Bharat Forge Limited — Q2 FY26

Bharat Forge Ltd Q2 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=MSfX2mxkYRQ Published: 6 months ago

0:02 2 seconds Ladies and gentlemen, good day and welcome to the Q2 and H1 FI26 earnings conference call hosted by Barat Forge Limited. 0:11 11 seconds As a reminder, all participant lines will be in the listenonly 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 this conference, please signal an operator by pressing star and then zero 0:25 25 seconds on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. 0:33 33 seconds Amit Kalyani, vice chairman and joint managing director Barat Foge Limited. Thank you and over to you sir. 0:41 41 seconds Yeah. Hi. Uh thank you. I am uh joined here. First of all a very warm welcome 0:47 47 seconds to all our uh friends in the analyst uh community uh and the investor community. 0:55 55 seconds Uh thank you for joining our uh Q2 investor call. We are u joined here well I'm joined here by our uh finance 1:04 1 minute, 4 seconds investor relations and uh global business development teams. Um I will 1:10 1 minute, 10 seconds first have Mr. Keditar CFO take you through our numbers and then I'll take you through a short overview and then we'll do a Q&A. 1:21 1 minute, 21 seconds Go ahead. Thank you and welcome to Bharat Coach conference call. Uh talking about standalone business highlights for the quarter and H1526. 1:31 1 minute, 31 seconds Uh the revenues standalone revenues were at 1947 crores which was a Q degrowth of 1:38 1 minute, 38 seconds 7 and a half%. The rapid regrowth in North American CV market coupled with inventory restocking has impacted our 1:46 1 minute, 46 seconds export performance and that is the main reason for the drop. uh CV exports to North America are down 48% on a 1:54 1 minute, 54 seconds sequential basis and about 67% on a YI basis. Passenger vehicle and other industrial segment has shown a 2:01 2 minutes, 1 second resilience limiting the impact on the profitability. 2:05 2 minutes, 5 seconds Uh standalone EBIDA in this quarter was at 545 crores with 28% margins which was lower by about 7.3% sequentially. 2:16 2 minutes, 16 seconds uh this includes rupes 24 crores on account of tariff charges. Uh talking about the H1 performance revenues were 2:25 2 minutes, 25 seconds at 4,52 crores and IBIDA margin at 27.9%. 2:30 2 minutes, 30 seconds Uh from a consolidated revenue perspective uh the quarterly revenues were 4032 crores and IA margins were 17.7%. 2:39 2 minutes, 39 seconds Steady performance in overseas subsidiaries and strong invitation in defense has helped the bottom line performance. Quarter to numbers also 2:48 2 minutes, 48 seconds includes first time consolidation of K drive mobility uh which was the American India manufacturing business which we 2:55 2 minutes, 55 seconds acquired. The integration progress is on tracks. Uh talking about the 6 months uh the consolidated revenues were 7,941 3:05 3 minutes, 5 seconds crores with evida margin of 17.6% 6% and we had cash of about 2,300 crores on a 3:11 3 minutes, 11 seconds consolidated basis. Uh during H1 uh of this fiscal the company had secured new business worth 1,582 crores across all 3:21 3 minutes, 21 seconds key businesses which includes uh component and industrial business of 823 crores, defense 559 crores and our 3:30 3 minutes, 30 seconds casting business of 200 crores. Talking about overseas subsidiaries, uh the European aluminium operations were 3:38 3 minutes, 38 seconds stable amidst soft demand due to holiday season. Utilization levels in Q2 were about 60 to 65%. 3:46 3 minutes, 46 seconds During the quarter, European operations recorded a bit of 32 crores. Uh US aluminium had a width quarter given the 3:55 3 minutes, 55 seconds sentiment in North American passenger car market. The US operations recorded Eid of 16 cr for this quarter. The 4:03 4 minutes, 3 seconds current utilization level uh is about 65%. 4:12 4 minutes, 12 seconds Hello. 4:14 4 minutes, 14 seconds Yeah. Uh uh the current utilization level of aluminium business in US was about 65%. 4:22 4 minutes, 22 seconds uh we continue to evaluate restructuring options for our European steel operations and we will update the progress by end of this fiscal. Now I 4:31 4 minutes, 31 seconds hand over uh to yeah good afternoon uh ladies and gentlemen. I'll just share some 4:40 4 minutes, 40 seconds observations and outlook with you. The reality on the ground is that uh 26th is turning out to be a very interesting 4:47 4 minutes, 47 seconds year because of uh demand uncertainty in the North American market due to the 4:54 4 minutes, 54 seconds trade policies and the you know kind of uh constant changes we are seeing in it. 5:00 5 minutes European exports do look weak as we sit in November. uh but they should show signs of recovery because at this point 5:08 5 minutes, 8 seconds in time uh there's a lot of restocking taking place due to the deceleration in the production numbers but the uh let's 5:17 5 minutes, 17 seconds say the supply side uh rate from our side is significantly lower than the build rates. There are a few more important aspects of our performance. 5:26 5 minutes, 26 seconds You know our balance sheet remains strong with a consolidated cash of about 2300 crores. Indian manufacturing which 5:33 5 minutes, 33 seconds is our Indian forging, defense, casting plus axle aggregates now accounts for about 2/3 of our consolidated revenues 5:41 5 minutes, 41 seconds across uh uh our global business. Uh and it's well diversified across segments and geographies. Aerospace now accounts 5:49 5 minutes, 49 seconds for about 13% of our industrial exports and we expect this business to grow at a very healthy rate going forward as well. 5:57 5 minutes, 57 seconds We've secured new orders and new business in the last quarter as well. 6:02 6 minutes, 2 seconds There are clearly some weak spots in our overall business portfolio which we will which we are working to sort out which mainly includes our overseas steel 6:10 6 minutes, 10 seconds business and to some extent our EV business in India. a constant endeavors to diversify business mix and uh this 6:19 6 minutes, 19 seconds has proved to be very relevant and uh paid off as you can see that we are weathering the storm far better than 6:27 6 minutes, 27 seconds companies that are directly uh you know playing only in one or two sectors. Uh while the cyclical businesses will 6:34 6 minutes, 34 seconds rebound at some point down the line, there are many new businesses that will start to generate revenue going revenue and growth going uh going forward in the 6:43 6 minutes, 43 seconds next one to two to three years. As the cash flows from the businesses increase further strengthening the balance sheet, please expect that we will look at uh doing more acquisitions in India. 6:56 6 minutes, 56 seconds Um so we are raising some funds right now. Uh this is this is all debt. It will be a combination of debt plus NCD 7:04 7 minutes, 4 seconds and this is both for organic growth plus for inorganic growth in India. So we've taken an enabling uh approval of up to 7:12 7 minutes, 12 seconds 2,000 crores and we will uh you know act action this depending on uh when the 7:19 7 minutes, 19 seconds timing is right. So what I'd really like to say is that uh we will continue our 7:26 7 minutes, 26 seconds focus on our customers products and opportunities globally but we are going 7:34 7 minutes, 34 seconds to double down on India as most companies in the world are because it's the fastest growing global market with the most headroom for growth. So we have 7:43 7 minutes, 43 seconds created a strategy that will allow us to get a longer get a stronger piece of the action in India and we're going to take 7:50 7 minutes, 50 seconds some very fundamental steps to implement a growth strategy that allows us to get 7:57 7 minutes, 57 seconds a larger share of this business. In terms of second half outlook in defense, we should see the momentum pick up for defense as execution improves. Uh 8:06 8 minutes, 6 seconds aerospace for the full year, aerospace will record strong growth over last year. The recent uh tie up of orders with global aero engine majors for 8:14 8 minutes, 14 seconds existing and new programs offers good long-term visibility on JS Auto. We are seeing continued growth. We have uh seen 8:23 8 minutes, 23 seconds we should see better topline and Eida performance in second half. JSA continues to receive uh strong uh 8:30 8 minutes, 30 seconds business inquiries and traction in export markets as well. 8:35 8 minutes, 35 seconds uh our Q2 sales growth for JS was about 26%. And I evida growth of about uh 44%. 8:42 8 minutes, 42 seconds So clearly you know even the profitability of the business is improving. New additions like K drive mobility offer significant long-term 8:50 8 minutes, 50 seconds opportunities on the product side. uh our focus is on our Indian manufacturing portfolio across steel forging, ferris 8:57 8 minutes, 57 seconds and aluminum casting is helping us increase our content per customer and also to move at a platform level with our customers. As global MNC's increase 9:06 9 minutes, 6 seconds their sourcing from India, Indian manufacturing business is geared to tap into this demand. Uh on the steel Europe, we will have a road map in place 9:13 9 minutes, 13 seconds outlining the shape and form of the proposed restructuring of the steel business by the end of this fiscal. So to sum up uh the near-term outlook for 9:22 9 minutes, 22 seconds the North American market is still a question mark. It depends on a lot of underlying factors. However, with multiple growth engines like aerospace, 9:31 9 minutes, 31 seconds defense and JS auto, this decline should get offset. In the medium term, we are in the midst of increasing our capacities in India to address 9:38 9 minutes, 38 seconds opportunities in many new sectors including aerospace and engineering. And this will be supplemented by the inorganic route in India where we 9:45 9 minutes, 45 seconds believe we can sign uh generate significant synergistic benefits and get to market faster than organic. So that's 9:54 9 minutes, 54 seconds really all I wanted to say right now and now I'm happy to take your Q&A and me and our my colleagues will be happy to answer your questions. 10:04 10 minutes, 4 seconds Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press 10:11 10 minutes, 11 seconds star and one on the touchstone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are 10:20 10 minutes, 20 seconds requested to please use handsets while asking a question. We also request all to restrict your questions to two per participant. In case of more questions, kindly come back in the queue. 10:32 10 minutes, 32 seconds Ladies and gentlemen, we will now wait for a moment while the question queue assembles. 10:41 10 minutes, 41 seconds Our first question comes from the line of Ben from Morgan Stanby. Please go ahead. 10:47 10 minutes, 47 seconds Uh, hi team. Uh, uh, it's it's a good quarter. You managed it well in this challenging environment. I'll just go back to our Q2 commentary where we 10:55 10 minutes, 55 seconds talked about Q2 being the toughest quarter in the year and now would you still maintain that u that the full impact of tariff slowdown especially on 11:04 11 minutes, 4 seconds the export side is already built in the detocking is done or do you expect that to trickle into Q3 as well? 11:17 11 minutes, 17 seconds I would say Q2 and Q3 should be similar and hopefully by Q4 we should see uh 11:25 11 minutes, 25 seconds going uptick and and you know like on the export of non-auto we've seen a nice jump sequentially uh could you talk a little 11:34 11 minutes, 34 seconds bit about what drove that because if I look at your aerospace numbers seemed largely flat quarter over quarter so what are the other segments that drove 11:41 11 minutes, 41 seconds that it's a multiple sectors it includes includes uh it includes uh uh power 11:51 11 minutes, 51 seconds genen, it includes uh construction, mining and aerospace. 11:57 11 minutes, 57 seconds It's also sustainable in that sense. Uh yes. 12:00 12 minutes Uh and lastly just on gross margins very impressive gross margins you know I think it's one of the highest that we've done in recent times could you uh help 12:08 12 minutes, 8 seconds us break down into factors that are driving it and uh how sustainable is this? 12:14 12 minutes, 14 seconds So we've done a lot of cost reduction work. Uh you know when the quarter started and it looked really bleak we 12:22 12 minutes, 22 seconds took a lot of block shutdowns etc. And we're trying to do more value addition in house more improve our product mix. 12:31 12 minutes, 31 seconds So it's a combination of all these factors. 12:37 12 minutes, 37 seconds Great. Uh thanks team. I'll come back in the queue. Yeah. 12:42 12 minutes, 42 seconds Thank you. Our next question is from the line of Kapir Singh from Nomira. Please go ahead. 12:50 12 minutes, 50 seconds Yeah. Hi sir. Uh sir on the defense order book just wanted to clarify there was a carbine order as well. What is the 12:57 12 minutes, 57 seconds size of that order? And I I order is not included in this. 13:02 13 minutes, 2 seconds Yeah. What is the size of that order sir? Yeah it's about 1,400 crores. 13:08 13 minutes, 8 seconds Okay. And uh what would be the execution timeline for that? First to sign the order then at 4 p.m. 13:16 13 minutes, 16 seconds So from the time the order gets signed I would say about 9 to 12 months. 13:23 13 minutes, 23 seconds Oh so entire order can be executed in 9 to 12 months. No no start. 13:28 13 minutes, 28 seconds Okay. Okay. I mean I I over a 4 year period because it's two lakh two lakh odd weapons. 13:37 13 minutes, 37 seconds Understood. And uh sir there was a mention in the commentary that there was some 24 crores carriage charges. What is 13:45 13 minutes, 45 seconds it related to and where is it accounted for? What? 13:48 13 minutes, 48 seconds So so this is the tariff charges the sharing of tariff the US tariff what we have for our US exports. 13:57 13 minutes, 57 seconds Okay. And where is it accounted? This is in sales. 14:02 14 minutes, 2 seconds Okay. Okay. So uh I mean u as things stand is this the peak or should we expect that there will be a further 14:11 14 minutes, 11 seconds impact uh because the tariff seems to have gone up right 14:20 14 minutes, 20 seconds you know I think it's a very dynamic situation it's difficult to you know comment uh with any amount of certainty 14:30 14 minutes, 30 seconds sure sir and you know it's it's a little bit of a you comparative information issue. So I don't think I want to talk about it very publicly. 14:39 14 minutes, 39 seconds Understood, sir. And sorry to interrupt. 14:43 14 minutes, 43 seconds We request you to please rejoin the queue if you have further questions. 14:46 14 minutes, 46 seconds Thank you. Ladies and gentlemen, you are requested to please restrict yourselves to two questions only. You may rejoin the queue if you have further questions. 14:55 14 minutes, 55 seconds The next question comes from the nine of Gjan Pritani from Bank of America. Please go ahead. Yeah. Hi, thanks for taking my question. 15:03 15 minutes, 3 seconds Just quick clarification there is no on this tariff there is no you know this was only for a month or two like it was 15:09 15 minutes, 9 seconds in quarter one it was only 14 crores but partial period right this is for the entire period is is that the correct way 15:17 15 minutes, 17 seconds to look at it entire quarter had a tariff implication you know this was for the quarter I don't want to say anything more than 15:26 15 minutes, 26 seconds that okay got correct no worries um just uh you know going to the uh the you know the defense business now with the uh 15:34 15 minutes, 34 seconds with the new order we'll be roughly at whatever you know 11,000 odd cr sort of uh order book how would you think you 15:41 15 minutes, 41 seconds know we think about the revenue or execution time frame of this uh I'm just trying to assess you know what sort of growth we think uh on the defense 15:50 15 minutes, 50 seconds business in over next you know two years more additional new wins what is the 15:57 15 minutes, 57 seconds growth that we taken from the current level we'll definitely continue to have you new wins and additions but uh uh our 16:07 16 minutes, 7 seconds execution will also start because I think a tech execution should start in maybe about nine you know 6 to 9 months 16:15 16 minutes, 15 seconds uh and then uh that will continue ramping up so that's a big order and then other orders you know what I 16:23 16 minutes, 23 seconds mentioned the carbine once that FOP once the order is signed then the FOPM and 16:31 16 minutes, 31 seconds then 9 to 12 months after that it will start. 16:35 16 minutes, 35 seconds So the 10,000 K order book which is there roughly right now it's fair to assume that you know 3ear sort of time frame is a good time frame to work with 16:43 16 minutes, 43 seconds in terms of execution or it could take longer than that. No it will take longer than that. 16:49 16 minutes, 49 seconds Hey realistically in this business from the time order is signed you cannot expect revenues to start in less than 12 months unless it's a revenue item. Okay. 17:01 17 minutes, 1 second If it's a revenue item then it can start much sooner but in capital items it definitely will take time. 17:09 17 minutes, 9 seconds Okay. Got it. And second question is on aerospace. I mean you know you do talk about a lot of winds. Can you also give us some perspective of on how to think 17:17 17 minutes, 17 seconds about the revenue stream there? What is it right now? How does that scale up basis the visibility you have over the next couple of years? 17:26 17 minutes, 26 seconds So you know aerospace for last year for the full year was in the ballpark of about 250 odd crores. 17:37 17 minutes, 37 seconds Okay. I think this year should be in excess of 350 crores. So we are growing 17:44 17 minutes, 44 seconds at that kind of rate or or higher and that rate should uh gun sorry to interrupt. the question to 17:52 17 minutes, 52 seconds I think hopefully it should continue for the next three four years at least. 17:56 17 minutes, 56 seconds Okay, got it. Thank you so much. I'll join that. Thank you. 18:01 18 minutes, 1 second Thank you. Our next question comes from the line of Nitan Jen from Fair Value Equity Advisory. Please go ahead. 18:09 18 minutes, 9 seconds Yeah. Uh congrats on a decent quarter. 18:12 18 minutes, 12 seconds Uh and I joined the call late. Uh so apologies if my questions are repetitive. uh so last quarter uh the 18:19 18 minutes, 19 seconds management had guided that Q2 will mostly be uh the bottom of uh this down cycle for the overall business. uh now 18:27 18 minutes, 27 seconds given the geopolitical situation between India and US it is still not resolved and we don't know when it will be resolved. So do we still stand with that 18:35 18 minutes, 35 seconds commentary or we see some more pain going forwards? 18:40 18 minutes, 40 seconds Well, clearly when we spoke last time, we were more hopeful of a quicker resolution to the issue. And if you see 18:48 18 minutes, 48 seconds the statements coming out of the US, you know, it seems like there's a solution, you know, which is very close to 18:55 18 minutes, 55 seconds finalization. So I I think we would have hoped for it to have happened a little earlier but uh I 19:02 19 minutes, 2 seconds would expect that uh hopefully in this quarter it should happen and I would say quarter 3 will be on a similar lines as 19:09 19 minutes, 9 seconds quarter two right okay that's as of now okay and uh can you provide some color 19:17 19 minutes, 17 seconds on what kind of revenue opportunity we have in the server manufacturing business over the next two three years and what kind of margins can we expect here 19:24 19 minutes, 24 seconds it has a very small it's a it's a business that we're trying to evaluate because we see that as a very large new 19:31 19 minutes, 31 seconds opportunity. Uh we see the whole data center space as a big opportunity. 19:37 19 minutes, 37 seconds Server manufacturing is I don't know if it's a end in itself or a means to an end because we want to understand uh the 19:45 19 minutes, 45 seconds whole product level and the system level uh architecture complexity and understand where opportunity for us 19:53 19 minutes, 53 seconds lies. So I don't think looking at server manufacturing as a very big opportunity uh right now because we are only 20:01 20 minutes, 1 second learning this business. Okay. So I think in 6 months from now to 9 months from now we'll have a better idea of this 20:09 20 minutes, 9 seconds business. Clearly that's a whole area that we are interested in but it's too early to talk about uh you know what size and scale and margins. 20:20 20 minutes, 20 seconds Okay that's helpful. Thank you so much. 20:23 20 minutes, 23 seconds Thank you. Our next question is from the line of Rishi Wara from Kotak Securities. Please go ahead. Yeah. 20:30 20 minutes, 30 seconds Yeah. Uh thank you for the opportunity and congrats on good set of numbers. Uh my first question is uh you know in the presentation you'd highlighted that the uh defense has uh transferred to KSSL. 20:42 20 minutes, 42 seconds Uh so was there any impact on the standalone revenues on account of this or uh you know the revenue booking remains the same? 20:51 20 minutes, 51 seconds Yes. So the revenue bookings remains the same. Uh it's only the business what we have transferred from uh from Bat to 20:59 20 minutes, 59 seconds Kani strategic systems. Uh and so it it more of the assets which have moved and all the new orders what we will get those would be on Kani strategic system. 21:10 21 minutes, 10 seconds Unex would be a part of standalone. 21:13 21 minutes, 13 seconds Yeah. So currently they are the order is on bat for limited. 21:17 21 minutes, 17 seconds Understood. And when if you win a carbine order whenever that would be a part of console a or subsidiary basically so that would be still based 21:25 21 minutes, 25 seconds the orders that we have RFPs that we have responded to prior to this understood 21:32 21 minutes, 32 seconds in bar will always be executed in bar understood and 21:39 21 minutes, 39 seconds is 100% subsidiary of bar so it really just from an accounting perspective nothing yeah 21:46 21 minutes, 46 seconds uh uh uh I just Second question on on the tariff situation just wanted to understand little better because today uh there is a PV component tariff which 21:55 21 minutes, 55 seconds you have then there is another CV component tariff on top of it there is metal uh tariff and then there is a reciprocal tariff. So for the US 22:03 22 minutes, 3 seconds business can you just bifurcate what percentage of business is you know linked to this kind of tariff because whenever the deal happens you know we 22:10 22 minutes, 10 seconds just want to understand which business or which segment does get positively impacted and when there where there is no impact any broader you can't break our tariff down in that 22:19 22 minutes, 19 seconds way you have a outlook on our overall business okay you have you you know how 22:26 22 minutes, 26 seconds much of our business goes to US how much goes to Europe so uh I I think we should just uh leave it at that. Uh there's one 22:35 22 minutes, 35 seconds thing actually I wanted to mention which uh I couldn't earlier uh because the paper is online 22:44 22 minutes, 44 seconds because it hadn't been sent to the stock exchange. Um just give me one minute. 22:52 22 minutes, 52 seconds Okay, I have it. I have it. 22:57 22 minutes, 57 seconds So we just wanted to make one announcement that uh yesterday uh uh our 23:05 23 minutes, 5 seconds defense business one a order from the Navy and this business. 23:13 23 minutes, 13 seconds So you can see it on the U BC website also. So Kalyani strategic system 23:19 23 minutes, 19 seconds secured a business of more than 250 crores for the supply of underwater 23:25 23 minutes, 25 seconds systems. This is uh for uh uh basically unmanned marine systems uh for the Navy. 23:35 23 minutes, 35 seconds So you may be aware that the underwater domain is a key focus area for us with India's huge coastline and uh 23:42 23 minutes, 42 seconds interesting neighborhood that we operate in. We have to protect and secure our uh navy and coastal facilities. So this is 23:51 23 minutes, 51 seconds one of the first uh orders that we have won. second order that we have gone for this but a hero order and this was just 23:59 23 minutes, 59 seconds one yesterday and this will be uh delivered from our facilities in Pune. 24:06 24 minutes, 6 seconds Uh and when does it start an executable period for the same? 24:10 24 minutes, 10 seconds This is within one year. All this has to be delivered within one year. Understood. It will start in this year. 24:16 24 minutes, 16 seconds Yeah, it has to be delivered within one year of yesterday. Okay. Okay. Thank you and all the best. 24:24 24 minutes, 24 seconds Thank you. The next question is from the line of Pam Am from Incred Capital. Please go ahead. 24:32 24 minutes, 32 seconds Yeah, thanks for the opportunity. So, first thing is with regard to a defense subsidy, uh there is some improvement in margins to a double digit. Is it more of a product mix? How sustainable is it? 24:44 24 minutes, 44 seconds Yeah. So look, it's a product mix issue and it will keep improving as our uh you 24:50 24 minutes, 50 seconds know mainline products uh come on stream and uh uh revenue ramp up ramp up. 25:00 25 minutes Okay. And uh second one is with regard to American Excel and now you are through with a couple of quarters on this acquisition. 25:08 25 minutes, 8 seconds uh in terms of uh uh broader strategy uh in how do you see where are the easier 25:15 25 minutes, 15 seconds foods to come through and what's a medium-term plan uh in terms of product profile expansion own and ICV business is a big 25:23 25 minutes, 23 seconds opportunity in India as is the SUV sector when it comes to the on highway market and then you also have a large 25:31 25 minutes, 31 seconds offhighway and specialy business. So we will focus on these two areas and uh grow our business 25:40 25 minutes, 40 seconds and are there any non-compete clauses for it in terms of exports? 25:44 25 minutes, 44 seconds Yes, there are there are uh geographies like in North America that are non-complete but everything is only for a period of 5 years. 25:52 25 minutes, 52 seconds Okay. And is there a scope to improve margins in the short term considering the rights and all or you feel? 25:58 25 minutes, 58 seconds Yes, absolutely. We are very focused on that. 26:03 26 minutes, 3 seconds Okay. Yeah. Are there any set rules you want to play over next five years in a sense first margins then products? How 26:10 26 minutes, 10 seconds to look at this entity? You will see clear horizon one and we have a separate team for Horizon 2. So, Horizon one team will 26:19 26 minutes, 19 seconds focus on existing products, ex existing markets and improvement in uh uh financials for those sectors and then uh 26:28 26 minutes, 28 seconds the new team will also focus on horizon and then broader uh top line bottom line 26:35 26 minutes, 35 seconds CG or you know let's talk about it in six months but clearly we have an aggressive growth plan. 26:44 26 minutes, 44 seconds Sure. Thanks. on the rest and promote just one correction uh this was the first quarter of consolidation. 26:51 26 minutes, 51 seconds Okay. For the KDS. 26:54 26 minutes, 54 seconds Yeah. For for American Metro India business. Oh yeah. Okay. Yeah. First quarter. Okay. Understood. Thank you. 27:00 27 minutes Full full. 27:04 27 minutes, 4 seconds Thank you. The next question comes from the line of Ragunan NL from Noama Research. Please go ahead. 27:12 27 minutes, 12 seconds Uh thank you sir for the opportunity. 27:14 27 minutes, 14 seconds Congratulations on strong members. Uh firstly uh any update you can provide on Euro page structuring have has your 27:23 27 minutes, 23 seconds customers approved your we have we had whatever we had to talk about we've already mentioned in the update and I already mentioned that before I don't have any more comment. 27:34 27 minutes, 34 seconds Got it sir. Uh secondly you know post the GST cuts how do you see the India NFC production outlook? 27:50 27 minutes, 50 seconds Well, as you as you've seen, uh the sales of pastas and all that has been strong, but also due to the festive season. So, now that the festive season 27:59 27 minutes, 59 seconds over, we'll need to monitor it for another month or two. Hopefully, it should be it should momentum should continue is what we think. 28:08 28 minutes, 8 seconds uh and on the MSCD side MSD the broader expectation is it should 28:15 28 minutes, 15 seconds remain flat not not a very significant growth or degrowth 28:22 28 minutes, 22 seconds you got it sir and lastly on BSI itself uh there has been a growth there is also 28:28 28 minutes, 28 seconds margin expansion to 14% how do you see the growth ahead uh in terms of order book and also 28:36 28 minutes, 36 seconds you talking about industry uh DFS uh which is the JS Autocast. 28:42 28 minutes, 42 seconds Yeah. Yeah. JS Autocast we already seeing improvement in margins and we are quite bullish that we will continue to improve our margins, improve our top line and uh product mix as well. 28:55 28 minutes, 55 seconds Got it sir. Thank you very much. 29:00 29 minutes Thank you. The next question is from the line of Mohit J from Tara Capital Partners. Please go ahead. 29:07 29 minutes, 7 seconds Yeah. Hi, thanks for the opportunity. 29:09 29 minutes, 9 seconds Just wanted to ask the uh the fun that you're doing which you said would be used for inorganic as well as organic purposes. If we do an inorganic uh uh uh 29:18 29 minutes, 18 seconds sort of a thing, would it be related to the current lines of businesses or can can it be in a completely different uh area? 29:27 29 minutes, 27 seconds Uh well, right now it's in areas that are very related to what we're doing and areas where we see opportunities for growth in India. 29:38 29 minutes, 38 seconds Okay. And um uh I mean uh are we comfortable doing let's say only some bolt sort of an acquisition or are we 29:46 29 minutes, 46 seconds comfortable doing some large ticket acquisition as well? 29:50 29 minutes, 50 seconds Well, it really depends on on uh uh it depends on the opportunity and the 29:57 29 minutes, 57 seconds circumstance. But you know, I think it's, you know, we're talking, we're trying to define the animal without uh knowing what it looks like. 30:07 30 minutes, 7 seconds Okay. Fair enough. Thank you. Thanks a lot. 30:11 30 minutes, 11 seconds Thank you. Our next question is a followup from Ben from Morgan Stanley. Please go ahead. 30:20 30 minutes, 20 seconds I know when I look at defense revenues for next year there should be a very sharp scale up right like your attack you're saying the scale up has not 30:28 30 minutes, 28 seconds started the carbine order comes in and then this marine order thing so any revenue number that you would um sort of 30:35 30 minutes, 35 seconds see like basically FI27 defense revenues 30:45 30 minutes, 45 seconds so it would be better than uh this year for So that's fair. So how how many years shall we build the ATAC order for? 30:54 30 minutes, 54 seconds Because next7 we said the the it will start execution from uh calendar 31:02 31 minutes, 2 seconds year 26 and over how many years? 31:07 31 minutes, 7 seconds At least it'll take about 3 years right. So yeah, so I think for the heads 31:14 31 minutes, 14 seconds up the scale up should be quite uh sharp with that for you in the coming years. Great team. Thanks. I'll come back. 31:22 31 minutes, 22 seconds That's all my thank you to ask a question. Ladies and gentlemen, you may press star and one. 31:30 31 minutes, 30 seconds Our next question is from the line of Rakkesh Roy from Boring AMC Omara Capital. Please go ahead. 31:37 31 minutes, 37 seconds Oh, hi sir. My first question regarding business. Can you light on the US scope of business? 31:42 31 minutes, 42 seconds Sorry to interrupt sir. Your line is not very clear. If you could please check the mode that you're using. Yeah, not clear. 31:51 31 minutes, 51 seconds Uh so please go ahead. 31:53 31 minutes, 53 seconds Yeah. My first question regarding s can you give the scope of business for our project? 32:03 32 minutes, 3 seconds That's that's like horizon 3 you know that's okay still far away. 32:10 32 minutes, 10 seconds But let me explain in a maybe in a very general way. You know, India wants to be 32:17 32 minutes, 17 seconds self-sufficient in many key areas. So, one of the areas is as much as possible in uh aviation especially for defense. 32:28 32 minutes, 28 seconds Right now, we have the capability of certain systems and components. We definitely have capabilities on the arms 32:37 32 minutes, 37 seconds and ammunition that go into the uh aircraft but on aircraft manufacturing at a component level, system level, uh 32:46 32 minutes, 46 seconds subsystem level, India does not have any established large scale players. Maroj is already a supplier of rotating 32:54 32 minutes, 54 seconds components to jet engine, high temperature components, uh structural components and landing gears. So these 33:01 33 minutes, 1 second are all the kind of uh you know capabilities that we will leverage to uh you know create an opportunity for 33:10 33 minutes, 10 seconds ourselves in the AMA program along with our partners. Right. 33:16 33 minutes, 16 seconds Next question regarding sir. 33:19 33 minutes, 19 seconds Okay. Yeah. My next question regarding sir recently sold Inc. packed with a UK based company for UB. So can you light on this s? 33:29 33 minutes, 29 seconds No it's all in the public domain. Yeah. 33:32 33 minutes, 32 seconds See uh UAVs are a very large opportunity. Okay. uh UAVs will go from 33:40 33 minutes, 40 seconds you know birds that cost a few thousand dollar to birds that cost you know uh 33:47 33 minutes, 47 seconds tens of millions of dollars. So we are looking at opportunities across the spectrum because some of these 33:55 33 minutes, 55 seconds opportunities and some of these products will also work with our existing products. Uh so that's where we see a lot of opportunity. 34:07 34 minutes, 7 seconds Thank you. The next question is from the line of Disha Sha an individual investor. Please go ahead. 34:15 34 minutes, 15 seconds Anu. Yes. 34:18 34 minutes, 18 seconds Uh thank you for the opportunity sir. Uh so I have two questions. One is uh regarding the order book. So um 34:25 34 minutes, 25 seconds regarding the defense order book especially uh you said earlier that uh it will take longer than 3 years for us to materialize for that to materialize 34:34 34 minutes, 34 seconds into revenue. So further to that my question is what would be the three years? No I'm sorry I said 34:42 34 minutes, 42 seconds I said more than three. Yeah. 34:43 34 minutes, 43 seconds No no that's not what I said. I said a order will get executed in 3 years from the time the delivery start. 34:52 34 minutes, 52 seconds Okay. Okay. Okay. So, how long will it take for that order book to convert like uh what is the conversion ratio or what 35:00 35 minutes is the conversion time frame to recognize it revenue? 35:08 35 minutes, 8 seconds I I I don't understand your question quite frankly as I mentioned there is a process called FOPM that has to take 35:16 35 minutes, 16 seconds place after which within 6 to9 months we will start deliveries first we will 35:22 35 minutes, 22 seconds deliver you know maybe about 15 or so guns after which we should increase our rate of uh delivery and in all we have 35:31 35 minutes, 31 seconds to deliver 187 guns. So I think we should deliver 187 in something like four years. 35:39 35 minutes, 39 seconds Okay. Okay. Okay. And uh to that uh the next question would be uh what would be uh the key challenges or dependencies in 35:48 35 minutes, 48 seconds converting the defense pipeline into deliveries like if if it might be any just to shed some light on that. Oh none. 35:57 35 minutes, 57 seconds None. Okay. Uh should I have one more? That's all. 36:01 36 minutes, 1 second Okay. Okay. Perfect. Uh I have one more question. So uh what is the expected margin trajectory uh especially as the 36:08 36 minutes, 8 seconds product makes shift towards defense and industrial verticles? 36:14 36 minutes, 14 seconds You know it's very difficult to give that because uh you know the mix product 36:19 36 minutes, 19 seconds mix within defense also uh uh is not fixed. So I think our goal is going to 36:28 36 minutes, 28 seconds be to balance return on capital employed, cash flow, topline, bottom line, you know, on a overall basis. 36:41 36 minutes, 41 seconds Thank you. We have no further questions ladies and gentlemen. I now hand the conference over to Mr. Amit Kalyani for closing comments. Over to you sir. 36:52 36 minutes, 52 seconds Uh thank you very much ladies and gentlemen for your time and interest in our company and your uh encouragement. 36:59 36 minutes, 59 seconds Uh I look forward to our continued dialogue and association. If anybody has any specific questions or clarification, 37:07 37 minutes, 7 seconds you may get in touch with our industrial relationship. Thank you very much and have a nice Thank you. 37:15 37 minutes, 15 seconds Thank you. 37:16 37 minutes, 16 seconds On behalf of Bhat Forge Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.