Diffusion Engineers Limited — Q3 FY26

Diffusion Engineers Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=WMOutCVSstM Published: 3 months ago

0:01 1 second Ladies and gentlemen, good day and welcome to the diffusion engineers limited Q3 and 9month FY26 earnings 0:08 8 seconds conference call. This conference call may contain certain forward-looking statements based on the beliefs, opinions and expectations as on the date 0:17 17 seconds of this call. These statements are not the guarantees of future performance and involve certain risks and 0:24 24 seconds uncertaintities that are difficult to predict. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you 0:33 33 seconds to ask questions after the presentation concludes. 0:36 36 seconds Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that 0:45 45 seconds this call is being recorded. I now hand the conference over to Mr. Prashant G, chairman and managing director for diffusion engineers limited. Thank you and over to you sir. 0:56 56 seconds Good evening everyone and welcome to diffusion engineers earning conference call for the third quarter and 9 months ended December 31st 2025. 1:06 1 minute, 6 seconds We are delighted to have you join us today and joined by Mr. Abishek Mandar a CFO Miss Sanchel Jazwar company secretary and compliance officer and our 1:15 1 minute, 15 seconds investor relations team from ad factors PR. The investor presentation and media leads have been uploaded to the stock exchanges and are available on our 1:23 1 minute, 23 seconds website. Before we dive into the quarterly performance strategic developments, let me brief briefly introduce our company for those of you 1:31 1 minute, 31 seconds who may be new to our story. The Fusion Engineers Limited founded in 1982 and inquired in Nagpur is a leading Indian engineering solution provider focused on 1:40 1 minute, 40 seconds welding consumables, wear and parts and heavy engineering equipment with over four decades of expertise. The company serves critical maintenance and 1:47 1 minute, 47 seconds performance needs across core industrial sector including industries such as cement, steel, power, mining, engineering and sugar. Then operates a 1:56 1 minute, 56 seconds fully integrated manufacturing platform uniquely producing specialized electros, flux core wires, composite wear plates, 2:03 2 minutes, 3 seconds readyto fit paths and heavy engineering equipment all under one roof. This integration ensures high quality, cost 2:10 2 minutes, 10 seconds efficiency and reliability for demanding industrial applications. Over 80% of our revenues are coming from repeat customers reflecting our strong customer 2:19 2 minutes, 19 seconds relationships. The company manufactures critical equipment such as high pressure grinding rows, industrial fans, air 2:25 2 minutes, 25 seconds separators, air heaters and other such large and complex equipments from its Npul based facilities and exposed to 30 2:33 2 minutes, 33 seconds plus countries. With IPO funded capacity expansion underway and a focus on a higher value uh engineering products, 2:41 2 minutes, 41 seconds DEL is well positioned for accelerated growth over FI27 to FI29. 2:48 2 minutes, 48 seconds FY26 has been a year of steady execution, strengthening fundamental and strategic capacity creation for reclusion engineers. Despite operating 2:57 2 minutes, 57 seconds at high utilization levels, we have continued to deliver double digit growth, improving profitability and enhancing our long-term growth visibility. Our performance this year 3:06 3 minutes, 6 seconds reflects the strength of our integrated business model, deep customer relationships across industries, and four decades of engineering expertise. 3:14 3 minutes, 14 seconds During the period under review, the company delivered healthy revenue growth supported by strong execution across welding consumables, wear solutions and 3:21 3 minutes, 21 seconds heavy engineering. Our consolidated ITA margins remain stable at around 13 to 14% despite operating in a high capacity 3:29 3 minutes, 29 seconds utilization environment. This stability underscores our disciplined cost management improving product mix. 3:36 3 minutes, 36 seconds Importantly, we continue to see margin headroom as new capacities come online and scale 3:43 3 minutes, 43 seconds efficiencies taken. Profitability has also been supported by better absorption, operating leverage and a growth contribution for a higher value products and solutions. 3:54 3 minutes, 54 seconds Our order book continues to remain robust standing close to 2 billion rupees reflecting sustained demand across cement, steel, power, mining and infrastructure sectors. 4:05 4 minutes, 5 seconds We are particularly encouraged by strong traction in rare based and engineered parts. Continued demand for specialized welding consumables, healthy inquiry 4:13 4 minutes, 13 seconds levels for large heavy engineering equipment including high pressure grinding rows. Over 80% of our business comes from repeat customers which 4:21 4 minutes, 21 seconds highlights the sticky nature of our offerings and trust customer place in our execution capabilities. 4:28 4 minutes, 28 seconds Currently we are operating at approximately 85% capacity utilization across key product segments. While this reflects strong demand, it also 4:36 4 minutes, 36 seconds reinforces the importance of our ongoing capacity expansion program. Our integrated operations from consumable to bareface to heavy engineering equipment 4:44 4 minutes, 44 seconds continue to differentiate us in the marketplace. Very few players in India possess this end to-end capability under one roof and this remains our key competitive advantage. 4:54 4 minutes, 54 seconds An update on capeex and expansion. As you are aware, we are in the midst of an significant expansion phase fully funded 5:01 5 minutes, 1 second through our IPO proceeds. Some of the key updates include welding consumables expansion expected to come uh alive 5:09 5 minutes, 9 seconds shortly adding 10 tons per day of incremental electrode manufacturing capacity. Ware capacity increased by 25% to more than 250 square meters per day. 5:19 5 minutes, 19 seconds A new wire manufacturing line enhancing backward integration and improved margins is getting ready at a manufacturer's place. Commissioning of new heavy engineering facility by the end of FY 26. 5:30 5 minutes, 30 seconds We expect we expect that these new assets will deliver an asset turnover of 3 to 3.5 times with full utilization to 5:38 5 minutes, 38 seconds be achieved over next two to three years that is by FYI 2028 29. Our long-term strategy and vision. Our strategy 5:46 5 minutes, 46 seconds remains focused on increasing the share of value added high margin products, deepening relationships with marquee customers, expanding our global 5:55 5 minutes, 55 seconds footprint with exports now reaching above 30 plus countries, and leveraging on our DSIR approved R&D facility to drive product innovation and 6:03 6 minutes, 3 seconds customization. With the current expansion cycle, we are building the foundation for the next phase of growth. 6:11 6 minutes, 11 seconds The outlook and guidance for looking ahead. We remain confident of delivering double-digit revenue growth even at our current utilization levels. With new 6:19 6 minutes, 19 seconds capacities coming online, FY27 onwards should start seeing accelerated growth in the range of 25%. Over the 6:27 6 minutes, 27 seconds medium-term, we are targeting EIA margins of 15 to 16% driven by scale backward integration and product mix. 6:33 6 minutes, 33 seconds Our long-term aspiration is to build diffusion engineers into a $6 billion topline post uh capex. The demand across 6:42 6 minutes, 42 seconds the demand environment across infrastructure, cement, mining and manufacturing remain supportive backed by government initiatives such as nation India and PLI as well as rising private 6:50 6 minutes, 50 seconds basics. With that, now I invite our CFO Mr. Meta to take you through Q3 and 9 months FY26 financial performance. 6:58 6 minutes, 58 seconds Thank you Pashan S. I will now walk you through our standalone and consolidated financial performance for 2,3 and 9 months FY26. 7:10 7 minutes, 10 seconds We'll start with consolidated financial performance highlights for quarter ended 31st December 2025. 7:17 7 minutes, 17 seconds Revenue from operations was 1,8.24 million in Q3 FY26 as again 79 7:26 7 minutes, 26 seconds 791.98 million in Q3 FY25 Y increase of 27.31%. 7:34 7 minutes, 34 seconds AITA excluding other income was at 135.05 05 million in Q3 FI26 as against 7:41 7 minutes, 41 seconds 104.72 million in Q3 FI25 increase of 28.96%. 7:49 7 minutes, 49 seconds AITA margin excluding other income for the quarter was at 13.39%. 7:55 7 minutes, 55 seconds Profit after tax stood at 120.11 million in Q3 FI26 as compared to 71.01 01 8:03 8 minutes, 3 seconds million includes the FY25 by Yi increase of 69.14%. 8:10 8 minutes, 10 seconds Considered performance highlights for 9 months ended 31st December 2025. 8:16 8 minutes, 16 seconds Revenue from operations was 2650.54 million in 9 months FY26 as against 8:24 8 minutes, 24 seconds 27.47 million in 9 months FY25 by increase of 13.88%. 8:32 8 minutes, 32 seconds AITA excluding other income was at 364.54 million in 9 months FI26 as against 323.75 8:39 8 minutes, 39 seconds million in 9 months FY25 increase of 12.60%. 8:45 8 minutes, 45 seconds Abita margin excluding other income for 9 months was at 13.75%. 8:51 8 minutes, 51 seconds Profit after tax stood at 344.4 million in 9 months FY26 as compared to 230.29 8:59 8 minutes, 59 seconds 29 million in 9 months FI25 Yoga increase of 49.55%. 9:06 9 minutes, 6 seconds Now I'll come to standalone performance highlights for quarter ended 31st December 2025. 9:13 9 minutes, 13 seconds Revenue from operations was 876 million in Q3 FY26 as again 735.42 million in Q3 FY25 while increase of 19.12%. 9:26 9 minutes, 26 seconds AITA excluding other income was at 116.75 million in QP FI26 as against 9:32 9 minutes, 32 seconds 85.67 million in QP FY25 increase of 36.27%. 9:39 9 minutes, 39 seconds AITA margin excluding other income for the quarter stood at 13.63%. 9:44 9 minutes, 44 seconds Profit after tax stood at 88.54 million in Q3 FY26 compared to 63.86 million in 9:53 9 minutes, 53 seconds Q3 FY25. while increase of 38.65%. 9:59 9 minutes, 59 seconds Now standalone performance highlights 9 months ended 31st December 2025. 10:05 10 minutes, 5 seconds Revenue from operations was at 2409.33 million in 9 months FY26 as against 2151.18 10:13 10 minutes, 13 seconds million in 9 months FI25 by increase of 12%. Abita excluding other income was at 10:21 10 minutes, 21 seconds 315.16 million in 9 months FI26 as against 273.81 million in 9 months FI25 increase of 15.10 million. 10:34 10 minutes, 34 seconds EITA margin excluding other income for the 9 months ended stood at 13.08%. 10:40 10 minutes, 40 seconds profit after tax today at 329.71 million in 9 months FI26 compared to 10:47 10 minutes, 47 seconds 217.12 million in 9 months FI25 Y increase of 51.86%. 10:54 10 minutes, 54 seconds With that I now open the floor to any questions you may have. Thank you for your time and continued support. 11:02 11 minutes, 2 seconds Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchstone 11:11 11 minutes, 11 seconds telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a 11:20 11 minutes, 20 seconds question. Ladies and gentlemen, we'll wait for a moment while the question assembles. 11:34 11 minutes, 34 seconds The fourth the fourth question is from the line of Vun Jane from Dollar Capital. Please Pratik. 11:41 11 minutes, 41 seconds Uh yeah. Hi uh good evening sir. So uh my first question is uh on this acquisition. 11:49 11 minutes, 49 seconds So uh just wanted to understand like uh what is this company and uh it is the pre-revenue company uh from uh what I've 11:58 11 minutes, 58 seconds seen and you got 10%. So how does it fit in? 12:05 12 minutes, 5 seconds So uh we talking about Torup sun systems private limited. So this company is involved in the design and development 12:13 12 minutes, 13 seconds of uh advanced systems for aerospace, marine and land applications and right now they are focusing on developing a 12:21 12 minutes, 21 seconds solution uh for vishor. Vishorad stands for very short range air defense system and they 12:28 12 minutes, 28 seconds are in the process of developing laser beam riding manportable missiles. U the 12:36 12 minutes, 36 seconds fact that they are a pre-revenue company is absolutely right but they have been able to secure a project prototype sanction order or project sanction order 12:44 12 minutes, 44 seconds uh under DAP2 uh make the category of DAP 2020 12:52 12 minutes, 52 seconds and uh they are only one of the two companies in India who have got this uh project sanction order and they are in 13:01 13 minutes, 1 second advanced stages of developing The solution which is needed for this manportable missiles which have become very very critical for 13:10 13 minutes, 10 seconds you know manning and for protecting our border lines and currently there is no other Indian company or in fact in the 13:17 13 minutes, 17 seconds world there are only two companies who have this solution and this Indian company is now trying to develop this under Atma Bharat and make a good 13:26 13 minutes, 26 seconds indigenous solution. Now the the purpose of investment is not just financial it is also strategic because uh with this 13:33 13 minutes, 33 seconds investment we also get manufacturing rights once a prototype is approved by the regulatory authorities which can be 13:40 13 minutes, 40 seconds DRDO and Indian army. So in exchange of this uh investment we also get involved directly in the development of the 13:48 13 minutes, 48 seconds prototype and in the and in the engineering of mass production once the prototype is approved. So this is the reason why we have invested in this company. 13:57 13 minutes, 57 seconds Sir you have just bought 10% so that is just so that you can be the welding supplier to them uh and the main 14:05 14 minutes, 5 seconds technology which uh they are using to manufacture and all that will rest with them and they'll be producing and selling you will just be the welding 14:14 14 minutes, 14 seconds supplier and that's why you have started this relationship with a 10% state. No, we are not just a welding company. We 14:21 14 minutes, 21 seconds are an engineering company now. And we aspire to become a broad-based engineering company and not just a welding company. And when when when we 14:30 14 minutes, 30 seconds say that we will get the manufacturing rights, our intention is to manufacture the entire system and not just uh aspects related to welding in this uh 14:38 14 minutes, 38 seconds solution that they are developing. So we will get the manufacturing rights to manufacture the missile as well as the launcher. 14:47 14 minutes, 47 seconds Okay. Okay. And uh so just uh uh just if since you have paid like uh I think you have valued it something between 40 to 14:55 14 minutes, 55 seconds 45 cr. So sir how have you valued this company since they don't have any revenue? 15:02 15 minutes, 2 seconds Uh I would take this question. Uh so uh we have done valuation based on the valuation reports received from the 15:09 15 minutes, 9 seconds valuers and also uh the estimated uh value of the PSO which they have 15:16 15 minutes, 16 seconds received and the estimated uh orders if the uh prototype is done it is valued on 15:24 15 minutes, 24 seconds that basis. Uh we have taken valuation of uh valuation reports of PC valuers for this purpose. 15:32 15 minutes, 32 seconds Uh okay sir. Okay. And uh so just last uh sir what is your guidance for FI27 uh revenue and uh margin guidance. 15:44 15 minutes, 44 seconds So uh for revenue guidance uh we will be in late teens uh for sure and as well as 15:50 15 minutes, 50 seconds on the margins uh we will be somewhere our aeta would remain in this level maybe one or 2% 1% which may 100 to 200 15:59 15 minutes, 59 seconds bips we expect to increase uh which in turn will increase our uh pack margins. 16:07 16 minutes, 7 seconds Okay. Okay sir. Uh uh that's all. I'll come back in. Thank you. Thank you. 16:14 16 minutes, 14 seconds Participants to ask a question you may press star and one now. 16:21 16 minutes, 21 seconds Participants who wishes to ask a question may press star and one now. 16:28 16 minutes, 28 seconds The next question is from the line of maga an investor. Please proceed. 16:45 16 minutes, 45 seconds Mommy, your rhyme is not audible. 17:07 17 minutes, 7 seconds The next question is on the line of Vun Jan from Dalat Capital. Please proceed. 17:14 17 minutes, 14 seconds Uh yeah. Uh sir, so I had another followup on uh so you had indicated in the past that you were L1 in I think uh 17:22 17 minutes, 22 seconds some railway contracts for Wand Bat. We just wanted to know what's the status on that. 17:28 17 minutes, 28 seconds Yeah. So we have received uh LOI for so there were six contracts in we were in 17:35 17 minutes, 35 seconds which we were in the top two biders and uh typically we don't because we don't have a previous experience and we not 17:42 17 minutes, 42 seconds approved vendors yet. we will get uh trial orders so to say uh considering part quantities out of the total 17:50 17 minutes, 50 seconds tendered quantity and in uh I think six contacts we were in the top two biders category out of which we 17:57 17 minutes, 57 seconds received Lois for already three such contracts and post received top of lois our uh capacity assessment and 18:05 18 minutes, 5 seconds capability assessment has been carried out by rides so and uh we are expecting their reports we are expecting it to be 18:13 18 minutes, 13 seconds positive and approved and post that we will get a confirmed purchase order from uh the tendering uh tender issuing 18:21 18 minutes, 21 seconds authorities which are different divisions of railways. So that is work in progress and uh already uh three lois 18:30 18 minutes, 30 seconds we've been received and uh our manufacturing facilities has been inspected by rights and you know we are in the process of getting the orders and then order execution will start. 18:41 18 minutes, 41 seconds Uh okay and and so sir what is the timeline for this? Uh if you can indicate something. 18:49 18 minutes, 49 seconds So I think uh these contracts will be executed within the next uh you know uh 3 to 5 months depending on the size of 18:57 18 minutes, 57 seconds the contracts. Um yes. 19:04 19 minutes, 4 seconds Okay. Okay. And and sir uh are they like higher margin contracts compared to your other you know roller press roller and other orders? 19:13 19 minutes, 13 seconds So these are uh uh please bear in mind that we are entering into a new sort of uh space and therefore uh it is uh and 19:22 19 minutes, 22 seconds because these are developmental orders we can't really comment on the margins as of now because there is a learning curve involved and these are new activities that we are doing. So 19:31 19 minutes, 31 seconds estimated margins we have some numbers but it is only after the execution of the project or at the late uh stage of 19:39 19 minutes, 39 seconds the project execution we will come to know what margins we are making. But uh even if in either case high margin or no margin the numbers are not going to make 19:47 19 minutes, 47 seconds significant difference in the overall uh margin scenario of the company because these are contracts which we will get 19:54 19 minutes, 54 seconds they will not be very sizable in value but they are very important to open new gates for us going forward. Once these items get approved by railways. 20:06 20 minutes, 6 seconds Uh okay. And and on sir your uh unit five uh I think your unit five was being 20:12 20 minutes, 12 seconds done. So uh that was for uh this uh wire stripper right which you guys were importing. So is that done? 20:20 20 minutes, 20 seconds Yes. uh the slitting line for making wires been has been installed and we are already producing our own strips which 20:28 20 minutes, 28 seconds is a raw material very important raw material for our flux code wire production and we have also uh I'm also happy to inform you that yesterday we 20:36 20 minutes, 36 seconds commissioned the 10 ton electrode plant uh and that has also gone online so our indicated manufacturing expansion and 20:44 20 minutes, 44 seconds unit 5 is already completed okay so sir now you won't need to import 20:50 20 minutes, 50 seconds uh this wire stripper at all or still there will be requirement. 20:55 20 minutes, 55 seconds No, so we were not importing the strips uh before also we were buying it from outside. Uh 21:03 21 minutes, 3 seconds this we have made it inhouse which will help us increase our margins for manufacturing of this plus code wire. 21:10 21 minutes, 10 seconds uh part of the quantity is still being bought because uh uh the current machine meets so our capac our requirements are 21:19 21 minutes, 19 seconds increasing for strips and I think we will need to add part of the equipment more to have 100% in-house uh 21:26 21 minutes, 26 seconds manufacturing of the strips uh but more than 50% is coming from in-house and uh balance is coming from our regular vendor which over time you know will 21:35 21 minutes, 35 seconds further increase uh the percentage will further increase from in-house production Okay. Okay sir. Uh thank you and all the best. 21:48 21 minutes, 48 seconds Thank you. Before we take the next question, we would like to remind participant Zim press star and one to ask a question. The next question is 21:57 21 minutes, 57 seconds from the line of Vijill Sha from RTL Investments. Please proceed. Right. Thanks a lot for the opportunity. 22:05 22 minutes, 5 seconds Uh first question is uh uh did I get it correct that you said that once your capacity of funds the revenue potential 22:14 22 minutes, 14 seconds of entire I mean uh entire family would be at 600. 22:23 22 minutes, 23 seconds So we indicated that our asset turn is close to 3 to 3.5 times of our investment. 22:30 22 minutes, 30 seconds uh the capacity expansion started happening uh when our revenue was around 335 crores which was last year and uh 22:39 22 minutes, 39 seconds our previous plant and machinery uh asset size was roughly around 95 crores. 22:44 22 minutes, 44 seconds So that is how we came up with this number of 3 to 3.5x and we are investing close to 100 cr. So considering that uh 22:52 22 minutes, 52 seconds after our capacities go fully live and utilization comes to around 85% of the added capacity we expect to be able to 23:01 23 minutes, 1 second do a turnover of 600 to 700 crores with this additional capacities. 23:06 23 minutes, 6 seconds Okay. And by what time frame do you think that your capacity utilization will reach around 85%. 23:15 23 minutes, 15 seconds So we expect it to happen by anywhere between FI28 and FI29. 23:22 23 minutes, 22 seconds Okay. Thank you. And another question is on your uh uh that recent acquisition. 23:27 23 minutes, 27 seconds So I just want to understand that what are your credential in making missile or launcher because if I look at your 23:35 23 minutes, 35 seconds product line it is thought there is some amount of heavy engineering involved but these are very different type of of uh 23:41 23 minutes, 41 seconds product. So what are your credential uh and secondly if the other company gets a 23:48 23 minutes, 48 seconds prototype approved the Br allowed to kind of a contract manufacturer manufacture to some I mean manu anyone 23:57 23 minutes, 57 seconds or it is that company itself has to produce it. 24:02 24 minutes, 2 seconds So uh I understood part of your question which you asked that what credentials or sort of experience do we have I did not understand the second bit of the question. screen if you can please repeat that. 24:12 24 minutes, 12 seconds Yeah. Prototype is uh by I mean uh is with the company where you have taken 10% stake. Now wouldn't uh government 24:21 24 minutes, 21 seconds ask that company sell to produce it. It is like you take make a prototype and work suggesting is that you can just 24:29 24 minutes, 29 seconds make a prototype and then they can get it contract manufactured anywhere that kind of arrangement which looks very uh 24:36 24 minutes, 36 seconds difficult in such high state defense kind of weather. So that is what I want to understand that what are the uh regulations around allowing it to be manufactured by somebody else. 24:48 24 minutes, 48 seconds Right? So uh a we are already a defense supplier. So we are supplying our welding consumables uh for manufacturing 24:56 24 minutes, 56 seconds of the T90 tank and armoring application. We are also bidding for uh 25:03 25 minutes, 3 seconds you know precision manufactured parts in the defense sector where uh not just the welding consumables but uh it also needs 25:11 25 minutes, 11 seconds uh engineering, fabrication and machining capabilities. So while you're right to observe that you know we are 25:19 25 minutes, 19 seconds involved in heavy engineering which involves manufacturing of large parts involving machining, fabrication, heat treatment and uh other complex 25:27 25 minutes, 27 seconds operations. uh but we also manufacture uh you know precision engineering parts which are smaller in size. So we have 25:35 25 minutes, 35 seconds also supplied some parts to skyroot which is a private space tech company based out of Hyderabad uh which used uh 25:43 25 minutes, 43 seconds the part that we supply to them as dyes uh for the you know filling of their propellants in the rockets. So we have 25:51 25 minutes, 51 seconds experience and it's just that that the engineering capability and machining capabilities we have we would need to invest more in newer facility to 26:00 26 minutes manufacture smaller parts. Right now we are making larger parts but the uh but the engineering capability exists with 26:08 26 minutes, 8 seconds us. So while we have technology 26:16 26 minutes, 16 seconds so that is developed by Torut sunbai systems private limited in consultation with DRTO and HMRL and they are de so 26:24 26 minutes, 24 seconds the army and the Indian armed forces need the solution so quickly that they are almost for prototyping they are you 26:31 26 minutes, 31 seconds know offering their own labs and 3D printing facilities to manufacture these parts in house. uh while because they 26:39 26 minutes, 39 seconds want to uh get this uh uh project successful uh and the most important bit is to make it indigenous so that they 26:48 26 minutes, 48 seconds don't have to depend on foreign countries and the supply chain disruption that may happen because of geopolitical. 26:54 26 minutes, 54 seconds So for prototyping it's almost like we are taking over but we are getting involved at this stage and prototype prototyping will take at least one to 27:01 27 minutes, 1 second two years to get approved. So we are now getting involved at this stage to start developing the engineering and uh manufacturing facilities to manufacture the part once the prototyping is done. 27:11 27 minutes, 11 seconds So propulsion technology is not our uh fit uh that will be developed by Pedoru 27:18 27 minutes, 18 seconds in uh support by uh the Indian armed forces and the DRDOS's who already have a very well established proportional 27:26 27 minutes, 26 seconds technology. Our bid is more on the contract manufacturing side which you mentioned. So once the design is ready, we will give you a manufacturing 27:33 27 minutes, 33 seconds partners who will make the uh item as per the design developed by group. 27:40 27 minutes, 40 seconds Okay sir, got it. Thank you very much. 27:45 27 minutes, 45 seconds Thank you. For one, before we take the next question, we would like to remind participants that you may press star and one to ask a 27:52 27 minutes, 52 seconds question. The next question is from the line of Saiaki from Nan Capital. Please proceed. 28:00 28 minutes Hi, thanks for the opportunity. Um, so my question is with regard to the capacity expansion uh in the heavy engineering segment. Um, so I understand 28:09 28 minutes, 9 seconds that the additional capacity have a turn of 3x. So there's a sort of a vision with regard to the revenue that we're 28:16 28 minutes, 16 seconds looking to uh arrive at, but could you provide some more color on the pathway to get to that revenue? For example, is 28:23 28 minutes, 23 seconds this additional uh capacity going to help us uh run through the order book quickly or do you think it provides us an opportunity to manufacture uh more 28:32 28 minutes, 32 seconds complex uh engineering uh good? Uh could you provide some more color on the pathway? Um 28:40 28 minutes, 40 seconds so the additional capacity will first of all enable us to get more orders because we are restricted by the number of orders we accept. uh because of our 28:48 28 minutes, 48 seconds current capacity utilization. Our customers can clearly see that we are busy and we are almost full. So they don't load us more with more contracts 28:56 28 minutes, 56 seconds because uh you know they can see our capacity utilization is already high while uh they are also seeing the erection in progress and uh you know the 29:06 29 minutes, 6 seconds plant coming sort of online like the man the construction of the plant happening. 29:11 29 minutes, 11 seconds So they've already started coming to us and have started asking us how much more orders can we load on you. So uh this is 29:18 29 minutes, 18 seconds so more orders because of more capacity this is uh one part of the answer. The second is of course we are adding to our machining capabilities which will enable 29:27 29 minutes, 27 seconds us to manufacture more complex and precision parts uh especially of a larger size when it comes to heavy 29:35 29 minutes, 35 seconds engineering product line of our business. U this could not have happened without a newer plant a plant with more space where we could have installed 29:43 29 minutes, 43 seconds these machines. So also the nature of items will change a bit and we will start accepting orders uh where we can 29:52 29 minutes, 52 seconds carry out critical and you know machining of critical machining of large parts. 30:01 30 minutes, 1 second Understood. Understood. Thanks for that clarity. And as a followup to the previous participants question with regard to the investment in uh troop. So 30:08 30 minutes, 8 seconds it sounds like we uh uh sort of the manufacturing rights that the company expects. It sounds like uh it doesn't 30:15 30 minutes, 15 seconds necessarily entail an end toend um solution for example um having to kind of develop the propulsion 30:23 30 minutes, 23 seconds um you know u expertise or uh sort of manage explosives etc. So it's largely 30:29 30 minutes, 29 seconds around the u sort of the outer shell of thought or or not necessarily a fully functioning system right you're like a 30:37 30 minutes, 37 seconds certain segment of the overall solution is what uh uh you're aiming for right so so even in manufacturing of uh you know 30:47 30 minutes, 47 seconds such systems there's typically not a single manufacturer who has all the sort of capabilities or the manufacturer 30:55 30 minutes, 55 seconds typically doesn't own all the technologies which gets involved in the manufacturing of some such parts. You know a lot of thing involves buying 31:03 31 minutes, 3 seconds things off the shelf or from different approved vendors who already have that credential and experience and things are 31:10 31 minutes, 10 seconds assembled together. So our intention is to be that ultimate aggregator where uh we are able to sort of assemble the 31:19 31 minutes, 19 seconds entire system in our workshop and uh supply it to the Indian armed forces. 31:26 31 minutes, 26 seconds Unless it might be probably initial date but uh has uh the team sort of uh uh probably you haven't arrived at that 31:34 31 minutes, 34 seconds stage yet but probably have a sense of like is this a revenue share model or a sort of a royalty model etc. I guess 31:41 31 minutes, 41 seconds those details are yet to be uh find out right. 31:45 31 minutes, 45 seconds Yes. Right now the focus is is to get the prototype up and running and uh in the parallel we are working on the engineering for mass manufacturing. Uh 31:54 31 minutes, 54 seconds you need to understand the difference between prototyping and mass manufacturing. A lot of engineering gets into uh developing lot of tools and lot 32:02 32 minutes, 2 seconds of dyes and you know jigs and fixtures when mass mass manufacturing comes. So there's a lot of engineering involved in that as well. So we are taking your care 32:11 32 minutes, 11 seconds of that bit and while PJO is focusing on getting the prototype in place. 32:17 32 minutes, 17 seconds Understood. Thank you all and all the very best. 32:21 32 minutes, 21 seconds Thank you. Before we take the next question, we would like to remind participants that we may press star and one to ask a question. The next question 32:29 32 minutes, 29 seconds is from the line of Tunel Jane from Nirval Bank security. Please proceed. 32:36 32 minutes, 36 seconds Yeah, good evening and uh thanks for taking my question. 32:40 32 minutes, 40 seconds Uh so my question relate to uh what was the roller uh revenue which has been uh 32:47 32 minutes, 47 seconds included in 9 month and where you see it in uh FI 26 and 27. 32:56 32 minutes, 56 seconds Uh so roughly around uh by the end of this year we will do close to around 60 33:02 33 minutes, 2 seconds to 70 CR in uh by the end of FI26 and uh 33:10 33 minutes, 10 seconds for FY27 uh we expect this to uh grow 33:18 33 minutes, 18 seconds in similar sort of uh percentage levels as indicated by ABC before. Please bear in mind that uh the 60 to 70 CR is 33:26 33 minutes, 26 seconds almost like a 100% growth over last year. So considering that uh you know next year we expect uh to grow as around 33:35 33 minutes, 35 seconds uh late teens or mid 20 uh from around 20 to 25% uh uh levels from this year. 33:47 33 minutes, 47 seconds And sir uh uh since the plant is starting uh from 1st of uh mean towards the end of this year uh and we'll have a 33:56 33 minutes, 56 seconds good capacity next year. So where you would like be looking your order booking towards the end of this year uh to start with uh uh for the new year. 34:07 34 minutes, 7 seconds So uh I think the real increase in the order book will start happening uh 34:15 34 minutes, 15 seconds by roughly around by the end of this year the Q4 of this year and also you know by the mid or end of next Q1 of 34:23 34 minutes, 23 seconds next year. So customers have already sort of started you know customers regularly keep visiting our facilities and they've started seeing the expansion which is in progress and we they have 34:32 34 minutes, 32 seconds already started uh discussing about larger quantities that they typically uh used to plan with us. Uh of course this 34:39 34 minutes, 39 seconds will take some time and some confidence building from our side but we think uh by the end of Q1 next year our order 34:47 34 minutes, 47 seconds book should increase substantially from uh what it is right now. I think the real effect of expansion in the order 34:54 34 minutes, 54 seconds book will start happening by the end of Q1. 34:57 34 minutes, 57 seconds Okay. Okay. And sir, uh what type of margin expansion you are looking at? Uh here seems like you will be uh near 35:06 35 minutes, 6 seconds about last year margin in on EIA level without the red next year where you are seeing the margin. 35:14 35 minutes, 14 seconds So you know margins in the short term get affected by raw material price volatility. So if the volatility is sort 35:22 35 minutes, 22 seconds of gradual we don't see that much of a problem. Uh but if it is sort of very volatile then of course in short term it affects us because it takes there is 35:31 35 minutes, 31 seconds always a time lag when we uh the raw material price is increasing and uh we able to pass on that price hike to our 35:39 35 minutes, 39 seconds customers. uh certain raw materials like tungsten, morbid denim, nickel and cobalt which are high sort of uh 35:49 35 minutes, 49 seconds performance materials, the prices of these raw materials have gone up significantly in the last month or so. 35:55 35 minutes, 55 seconds So uh you're right to say that in spite of the fact that you know a margin improvement has happened by the end of this year we may end up at the same ITA 36:03 36 minutes, 3 seconds levels but going forward we are hoping a margin expansion of 100 to 200 basis point and IATA levels uh in spite of 36:11 36 minutes, 11 seconds this volatility considering the scale of operations as they increase. two that is targeted uh in the next year or maybe 36:18 36 minutes, 18 seconds over a period of one or two year in in the next year in the by 207. 36:26 36 minutes, 26 seconds Okay. Okay sir. Great. Thank you very much sir. Thank you. 36:32 36 minutes, 32 seconds Before we take the next question we would like to remind participant that you may press star and one to ask a question. The next question is from the 36:40 36 minutes, 40 seconds line of Johan Mata an investor. Please proceed. 36:45 36 minutes, 45 seconds Hello uh good evening. Thank you for the opportunity. Uh sir, if you could just uh shed some light on any specific end 36:53 36 minutes, 53 seconds industries that have been driving uh the demand and you know demand for our products specifically or is it uniform across our uh application sectors? 37:04 37 minutes, 4 seconds So I think the top two industries which are driving our growth or three industries would be cement, steel and power. 37:14 37 minutes, 14 seconds uh cement because there's a lot of capex happening in brownfield and green field expansion in the sector uh driven 37:21 37 minutes, 21 seconds primarily by uh you know capacity expansion by two or three large cement producers in India. uh steel is also 37:29 37 minutes, 29 seconds seeing a major capacity expansion across different u integrated steel manufacturers and uh power sector also I 37:39 37 minutes, 39 seconds think there is a lot of focus again on thermal based or coal based power generation and there are new orders 37:46 37 minutes, 46 seconds percolating from the expansion that Adani power and NTPC is doing so this is driving it apart from this there's also 37:54 37 minutes, 54 seconds growth coming in from engineering sector which is typically ally you know uh players who are then supplying 38:02 38 minutes, 2 seconds ultimately to the same end customer industry that I spoke to you about which is steel cement and power so we getting 38:09 38 minutes, 9 seconds good amount of orders from manufacturers of equipments which are supplying to these sectors 38:16 38 minutes, 16 seconds got it sir got it so uh we can expect uh the same industry spread to remain in the foreseeable future demand spread 38:24 38 minutes, 24 seconds from these industries yes uh we keep speaking to our customers and they are very confident about this sort 38:32 38 minutes, 32 seconds of expansion happening for the next 3 to 5 years uh and I think uh there is only more and more need for integrated 38:40 38 minutes, 40 seconds manufacturers with good quality and timely execution and who you know and the order book can swell quickly 38:48 38 minutes, 48 seconds considering the expansion happening in the industry. 38:51 38 minutes, 51 seconds Got it sir. Got it. Just uh to touch touch upon our capacity uh uh if you could give us what the utilization 38:58 38 minutes, 58 seconds levels are at present and if uh they are below the optimal levels what kind of timelines we can expect before capacity 39:06 39 minutes, 6 seconds utilization reaches optimal level and the third part to the question is once optimal levels are reached do we have any capeex plans on the horizon uh maybe 39:15 39 minutes, 15 seconds over the next year or two so before we are undergoing this capeex our current utilization levels are 80 to 39:22 39 minutes, 22 seconds 85 5%. And after uh the capacity expansion gets completed uh of course we are doubling our capacity. So the 39:30 39 minutes, 30 seconds utilization levels will come down to say uh in in the especially the key product segment will come down to say around uh 39:39 39 minutes, 39 seconds 50 to 60%. And I think in the next uh uh 12 to in next 24 months to 30 months we 39:46 39 minutes, 46 seconds should be able to get it back up to 80 to 85%. between next 24 to 36 months. 39:54 39 minutes, 54 seconds Understood sir. Understood. So with the new capeex after doubling maybe two to two and a half years down we'll again reach our current utilization levels of 40:01 40 minutes, 1 second 85 and 85 is a comfortable level or would you look at you know ramping that up as well? 40:08 40 minutes, 8 seconds No I think 85% is for manufacturing is already sort of too high. we should uh start expansion 40:16 40 minutes, 16 seconds planning before we reach 80% so that by the time that level comes up we are ready with uh new facilities. 40:24 40 minutes, 24 seconds Understood. So that makes sense. So just last uh query if you could shed some light on the overall uh you know 40:32 40 minutes, 32 seconds long-term strategy in terms of uh cross-selling sourcing and uh synergies 40:38 40 minutes, 38 seconds from these basically relating to sourcing and cross-selling. 40:45 40 minutes, 45 seconds So can you please explain a little bit more about cross-selling and cross sourcing? Sorry for my ignorance. 40:52 40 minutes, 52 seconds In terms of uh in terms of raw material sourcing if we have any uh sort of 41:00 41 minutes cushions to you know take care of any volatility in raw material right? No. So uh 41:08 41 minutes, 8 seconds you know tungsten for example is seen volatility which is unlike ever seen ever. So for example current price 41:16 41 minutes, 16 seconds levels of tungsten are tungsten is 300% or more in fact than average price levels of uh 2024 and I think more than 41:24 41 minutes, 24 seconds 200% of average price levels of 2025. So you know you can't really plan such things and you have to depend on passing 41:32 41 minutes, 32 seconds on the cost to the customers. But yeah you know some of the things that we are doing is uh you know working with more 41:39 41 minutes, 39 seconds vendors uh especially Indian based vendors so that uh we don't have to depend on uh you know we not 41:47 41 minutes, 47 seconds concentrated or dependent on one single vendor and also like we set up our internal strip manufacturing or strip slitting and winding facility. Uh we 41:56 41 minutes, 56 seconds also intend to sort of do some part processing inhouse so that we can uh cut down on cost and uh can plan raw materials better. 42:07 42 minutes, 7 seconds Got it. Got it sir. That makes sense. Uh that that was all from my side. Uh thank you for taking my questions and best of luck sir. Thanks. 42:15 42 minutes, 15 seconds Thank you. The next question is from the line of Sai Sakit from Mim Capital. Please proceed. 42:23 42 minutes, 23 seconds Thanks for the opportunity again. Um so my question is with regard to uh the management commentary in some of the earlier uh conference call with regard 42:31 42 minutes, 31 seconds to um the seasonality aspect in the business particularly I believe uh the comment was around sort of Q2 and Q4 42:38 42 minutes, 38 seconds being typically u uh stronger or larger relative to Q1 and Q3. Uh but uh with 42:45 42 minutes, 45 seconds regards to sort of now the business uh mix sort of moving more and more towards heavy engineering uh wear plates and 42:53 42 minutes, 53 seconds wear path do we uh do we see a sort of an opportunity to kind of rethink this as it sounds like the uh revenue 43:01 43 minutes, 1 second visibility going forward will largely be dependent on execution base. Uh so do we think that the seasonality piece would continue going forward or 43:10 43 minutes, 10 seconds with this uh change of it? So ultimately our goal is to get out of the 43:17 43 minutes, 17 seconds seasonality and you know uh get an order book and execution cycle sort of synced 43:24 43 minutes, 24 seconds so that we can uh you know always be our maximum utilization and execution from our production facilities so that you 43:32 43 minutes, 32 seconds know we get uh reliable sort of revenue numbers. But uh and you know you can see that it also depends on the order mix and the timing of the order coming in. 43:43 43 minutes, 43 seconds Uh so our intention is to sort of try and have equal order book or you know sort of similar levels of order book 43:51 43 minutes, 51 seconds coming in uh so that the seasonality goes out. Having said that there is some seasonal element which will always be 43:57 43 minutes, 57 seconds there because uh especially u you know in uh and that depends on the major shutdowns that most of these process 44:05 44 minutes, 5 seconds plants take. So rainy season is typically when it's a lull period for them to sell in the market and that is when major shutdowns of these plants 44:13 44 minutes, 13 seconds happen and that's when the demand sort of momentarily spikes because all the customers especially doing operational 44:20 44 minutes, 20 seconds capex operational expenditure for maintenance and replacement of spare parts that's the time where the demand is the maximum because they want to uh 44:29 44 minutes, 29 seconds carry out the maintenance during the lull period of their uh respective industries. So uh that is when you know 44:36 44 minutes, 36 seconds Q2 sort of kicks in uh that is the time when uh you know Q1 ending and Q2 beginning that's when the maximum demand 44:44 44 minutes, 44 seconds demand happens but as you rightly pointed out we are moving away from just selling our consumables and getting into more engineered products and uh large 44:52 44 minutes, 52 seconds industrial solutions. So that will sort of reduce the effect of seasonality but some effect will always be there. 45:00 45 minutes Understood. Got it. Uh and a followup to the sort of the earlier question I had with regard to the capacity expansion. U perhaps a bookkeeping question in the 45:08 45 minutes, 8 seconds sense that do we see a immediate surge in sort of uh depreciation aspect given the new tools and machines uh or is that 45:17 45 minutes, 17 seconds uh within the more of a manageable range in a sense that we would see a a good sort of uh year-over-year upside. 45:25 45 minutes, 25 seconds So uh in the depreciation front uh there would be some uh spike in it because a large amount of capex will get 45:33 45 minutes, 33 seconds capitalized in this quarter. So there would be some spike uh that's why we may have some impact on our PBT but with the 45:42 45 minutes, 42 seconds AITA margins uh it will see an improvement. Understood. Thank you very much. 45:51 45 minutes, 51 seconds Thank you. Before we take the next question, we would like to remind participants that you may press star and one to ask a question. The next question 45:58 45 minutes, 58 seconds is on the line of Vikran Sahu from RK Advisor. Please proceed. 46:11 46 minutes, 11 seconds Hello Mr. Vikrant, you may proceed with your question. Hello. Hello. Am I audible? Yes, sir. 46:19 46 minutes, 19 seconds Yeah. Thanks for the opportunity, sir. I just have few questions like uh how diversified is the refusion engineers customer base today and has the customer 46:27 46 minutes, 27 seconds concentration reduced compared to the last year. 46:33 46 minutes, 33 seconds Uh so our customer base is very diversified. I think uh the single biggest customer doesn't account for even 20% of our turnover. I think it would be less than 15%. 46:44 46 minutes, 44 seconds Um so and we have a large uh customer base uh with large proportion of repeat orders coming in. 46:53 46 minutes, 53 seconds Does that answer your question? 46:55 46 minutes, 55 seconds Yeah. Yeah. I got it. And one more question over the medium term do you expect the company to grow faster than the core business due to a smaller base 47:03 47 minutes, 3 seconds or uh converge for toward group average growth rates? 47:11 47 minutes, 11 seconds Uh sorry we could not uh understand your question. If you can just repeat it please not hear you. Uh just saying that over the medium term do we expect the 47:20 47 minutes, 20 seconds company to grow faster than the core business due to the base of what we had currently or the growth towards the average growth rates? 47:29 47 minutes, 29 seconds So uh uh that's what the I would say we have given our uh 47:36 47 minutes, 36 seconds I would say guidance also uh that we are expecting that we would be doing somewhere around 600 650 CR in next 47:45 47 minutes, 45 seconds three to three years by 27 28 or 28 29 and this is the pace at which we expect us to grow. So as a follow-up question 47:54 47 minutes, 54 seconds to his comment, can you please explain us when you say average growth rate with respect to core sector 48:01 48 minutes, 1 second uh uh who which growth rate are you referring to? 48:08 48 minutes, 8 seconds Like about the top line and the bottom line? Hello. 48:19 48 minutes, 19 seconds So are you saying that are we growing faster than the welding industry, welding consumables industry or the wear path industry? Is that what your question is? 48:28 48 minutes, 28 seconds Yes. Yes. 48:31 48 minutes, 31 seconds Yeah. So we expect to grow faster than the average growth rates that are visible in the welding consumables or 48:37 48 minutes, 37 seconds the welding solutions industry and that is what we've indicated uh before also in the call. 48:45 48 minutes, 45 seconds Okay. Okay. Got it. Thank you so much for the answer sir. I rejoin the Thank you. 48:51 48 minutes, 51 seconds Thank you. We take that as the last question. I now hand the conference over to Mr. Krashan Gag, chairman and managing director for diffusion engineers limited for closing comments. 49:01 49 minutes, 1 second Over to you sir. 49:04 49 minutes, 4 seconds Thank you all for your participation and insightful questions. As we as we move through FI26, we remain focused on execution, innovation and scaling 49:12 49 minutes, 12 seconds sustainably. I would also like to express my grand dedicated team members, valued clients, suppliers, bankers, and all other stakeholders who continue to 49:20 49 minutes, 20 seconds place share trust in us. For any further information, please feel free to connect with our investor relations team. Thank you and have a great evening ahead. 49:30 49 minutes, 30 seconds Thank you. On behalf of Dusion Engineers Limited, that concludes this conference. 49:35 49 minutes, 35 seconds Thank you for joining us and you may now disconnect your lines.