about. 31:25 31 minutes, 25 seconds Uh thank you thank you for the question. 31:27 31 minutes, 27 seconds Uh so if you look at our wallet share with respect to our customers anymore 31:34 31 minutes, 34 seconds whether it is you know GD LC yes we are at about 1 one and a half% of where we could be. So our wallet share is only 31:42 31 minutes, 42 seconds about one and a half%. So the head of growth is definitely massive which is also visible which is also visible in 31:50 31 minutes, 50 seconds the contracts that we signing right. So if you look at Mitsubishi, you know, we signed phase one of the contract in November 2024. We 31:59 31 minutes, 59 seconds inaugurated the new facility in March 2020 uh sorry uh in November and then we inaugurated the facility in March 2025 32:08 32 minutes, 8 seconds and then now you know uh just a few weeks ago we signed phase two of that contract. This is a clear sign that the 32:15 32 minutes, 15 seconds demand for the products that Adat's making is very very high and this should continue for a longer period. So when we talk about our growth guidance and when 32:23 32 minutes, 23 seconds our chairman spoke about growth guidance of 25 to 30% that is taking into account the massive demand that we see across 32:30 32 minutes, 30 seconds each of our customers and and one of the reasons we are building dedicated plans is because each of these customers can take us to you know the consolidated 32:39 32 minutes, 39 seconds revenues that we are delivering as a business over time. 32:44 32 minutes, 44 seconds noted and s this plants which you have commissioned right now. Uh so can you just give us the peak utilization 32:52 32 minutes, 52 seconds timelines for the already existing commission plant and the next three or four shared which are uh would be coming. 33:00 33 minutes So this is this is something that's happening in parallel right. So while uh while the existing facilities that have been inaugurated are getting operational 33:08 33 minutes, 8 seconds and the facility that has been operational is ramping up production. So our our sense is that you know over the next about 12 months we would want to 33:16 33 minutes, 16 seconds finish the entire plant in terms of construction in including uh move our 33:22 33 minutes, 22 seconds manpower base you know uh to there we building a housing colony for our employees so that you know we are able to stabilize operation there. So in 33:31 33 minutes, 31 seconds about 12 months infrastructure should be up and running and then slowly after that you will see each of the plant reaching its max capacity right this should happen progressively. 33:43 33 minutes, 43 seconds So should we take 18 to 24 month as a peak uh utilization for the new plant? 33:50 33 minutes, 50 seconds Uh I would I would urge you to look at it from a revenue guidance perspective uh and not from a utilization perspective. 33:56 33 minutes, 56 seconds So I would urge you to think of our business from that and look at 30% 25 to 30% growth year on year across our 34:04 34 minutes, 4 seconds segments and then you'll be able to derive it which is very very good right so and we maintain the guidance we've deepen our guidance so don't look at it 34:12 34 minutes, 12 seconds from a utilization of capacity perspective look at it from this this perspective otherwise you know because we are working on different product 34:20 34 minutes, 20 seconds lines different machines so if you look at it from a utilization perspective you know it it may not give you the you know 34:27 34 minutes, 27 seconds correct direction but look at it from our revenue guidance that we've shared with you. 34:33 34 minutes, 33 seconds No, no. And any update on this for your foring plan basically? I'm sorry. Can you repeat that again? 34:42 34 minutes, 42 seconds Any update on that foring plan basically? 34:45 34 minutes, 45 seconds So yeah, so out of the sheds that we've uh inaugurated, factories that we've inaugurated for customers, there were three factories, one for female Mitsubishi and one for G's team. Uh 34:54 34 minutes, 54 seconds we've also had our poing plant which is already in operation partly you know uh so we are setting that up and you know while while the other plants get 35:02 35 minutes, 2 seconds operational this should also come up. So there are a few equipment that has been installed deployed and are running and the others are work in progress. See we 35:11 35 minutes, 11 seconds are trying to you know it is important that everybody appreciates that this is a very complex project management exercise right Mr. job to call it. We're 35:19 35 minutes, 19 seconds building factories which are 10 times the size. We are deploying machines which are equivalent to what we have. We are hiring people, training them, 35:27 35 minutes, 27 seconds ensuring that our machines are not idled and all of this have to move parallelly while we have to grow at 30 35%, we have to not compromise on our margin. So this 35:36 35 minutes, 36 seconds is pretty complex project management and I think we should credit you know AAD's uh you know vision and execution for it. 35:44 35 minutes, 44 seconds So I would say that you know we are in we are on target to achieve all the operational milestones that we have for 35:51 35 minutes, 51 seconds the business and this is massive right you you've seen the facility firsthand to see the scale uh that we are looking at. 36:01 36 minutes, 1 second Yes that's all for my friend. Thank you and all the best for future. Thank you. 36:08 36 minutes, 8 seconds Thank you. The next question is from the line of Rakkesh Roy from Boring AMC Omhara Capital. Please go ahead. 36:16 36 minutes, 16 seconds Yeah. Yeah. Morning sir. My first question regarding your famous class. 36:19 36 minutes, 19 seconds Just said your famous class is already completed. 36:22 36 minutes, 22 seconds Sorry to interrupt sir. Uh your voice is cracking. Hello. Uh now is okay? Yes. 36:29 36 minutes, 29 seconds My first question related to your plant. 36:32 36 minutes, 32 seconds As you mentioned your plant is already completed. So can we expect number from Q4 or Q1 next year? 36:43 36 minutes, 43 seconds Uh thank you for the question. I think we attempted to address it in the last uh call as well that uh in the last question as well. See we are 36:50 36 minutes, 50 seconds inaugurating plans uh deploying machines and slowly ramping up production. So obviously in the H2 of this year there will be contribution that you will see 36:58 36 minutes, 58 seconds but to what extent uh you know we'll only be we'll be only able to talk about it in the next quarter right because the 37:05 37 minutes, 5 seconds machines have uh are in the process of getting deployed and uh employees are being deployed in that but we will hit 37:12 37 minutes, 12 seconds our revenue guidance that we've spoken about we've already delivered 277 crores and we are on uh you know if you look at 37:19 37 minutes, 19 seconds our AR we are on an AR of about 577 crores facility. So we should look at it whether it comes out of the sealing 37:26 37 minutes, 26 seconds facility or the other dedicated facilities we should get our guidance. 37:33 37 minutes, 33 seconds Okay. Right. Right. And regarding say your stuff and you as you say it is 37:39 37 minutes, 39 seconds first relationship with company. So in what product we are going to make and how much time to take to validate our product? 37:50 37 minutes, 50 seconds Yeah. Can you repeat that question again regarding so what we are going to make and second 37:58 37 minutes, 58 seconds is same and how much time take validate the product from the suffer side. 38:04 38 minutes, 4 seconds Uh actually saf is a defense uh uh division so we can't uh you know we can't reveal any more details on the as 38:13 38 minutes, 13 seconds it's a defense project for saf military team. So we can't we not supposed to speak anything. 38:18 38 minutes, 18 seconds Okay. And uh how much is time take to validate the product or or same thing if you ask is it titanium or super 38:27 38 minutes, 27 seconds we can't anything sorry for this but a different thing and we have signed 38:36 38 minutes, 36 seconds I think the point that you need to 38:44 38 minutes, 44 seconds relationship with all manufacturers Right. And so that is important and we 38:50 38 minutes, 50 seconds are also like we said we operate in highly engineered and critical parts which are missing life critical. So we are going to be making critical parts of 38:58 38 minutes, 58 seconds the platform. So this is an opportunity that will obviously backward from you to compact qualification production and 39:06 39 minutes, 6 seconds then wrap up. So this is the normal cycle of how every Williams journey happens with you know uh you know so it 39:14 39 minutes, 14 seconds should also be another point I would like to point I would like to please you know uh on these engines you know these 39:24 39 minutes, 24 seconds engines are are not a subject these engines are are the heart of heart of an aircraft whe it's a manager 39:33 39 minutes, 33 seconds if these are are signing of the taz definitely it's a big validation that's 39:41 39 minutes, 41 seconds that's the key that's the key once this these validations uh you know it's a big validation of you know companies like 39:48 39 minutes, 48 seconds Safar Rolls-Royce coming in uh working with Azad for these critical components it's it's one of a big thing it's a one 39:56 39 minutes, 56 seconds of a big thing and definitely they find value in that definitely they find the capability that's the reason you know we are there in the picture so when we talk 40:05 40 minutes, 5 seconds initially what you signed up and how much time it takes. This is not this is this is the point where this takes a lot of time. It takes a lot of time to get 40:14 40 minutes, 14 seconds these products in the engine. It doesn't just we have a contract and we just start supplying the parts like that because this business is different. They have a lot of qualifications in it. 40:23 40 minutes, 23 seconds There are a lot of you know approvals uh involved in this. So it takes its own time. So I request you gentlemen to please visit us and we can show you more in detail. 40:33 40 minutes, 33 seconds Right. Sure. Last question see which you received second second of order as you said total value is now 13x7. 40:43 40 minutes, 43 seconds So how much time to take this complete this order and any outlook for it's a five year contract it's it's a five year contract. 40:52 40 minutes, 52 seconds Okay. 40:53 40 minutes, 53 seconds It's a five year contract. You have to finish this five years. 40:57 40 minutes, 57 seconds It's a five year contract. Any idea that this third third phase also for any 41:04 41 minutes, 4 seconds as we as we as we ramp up capacity we are always opens as as my colleague Vishnu mentioned we are increasing our market share and this is evident that we 41:12 41 minutes, 12 seconds are increasing our market share right thank you sir thank you 41:22 41 minutes, 22 seconds thank you ladies and gentlemen we request you to limit your questions to two per participants in case for followup please rejoin the queue. The 41:31 41 minutes, 31 seconds next question is from the line of Pratik from Union Mutual funds. Please go ahead. 41:37 41 minutes, 37 seconds Yeah hi uh many congratulations Rakkesh and the team for a stellar set of numbers. Uh couple of questions from my 41:44 41 minutes, 44 seconds end as we start commercializing our new capacities um going ahead maybe from next year onwards. Do you reckon uh 41:52 41 minutes, 52 seconds there can be a step up uh to the revenue growth momentum which we have already seen u of 25 30% which you have been 41:59 41 minutes, 59 seconds guiding uh already first half has been north of 30%. With new capacities getting commercialized 42:07 42 minutes, 7 seconds do we see a uh do we sense a leg up uh in the revenue growth momentum going ahead? 42:13 42 minutes, 13 seconds Yeah I think this is exactly thank you for your question. This is exactly you're telling it's not a small thing you're attempting. It's it's it's 42:20 42 minutes, 20 seconds evident of having a 10x capacity in less than 16 months. We can't expect that we can jump from day one. So that's the 42:28 42 minutes, 28 seconds reason always in the last poll also I said even in this I say that FI26 is key for stabilization. 42:35 42 minutes, 35 seconds We we need to stabilize first. We need to put things in place. We have signed the contracts. We have committed the customers. So focus should be more in 42:44 42 minutes, 44 seconds stabilizing the factories, stabilizing the manpower, machines, processes because this is not something a normal 42:51 42 minutes, 51 seconds uh two access, three access machine or something that we put up and so on. It's a five access machine, high technology and the many many processes involved as 43:00 43 minutes as I mentioned uh every time that these are not easy the life difficult everything related to that has to be 43:08 43 minutes, 8 seconds very critical right you have to be very cautious in going in. So my humble request is FI26 is there. I can see that 43:16 43 minutes, 16 seconds we will stabilize and I tell you FI26 stabilization is a great marathon task received in a very very challenging short time. 43:26 43 minutes, 26 seconds I can assure you that it's not easy. Yeah. 43:30 43 minutes, 30 seconds No fair fair totally agree with you. But once things get stabilized maybe a year down the line there is a lot of scope 43:37 43 minutes, 37 seconds right to accelerate a journey from being better because the opportunities are enumerous across sectors and scale 43:45 43 minutes, 45 seconds difference in itself can you know what really or you would be comfortable with this 20 43:51 43 minutes, 51 seconds to 30% rate to overcome so um Mr. 43:58 43 minutes, 58 seconds here. So we we urge to stick to the guidance that we sharing which is 25 to 30%. 44:04 44 minutes, 4 seconds Like we've always done we strive internally to beat our guidance and internally we are chasing higher numbers but for uh for everybody I think 25 to 44:13 44 minutes, 13 seconds 30% is the guidance that we'd want to stick to the near-term and media term. 44:18 44 minutes, 18 seconds Got it. And on the margins front uh as you mentioned more and more indigenous stuff which we're trying to do which is helping our margins trajectory. uh is 44:26 44 minutes, 26 seconds there room further for margins to improve from here on or the bandwidth? So we are already delivering 36% margin. 44:33 44 minutes, 33 seconds So and I think uh we'd want to sustain that and over time I think as operational excellence kicks in we'll have operating leverage that could 44:40 44 minutes, 40 seconds further improve our see uh one of qualification cycle in our business you know uh if not capitalized we expense 44:50 44 minutes, 50 seconds the we expense out the qualification cycle. So we expect to improve our margins in the future but um right now 44:58 44 minutes, 58 seconds our focus is to sustain it and grow at 25 to 30%. Got it. Once again many congratulations. 45:07 45 minutes, 7 seconds Thank you for your questions. 45:12 45 minutes, 12 seconds Thank you. The next question is from Vishal from Bandan AMC. Please go ahead. 45:21 45 minutes, 21 seconds Uh hi. Uh a couple of questions. So could you update on the status of the engine development contract with GT dear 45:28 45 minutes, 28 seconds you thanks thanks for asking uh thanks for asking uh a very nice question super 45:37 45 minutes, 37 seconds excited I would say first thing on on your question uh more than the deliveries we all are super excited to 45:45 45 minutes, 45 seconds to get this first jet engine of uh the India and uh uh being a very prestigious 45:53 45 minutes, 53 seconds one And uh we all are especially my my full attention is on that and uh I would uh tell you that we're going to deliver 46:02 46 minutes, 2 seconds it very soon I think couple of months more uh we going bit stable on that and we are on track to deliver that engine. 46:14 46 minutes, 14 seconds Uh oh. Okay. Could could we uh how have the trials been? I mean some of the milestones that you guys would have determined uh meeting those milestones. 46:25 46 minutes, 25 seconds No the f the trial the first two engine the first two engines what we're dealing trial will happen within DDO. Okay. 46:32 46 minutes, 32 seconds Okay. uh post that post you know because they also they will they will also have to stabilize being the first engine uh you know uh they will do their trials in 46:41 46 minutes, 41 seconds house and after that trials and once everything is done then we will we will shift the test bed in a 46:49 46 minutes, 49 seconds okay okay and uh that's what I I that is what we are guessing you know we I think that is the process however ones we will 46:57 46 minutes, 57 seconds know from mod only we will not know now so that's that's what we presume this is what We are thinking that going forward 47:04 47 minutes, 4 seconds we may also have to do the testing but let's see let's see let's first deliver the first two engines and then that's more key. 47:12 47 minutes, 12 seconds Uh sure. So uh in terms of the milestones of the performance of the engine in terms of the thrust and other parameters that you yeah uh uh would be 47:21 47 minutes, 21 seconds monitoring. So uh is the at this stage is the engine meeting those parameters those milestones? No, no, no. It's it's 47:28 47 minutes, 28 seconds too early Michelle. That's all going to happen in India, not here. 47:33 47 minutes, 33 seconds Fair enough. Fair enough. And my uh other question is on uh uh is on working capital side. So when we say that we 47:41 47 minutes, 41 seconds should see improvement in the second half uh what will lead to uh this improvement in the second half? So yeah, 47:48 47 minutes, 48 seconds I think as as mentioned uh previously also on the working capital we again uh we also include that in stabilizing for 47:57 47 minutes, 57 seconds FI26 that is also one of the key and we have been telling right from the IPO stage that this working capital is an is 48:05 48 minutes, 5 seconds a point which we all need to address and there are specific reasons behind that working capital which we are addressing and we are quite successful in in 48:13 48 minutes, 13 seconds solving few of the issues and FI26 I think This is also is going to be stabilized and we are on track on that. 48:24 48 minutes, 24 seconds Okay. Uh and uh what are your capeex plans uh for the next couple of years? How does the cape plan 26 27? 48:33 48 minutes, 33 seconds I think we are good with the the fun what we have done and contract uh unless unless we unless we see some more 48:42 48 minutes, 42 seconds massive opportunity coming every every opportunity massive here in AAN right so so what what we all I urge every 48:50 48 minutes, 50 seconds investor I urge every person like please allow 526 to to go go in a in a in a manner which we are we are we are you 48:58 48 minutes, 58 seconds know very uh confident and we are on track And I believe that you'll see some very nice uh uh journey going ahead. 49:10 49 minutes, 10 seconds Uh but uh in case you have specific plans in terms of you can uh quantify the capex plans for this year and the next year it will be helpful to me. 49:19 49 minutes, 19 seconds At the moment I I think uh it's very difficult to quantify because we have we have already uh you know for FI26 FI27 49:27 49 minutes, 27 seconds the capex has already been ordered and uh FI28 also partially we have ordered and uh uh going forward the company will 49:36 49 minutes, 36 seconds generate it own enough cash so that you know we can balance the other requirements. 49:46 49 minutes, 46 seconds Okay. Thank you. Thank you. 49:52 49 minutes, 52 seconds Thank you. Next question is from the line of Koshek from Ashikha Group. Please go ahead. 50:00 50 minutes Hi sir. Uh sir I just wanted to uh on the follow-up question of the last previous question only I just wanted to understand till that how much capex have 50:07 50 minutes, 7 seconds we deployed and how much capex have we uh uh invested. So and with that investment then what kind of the topline that we are able to see. 50:17 50 minutes, 17 seconds So uh thank you for the question. So I think if you look at the deployment in capit we've deployed roughly about 213 50:25 50 minutes, 25 seconds crores so far uh that has been deployed but uh if you want to understand what is the kind of revenue potential that you 50:34 50 minutes, 34 seconds will see basically deployment so you should look at our QIP raise of 700 crores and look at the incremental asset turn that we are building for this 50:42 50 minutes, 42 seconds business. It should be in the range of 1.7 to 1.8 eight right and progressively taking it towards two. So if you look at 50:50 50 minutes, 50 seconds that deployment over the next few years you should be able to understand what is the kind of revenue potential that the business would have with this deployment. 50:59 50 minutes, 59 seconds Uh so please correct me uh am I right by assuming that 2500 will be the total uh 51:07 51 minutes, 7 seconds top line that we can achieve with the total capex that we are into? I mean I would urge you to do the math yourself at 25 to 30% growth year on year from 51:16 51 minutes, 16 seconds year and look at the asset term deployment of 700 crores at 1.7 1.8x and you will get the number. So I would not 51:23 51 minutes, 23 seconds want to talk about uh what is the number because you know we're not giving any other guidance but 25 to 30% and you should be able to get your answer there. 51:33 51 minutes, 33 seconds Got it. Got it. Got it. Thanks for that. 51:35 51 minutes, 35 seconds And uh second thing sir uh like uh also there was another question on that uh uh the GTR uh engine part. So once we have 51:44 51 minutes, 44 seconds this engine completely coming into our existence what kind of orders that we can say or like what is this specifically mean to India as a country 51:52 51 minutes, 52 seconds and what Azad will be uh getting benefit out of it completely. 51:57 51 minutes, 57 seconds So this is so this is a strategic defense contract. Yeah. 52:02 52 minutes, 2 seconds The first question uh the answer I would give to this is I will feel very proud for the country and not for Azad because this is the need of the hour of the 52:10 52 minutes, 10 seconds country of the chat engine and and we all should be happy we all should feel proud once these engines get successful 52:18 52 minutes, 18 seconds and uh rest follows because it's a massive massive uh breakthrough and uh we can't even quantify or imagine what 52:26 52 minutes, 26 seconds could be the volume or what is the platform because these are all defense strategy strategic you know platforms which no one will know but one thing is 52:35 52 minutes, 35 seconds there we all should be happy and proud that we'll develop our state engine and then of course developing it uh the 52:43 52 minutes, 43 seconds completely the production will happen in our own country in own country in a 52:50 52 minutes, 50 seconds in a much value addition will be done no I I I think it's too early questions 52:57 52 minutes, 57 seconds you're asking as I mentioned let's first test the engine and we all wait for the engine to successfully, right? Got it. 53:05 53 minutes, 5 seconds However, these numbers are not projected in our projection. So, don't worry on that. 53:11 53 minutes, 11 seconds Sure. Sure. Thanks. Thanks for that. 53:16 53 minutes, 16 seconds Thank you. The next question is from the line of Janice Chira from Ken Family Office. Please go ahead. 53:24 53 minutes, 24 seconds Uh good morning sir and congrats on the good set of members. Am I audible? Yes sir. 53:30 53 minutes, 30 seconds Yeah. Uh I just wanted to ask in terms of tariffs uh if you can uh throw some light as to how are they affecting you 53:38 53 minutes, 38 seconds if at all and what are the counter measures that you are taking. 53:43 53 minutes, 43 seconds So uh so thank you for the question. So I think we we've addressed this before tariffs as a situation has been ever 53:50 53 minutes, 50 seconds evolving either for you know both for our customers and for us. We haven't seen any impact uh you know or you know 53:58 53 minutes, 58 seconds proactive communications that is changing any uh that is changing the way we are doing business today. Our deliveries have been lined up for the 54:06 54 minutes, 6 seconds next 6 to 8 months and purchase orders are with us. Uh so we are not seeing any change from that perspective right and 54:13 54 minutes, 13 seconds you anyway know our price differential between Azad and uh you know the countries. So we only compete with 54:20 54 minutes, 20 seconds China, Japan, uh, US and other suppliers and we are maintaining a very healthy pricing delta from that perspective 54:28 54 minutes, 28 seconds right and our product line is also very very niche. So it's amongst the most critical components that are a part of 54:36 54 minutes, 36 seconds these. So it's very difficult for an OEM that has spent the last 10 15 years building the supply chain getting product qualified to just move it 54:45 54 minutes, 45 seconds because of some cost impact. The decisions that OEMs take on these mission and life critical parts are not based on cost. It is important to note 54:53 54 minutes, 53 seconds that it's based on you know our ability to supply these or manufacture these parts. So we are not seeing any impact there and we believe you know and that's 55:02 55 minutes, 2 seconds why we are very confident about the guidance whether it is a revenue or margins right so we'll stick to that. So 55:09 55 minutes, 9 seconds uh we understand that I think the same thing uh in the previous calls we've said the same thing. uh my question was more to do with uh like uh will it 55:18 55 minutes, 18 seconds impact in terms of deliveries I'm certain that it's a medicable and uh but will it margin in any sense it will not 55:29 55 minutes, 29 seconds we don't see any second in terms of 55:36 55 minutes, 36 seconds yes to get more dedicated lines to get uh to get commercial 55:43 55 minutes, 43 seconds I'm sorry change between that again. So there are 10 dedicated lines that you are developing right now. 55:52 55 minutes, 52 seconds Yeah. So when you say dedicated lines, do you mean factories? Yeah. 55:57 55 minutes, 57 seconds Yeah. So we building independent factories for our customers depending on the demand that we see for each one of them. So right now we've done three and you will see a you know a few more coming up in the next few quarters. 56:09 56 minutes, 9 seconds uh if you can hear some ball numbers of how much how many are we expect I'm sorry we won't be able to share that uh 56:16 56 minutes, 16 seconds but I can tell you that we see a few coming in the coming quarters thank you so much 56:25 56 minutes, 25 seconds thank you the next question 56:34 56 minutes, 34 seconds it's from the line of Nandanda Garval from Investments please go ahead Hello. 56:43 56 minutes, 43 seconds Am I audible? Yeah, you'll have to be louder. 56:47 56 minutes, 47 seconds Okay, I have to be uh sir. Uh first is congratulations on a good set of numbers 56:54 56 minutes, 54 seconds and uh my question is that uh have we started the construction for the phase two of our facility that is the second unit? 57:05 57 minutes, 5 seconds So phase two we have it. So we want to complete phase one then start building phase two. Okay. 57:12 57 minutes, 12 seconds So this is in pipeline right? So this is already lined up but we would want to first finish the construction in the current uh boundary that we have move it and then slowly move to phase two. 57:24 57 minutes, 24 seconds Okay. So the first phase will be completing in the next 12 months. Sorry. 57:31 57 minutes, 31 seconds uh the first phase right so we'll be complet so over the next 12 months you should be completing phase one right and then uh 57:39 57 minutes, 39 seconds post which phase two will start but any revenue guarance that we're giving over the next 3 to four years is not 57:47 57 minutes, 47 seconds dependent on the second facility coming in okay understand yeah we are doing that because we see a massive demand and that's why we'll be 57:56 57 minutes, 56 seconds moving to phase two but we don't see uh any impact on revenues with respect the phase two. 58:02 58 minutes, 2 seconds Okay. And the second contract that we have signed with uh the contract is also for five years. You know, we have to complete it in 5 years. 58:12 58 minutes, 12 seconds Yeah. Okay. Yes. 58:15 58 minutes, 15 seconds And what how are we on the Rolls-Royce of engine component what the order that we have got? 58:23 58 minutes, 23 seconds So when are we going to start production to that? 58:27 58 minutes, 27 seconds So so we are in the problem qualification. Uh next financial year we'll start some deliveries. Okay. Next financial year. 58:36 58 minutes, 36 seconds Yes. Okay. 58:39 58 minutes, 39 seconds Uh thank you. Thank you. 58:46 58 minutes, 46 seconds Thank you ladies and gentlemen. Due to time constraint that was the last questions. I now hand over the conference over to the management for the closing comments. 58:58 58 minutes, 58 seconds So uh I'd like to thank you know everyone for joining the call and giving us your time. We're very happy to share 59:06 59 minutes, 6 seconds that we've had a stunning quarter and a half year early numbers and happy that we've addressed most of the queries that came in. Thank you so much. We are 59:14 59 minutes, 14 seconds looking for an exciting H2 ahead and we would in the next coming quarter we would be talking more about how we are 59:22 59 minutes, 22 seconds building and deploying capex and how we are able to you know talk about the newer contracts and execution. So we'll talk about that in Q3 as well. Thank you 59:30 59 minutes, 30 seconds so much on behalf of Azad Engineerings Limited. 59:37 59 minutes, 37 seconds Thank you for joining us and you may now disconnect your lines.