Craftsman Automation Ltd — Q4 FY26

Craftsman Automation Ltd Q4 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=mCUM92OSgTU Published: 5 days ago

0:00 Ladies and gentlemen, good day and welcome to the earnings conference call of Craftsman Automation Limited. As a reminder, all participant lines will be 0:08 8 seconds in the listenon mode. There will be an opportunity for you to ask questions after the presentation concludes. 0:15 15 seconds Should you need any assistance during this conference, please signal an operator by pressing star followed by zero on your touchstone telephone. I now 0:23 23 seconds hand the conference over to Mr. Shinasan Ravi, chairman and managing director of Craftsman Automation Limited. Thank you and over to you Mr. Ravi. 0:34 34 seconds Thank you. Good afternoon everybody and thanks for joining the earnings call. Um uh we have uploaded the presentation. 0:42 42 seconds I hope all of you had a chance to have a look at it. So straight away we can start with the uh Q&A please. 0:51 51 seconds Thank you very much ladies and gentlemen. We will now begin with the question and answer session. 0:56 56 seconds Participants who wish to ask questions may press star and one on the touchstone telephones. If you wish to withdraw yourself from the question queue, you 1:05 1 minute, 5 seconds may enter star and two. Participants are requested to use only handsets while asking a question. Please note that some 1:13 1 minute, 13 seconds of the statements made during this earnings conference call may constitute forward-looking statements which are subject to risks and uncertainties and 1:21 1 minute, 21 seconds are not guarantees of future performance. We encourage you to refer to the disclaimer section in the company's investor presentation. 1:29 1 minute, 29 seconds Further, the management will not be addressing any customer specific queries due to confidentiality obligations. 1:36 1 minute, 36 seconds Participants are requested to avoid mentioning customer names while asking questions. We also request participants to limit themselves to a maximum of two 1:44 1 minute, 44 seconds questions at a time so that all participants have an opportunity to ask their questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. 1:56 1 minute, 56 seconds The first question is from the line of Joseph George from IFL. Please go ahead. 2:02 2 minutes, 2 seconds Uh hi sir. Uh good afternoon. So it is one question. Uh when I look at your line is unmuted. You may go ahead and ask your question. 2:11 2 minutes, 11 seconds Hello, am I audible? Hello, am I? 2:17 2 minutes, 17 seconds With questions may enter star and one. Hello. 2:40 2 minutes, 40 seconds We have the question from Mr. Joseph George from IFL Cap. Please go ahead. Uh am I audible this time? 2:52 2 minutes, 52 seconds Okay. I think uh he's not able to join looks like. Uh then participants if you have any questions 3:01 3 minutes, 1 second at this time you may enter star and one. 3:14 3 minutes, 14 seconds We have a question from the line of Pesh Cheddar from Lucky. Please go ahead. 3:19 3 minutes, 19 seconds Yes sir. Uh can you uh talk about a little bit on the alloy wheels project uh on the expansion side that we had? 3:30 3 minutes, 30 seconds Yes. The exit rate of the alloy wheel uh approximately it is 3:36 3 minutes, 36 seconds around um uh volume wise analyzed when you look at it on the March. So it is uh 3:45 3 minutes, 45 seconds equal to around 3 million uh alloy wheels is the exit rate for the month of March. So we cannot say that we have been wrapping up in steps at bi as well 3:53 3 minutes, 53 seconds as in shagi. So we have uh done at a volume which is at a run rate equal to 4:02 4 minutes, 2 seconds close to 3 million wheels for the month of March for uh for the annualized I would say 4:09 4 minutes, 9 seconds and the project would have started in quarter 4 right uh quarter 4 or quarter three for 4:18 4 minutes, 18 seconds shagiri but uh bi is in operational the phase one is operational for for the full year. 4:26 4 minutes, 26 seconds Okay. Uh and how about the Hosour one? 4:31 4 minutes, 31 seconds Hosour one we started in Q3 and uh we still ramping up. Yeah, both plans we are still ramping up. The exit run rate 4:40 4 minutes, 40 seconds uh has been uh to the tune of annualized March number when we annualize it is equal to around 3 million. 4:48 4 minutes, 48 seconds Okay. And in the aluminum die casting side of the business uh uh you know uh 4:56 4 minutes, 56 seconds the uh the acquisition of uh of the sunbeam uh where are we in terms of the 5:04 5 minutes, 4 seconds capturing of margins via the shift and what is the progress there? 5:10 5 minutes, 10 seconds We are lacking behind on the margin wise with the sing still at single digit for various reasons but we are on the right 5:18 5 minutes, 18 seconds track that we are um exiting customers where it's not profitable existing um subsegments of the business with same 5:26 5 minutes, 26 seconds customers where it's not profitable totally or even selling one portion of the uh low value business which is around 30 crores per year. uh we have 5:34 5 minutes, 34 seconds sold that uh line of uh equipment and business which you disclosed to stock exchange. So the customers who are 5:42 5 minutes, 42 seconds exiting also need some time to find other suppliers. These are nonprofitable businesses and unviable going forward. 5:48 5 minutes, 48 seconds So the restructuring is on. So the we are on the right track. So from Q2 onwards on the current year we will see 5:56 5 minutes, 56 seconds some traction uh the reduction of manpower the reduction of products reduction of customers and um revisiting everything and also resetting the prices 6:04 6 minutes, 4 seconds which are legacy prices legacy products and also uh on the aluminium uh price reset or the aluminium price pass 6:13 6 minutes, 13 seconds through. We have been very clear with the customers when aluminium price through is not there uh then we are declining to uh supply. So all these are 6:23 6 minutes, 23 seconds in action as far as sunbeam is concerned not only in sunbeam across the other aluminum plants also which is uh it is 6:29 6 minutes, 29 seconds slightly common. So uh we will see the results coming into Q2 from Suni. 6:37 6 minutes, 37 seconds Okay. And my last question is on the growth rate overall. uh how should we see FI27 6:46 6 minutes, 46 seconds uh to be looking like on the revenue growth side? 6:50 6 minutes, 50 seconds Uh I mean as I mentioned last time itself uh we for the first time we had given some guidance because of so many 6:57 6 minutes, 57 seconds uh changes in the business so many plans coming in and also subsidiaries. So I will just give you rough indication. it 7:04 7 minutes, 4 seconds is totally double digit most probably um in the mid- teens I would say that is what is the u expectation for the growth 7:13 7 minutes, 13 seconds and when you say mid- teens we also have to um assume that the aluminium prices um are around the level what it's 7:21 7 minutes, 21 seconds currently if there's any change in aluminium prices there can be some commodity price impact which will either inflate or deflate the top line so I say 7:30 7 minutes, 30 seconds that we are still on the growth path that is very clear uh new projects are kicking in across all the divisions I would say whether it's powertrain or 7:37 7 minutes, 37 seconds alumnium or I mean also industing segment so the momentum of growth is um reasonably uh we are well placed I would 7:45 7 minutes, 45 seconds say okay thank you sir thank you the next question is from the 7:52 7 minutes, 52 seconds line of wignesh from Kesma wealth please go ahead hi am I audible 8:01 8 minutes, 1 second yes sir please go ahead yeah yeah So just want to understand uh are you having any plans to scale up any particular segment or over a medium term 8:09 8 minutes, 9 seconds for the next three to four years apart from the power train segment? 8:15 8 minutes, 15 seconds Power train is scaling up. Um also the station engine side is the order book is um for the first 100 million is 8:21 8 minutes, 21 seconds finalized and is with us. So as earlier as stated earlier I would say we will be able to reach that 100 million uh sort of revenue in 2930. So it is on track. 8:33 8 minutes, 33 seconds The second phase the order intake of the inquiry momentum is pretty strong. So we may go for phase two expansion there 8:41 8 minutes, 41 seconds also for the beyond that 100 million uh revenue. You are aware that the uh data center market or a is uh booming all 8:50 8 minutes, 50 seconds over the world and uh post the Iran crisis um there is more focus on the Pacific region for installing data 8:58 8 minutes, 58 seconds centers. This is giving some more advantage to manufacturing in India in uh some sense for uh them. Capacity wise 9:07 9 minutes, 7 seconds almost everybody is full. That is uh the another positive point. Coming to the um general power train um the other 9:14 9 minutes, 14 seconds projects of multinational companies setting up plants here and ramping up. 9:17 9 minutes, 17 seconds Uh that is also a work in progress. We are seeing that the domestic um business farm sector has been doing better. truck 9:25 9 minutes, 25 seconds segment is uh somewhat um muted I would say in general. So the other business 9:31 9 minutes, 31 seconds about uh the export of some truck engine blocks to outside India which we said will be discontinued but that is going 9:39 9 minutes, 39 seconds to continue that's a good news. So on the powertrain uh we are stable and we are growing. Uh I think we can expect a double digit growth. On the aluminium 9:48 9 minutes, 48 seconds side um uh we are present from two wheeler to four-wheeler to also indust aluminium some portion is there. So we 9:56 9 minutes, 56 seconds frankly speaking we are focusing on value added products like uh casting and missioning. uh we are not interested uh 10:03 10 minutes, 3 seconds really to do only the casting portion and wherever we are doing a little I think uh we are in negotiation with customer either we convert it to with 10:12 10 minutes, 12 seconds missioning or we have to find new customers with higher value addition because aluminium per se the commodity price are going up energy price are 10:20 10 minutes, 20 seconds going up labor cost is going up and also all consumables are going up so the uh margins on um basic rock casting is not 10:29 10 minutes, 29 seconds going to be viable and craftsman we don't have that model 95% is missioned and um in DR yes it is critical casting 10:37 10 minutes, 37 seconds so it is still okay for some basic missionaching but for sunbeam it is not okay because it is uh not so complicated 10:44 10 minutes, 44 seconds parts but at the same time uh most cases missioning is not not most cases at least the domestic portion missioning is 10:51 10 minutes, 51 seconds not there so there will be some tough decisions to take in the coming quarters on the improve improvement in value addition to answer your question uh we 11:00 11 minutes don't really are uh worry about which is the customer. We are getting uh inquiries for four-wheelers for export market both Europe and North America. 11:11 11 minutes, 11 seconds We're increasing then there is more in increasing um uh inquiry trend at least. 11:17 11 minutes, 17 seconds So this means um uh the potential for growth in the export segment is quite high. Uh so we are picky and choosing 11:24 11 minutes, 24 seconds the business uh which is viable and sustainable over a longer period of time and our stated ambition on the alumni 11:31 11 minutes, 31 seconds business um in the last year I think I had mentioned a couple of times at least during the call that uh the first leg or 11:39 11 minutes, 39 seconds first phase will be to touch $1 billion in the remaining business and for that uh we are also uh increasing the focus 11:46 11 minutes, 46 seconds by merging the entities of the business model which you have also put up disclosures in the stock exchange. So the aluminium business is on a growth 11:54 11 minutes, 54 seconds track on industrial engineering. Yes, it is a smaller portion of the business but that is also the backbone for our power train and alumnium business. There also we see good traction uh going forward. 12:08 12 minutes, 8 seconds That was helpful. So thanks for detailed answer. Just one question that on the second phase of the powertrain segment when are we planning to start and uh 12:16 12 minutes, 16 seconds commission on the revenue stream for the second phase? 12:21 12 minutes, 21 seconds I think we should take a decision by September based on the order input. Uh now the orders what we have uh already 12:28 12 minutes, 28 seconds agreed to take or taken or order received I would say uh is completing the uh capacity for phase one both at 12:36 12 minutes, 36 seconds the foundry side as well as at the missioning site. At the foundry side um it is modular and it is only incremental 12:44 12 minutes, 44 seconds investments required to go to the next phase. on the missioning side it might not be just incremental it's slightly more than incremental so we are 12:51 12 minutes, 51 seconds preparing for that uh uh today and the lead times are quite high and uh one good thing is we had our investment done 12:59 12 minutes, 59 seconds at uh for starting from 21 onwards itself in small small steps in 23 24 we had made disclosures and in 24 even a 13:09 13 minutes, 9 seconds public disclosure regarding this business so I think uh this gestation period um is quite long that is the reason our foundation in this business 13:17 13 minutes, 17 seconds is pretty strong and we are able to capture uh the orders or the growth uh which is uh coming in a hurry now. So 13:25 13 minutes, 25 seconds even the next set of orders we'll be able to have a step up incremental investment where uh all the building 13:33 13 minutes, 33 seconds blocks are there to go up but all the decisions will be taken on basic basically after reconsidering or uh looking at the order question in September. 13:44 13 minutes, 44 seconds Okay Dr. Thank you. That's it for Okay. 13:48 13 minutes, 48 seconds Thank you participants. If you have any questions at this time, you may enter star followed by one on your handsets. 13:54 13 minutes, 54 seconds The next question is from the line of Sentel Kumar from Jointra Capital. Please go ahead. 14:00 14 minutes Thanks for the opportunity. Am I audible sir? Yes sir, you're audible. Yes, please. 14:06 14 minutes, 6 seconds Yeah. Uh I just want to know is there any new business opening for uh our industrial engineering 14:14 14 minutes, 14 seconds lacks in data center business that center per se? Yes, there is 14:23 14 minutes, 23 seconds possibility but uh it'll be more going into aluminium side for certain reasons. 14:27 14 minutes, 27 seconds I understand um uh that requirement is also using some extrusions and things like that. But uh so far uh we have 14:35 14 minutes, 35 seconds given racks for the manufacturing sector where for the automotive where they are uh storing the 14:42 14 minutes, 42 seconds batteries because it has to be very safe for fireproof and things like that. We have made supplied ESRS systems uh to 14:50 14 minutes, 50 seconds and vertical lift modules for these uh divisions. 14:56 14 minutes, 56 seconds the scale which uh our um Asian uh neighboring country has done I think there they're using lot of storage but 15:04 15 minutes, 4 seconds we are there is a lot of discussion happening for two of the projects coming in for battery manufacturing yes something may 15:13 15 minutes, 13 seconds come up it may be awarded to multinationals but I think there is an opportunity but it not be in the scale of what has happened in our neighboring 15:21 15 minutes, 21 seconds country China thank you that's Thank you. Participants with questions may enter star and one on your handsets. 15:33 15 minutes, 33 seconds The next question is from the line of Joseph George from IFL. Please go ahead. Uh thank you. Am I audible now? 15:41 15 minutes, 41 seconds Yes sir. Perfect. So I have two questions sir. 15:44 15 minutes, 44 seconds One is in relation to the powertrain segment margins. We saw a good spike uh this quarter. Is it attributable to uh scale benefits and will it sustain one? 15:54 15 minutes, 54 seconds Uh in relation to that you mentioned that you know overheads, labor etc are going up. Um and this question pertains 16:02 16 minutes, 2 seconds to you know all the segments. How easy will it be to pass on all these overheads you know energy costs maybe 16:09 16 minutes, 9 seconds labor etc to the customers? uh in the given context context on the power train segment uh I think we 16:18 16 minutes, 18 seconds have grown only a small portion last year it's not the scale benefit which has really played out in the last year uh I would say that the repair 16:27 16 minutes, 27 seconds maintenance which went on for almost four five quarters which was depressing the uh abit margins uh was the main uh 16:36 16 minutes, 36 seconds AITA margins were the main reason for that uh change and whatever the um some of the 16:45 16 minutes, 45 seconds manpower production uh by some automation or um better methods that has also paid off in general and I would say 16:54 16 minutes, 54 seconds the new products uh which at the newer prices which some of them have come into production has helped also the to 17:01 17 minutes, 1 second average the legacy prices. So that is uh the scale is still not built up uh in the power train as we expected. uh so it 17:09 17 minutes, 9 seconds is likely to have um a meaningful advantage in the coming years I would say. I would draw one attention here the 17:19 17 minutes, 19 seconds amount of capex which has gone into powertrain and subsequently also in aluminium. The capex powertrain is very difficult to replicate because of the 17:27 17 minutes, 27 seconds today's uh cost scenario. You had mentioned uh the operating cost. I will now talk about capital costs. capital 17:34 17 minutes, 34 seconds cost uh some of it is real estate like land and building which everybody knows how much it has gone up but I also say the equipment uh which was costing say 17:42 17 minutes, 42 seconds $100,000 may have gone up to 110 or 115 over the last 20 years with the better features maybe the better features or 17:50 17 minutes, 50 seconds better productivity might have improved uh the mean offset the increased cost of the in dollar terms maybe to from 110 17:59 17 minutes, 59 seconds $100 $100,000 to maybe $110,000 or $120,000 but what is um the most challenging is the uh dollar when we 18:08 18 minutes, 8 seconds look at a period of almost um um 15 20 years it is almost doubled 20 years is 18:15 18 minutes, 15 seconds almost doubled right totally on this. So the capex cost for anybody entering this business is very very very large totally. Here we are using a mixture of 18:24 18 minutes, 24 seconds our own equipment manufacturing for the special purpose missions and very very prudently we are adjusting the uh 18:30 18 minutes, 30 seconds requirements to uh still be competitive and get more orders. The the new orders 18:38 18 minutes, 38 seconds are coming at new prices. There are legacy issues which we need to address uh on all the consumables um like power 18:47 18 minutes, 47 seconds the cutting oil which is petroleum based the tools which are carbide 18:54 18 minutes, 54 seconds based which is imported from China which has increased multiple fold in the last and of course the labor which is uh 19:02 19 minutes, 2 seconds labor cost is the beginning of the journey I would say it is going to be we are less than a dollar on the contract labor of course we don't employ a lot of 19:10 19 minutes, 10 seconds contract labor but uh it is less than a dollar per hour. This is going to significantly improve to double or triple in the coming years. So what we 19:19 19 minutes, 19 seconds have done is in the last many years we never um cut back on capex that is shown in our depreciation being very very 19:25 19 minutes, 25 seconds high. So that is helping us to mitigate some of the uh labor uh cost increases 19:32 19 minutes, 32 seconds and the labor code really is not uh affecting us in in a meaningful way in total and um more so whatever equipment 19:41 19 minutes, 41 seconds we have invested in the last few years require less and less labor uh uh going forward and we can afford to retain the quality labor I would say in some sense. 19:52 19 minutes, 52 seconds Coming to the um aluminium uh commodity price uh for the aluminium business and also across all plants regarding the 20:01 20 minutes, 1 second power and fuel mainly power and fuel is more um specific for the aluminium business. the legacy products uh from at 20:10 20 minutes, 10 seconds least the one of the acquisitions we made in the last is suffering very badly because of the 15 year old 10 year old 20:18 20 minutes, 18 seconds legacy products and some of the minuscule customers the minuscule customers we are exiting and the legacy 20:26 20 minutes, 26 seconds products um we are resetting the prices or we are exiting or we reallocating that capacity to other profitable 20:34 20 minutes, 34 seconds customers. So that is on already and um that is the way we need to look at it because what costed um something uh 10 20:43 20 minutes, 43 seconds years ago the comparent price on the gross margin cannot remain the same today in today's context of prices. So 20:51 20 minutes, 51 seconds um yes there is should be not a price increase but a reset of the prices I would say because price increase means 20:58 20 minutes, 58 seconds it is a small percentage but now on gross I mean value addition portion it has to be a reset. 21:05 21 minutes, 5 seconds Understood sir. Sir the second aspect I wanted to discuss was on cash flows. So when I look at your cash flow statement 21:12 21 minutes, 12 seconds in FI25 there's a negative working capital impact of about 400 crores and FI26 there's another 600 crores. So I 21:19 21 minutes, 19 seconds want to understand how to think about this. Is it because of you know one time reduction in pay bills which will reverse in coming years or uh is this 21:28 21 minutes, 28 seconds the level at which the working capital days will uh you know stay from here on? 21:34 21 minutes, 34 seconds Uh I think the plants which are suppose the aluminum business was um uh ramping 21:42 21 minutes, 42 seconds up in the last few years. Earlier it was mainly powertrain driven. So that means suddenly there was a spike in the working capital requirement and now 21:50 21 minutes, 50 seconds rationalization has happened. I think the uh payment cycles are also set in. 21:55 21 minutes, 55 seconds So I think it is the same way going forward. I don't think there is any big change. 22:02 22 minutes, 2 seconds Okay. So last thing was on capeex. What is your expectation of capeex for say fi 2728 and as a result how will you know 22:10 22 minutes, 10 seconds the debt reduction etc uh uh move on uh fi 27 itself we are not very clear 22:18 22 minutes, 18 seconds about the capex as today because we have taken some um inream requirements but September we have to decide uh on the 22:25 22 minutes, 25 seconds capex even for fi27 fi28 depends on the performance of fi27. So we are continuously monitoring the net to aita 22:34 22 minutes, 34 seconds as an um the monitor to uh bring it down. That is how we look at it. Uh today uh we are more concerned uh about 22:42 22 minutes, 42 seconds the absolute payout on the uh cash flow for the manpower related 22:50 22 minutes, 50 seconds costs. It may be workers, it may be staff, it may be anything related to services outside also because this is the inflatory manner. So we don't mind 22:59 22 minutes, 59 seconds um some investment to offset that increased cost. 23:06 23 minutes, 6 seconds Okay. So should we think of you know KPEX similar to say last year 1,100 cr or for this year? I know you mentioned that you have to reset it in September 23:14 23 minutes, 14 seconds but as of now is that a good number to work with? 23:19 23 minutes, 19 seconds See when we speak the dollar has become uh 95. We do not know whether the dollar is going to uh go somewhere else. We do 23:26 23 minutes, 26 seconds not know whether we are going to get uh medium gestation projects or quick product projects. I would say when 23:34 23 minutes, 34 seconds there's a quick project then the capacity hits us immediately otherwise it may be postponed by a year or two. So we will uh take it uh in steps going 23:43 23 minutes, 43 seconds forward as I mentioned that uh net debt to IITA will continuously start uh falling down because the heavy weight 23:51 23 minutes, 51 seconds lifting has been done. So to proportionate to the gross block today if you look at it and the gross block is 23:59 23 minutes, 59 seconds also a little deceptive because the bulk of the investment has been done many years ago and uh that has done at a 24:06 24 minutes, 6 seconds lower um capex cost. Today when uh DRX wanted to go for another plant just for 24:15 24 minutes, 15 seconds the green field uh land acquisition itself on public disclosure you know it is the region of around uh 150 crores 24:22 24 minutes, 22 seconds 150 around 150 crores just the land which is adjacent to the zipcot area the we paid less than the zipcot area but it 24:30 24 minutes, 30 seconds is uh uh the capax which is required and at the current civil construction when you are looking at it is high so the 24:38 24 minutes, 38 seconds cost of doing business or cost of expansion is disproportionately high on this matter. So in spite of that our ROC 24:46 24 minutes, 46 seconds on a consolidated basis has been 16%. So we can track net to beta and ROC uh more 24:53 24 minutes, 53 seconds rather than the uh debt portion and as craftsmen we look at more the outflow towards manpower costs which is I think 25:01 25 minutes, 1 second the forest uh which is causing sleepless nights not the dead portion. 25:08 25 minutes, 8 seconds Understood sir. Thank you. Thanks for all the responders. Thank you. 25:12 25 minutes, 12 seconds Thank you participants. If you have any questions at this time, you may enter star and one on your touchdown telephones. The next question is from 25:20 25 minutes, 20 seconds the line of V Nanti from Hathway Investments. Please go ahead. Yeah, thank you for the opportunity. Just wanted to know a couple of things. 25:29 25 minutes, 29 seconds One is on the capacity utilization. If you can just throw some light on power train and then aluminium all the three different units at what capacity are they being utilized? 25:42 25 minutes, 42 seconds Power train uh we are still at around uh 60 70% because there are some pockets and segments where uh the 25:50 25 minutes, 50 seconds the customers are not doing well. So but I think 85% uh will be the upper limit. 25:56 25 minutes, 56 seconds So that means um we have around 20 25% headroom uh with the market as well. Uh there also we are slightly adding capacity uh on the conventional 26:05 26 minutes, 5 seconds powertrain on the new power train business of the large engines. It is still not seeing any revenue only samples are going and some pilot lots 26:13 26 minutes, 13 seconds are getting invoiced but it is not even 5% of our power train revenue as of now. 26:18 26 minutes, 18 seconds Even in the current year we don't expect that uh we'll be anywhere a meaningful single digit. It'll be very low singledigit number. So next year it may 26:26 26 minutes, 26 seconds be reaching um uh high singledigit number I think as part of the powertrain or the large engine projects uh 29 FI 29 26:33 26 minutes, 33 seconds FI30 will be seeing good traction on that segment. So there the capacity utilization is practically um 26:43 26 minutes, 43 seconds uh in 10% level because still all the lines and samples and prototypes are going on. There's no revenue uh per se. 26:51 26 minutes, 51 seconds So uh overall if you take that new power train business also into consideration our capacity utilization is around 60%. 27:00 27 minutes On aluminium aluminium um on the alloy wheel I think I had just mentioned that our exit rate 27:08 27 minutes, 8 seconds is around close to uh 3 million uh on the annualized basis as of March and our 27:16 27 minutes, 16 seconds capacity is around uh 5.5 million. I think we should touch around close to 4 million in the next year. That means 27:24 27 minutes, 24 seconds around um 70 80% capacity utilization between the plants. So the next level of expansion there which we had said phase 27:33 27 minutes, 33 seconds two we are not really pushed hard on that. We want to wait and watch uh on this matter. We are looking at the commodity prices pass through on the 27:40 27 minutes, 40 seconds aluminum pricing. It has to happen that we need um lot of cooperation support from the customer uh to do that. There 27:49 27 minutes, 49 seconds should not be lead lag there which is which will hurt us badly. Second thing is uh imports of this alloy wheel. What 27:56 27 minutes, 56 seconds is the way going forward? Is there going to be some competition coming there again back after the BAS norms has been 28:03 28 minutes, 3 seconds uh more or less settled down now. So we have to wait and watch but the current capacity is more or less sold. We don't have any major issue on that matter. 28:14 28 minutes, 14 seconds Whether to expand further which will give better operating leverage is a matter of question. We'll take a decision after the uh this financial 28:22 28 minutes, 22 seconds year. I don't think we'll take a decision in this financial year to further stretch the alloy wheel capacity. 28:27 28 minutes, 27 seconds Uh what about Sunbeam and DX? Are they included in this? No. Sunbeam and DRXM does not do all. 28:36 28 minutes, 36 seconds So what are their capacities? 28:41 28 minutes, 41 seconds The Sunbeam is a new equation where we are downsizing the capacity, downsizing the customer base, downsizing the product lines. I think that was my first 28:49 28 minutes, 49 seconds statement uh that we are exiting customers, we existing selling the some of the um lines which has there been a public disclosure and even with the same customers sub products we are exiting. 28:59 28 minutes, 59 seconds So the capacity utilization um which is around 70% will come down to around 45 50% in the near for the sunbeam because 29:07 29 minutes, 7 seconds some of them are legacy products unwable to continue manufacturing. So that is a um one thing and subsequently also the 29:14 29 minutes, 14 seconds cost will uh come down the operating cost will come down and no impact on uh actually margins will improve when we uh 29:21 29 minutes, 21 seconds do that activity and the capacity will be utilized for new customers and new products that way. So that is a new equation which is work in progress on 29:30 29 minutes, 30 seconds DRX. I think we are operating at a reasonable capacity which is beyond this capacity we cannot really extend 29:38 29 minutes, 38 seconds ourselves because we are a very critical um component supplier to the four-wheeler manufacturing customers of 29:46 29 minutes, 46 seconds ours. We have received more orders um with the same customer base and also more Indian OEMs also have given orders 29:54 29 minutes, 54 seconds to us in the rec recently. So we are expanding that capacity. So their capacity utilization is uh the tune of 30:00 30 minutes around 88 80% I would say beyond that it's again seasonal. So we cannot go beyond that. So there will there is investments going on in here and in 30:08 30 minutes, 8 seconds craftsman side also the capacity utilization is um a reasonable 75 80% level but our incremental orders are 30:16 30 minutes, 16 seconds quite uh strong. So we are increasing capacity. Sunbeam as I mentioned we are decreasing capacity but the capacity will be reallocated among that. That is 30:25 30 minutes, 25 seconds one of the reasons for our restructuring. If you have seen uh we have Yeah. So that we can um with one 30:32 30 minutes, 32 seconds vendor code or with the same customer base we can operate the capacities. 30:37 30 minutes, 37 seconds Yeah. The the other thing which I wanted to check out was what is this uh u deal that you have done with sukyakash developers and sikara technologies for 30:46 30 minutes, 46 seconds your s paramaturur project that is a dr action. We couldn't get the land on time from um Sipcot which is equivalent to the MIDC in Maharashtra. 30:58 30 minutes, 58 seconds So the land parcel what we wanted is 50 acres and we couldn't get that. We got bits and pieces of it 10 acres and new 31:06 31 minutes, 6 seconds sites which were still not allocated. So there should have been a delay of 2 years in the project. Customer was giving an order time order. So adjacent 31:15 31 minutes, 15 seconds to the sipcot land at a lower price which he had mentioned now in the same earnings call we had taken at 15 20% lesser uh land parcel which has been 31:24 31 minutes, 24 seconds accumulated by some property developers by buying maybe from 150 individual land 31:30 31 minutes, 30 seconds users and we have taken over uh as an um as a vehicle uh the investment in those 31:37 31 minutes, 37 seconds two companies. So we have taken around 50 acres of land at around 150 cr uh cost that we have taken over those 31:44 31 minutes, 44 seconds companies. Those are the subsidiaries and and this will be developed uh by when would that be commissioned? Because it's a green field project, right? 31:53 31 minutes, 53 seconds The Greenville project is already on. 31:55 31 minutes, 55 seconds The civil construction is on and the plant will be commissioned by December. 31:59 31 minutes, 59 seconds So next year it'll be in operation and all this will get merged when we are doing the scheme of things whatever we have filed. So there will be no 32:06 32 minutes, 6 seconds subsidiary once that is uh yeah one one last question if you don't mind uh any any development on the conven 32:15 32 minutes, 15 seconds we have put it up for sale now the prices have gone up uh the um government has uh taken some action for widening 32:23 32 minutes, 23 seconds the road and we are road facing so we have seen that uh the property prices are shooting up but still I think the 32:30 32 minutes, 30 seconds sale is elusive because who is looking for buying it is asking a discount from the current market price current market price has got reset by at least 15% in 32:39 32 minutes, 39 seconds the last one year uh on the matter so we it should get sold it's only a matter of time if you're able initial price what 32:47 32 minutes, 47 seconds whatever if you wanted to sell at that price there are too many buyers I would say but we are not willing to sell at that price yeah thank you thank you and wish you 32:56 32 minutes, 56 seconds all the best it's a very good set of numbers thank you much thank you the next question is from the line of wignesh from Kisma health please Go ahead. 33:07 33 minutes, 7 seconds Uh thanks for the opportunity. So just want to check on the man power thing which we are uh focusing on rationalization or cutting rules. Could 33:16 33 minutes, 16 seconds you throw some light on it? How are we planning to do that? 33:22 33 minutes, 22 seconds This is by better um operations in general and better operations means uh also better equipment, better layouts, 33:30 33 minutes, 30 seconds better processes and some amount of uh ergonomics in the handling of the um production on top of it some 33:39 33 minutes, 39 seconds semi-automation and some automation where there is some volumes. So uh this means that uh reinventing the uh 33:47 33 minutes, 47 seconds production to a very high band for productivity. 33:52 33 minutes, 52 seconds Uh any approximate cost or like benefits you will be estimating from this move? 33:58 33 minutes, 58 seconds I'm sure that still it'll be inflationary even after doing all that uh see when inflation of manpower cost is going to go up at 20% year on year 34:06 34 minutes, 6 seconds instead of the 5 10%. that uh we'll be good enough uh to uh have a manpower savings or without 34:15 34 minutes, 15 seconds additional manpower growing. Uh we'll be mostly be able to offset the incremental manpower cost but surely there will be 34:22 34 minutes, 22 seconds incremental manpower cost. If not otherwise we will see huge amount of incremental cost. It will not be for craftsman or craftsman group alone. It's 34:31 34 minutes, 31 seconds across the industry. You can see that happening all over the place. And now everybody is talking about labor shortage. Uh and it's not really labor 34:39 34 minutes, 39 seconds shortage. It is the cost of labor going up and um labor not willing to work at that particular prices. We have seen protests in the NCR region uh overall across three states uh various reasons. 34:52 34 minutes, 52 seconds Uh and I don't want to comment on that because it's very sensitive. I would say that um there is going to be a reset in the labor cost and all the governments 35:00 35 minutes are working towards also increasing the minimum wages uh which is been done on some states very recently in the last um 35:08 35 minutes, 8 seconds few months and now the new labor code also is coming to picture and this minimum wages will be getting reset this on the bottom of the pyramid. we don't 35:17 35 minutes, 17 seconds employ too many people at the bottom of the pyramid except for uh the quiet company like uh Sunbeam uh otherwise uh 35:25 35 minutes, 25 seconds also the cost of manpower is going to go up in general. So this is uh more than um as I mentioned what is worrying us 35:34 35 minutes, 34 seconds more is not the debt as I mentioned what is worrying us the inflationary manpower cost which is very difficult to pass on to customer this is where we working on 35:44 35 minutes, 44 seconds okay thank you for and any timeline for aluminium segment of reaching $1 billion I think it'll be two to three years time 35:52 35 minutes, 52 seconds it is also a little sensitive towards aluminium prices but I would say that at the current aluminium prices I think two two to as we should. 36:01 36 minutes, 1 second Okay. Thank you. 36:04 36 minutes, 4 seconds Thank you. The next question is from the line of Ram Shashin from Aventus Park. Please go ahead. 36:10 36 minutes, 10 seconds Hi. Uh good evening sir. Thanks for the opportunity. My question is primarily on the decision to consolidate the aluminium entities. Sunbeam dear Axion. 36:20 36 minutes, 20 seconds uh could you walk us through you know your strategy behind this sir you know what are the steps that you'll practically be taking to extract more 36:28 36 minutes, 28 seconds value from this consolidated entity that's what I wanted to uh uh we look at our public disclosure 36:35 36 minutes, 35 seconds we also mentioned that uh the uh not only Sunbeam and uh DR we also looked at 36:42 36 minutes, 42 seconds our aluminium business of craftsman also how we can um uh have better leverage or better synergy 36:51 36 minutes, 51 seconds between all the aluminium businesses that is our target. So the easy one was how to do it with DR and uh Sunbeam but 36:59 36 minutes, 59 seconds is also related to craft aluminium business. 37:03 37 minutes, 3 seconds The way to look at is that um for example we'll be around 6,500 cr in the 37:09 37 minutes, 9 seconds aluminum business in the um FI 27 or so just an approximation. I don't want to give any guidance please I'll 37:17 37 minutes, 17 seconds negate that if it is taken as a guidance what I'm trying to say is that some equipment some people some processes may be written and there identity here we 37:26 37 minutes, 26 seconds may have customer base so it's difficult to do marketing with these small small uh subsegments in the business and our 37:34 37 minutes, 34 seconds competitors across the world are 3 billion to6 billion in revenue uh these are the customers some of them are already present in India wanting to 37:42 37 minutes, 42 seconds expand their footprint so when uh we go with the each of the businesses at 200 million $100 million revenue or $300 37:49 37 minutes, 49 seconds million revenue and try to take an order for 100 million 200 million it is um uh to share the resources and uh to grow 37:57 37 minutes, 57 seconds the business it is becoming unwieldy it is very expensive so that is the reason for rationalizing the I mean sorry 38:05 38 minutes, 5 seconds looking at the synergy and trying to merge these companies businesses understood so this will not just uh put 38:14 38 minutes, 14 seconds us in good state to win more businesses but will also make the operations more efficient. So it will be a benefit on both ends. 38:21 38 minutes, 21 seconds Yes. uh see craftsman doesn't have a plant in Chennai for the aluminium business but all our peers from the 38:28 38 minutes, 28 seconds north and west have aluminium uh in manufacture al component manufacturing like craftsman there are quite a few 38:37 38 minutes, 37 seconds some of them are also listed uh all of them have got a presence in the chennai region but craftsman per se doesn't have a presence in the chennai region we are 38:45 38 minutes, 45 seconds in kuimore and we are in uh Bangalore and uzour as of now so we want to create a separate campus for that and uh add 38:53 38 minutes, 53 seconds aluminum business of craftsman which is high pressure die casting mainly and then uh Dr is plant is full so we have 39:00 39 minutes to expand a going to put a plant there for DR action then again one more plant for craftsman doesn't make sense so we 39:09 39 minutes, 9 seconds it is better if you look at it uh in the future to share that is the idea behind it but uh the first step is about very 39:16 39 minutes, 16 seconds clearly sharing the uh craftsman sorry deer and sunbeam subsidies Sure. 39:23 39 minutes, 23 seconds Thanks. Thanks for your time. 39:25 39 minutes, 25 seconds Thank you. The next question is from the line of Karthi from Suesh Advisors. Please go ahead. Sir, good afternoon. I hope I'm audible. 39:34 39 minutes, 34 seconds Yes sir. Yes sir. 39:35 39 minutes, 35 seconds Yeah sir. Uh just on the leverage point I understand philosophically you're thinking about leverage but uh just from 39:42 39 minutes, 42 seconds the outside 3,300 crs a bit on the higher side. So two questions. One is are you looking at the consolidation of 39:50 39 minutes, 50 seconds the aluminium business as a way to deleveraging or do you believe that there are other ways to reduce debt? Some some some concrete guidance on that would be helpful. 39:59 39 minutes, 59 seconds It will be more to fund our future investments maybe but I think this debt portion of it debt to IITA wise if you 40:07 40 minutes, 7 seconds look at it the forwardlooking IATA I think we are uh already at 2.43 debt to net debt to AIA. So we are be looking at 40:14 40 minutes, 14 seconds um going forward it'll be less than two I would say uh in the coming in the the current year itself totally. So and then 40:23 40 minutes, 23 seconds it'll go down further to 1.5. So that is a natural progression uh of the debt to AIA. So the way to look at is uh if you 40:31 40 minutes, 31 seconds don't grow the business at the current level and uh the level I think the debt may be lower but I think the margins will start uh looking downward I would 40:40 40 minutes, 40 seconds say with the new without the new products the land sale of gurugam if you take away the land sale of guram then 40:47 40 minutes, 47 seconds look at the debt we should look at the debt at say 2700 on the consolidative basis not at 3,00 40:57 40 minutes, 57 seconds that helps sir thank you so Thank you. Participants with questions may enter star and one. 41:09 41 minutes, 9 seconds We have a question from Shipamatra from Ambit AMC. Please go ahead. Hi sir, thanks for taking my question. 41:15 41 minutes, 15 seconds Sorry if it is a repetitive question. Uh could you uh broadly tell me uh what margins will be clocking DR Axian and Sanim in FI2 for the whole year? 41:26 41 minutes, 26 seconds I think that will come in the segment wise results. I think independently I think uh we are around the same range. I would say it is a slightly different business. 41:35 41 minutes, 35 seconds On the aluminum side we have given the segment wise results. Um there is absolutely no profitability at if you 41:44 41 minutes, 44 seconds look at it at level it may be there at Sunbeam but profitability is not there. 41:48 41 minutes, 48 seconds So you can uh just look at that uh number between DR and 41:57 41 minutes, 57 seconds all of the evidence come from these two companies Craftsman and DR. 42:02 42 minutes, 2 seconds Got it. Got it sir. Uh secondly sir how is our alloy wheel business ramping up? Uh what kind of revenues are we talking? 42:10 42 minutes, 10 seconds Sir I have answered that already. uh thing on the alloy wheel because uh the current run rate is around 3 million uh 42:17 42 minutes, 17 seconds exiting out of that. the revenue wise um um if you look at it 42:26 42 minutes, 26 seconds last year it's not that much around 240 crores I think so 280 crores 42:34 42 minutes, 34 seconds is it so around 280 crores is the uh revenue in the last financial year for the alloy got it sir and margins would be 42:42 42 minutes, 42 seconds somewhere in the low single digit margins uh for the um bi plant it will be at the highest single digit or maybe even 42:50 42 minutes, 50 seconds double digit but at the ozour plant it will be single digit because still it's ramping up the plant utilization level is not high that's the reason 42:58 42 minutes, 58 seconds got it sir got it understood sir and uh uh sir that's all thank you thank you we have a followup from the 43:07 43 minutes, 7 seconds line of bin nandarni fromway investments please go ahead yeah uh thank thanks for the opportunity again uh if I look at the aluminum 43:16 43 minutes, 16 seconds business IT level we are at around 10.3 which was same as last year. Uh this year with the uh corrections that you are trying to make consolidation etc. 43:26 43 minutes, 26 seconds would you look at at least a couple of uh percentage points growth there? 43:33 43 minutes, 33 seconds See the business significant capex has been done last year. If we had not we had stopped capex in the second half of the year I think the margins would have 43:41 43 minutes, 41 seconds improved. Those capex has not been put to use at all. So what is restarting the uh margin um expansion is the new capex 43:49 43 minutes, 49 seconds which is working it is under commissioning or just started production which is not yielded to the uh full quarter revenue surely not the full year 43:57 43 minutes, 57 seconds revenue on the matter. So when the base becomes higher on the installed capacity and then marginal investments are being 44:04 44 minutes, 4 seconds made that might not affect the um depression in margins but I think uh that is one of the reasons you see that 44:12 44 minutes, 12 seconds u the uh it is not an apple comparison 44:19 44 minutes, 19 seconds yeah but could you could you look at uh I mean should we look at around 100 200 bits increase in the next year on this margin if you're going at this rate. No. 44:30 44 minutes, 30 seconds Okay. 44:31 44 minutes, 31 seconds Because uh the future capex in this this year will again spoil the margins. Oh whatever gains we are making. Okay. 44:39 44 minutes, 39 seconds On the install capacity. 44:40 44 minutes, 40 seconds So maybe another 2 three years down the line it should be a much better. 44:43 44 minutes, 43 seconds Yeah. If our base is 100 and we are expanding by 5%. Then the margins will improve. But the base is 100 and we're 44:51 44 minutes, 51 seconds expanding at 30 and the result is shown as 110 on the practical results because still other things are not looked like 44:58 44 minutes, 58 seconds it's something like um uh 20% growth in capacity but a 5% growth in revenue. So it is not it is 45:08 45 minutes, 8 seconds so so the coming years will be much much better. uh I think uh when we reach uh across a billion and then we slow down 45:15 45 minutes, 15 seconds the capex and then it is an smaller portion of the installed capacity then the margin should improve provided we 45:23 45 minutes, 23 seconds get the right products at the right prices. Yes. Okay. Thank you. Thank you very much. 45:29 45 minutes, 29 seconds Thank you ladies and gentlemen. That was the last question. I now hand the conference back to Mr. Shri Nasan Rai for closing comments. 45:37 45 minutes, 37 seconds Thank you for all joining and thank you for the confidence of the investments done. Uh I think investments done a little earlier and the borrowing done 45:45 45 minutes, 45 seconds earlier is a better choice because in the coming few years the capex uh the same capex which has been done in this 45:52 45 minutes, 52 seconds financial year it will be 1.5 times more uh because of the capex cost increase. 45:58 45 minutes, 58 seconds So this is one of the factors which we have taken account that to put up capex a little earlier so that we'll become more competitive in the future. Uh thank you very much and uh we'll sign off. 46:10 46 minutes, 10 seconds Thank you. Thank you on behalf of Transmen of Automation Limited. That concludes this conference call. Thank you for joining us and you may now disconnect your lines. Thank you.