Craftsman Automation Limited — Q3 FY26

Craftsman Automation Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=pfzdlJEi_Q8 Published: 3 months ago

0:02 2 seconds Ladies and gentlemen, good day and welcome to the earnings conference call hosted by Craftsman Automation Limited. 0:10 10 seconds As a reminder, all participant lines will be in the listenon mode and there will be an opportunity for you to ask questions after the opening remarks are concluded. 0:20 20 seconds Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone. 0:28 28 seconds I now hand the conference over to Mr. 0:30 30 seconds Shinasan Ravi, chairman and managing director of Craftsman Automation Limited. Thank you and over to you Mr. Ravi. 0:39 39 seconds Thank you. Good afternoon everybody. 0:41 41 seconds Thanks for joining the earnings call. Uh the presentation has been updated in the exchanges. So I hope we had time to go 0:49 49 seconds through that. So we are ready for the Q&A. Uh please uh who is in the queue? I think we can start the Q&A. 1:01 1 minute, 1 second Thank you. 1:03 1 minute, 3 seconds Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. 1:14 1 minute, 14 seconds If you wish to remove yourself from the question queue, you may press star and two. 1:19 1 minute, 19 seconds Participants are requested to use their handsets while asking a question. 1:24 1 minute, 24 seconds Ladies and gentlemen, we will wait for a moment while the question cue assembles. 1:31 1 minute, 31 seconds Ladies and gentlemen, you may note that some of the statements which may be made by the management team during this earnings conference call may contain 1:38 1 minute, 38 seconds certain forward-looking information which are not guarantees of future performance and are subject to a number of risk and uncertaintities. 1:47 1 minute, 47 seconds We encourage you to refer to disclaimer in the investor presentation of the company. Further, the management will 1:55 1 minute, 55 seconds not be addressing any customer specific queries owing to confidential obligations. 2:02 2 minutes, 2 seconds We kindly request that you avoid mentioning any customer names in your questions. 2:08 2 minutes, 8 seconds Ladies and gentlemen, we further request all participant to ask maximum of two questions at a time to allow the other participants to ask their questions. 2:20 2 minutes, 20 seconds We take the first question from the line of Mumukesh Mandlesa from Anandraati Institutional Equities. Please go ahead. 2:28 2 minutes, 28 seconds Yeah. Uh thank you sir for the opportunity. Uh uh sir on the aluminum side aluminum standard margin sir uh 2:36 2 minutes, 36 seconds this quarter there's a dip sequentially Q and Q uh I just want to understand what could be the reasons for the decline uh is it some aluminum uh higher 2:46 2 minutes, 46 seconds cost impact and also sir uh how do you see the uh uh aluminum standard margins over period of time 2:54 2 minutes, 54 seconds for the analyst basis I think the aluminum will be moderating at higher level Q3 I think 3:01 3 minutes, 1 second There's a startup of a new plant in shagari. We have um incurred um operational losses in the first quarter 3:09 3 minutes, 9 seconds to prove out all the parts totally. So as a consolidated I mean as a standalone it affected the standalone because it's 3:16 3 minutes, 16 seconds quite also significant plant. So we have started production now and um I think production will ramp up in the by Q2 to 3:23 3 minutes, 23 seconds a reasonable level. I think it'll be improving from Q4 onwards continuously. 3:29 3 minutes, 29 seconds So I don't see any big change in the aluminium uh business uh margins going forward. Optically yes the commodity 3:39 3 minutes, 39 seconds prices have been quite um violent in the upward surge and uh it is quite significant in aluminium and it has 3:46 3 minutes, 46 seconds continued to remain that way. So our margin will be on the gross margin or valid edition I would say. So optically 3:54 3 minutes, 54 seconds our margin may come down but it'll be quite intact as far as the margin is concerned. The second um uh point will 4:01 4 minutes, 1 second be that the uh for the secondary aluminium there is an volatility on the imports because of the sudden surge of 4:11 4 minutes, 11 seconds the dollar or the rupee depreciation I would say all this has played out but uh we have a pass through with the customer some are immediate some are taking a 4:19 4 minutes, 19 seconds month or two so there isn't affect in the long term but in the short term yes there has been minor corrections there 4:27 4 minutes, 27 seconds yes thank Got it sir. Um [clears throat and cough] sorry uh so on the u alloyable side u 4:37 4 minutes, 37 seconds how we are seeing the utilation levels for the 5.8 million capacity and also want to check uh have the alloy wheel 4:44 4 minutes, 44 seconds margins moved to a normal range of something like high singledigit margin or still the uh it's ramping up in terms of margins. 4:53 4 minutes, 53 seconds So we have not even touched 50% of the installed capacity I would say because of the high variety of parts which are under is all subject to BS approval also 5:03 5 minutes, 3 seconds and the model developments and also customer validation. So the uh second thing is the because of the steep ramp 5:11 5 minutes, 11 seconds up and also addition of new plant we are not in the double digit uh margin yet or even a single digit we are lower than that but when the plan becomes optimal I 5:20 5 minutes, 20 seconds think by Q3 uh we should be reaching that level Q3 of next year remain 5:28 5 minutes, 28 seconds and uh and next year Q3 we should also get a a good 60 70% plus utilation levels for the plan right sir 5:36 5 minutes, 36 seconds yes correct Got it sir. Uh so on the I am sorry to interrupt you. Could you please join back the qu for follow-up questions? 5:45 5 minutes, 45 seconds Thank you. 5:47 5 minutes, 47 seconds Thank you. We take the next question from the line of MKkesh Saraf from Aventes Park. Please go ahead. 5:55 5 minutes, 55 seconds Yes. Good evening and uh thank you for the opportunity. Uh firstly [clears throat] is on the power train segment. uh could you kind of uh give us 6:03 6 minutes, 3 seconds some sense on uh the fact that commercial vehicle segments are looking better now the outlook seems a lot more 6:10 6 minutes, 10 seconds positive and so does tractors so how do we see this segment uh fair for us um uh we've seen numbers around this 450 cr 6:18 6 minutes, 18 seconds now quarterly date uh how can this kind of ramp up further in the last um mostly couple of years 6:26 6 minutes, 26 seconds commercial vehicle was quite muted and even tractor was muted So tractor is doing very well in the this financial 6:34 6 minutes, 34 seconds year and commercial vehicle is showing sometimes green shoots of some marginal growth. The more interesting portion 6:41 6 minutes, 41 seconds will come in the coming years when commercial vehicle moves to the higher engine capacities and gearbox capacities 6:47 6 minutes, 47 seconds which we expect. The um norm globally is of heavy duty means um higher horsepower 6:54 6 minutes, 54 seconds 400 plus horsepower plus also on 800 Newton meter but we are seeing a little 7:02 7 minutes, 2 seconds of seeding in the market by some of the OEMs in India and the results have been quite positive uh for the they're only 7:10 7 minutes, 10 seconds battling with the delta cost whether the productivity and fuel efficiency are offsetting the initial investment. So 7:18 7 minutes, 18 seconds this will move just like any other product moves up the uh for the higher capability which is more productive for 7:26 7 minutes, 26 seconds the fleet owners. This will happen that will be the more interesting. So absolute numbers growing will be growing at single digit. Yes. At the same time 7:35 7 minutes, 35 seconds uh the growth in tonnage also will be at single digit but I think the ability to turn around the um fleet and 7:43 7 minutes, 43 seconds the the per vehicle cost I think that is set to move up as we move forward. 7:50 7 minutes, 50 seconds Right. Right. So uh we should we should kind of hence see that benefit for us going through. 7:56 7 minutes, 56 seconds Yes. And uh the silver lining as far as craftsman is concerned is this means new product development and at least we can 8:04 8 minutes, 4 seconds really do the costing from scratch at the current capex. The capex is also very high related to any infrastructure 8:11 8 minutes, 11 seconds and also import of machinery because of the exchange rates and we have the new labor code which is coming in very soon that also will we need more automation. 8:19 8 minutes, 19 seconds Craftsman has been preparing very well for the last 3 years on manpower productivity by uh uh investment into 8:27 8 minutes, 27 seconds automation and better equipment or I would say more productive equipment in line with the international um level of 8:34 8 minutes, 34 seconds operations. So the uh international competitors so that in that sense I think um new products call for also high 8:43 8 minutes, 43 seconds reliability from the suppliers and high capability from the suppliers also. So that will help us to product price the product right and the end product of the 8:52 8 minutes, 52 seconds OEM which goes to the market the product is so highly priced uh because of the technology is packed in and also the 8:59 8 minutes, 59 seconds productive nature the it will not impact them but I think u I'm not saying there's a price reset but I think reasonable pricing compared to the 9:07 9 minutes, 7 seconds legacy prices got it got it and uh secondly uh if you 9:16 9 minutes, 16 seconds are benefiting not only from the volume growth but I think the horsepower um average horsepower is increased. Yeah. 9:24 9 minutes, 24 seconds Right. Right. Understood sir. And uh on Sunbeam if you could kind of just um uh take us through I mean where are we in 9:32 9 minutes, 32 seconds that journey towards double digit margins now that [clears throat] we we've been running it now for a few quarters. So um you know do you do you 9:41 9 minutes, 41 seconds kind of uh see that uh uh you know it's going to happen say in the next two quarters three quarters. How do you see that? 9:48 9 minutes, 48 seconds Uh three headlines. One is the heavy weightlifting of Sunbeam is over that we cross the most critical point of 50% and 9:57 9 minutes, 57 seconds now it is a journey which will continue to improve. So we will be seeing margins from Q2 of next year improving at um 10:07 10 minutes, 7 seconds we'll end the year for a 10% or sort of aida level from the current uh year of 10:13 10 minutes, 13 seconds around 7% totally. Uh so the exit run rate will be much higher that is the Q4 10:20 10 minutes, 20 seconds will be higher than the 10% is what we see and we are not still taking any new business which we will be starting in 10:27 10 minutes, 27 seconds the coming quarters. Um you know even on the two-heer side there are premium vehicles coming up. There is a shift towards outsourcing of uh missioning 10:35 10 minutes, 35 seconds activity which the OEMs are doing in house and we are strategically placed in many geographic locations for the um uh 10:44 10 minutes, 44 seconds business. So um yeah uh for Sunbeam especially we're also having a plant in Gujarat Ludjana 10:51 10 minutes, 51 seconds and um we can uh supply to Uttrack and I mean the plant at um yes and also in the south uh we are not 11:00 11 minutes invested for sunbeam but it's possible uh to look at similar parts and maybe also invest in the future but I would 11:08 11 minutes, 8 seconds say that those set of family parts craftsman is doing as well as sunbeam is doing for two wheeler sunbeam has also 11:15 11 minutes, 15 seconds got uh increased um potential for the exports going forward. While we wait for 11:22 11 minutes, 22 seconds the total restructuring of uh Sunbeam to happen thoroughly, we have more or less integrated the three teams on the 11:29 11 minutes, 29 seconds working side of it. We have participated in the Eurogus exhibition just two weeks ago in Nuremberg where all this key 11:37 11 minutes, 37 seconds aluminium exhib exhibition for aluminum suppliers and all three teams participated together. We have exhibited the products together. [clears throat] 11:44 11 minutes, 44 seconds you see a good response. The traction of being at least uh getting to a mediumsiz aluminium company 11:53 11 minutes, 53 seconds in the coming two years as a group will help Sunbeam to leverage that. Okay. Got it. Got it. So, understood. 12:02 12 minutes, 2 seconds Great. So, thank you so much. I'll get back in the Thank you. We take the next question from the line of Abishek Jan from Alphaacurate Advisers Private Limited. 12:13 12 minutes, 13 seconds Please go ahead. 12:14 12 minutes, 14 seconds Uh thanks for opportunity and congrats for a strong set of numbers sir. Uh sir uh uh in industrial and engine segment 12:23 12 minutes, 23 seconds uh we have seen a very sharp jump in EIT margin. So just wanted to understand uh 12:29 12 minutes, 29 seconds is it sustainable and are we uh looking some improvement on the business and uh on the top line and the margin both sides. 12:40 12 minutes, 40 seconds Yes, it is sustainable and uh the with the operating leverage which we are now started to generate, we will see margin 12:47 12 minutes, 47 seconds expansion in the next financial year and the demand for these products is increasing in India and we are the 12:55 12 minutes, 55 seconds second largest player in the country as far as the static racking and we are one among the two largest Indian players I would say on the automated storage and 13:04 13 minutes, 4 seconds uh both are gaining traction. The second important uh point is since the market is also growing and there's been 13:11 13 minutes, 11 seconds consolidation of the supplier base. It is a very clear um segregation which has happened from the top five players and 13:20 13 minutes, 20 seconds the other players they have become regional players and also on the top five players I think the number one and 13:27 13 minutes, 27 seconds number two where we are number two and among the other three there is also clear gaps which is there just like in the passenger vehicle segment. um this 13:36 13 minutes, 36 seconds means the larger projects execution uh mostly lies on uh three of uh the suppliers. So that way I think there's 13:44 13 minutes, 44 seconds no need to undercut each other on this matter and uh we feel that we have made enough traction in the and also pro the 13:52 13 minutes, 52 seconds product in the market. So we need not also go on a cost cutting sorry uh sales price cutting strategy to win orders. So 14:01 14 minutes, 1 second the optimum usation of the plant will come in in the next 2 three quarters where we will be able to see margin expansion due to better operating 14:10 14 minutes, 10 seconds leverage and also better purchasing power from the steel. 14:15 14 minutes, 15 seconds Okay sir got uh sir uh my next question on the operating margin side from last two 14:22 14 minutes, 22 seconds quarters we have seen that uh operating margin is hovering between uh around 15 to 15.3%. 14:28 14 minutes, 28 seconds Uh so just wanted to understand what would be the uh margin lab in quarter 4 14:35 14 minutes, 35 seconds and in 27. Uh as you said that uh this quarter margin also impacted because of 14:42 14 minutes, 42 seconds that addition of the new plants and that impacted to some extent the aluminium uh 14:49 14 minutes, 49 seconds margin. So if we take the for 27 number what kind of the uh real what kind what kind of the margin expansion we can 14:58 14 minutes, 58 seconds build it in our model the model of percentage of revenue as the margin I think it doesn't hold good 15:07 15 minutes, 7 seconds for many reasons for example aluminium um exports from China has been dropped by 8% so 15:15 15 minutes, 15 seconds aluminium prices have jumped by around 16% from $2,800 to around $3,250. $50 something like this. So highest levels 15:22 15 minutes, 22 seconds in April 22 which was the last peak. So when the top line only increases with the same um value addition um not margin 15:31 15 minutes, 31 seconds but value addition absolute value artificially it looks like the margin reduces. So we have to look at it in relation with the commodity prices. So I 15:39 15 minutes, 39 seconds would kindly request you to look at the gross margin and the margin versus the IITA margins or EIT margins versus the 15:48 15 minutes, 48 seconds gross margins. That will be the right figure because aluminium again further increases artificially it look like our margins have come down. But in the third 15:57 15 minutes, 57 seconds quarter uh uh uh if I see that topline number of uh this aluminium business that was quarter and quarter flat 16:06 16 minutes, 6 seconds despite that we have seen around 200 bits margin contraction. So if you can uh throw some light over there that what 16:13 16 minutes, 13 seconds were the three [clears throat] uh key uh reasons for that uh 200 bits of uh 16:19 16 minutes, 19 seconds margin uh uh contraction on edit level and how this numbers will start to improve. 16:28 16 minutes, 28 seconds See the revenue what you see on the aluminium is the of the some of the increased aluminium prices. So you can say that the uh top line has been flat. 16:38 16 minutes, 38 seconds It may be uh reduced for us as far as our contribution goes totally because it may be attributed the top line being 16:46 16 minutes, 46 seconds flat or growing or being stable may be because of the increased aluminium prices. So you cannot just come and look 16:55 16 minutes, 55 seconds at the top line and look at it. I said only one time event about this um new plant at Shigiri for the alloy wheel 17:01 17 minutes, 1 second which has impacted our margins. Yes. uh that is um will be there for a quarter or two then it'll go away just like we 17:08 17 minutes, 8 seconds had in the past about uh when you started the biat plant if you remember but otherwise the top line are not strictly comparable between even Q2 and 17:17 17 minutes, 17 seconds Q3 because aluminium prices are different thank you s my thank you thank you we take the next 17:26 17 minutes, 26 seconds question from the line of nicl from I thought PMS please go ahead 17:33 17 minutes, 33 seconds uh yeah Thanks for the opportunity. So I have a question on the order book for uh stationary engines. Can you provide the split uh for the 100 million between 17:41 17 minutes, 41 seconds prime power source and backup uh power source? 17:45 17 minutes, 45 seconds So our customers do not tell us whether it's for prime power or backup power. So we have no and these are funible at least the product what we make is 17:54 17 minutes, 54 seconds funible. They manufacture everything under one roof. So the um second uh point is the order book. I think it is 18:02 18 minutes, 2 seconds um we are inching towards an annual level of around $60 million now dollars that also for FI29 and now the balance 18:10 18 minutes, 10 seconds $30 $40 million also will get tied up in the next year or so. So we will be on track with the $100 million revenue for 18:17 18 minutes, 17 seconds uh FI29, FI30, FI29 possibly if the testing and taxation. The demand for the products is quite high and the customers 18:25 18 minutes, 25 seconds support on the product on the order books as well as on the product development is quite significantly high. 18:32 18 minutes, 32 seconds We will be touching a peak uh requirement in the market by 2030. All the OEMs are geared up towards that. So 18:39 18 minutes, 39 seconds we are in time for this to catch this um upward curve. 18:46 18 minutes, 46 seconds Okay. Okay. And uh from the Scrumberg acquisition, do you see any demand coming in beyond uh data centers like 18:55 18 minutes, 55 seconds from other industries? And also what kind of steady state margins are you expecting from this uh business? 19:02 19 minutes, 2 seconds See energy per se um has been growing not significantly in the past but this 19:10 19 minutes, 10 seconds data centers or AI has driven the energy to be suddenly spike I would say but even after spike is over and even at 19:17 19 minutes, 17 seconds larger base we still see energy will uh demands will be keep growing and backup requirements will keep growing. So uh 19:25 19 minutes, 25 seconds but it'll not be as high as this what is happening. So once we are into this elite league of this supply of these 19:32 19 minutes, 32 seconds critical parts I think um there there is many a lot of validation required to onboard a supplier. We are through with the first phase. Second phase is on now. 19:43 19 minutes, 43 seconds So we will be starting to supply in a year a year and a half. Uh the first invoicing will start. So that is the uh 19:50 19 minutes, 50 seconds most important point in a milestone so that we will continue to leverage this um relationship with our customers for 19:58 19 minutes, 58 seconds future products. India per se is also well poised for this taking advantage of this uh technological growth because 20:07 20 minutes, 7 seconds there's not much of capacity in Europe nor in North America since Ksman also owns an foundry for these large engines. 20:16 20 minutes, 16 seconds Craftsman and Fenberg goes which is near it is an Hamburg which is near Nuremberg we have an insight into whatever capacities are available in Europe also 20:24 20 minutes, 24 seconds totally and what is really happening to those capacities. So the we are working hand in hand with the customers to see 20:32 20 minutes, 32 seconds we align with their future requirements on volume. 20:37 20 minutes, 37 seconds Okay. And uh one more question. What are the current debt levels of the company both short and long-term? Given that 20:45 20 minutes, 45 seconds OEMs finished 2025 with like near optimal inventory day, has that been like a bullwith effect on your working 20:52 20 minutes, 52 seconds capital needs because of the recent surge in surge in demand because of the GST reduction? 20:59 20 minutes, 59 seconds No. On the power train, I think there is no increased uh requirement of working capital per se in aluminium. I think the 21:07 21 minutes, 7 seconds delta price of the price increase will have that marginal um 10% or 15% increase in the working capital 21:14 21 minutes, 14 seconds requirement. So the um question is u net debt to I would rather look at um debt 21:22 21 minutes, 22 seconds to eit debt to aid on a consultant level we are at 2.5 okay 21:29 21 minutes, 29 seconds on on a 9month figure which is annualized. Okay, thanks. That's also my thing. 21:38 21 minutes, 38 seconds Thank you. 21:40 21 minutes, 40 seconds Thank you. Ladies and gentlemen, if you wish to ask a question, please press star and one. 21:47 21 minutes, 47 seconds We take the next question from the line of edge of Frederick from Sundaram Mutual Fund. Please go ahead. 21:55 21 minutes, 55 seconds Hi sir, thanks for the opportunity. Sir, in aluminum uh are there products where we can uh benefit out of this aluminum 22:04 22 minutes, 4 seconds price increase? meaning uh it is not on per turnage basis and on more product level pricing. 22:10 22 minutes, 10 seconds We never have ever quoted for patternage basis at all. Aluminium is a calculated uh material cost and uh that is it and 22:20 22 minutes, 20 seconds that is anybody can calculate it not only the customer. So it is an um very clear engineered number which nobody can 22:28 22 minutes, 28 seconds dispute on the weight of the part nor on the cost of the material. cost of material of course there can be some dispute on plus - 3% on market prices 22:37 22 minutes, 37 seconds that is it so beyond that whatever is the gross mean value addition what we do on the casting side and the post casting 22:44 22 minutes, 44 seconds process can be painting can be some heat treatment and also can be also the missioning side so we are an engineer 22:52 22 minutes, 52 seconds company where we do a lot of missioning per se as craftsman standalone but sunbeam and diaxin are more on the casting on the side sunbeam on the 23:00 23 minutes exports yes it is a fully finished product. So we never have ever quoted for pertain basis on matter. It is 23:08 23 minutes, 8 seconds always component to component this component this price. 23:13 23 minutes, 13 seconds Okay. So uh I mean despite quoting at those levels you're saying the the spread is what we compute as value at. 23:21 23 minutes, 21 seconds So always when prices increase there will be a optical reduction in margins. So that that will always happen right. 23:28 23 minutes, 28 seconds Yes correct. See suppose a tailor is [clears throat] getting,000 rupees for stitching and the government is 2,000. 23:34 23 minutes, 34 seconds The margin is on say has got margin. So the material cost goes up. We have no it is a pass through. So it only optically 23:42 23 minutes, 42 seconds increase the top line revenue. Yeah. Got it. So sir secondly on this Euro FTA can there be better 23:49 23 minutes, 49 seconds opportunities than earlier charged in Kotavari from Europe? 23:56 23 minutes, 56 seconds No, I think the Kodavati project is based on a very special product where there's a unique once in a lifetime sort 24:04 24 minutes, 4 seconds of an uh requirement coming up for the OEMs who are manufacturing those products which are hardly less than 10 24:11 24 minutes, 11 seconds companies all over the world. So this is driving that um they are going to lose their customer base if they don't ramp 24:18 24 minutes, 18 seconds up on that matter. Uh so everybody is in a race to create uh capacities. Nobody's worried about this FTA per se. I think I 24:27 24 minutes, 27 seconds mentioned in the previous earnings call the engine or the generator I say generator cost anywhere between uh one 24:34 24 minutes, 34 seconds um billion um uh sorry $1 million uh dollar to say $1.5 million per generator 24:43 24 minutes, 43 seconds whereas our product may be around 20 $30,000 depending on the configuration and size of the engine things like that. 24:49 24 minutes, 49 seconds So we are not any significant um game changer as far as their bill of material or the cost goes in. So it more is 24:58 24 minutes, 58 seconds driven by the capability of the supplier in this case craftsman and also the reliability of quality is extremely 25:07 25 minutes, 7 seconds important uh for the customer to take a decision. This was normally made in house. So the trust to give it the orders outside to a supplier itself is a 25:16 25 minutes, 16 seconds big big step for these OEMs. If you ask for the other not the bottom of the pyramid at least the middle of the 25:23 25 minutes, 23 seconds pyramid products where we are um somewhat present a little but on the top of the pyramid products this is not the 25:30 25 minutes, 30 seconds criteria is not the criteria but middle of the pyramid products there is an um earlier it was we need to be 30% cheaper 25:38 25 minutes, 38 seconds than what they develop in Europe. Now the Europe cost have gone up and now they're feeling the pinch. Now they're looking at 20% we should be cheaper than 25:46 25 minutes, 46 seconds Europe to get the order. We don't really engage on the sort of businesses but with this FDA coming in I think the gap 25:53 25 minutes, 53 seconds will be further reduced totally. So the and the trust on India's supplier base has to improve because of infrastructure 26:01 26 minutes, 1 second for shipping logistics reliability of quality and delivery. Once it improves we can come at even at 10% leverage we 26:09 26 minutes, 9 seconds have on the pricing is we have lesser pricing than the European counterparts we can easily win the order but on aluminium the other things are happening 26:17 26 minutes, 17 seconds now I'm switching out to aluminium sorry about that but I aluminium there is a lot of distress in 26:24 26 minutes, 24 seconds the aluminium supplier community base especially in the autoillary both in North America as well 26:34 26 minutes, 34 seconds as in Europe they all invested heavily for Europe and many of them are getting insolvent or they don't have the ability 26:41 26 minutes, 41 seconds to invest further. So when the swim back is happening to hybrid and ICE in a bigger way uh these companies are not 26:50 26 minutes, 50 seconds able to adopt at all and the uh the products are have to be outsourced to other regions. So we are 26:59 26 minutes, 59 seconds still competing with our Asian partners and other regions also. So I think between we are not really competing now 27:07 27 minutes, 7 seconds with the European supplier base or the American supplier base on the products what we manufacture. 27:13 27 minutes, 13 seconds Very clear sir. Thanks. Thanks for that. 27:17 27 minutes, 17 seconds Thank you. We take the next question from the line of mumatia institutional equiities. Please go ahead. 27:31 27 minutes, 31 seconds Omkesh uh please unmute your line and proceed with your question. Yeah sorry uh thanks for the opportunity again uh 27:38 27 minutes, 38 seconds sir on the capex side what was the capex for the 9 month and what is expected for the full year sir and can you s again 27:45 27 minutes, 45 seconds indicate the debt level what is the debt gross and net currently sir I think this can be taken offline on 27:53 27 minutes, 53 seconds this uh subject various uh subsidies also we have to as 27:59 27 minutes, 59 seconds I mentioned consolant net IATA you know the uh ITA levels it is 2.55 as of now and the um today the return of capital 28:09 28 minutes, 9 seconds employed is pre-ax is around 16% totally roe is around 12% annualized so the uh 28:16 28 minutes, 16 seconds we look at it now the there is big upurge in orders as we speak also so we are um looking at standalone capex for 28:25 28 minutes, 25 seconds craftsman around close to cr this year because we have added quite significant revenue if you recall our IPO value 28:33 28 minutes, 33 seconds turnover was around say 1,300,400 range and now this year alone we added we adding around 1,000 cr to the top line 28:41 28 minutes, 41 seconds uh overall and we are seeing that this growth is going to continue in the coming quarters also in the coming years so we are um incurring capex at that 28:50 28 minutes, 50 seconds level so I will not like to comment on closing debt or uh this but I think um we have seen the uh higher level of net 28:58 28 minutes, 58 seconds to debt a bit 2.55 this will keep improving Got it sir. And so finally sir on this u 29:06 29 minutes, 6 seconds recently uh sun being sold his aluminum twist set to shriam twist. Uh just want to understand I mean what kind of business was that sir? 29:16 29 minutes, 16 seconds It was generating around 30 crore revenue approximately with two customers um there both on the two side in the NC 29:24 29 minutes, 24 seconds region totally you know these uh customers and um historically I think earlier it was slightly higher number 29:32 29 minutes, 32 seconds but the products have migrated and moved during the sunbeams um troubled period and not developed the new products so it 29:40 29 minutes, 40 seconds doesn't make any material change to have this 30 cr revenue uh with the variety of products and we are not a key market player also uh Sunbeam there. So we are 29:50 29 minutes, 50 seconds simplifying the uh business model of Sunbeam to its core competencies overall other strategies. In fact not only that particular business and number of 29:58 29 minutes, 58 seconds customers also we have are on the exit mode we have given 3 months 6 months notice for that these customers I think 30:05 30 minutes, 5 seconds numbering around 10 contribute to 5% of our uh revenue. So this means that uh we'll become more and more efficient as 30:13 30 minutes, 13 seconds we move on. uh now as we speak I think um 97 or 95% of the revenue is coming 30:20 30 minutes, 20 seconds from uh four five customer groups I would say in total so we want to focus on that stabilize that and then add more 30:28 30 minutes, 28 seconds customers which are sizable value here after adding a customer on um value I think at threshold level I think the initial orders itself we are looking at 30:36 30 minutes, 36 seconds $10 million going all the way to $30 million even for a smaller company like Sunbeam because of the uh new costs of 30:46 30 minutes, 46 seconds um I would say labor, the infrastructure, the capex mean the equipment cost has gone more uh the u 30:54 30 minutes, 54 seconds and the demands from the customer also are quite high because of the new requirement of quality and things like 31:01 31 minutes, 1 second that. Also as we speak the um increased um requirements um for all sort of tax 31:08 31 minutes, 8 seconds and other compliances software all these things are also going up. So we cannot really handle retail business. This is why we rationalizing from James. 31:20 31 minutes, 20 seconds Got it sir. Thank you so much for the opportunity. 31:24 31 minutes, 24 seconds Thank you. We take the next question from the line of Vignes SBK from Kimma Wealth. Please go ahead. 31:33 31 minutes, 33 seconds Hi. Am I audible? Yes. 31:37 31 minutes, 37 seconds Yeah. Thank you. I just want to know how do we see the revenues across the segments uh growing in the next couple of years. Do we see like industrial 31:45 31 minutes, 45 seconds engineering like ramping up? What's your view on? 31:50 31 minutes, 50 seconds Yeah, industrial engineering I think high single digit or low double digit will be there on powertrain also we see the similar number on um aluminum products will be in the high teams. 32:04 32 minutes, 4 seconds Okay. And uh uh how do you see like uh from IC to uh electric vehicle shift and the benefiting or the usage of aluminium 32:13 32 minutes, 13 seconds products more towards the EV is that happening or uh can you please repeat the question or 32:22 32 minutes, 22 seconds the demand the demand for the aluminum products is it increasing as we slowly move to the EV side 32:31 32 minutes, 31 seconds because of lightweing or something like that in two two different ways we'll first I will answer it for ice which is 32:38 32 minutes, 38 seconds uh applicable and then we'll talk about hybrid ice and then the EV all the three segments will benefit from lightweing 32:47 32 minutes, 47 seconds very clearly because it means lesser carbon footprint lesser cost of the vehicle in engine size and better um 32:55 32 minutes, 55 seconds even the passenger car segment we might have noticed slowly but surely that now 1.5 liter is becoming uh predominant 33:02 33 minutes, 2 seconds even though the 1.5 liter of the current uh passenger cars are pumping out more power than the 2 lit of the gasoline 33:10 33 minutes, 10 seconds earlier. So the now earlier the 1.5 lit uh power was being used for 1.2 liter 33:18 33 minutes, 18 seconds also the engines have become more powerful and more smaller. So even in spite of all that I think the engine capacity is going in India from 1.2 to 33:26 33 minutes, 26 seconds 1.5 liter. So this means that the other amenities or other features which the customers want they will need some sort 33:34 33 minutes, 34 seconds of engine power or an hybrid to supplement the activity. So all this uh or the cafe norms um will drive them 33:44 33 minutes, 44 seconds drive the OEMs to have lesser um emissions in total to have meet the 33:52 33 minutes, 52 seconds cafe. So for that lightweing is the best way in yes on EV it will become more 33:58 33 minutes, 58 seconds predominant because the more lighter the vehicle the same battery will give a higher range or uh the we can reduce the 34:06 34 minutes, 6 seconds size of the battery uh to give the same range that means the cost of the battery in relation uh decrease in cost of the 34:14 34 minutes, 14 seconds battery in relation with the increased content of aluminium. It is quite signaling advantageous for the OEM to move towards aluminium on the ice and 34:22 34 minutes, 22 seconds hybrid. The challenges are slightly different. Um the new platforms have to take the new they have to bring out the 34:30 34 minutes, 30 seconds new designs which the western world has already adopted in the last 10 years and only then the aluminium content will increase. But as uh OEMs built new 34:39 34 minutes, 39 seconds plants, it it is only then possible for them to make this big change. Always they say platform when we we have to 34:48 34 minutes, 48 seconds develop a new platform because existing platform will not meet the safety norms or will not meet the uh new requirements which are come up. So when they invest 34:57 34 minutes, 57 seconds for a new platform which is much more than the powertrain investment they build in uh features which uh can take 35:04 35 minutes, 4 seconds in more aluminium I would say. So that is the time aluminium content will dramatically increase. We have got a long way to go for the increase of 35:12 35 minutes, 12 seconds aluminum content in the passenger vehicle when compared to the western world. So it is happening but it's not happening at the 35:22 35 minutes, 22 seconds okay sir thanks for the great explanation. Thank you. 35:27 35 minutes, 27 seconds Thank you. We take the next question from the line of Abhishek Jan from Alphaacurate Advisor Private Limited. Please go ahead. 35:35 35 minutes, 35 seconds Uh sir uh my next question is on uh date side. Uh so what's your plan to reduce your date as you were uh earlier 35:45 35 minutes, 45 seconds indicated that uh you will sell one of your land and you'll start to reduce date in FY27. We just wanted to 35:53 35 minutes, 53 seconds understand uh how much date reduction will happen in FY27 onwards uh and what is your target for 36:02 36 minutes, 2 seconds the medium term? See uh we already sold anything debt below debt to a bit below 36:09 36 minutes, 9 seconds two is compatible and we like to stabilize at 1.5 when we have gone through this big growth cycle. So as we 36:16 36 minutes, 16 seconds speak it is 2.5 in spite of the land not getting sold land has become very and very hot property I would say in that 36:24 36 minutes, 24 seconds region and while we waiting for the best price we are engaged with multinational um companies who are in the business of 36:32 36 minutes, 32 seconds selling this land various advertisements have come in offers have come in so we are evaluating those offers for the best possible price we are carrying around 36:40 36 minutes, 40 seconds 350 crores worth value in the books which was um at the last year when we had done the evaluation. So we are 36:48 36 minutes, 48 seconds seeing what best we can do for the shareholders. So that will surely reduce the debt but we are not uh in such a 36:55 36 minutes, 55 seconds hurry that we have to sell the land at a lower price to reduce the debt. 37:00 37 minutes So you mentioned that uh your date to VA uh reduction uh uh to be around 1.5 from 37:08 37 minutes, 8 seconds the 2.5 now. So how much time it will take? Uh sir I think I would need to be very honest if you grow at 5% it will 37:17 37 minutes, 17 seconds take only two years to get to debt to a 1% one is to one and another two years we grow at 5% the debt will be gone 37:25 37 minutes, 25 seconds totally there will be no new customers so we are balancing the direct on the matter so at a steady state at a lower growth at around 8 10% I think we can 37:34 37 minutes, 34 seconds have a debt to a bit between anywhere between 1 to 1.5 totally so there will be today we have grown the business from 37:41 37 minutes, 41 seconds 1,500 to 7,000 for the very fact that India and our Asian neighbor we have not uh kept basis all our customers are 37:50 37 minutes, 50 seconds disappointed that we don't have the capacity nor the infrastructure to handle those big orders totally so for that I think um without building bridges 37:59 37 minutes, 59 seconds I think the infrastructure will not grow in the country nor we invest for uh we cannot have the multinational customers to place single orders of $50 38:07 38 minutes, 7 seconds million$100 million with us unless we have the capability to deliver that So with a smaller base yes it looks like as 38:15 38 minutes, 15 seconds if the capex is high but I think we are looking at uh even in the aluminum space competitors who are having $8 billion 38:23 38 minutes, 23 seconds only in the aluminum revenue and all the top 10 aluminum players are between 3 billion to 8 billion and you know that uh we stated fact is we are less than 38:31 38 minutes, 31 seconds half a billion dollar in aluminum revenue. So unless we scale up capacity, we cannot even bid for the orders. On one side, we want to broadbase the 38:39 38 minutes, 39 seconds customer. We want to export. We want to be one among the uh players who are uh capable of going to the next 10 15 years 38:48 38 minutes, 48 seconds cycle of this sort of um not only growth phase, I would say sustainability. So I think we are doing capex to sustain the 38:56 38 minutes, 56 seconds company for with getting new orders at with new technologies. 39:03 39 minutes, 3 seconds Condition sir in a power team business you are also adding capacity so just wanted to understand when it will be completed and how much incremental 39:12 39 minutes, 12 seconds revenue would be generated uh on this uh capacity I hope we'll continue to invest for the 39:19 39 minutes, 19 seconds power train for the first next 5 to 10 years and this was um a stated fact that we bet on ice rather than on EV and now 39:28 39 minutes, 28 seconds we see that it is paying off um so There is a lot of consolidation happening within India as well as uh 39:36 39 minutes, 36 seconds rest of the world in the number of supplier base because again of the technological change and the new demands on uh the emission norms I would say. 39:46 39 minutes, 46 seconds So uh we are becoming um getting more inquiries as we speak. So as long that demand keeps going we'll continue to expand and invest in capacities. 39:56 39 minutes, 56 seconds And what would be the near-term capacity additions in the power train business? How much that would be? 40:03 40 minutes, 3 seconds I think 10% capacities uh 5 to 10% is what we are looking at in the next 12 months starting from even this January. 40:11 40 minutes, 11 seconds Yes. Thank you sir. 40:16 40 minutes, 16 seconds Thank you. We take the next question from the line of Nikl Raalo from I thought PMS. Please go ahead. 40:24 40 minutes, 24 seconds Uh yeah thanks for the opportunity again. uh so we are action on sida margins are at 20% uh I think currently 40:33 40 minutes, 33 seconds so just wanted to know this is the peak or uh in the coming years and uh how can we 40:40 40 minutes, 40 seconds achieve this uh see uh we are putting up one more plant for DRX we have done the 40:48 40 minutes, 48 seconds disclosures in the stock exchange you may be aware that we have received some orders and it's quite significant uh 40:55 40 minutes, 55 seconds this plant um investment and capacities as we move on. So as we move on when the new plant comes into operation two 41:02 41 minutes, 2 seconds quarters we'll have a hit on the margins because there will be pre-operative cost which is there and suboptimum utilization of the plant. But as you 41:10 41 minutes, 10 seconds move forward again the it'll normalize and when that plant comes in at full operating capacity in the coming 3 4 years we will see that margin expansion 41:18 41 minutes, 18 seconds will happen because the older projects will come down. Again margin expansion I put a caveat here or I put a disclaimer here which is a very strong disclaimer. 41:29 41 minutes, 29 seconds Our margins are related to only gross margins compared on percentage of the gross margins or the after the material 41:36 41 minutes, 36 seconds cost is removed from the top line. So otherwise it is not an apple to apple today aluminium is at 230 rupees 240 rupees or 280 rupees on the special 41:44 41 minutes, 44 seconds alloys. No no sorry on special alloys it is more than 283 rupees tomorrow it may be 500 rupees. So we calculate margins on that it'll be wrong. So I would 41:52 41 minutes, 52 seconds rather say it'll come on operating leverage and how well we control our uh costs and how well we are doing 41:58 41 minutes, 58 seconds controlling our uh I mean the product mix and our strategies going forward. 42:08 42 minutes, 8 seconds Okay, thank you. That's all for my thank you. We take the next question from the line of Himmanu Singh from Boda 42:17 42 minutes, 17 seconds BNP Paraliba Mutual Fund. Please go ahead. 42:21 42 minutes, 21 seconds Hi sir. Uh thank you for the opportunity sir. Uh so just wanted to understand what is our exposure uh by segment. Can 42:30 42 minutes, 30 seconds you give any rough figure like CV passenger vehicle two wheelers? 42:36 42 minutes, 36 seconds So only on the power train you're talking about as a whole as a company I think where you're talking about as a whole as a a company. Just a minute we 42:43 42 minutes, 43 seconds will Mr. Viml is opening the slide and Mr. Nashar also is giving me uh some inputs. Just a minute we'll take the 42:50 42 minutes, 50 seconds exact slide as a consolidated uh revenue per se with across all the subsidies 42:59 42 minutes, 59 seconds also passenger vehicle contributes to 34% revenue two-heer is 24 commercial 43:05 43 minutes, 5 seconds vehicle is 12 storage is 9% and balances uh tractor is around 4% and uh all other 43:12 43 minutes, 12 seconds products high in fiveway is around 5% other powertrain is 4%. So it is quite uh quite a long tail. 43:21 43 minutes, 21 seconds Okay. Okay. Sure sir. And sir uh next question is on the standalone uh aluminium power uh performance. So we 43:31 43 minutes, 31 seconds have seen the uh revenues also coming down in margins uh on the a bit level falling sharply almost like 500 basis point. 43:41 43 minutes, 41 seconds Particular reason how should we see this going ahead? 43:47 43 minutes, 47 seconds See there are OEMs who shut shop for the annual maintenance and post the uh festive season inventory correction. The product mix would have been changed. 43:56 43 minutes, 56 seconds Maybe our revenue would have been flat because of aluminum prices or because of new products we brought into line which are suboptimum and the existing product 44:03 44 minutes, 3 seconds lines will not be utilized properly in December because customers do not inward material uh in the last two weeks of the month because the year of manufacturer 44:11 44 minutes, 11 seconds and a lot of other things which are there. We also have increased our capacities uh quite significantly and we 44:18 44 minutes, 18 seconds carried those costs in December which in December it was uh not full been not full utilization not the exact word but 44:26 44 minutes, 26 seconds it is uh below optimum level for December usage. So this will continue as we ramp up. it will not be a stable 44:33 44 minutes, 33 seconds level. There will be fluctuations from one quarter to one uh one quarter depending on festive season depending on how the customer performs how that 44:41 44 minutes, 41 seconds particular product segment uh is contributing. So we will have that but as an annual basis I don't see any big change. 44:51 44 minutes, 51 seconds Okay. Okay sir. Thank you so much. 44:56 44 minutes, 56 seconds Thank you ladies and gentlemen. As there are no further questions from the participant, I now hand the conference over to Mr. Shinawasandra Ravi for his closing comments. 45:07 45 minutes, 7 seconds Uh thank you very much for joining and uh what I wish to tell our shareholders and investors I would say thank you for 45:14 45 minutes, 14 seconds stay and staying with us during this uh large uh change what we have brought about the company from a standalone to 45:22 45 minutes, 22 seconds with the subsidiaries and things like that. we have more interesting things to do in the to make the company more 45:30 45 minutes, 30 seconds strategically aligned in line with the global requirements. So we are working on that and um thank you for your support. 45:40 45 minutes, 40 seconds Thank you on behalf of Craftsman's Automation Limited. That concludes this conference call. Thank you for joining us and you may now disconnect your lines.