Elecon Engineering Company Limited — Q2 FY26

Elecon Engineering Company Ltd Q2 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=UQ-1nGEcZ0s Published: 7 months ago

0:00 Ladies and gentlemen, good day and welcome to Eleicon Engineering Company's 2Q FYI26 conference call hosted by MK 0:09 9 seconds Global Financial Services Limited. As a reminder, all participant lines will be in the listenon mode and there will be 0:16 16 seconds an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an 0:24 24 seconds operator by pressing star and then zero on your touchstone phone. I now hand the conference over to Mr. Ashwini Sharma, MK Global Financial Services Limited. 0:35 35 seconds Thank you and over to you sir. 0:39 39 seconds Yeah, thank you. Uh good afternoon everyone. I would like to welcome the Eleon Engineering Management and thank you for you know for this opportunity. 0:49 49 seconds We have with us today Mr. uh Prejin Patel chairman and managing director Mr. 0:55 55 seconds Deepak Dalawadi head of gear division Mr. Koshik Patel head of material handling equipment division and Mr. 1:03 1 minute, 3 seconds Narima Ragunatan chief financial officer. I shall now hand over the call to the management for the opening remarks and post which we'll open the uh Q&A session. Over to you sir. 1:18 1 minute, 18 seconds Thank you Ashini. Good evening everyone and a very warm welcome to our Q2 and H1 FY26 earnings conference call. 1:30 1 minute, 30 seconds On the earnings call today I am joined by my colleagues Mr. Aayusha non-executive director 1:38 1 minute, 38 seconds Mr. Deepak Dalwari business head of clear division Mr. Koshi Patel business head of MC division Mr. Nariman Ragunatan CFO. 1:51 1 minute, 51 seconds The press release and the investor presentation have been uploaded to the stock exchanges 1:58 1 minute, 58 seconds and are also available on your company website. I trust you've had the opportunity to review them. 2:06 2 minutes, 6 seconds Let me begin with a brief overview of the macro environment and our business positioning followed by a detailed 2:13 2 minutes, 13 seconds review of our financial performance which Mr. Nariman, our CFO, will take you through. Eleon Engineering continues 2:22 2 minutes, 22 seconds to stand strong as a leading manufacturer of industrial gear solutions and material handling 2:29 2 minutes, 29 seconds equipment. Our commitment to innovation, engineering excellence and deep customer relationships 2:37 2 minutes, 37 seconds across key industries including steel, cement, sugar, power and marine has enabled us to remain resilient in an evolving global environment. 2:49 2 minutes, 49 seconds We hold a leadership position in India's organized industrial gear market along with strong foundation for delivering 2:57 2 minutes, 57 seconds solutions in the MHE division since seven decades. 3:03 3 minutes, 3 seconds Our global footprint spans nearly 95 countries supported by a robust distribution network and a longstanding 3:11 3 minutes, 11 seconds relationship with key industry players. 3:18 3 minutes, 18 seconds With our longstanding experience and engineering capabilities, we are well placed to 3:26 3 minutes, 26 seconds capture opportunities emerging from the ongoing capeex cycle both in India and overseas. 3:35 3 minutes, 35 seconds As a part of our strategic vision, we aim to increase the share of exports to 50% of the total revenue by FY30. 3:46 3 minutes, 46 seconds This global ambition is underpinned by strong R&D, product innovation and strategic tieups with global OEMs. Our 3:55 3 minutes, 55 seconds business is anchored by two divisions, industrial gears and material handling recruitment, each playing a distinct role in shaping our overall performance. 4:05 4 minutes, 5 seconds The gear division which contributed approximately 76% of our consolidated revenue in Q2 4:14 4 minutes, 14 seconds delivered a steady performance growing 9% year on year in revenue despite a 4:22 4 minutes, 22 seconds challenging external environment. The domestic b business continued to build on the momentum while overseas business 4:31 4 minutes, 31 seconds has demonstrated a resilience performance during the quarter in spite of delays in order receipt and 4:40 4 minutes, 40 seconds execution primarily in select overseas markets affected by geopolitical volatility. 4:50 4 minutes, 50 seconds However, this is a matter of timing. I want to emphasize that the underlying demand remains healthy and we have 4:58 4 minutes, 58 seconds witnessed robust order inflows in both markets and encouraged by the sustained 5:05 5 minutes, 5 seconds inquiry levels which bodess well for the future order inflows. The division is 5:12 5 minutes, 12 seconds well positioned to build on this momentum supported by improving market sentiment and ongoing capital investments across key industries. 5:23 5 minutes, 23 seconds that is steel power and cement which is expected to drive growth. We are also 5:30 5 minutes, 30 seconds witnessing encouraging order visibility in the sugar segment reflecting broader industrial momentum. 5:40 5 minutes, 40 seconds Having said that we do not foresee any material impact on the business from a 5:47 5 minutes, 47 seconds fullear perspective. Our ME division continued its strong growth trajectory with 33% year-on-year revenue growth in 5:56 5 minutes, 56 seconds Q2 supported by robust demand and increased execution. 6:03 6 minutes, 3 seconds This performance is driven by a healthy order book largely from power cement mining and port sectors. 6:11 6 minutes, 11 seconds As we pivot towards product supply and expand our aftermarket services, we believe this division will continue to 6:20 6 minutes, 20 seconds deliver sustained growth in the years ahead, backed by a healthy pipeline, solid order backlog, and a deep customer relationships. 6:31 6 minutes, 31 seconds All in all, despite short-term execution delays in international markets, the business fundamentals remain strong. The 6:39 6 minutes, 39 seconds timing difference between order intake and execution has temporarily impacted revenue recognition. 6:48 6 minutes, 48 seconds But with a solid order book and execution pipeline across both our divisions provides a strong foundation 6:55 6 minutes, 55 seconds and visibility for healthy growth in coming quarters. 7:01 7 minutes, 1 second Elicon remains focused on driving its long-term growth strategy. We are actively diversifying our business 7:09 7 minutes, 9 seconds portfolio and expanding our presence across new sectors and international markets. Our wide-range product 7:17 7 minutes, 17 seconds portfolio backed by strong in-house R&D and engineering capabilities continues to differentiate us in the 7:25 7 minutes, 25 seconds industry. our ability to deliver customized highquality solution positions as well to meet the evolving and complex needs of our customers. 7:38 7 minutes, 38 seconds With this I hand over the call to our CFO Mr. Niman Ragunatan for a detailed 7:45 7 minutes, 45 seconds overview of our financial performance for Q2 and H1 acquire 26. Over to you 7:53 7 minutes, 53 seconds Mr. Nas. Yeah, thank you sir. Good evening. 8:00 8 minutes Today it's my pleasure to take you through the financial highlights for the quarter and half year ended 30th September 2025. 8:09 8 minutes, 9 seconds Financial performance Q2 FYI26. 8:12 8 minutes, 12 seconds We are pleased to report a resilient and encouraging performance in Q2 FI26 despite some short-term external 8:21 8 minutes, 21 seconds challenges. For the quarter ended September 2025, our consolidated revenue from operations stood at rupees 578 8:29 8 minutes, 29 seconds crores compared to 508 crores in Q2 FI25 reflecting a growth of 14%age on a 8:36 8 minutes, 36 seconds year-on-year basis. This growth was primarily driven by strong domestic demand across both our gear and MHC 8:45 8 minutes, 45 seconds divisions. The OC's business remained flat during the quarter impacted by timing related delays in order receipt 8:54 8 minutes, 54 seconds and execution due to geopolitical volatility in select international markets. Nonetheless, the inquiry levels 9:01 9 minutes, 1 second in most overseas markets remains encouraging and we expect execution to pick up space in H2 FI26. 9:10 9 minutes, 10 seconds Domestic demand 2 is picking up meaningfully particularly from the core sectors of power, steel and cement. 9:18 9 minutes, 18 seconds The domestic market contributed 79%age to the consolidated volume while the remaining 21%age came from overseas 9:27 9 minutes, 27 seconds markets. The order intake for Q2 FI26 is 688 crores. A strong 28%age growth year 9:36 9 minutes, 36 seconds on year. It is contributed by domestic market rupees 516 crores up 32%age year 9:44 9 minutes, 44 seconds and overseas market rupees 172 crores up 18%age yearon year. This robust order 9:52 9 minutes, 52 seconds inflow along with healthy or inquiry levels keeps us optimistic for higher growth in the second half of the year. 10:01 10 minutes, 1 second Our consolidated AIA for the quarter stood at rupees 126 crores compared to 10:08 10 minutes, 8 seconds 112 crores in Q2 FI25 an increase of 12%age yearon year. The AITA margin for the quarter was 21.7%age. 10:18 10 minutes, 18 seconds Every margin was impacted temporarily due to higher employee cost and a change in the product mix within the gear 10:25 10 minutes, 25 seconds division. We expect margins to normalize in H2 FI26 as volumes pick up and 10:33 10 minutes, 33 seconds operating leverage comes into play through recently commissioned capacity ramp up and order book converts faster into revenue. 10:42 10 minutes, 42 seconds Profit after tax for the quarter stood at 88 crores representing a pack margin of 15.2% 2%age 10:50 10 minutes, 50 seconds for the half year ended September 2025 after adjusting for the one one-time arbitration income of Rs 25 crores 10:59 10 minutes, 59 seconds recognized in Q1 FI26 in MH division adjusted consolidated revenue stood at 11:06 11 minutes, 6 seconds Rs,43 crores up from Rs 901 crores in H1 FI25 11:13 11 minutes, 13 seconds adjusted EVITA was 231 crores up from 205 crores with an AITA margin of 22.1%. 11:23 11 minutes, 23 seconds Apart from the above 25 crores recognized in the revenue in Q1 FI26, an additional rupees 10 crores was also 11:31 11 minutes, 31 seconds recorded under other income as part of arbitration settlement and further rups 80 crores was recognized as an 11:38 11 minutes, 38 seconds exceptional income below PBT representing unrealized marktomarket gains from investment reclassification. 11:47 11 minutes, 47 seconds As a result, profit after tax for H1 FI26 include including these onetime incomes stood at rupees 263 crores. 11:57 11 minutes, 57 seconds Segment wise performance. The gear division contributed 76%age of total revenue in Q2 FI26. 12:05 12 minutes, 5 seconds For the quarter ended September 25, the gear division's revenue stood at rupees 441 crores compared to 405 crores in Q2 12:14 12 minutes, 14 seconds FI25 up 9% yearonear. This performance was resilient despite delays in order execution due to delay in receipt of 12:23 12 minutes, 23 seconds order from customers. We anticipated we anticipate faster conversion of order 12:30 12 minutes, 30 seconds into revenue in H2 helping us stay on track to achieve the full year guidance. 12:35 12 minutes, 35 seconds The EIT for the gear division stood at rupees 85 crores in Q2 FI26 compared to 87 crores in Q2 FI25. 12:44 12 minutes, 44 seconds The EIT margin declined to 19.2%age 2%age in Q2 FI26 compared to 21.5%age in 12:53 12 minutes, 53 seconds the same quarter last year primarily due to the increase in employee cost and change in the product mix with respect 13:00 13 minutes to engineered and catalog products. A bit margin was also impacted by accelerated depreciation on newly assets capitalized. 13:09 13 minutes, 9 seconds However, we are confident as the revenue scale up, we will be able to recoup the margins with operating leverage leverage playing out in the H2 FI26. 13:20 13 minutes, 20 seconds The order intake for the quarter was 497 crores reflecting a 15% year-on-year increase. Open order book stood at 13:29 13 minutes, 29 seconds rupees 771 crores as on 30th September 2025 providing strong visibility in the upcoming quarters. 13:38 13 minutes, 38 seconds The material handling equipment division continued its strong growth momentum in Q2 FI26. Also revenue for the quarter 13:46 13 minutes, 46 seconds was rupes 137 crores compared to 103 crores in Q2 FI25 up 33%age yearon year. 13:54 13 minutes, 54 seconds This growth was driven by solid demand in the product supply and the aftermarket segments particularly from 14:01 14 minutes, 1 second the cement power and port sectors. The EIT for M student rupees 35 crores 14:08 14 minutes, 8 seconds compared to 26 crores in Q2 FI25. The EIT margins improved to 25.7%age up from 25.4%age in Q2 FI25. 14:20 14 minutes, 20 seconds The order intake for the quarter student rupes 191 crores compared to 104 crores in Q2 FI25. Open order book for MS 14:29 14 minutes, 29 seconds student rupes 455 gross as at 30th September 25 reflecting strong growth prospects going forward. 14:40 14 minutes, 40 seconds On the balance sheet front, we continue to maintain a robust balance sheet with strong net cash position of around 600 14:48 14 minutes, 48 seconds crores offering us significant flexibility to pursue growth opportunities, capex plan and navigate macro uncertainties. 14:58 14 minutes, 58 seconds Looking ahead, the capex budget for FI26 to FI28 is estimated at rupes 400 crores 15:06 15 minutes, 6 seconds aligned with our long-term strategic goals. 15:10 15 minutes, 10 seconds Furthermore, we are pleased that the board has declared an interim dividend of rupees 0.50 each 15:18 15 minutes, 18 seconds that is 50% per equity share of face value of rupees 1 each, reaffirming our commitment to delivering value to shareholders. 15:27 15 minutes, 27 seconds To conclude, we are confident of achieving our annual guidance of achieving consolidated revenue of rupes 15:35 15 minutes, 35 seconds 2650 crores and EITA margin of 24%age in FI26. 15:43 15 minutes, 43 seconds Our strong order book, healthy enquiry pipeline, domestic demand momentum and anticipated acceleration in 15:52 15 minutes, 52 seconds international execution in H2 provide the foundation for a strong finish to FI26. 15:58 15 minutes, 58 seconds With that, I would like to open the floor for questions you may have. Thank you. 16:06 16 minutes, 6 seconds Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press 16:14 16 minutes, 14 seconds star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you 16:20 16 minutes, 20 seconds may press star and two. Participants are requested to use handsets while asking a question. 16:27 16 minutes, 27 seconds Ladies and gentlemen, we will wait for a moment while the question assembles. 16:49 16 minutes, 49 seconds The first question is from the line of Dishar Vaya from Bandan AMC. Please go ahead. 16:57 16 minutes, 57 seconds Uh hello, good evening. 17:00 17 minutes Uh have any of our clients told us to delay the execution especially in gears domestic or abroad? 17:09 17 minutes, 9 seconds Uh the domestic market has taken some time in the beginning to 17:17 17 minutes, 17 seconds to take traction. However, there have been no incidences in the local market 17:25 17 minutes, 25 seconds where uh they have asked us to delay the execution. 17:29 17 minutes, 29 seconds Uh on the other hand uh in the international market yes uh there have been situations because of the uh 17:37 17 minutes, 37 seconds geopolitical scenario where the customer is confident of the project that they are going to go 17:46 17 minutes, 46 seconds through with it but they have paused for a while. 17:54 17 minutes, 54 seconds So when I look at the G sorry when I look at the gears business the revenue 18:00 18 minutes growth of 11%. Seems to be uh much at the lower end and uh the contribution of 18:10 18 minutes, 10 seconds international business is not very significant. So uh on the domestic side could you elaborate as to what is 18:17 18 minutes, 17 seconds happening for gears on domestic side? See we are are doing 18:26 18 minutes, 26 seconds various projects especially uh if you look at it in the power cement 18:34 18 minutes, 34 seconds uh sector as well as sugar uh the orders quite often come in lumps. 18:42 18 minutes, 42 seconds Uh we recently received an order in gear in in the power sector 18:50 18 minutes, 50 seconds uh which was one of the largest ever which was amounting to 80 crores of 18:57 18 minutes, 57 seconds rupees. So it it comes in lumps quite often and therefore the uh if you look at it these orders have come in. 19:08 19 minutes, 8 seconds However, the execution may be uh for a longer duration because 19:15 19 minutes, 15 seconds the customer wants the deliveries in uh the last quarter or in the first or second quarter of next year. 19:27 19 minutes, 27 seconds So, uh those kind of situations we have to play around with. 19:32 19 minutes, 32 seconds What is important that we are confident of reaching our annual targets of 19:39 19 minutes, 39 seconds topline which is the revenue as well as the EITA margins by the end of the year. 19:47 19 minutes, 47 seconds Okay. Uh and could you uh for decline in margins uh in the gear business? 19:55 19 minutes, 55 seconds See it all depends on the product mix. 19:58 19 minutes, 58 seconds As I told you uh it not only depends on the product mix but it also depends on 20:05 20 minutes, 5 seconds uh the turnover or the top line. So by the end of the year it will all even out 20:11 20 minutes, 11 seconds to the uh the projected EITA that we have defined 20:21 20 minutes, 21 seconds to guide for about say 25% margins uh in the gear business. uh should that be achievable for the year? 20:30 20 minutes, 30 seconds Yes. Uh uh definitely um once the turnover picks up in the second half as what CMD has said the margin of whatever 20:40 20 minutes, 40 seconds we have projected it definitely is achievable. Okay. Okay. 20:49 20 minutes, 49 seconds Thank you. Thank you. 20:56 20 minutes, 56 seconds Thank you. The next question is from the line of Mr. Bala Subramanyam from Ahazal Capital. Please go ahead. 21:03 21 minutes, 3 seconds Uh good evening sir. Thank you so much for the opportunity. So I just want to understand uh the decline of margins uh 21:09 21 minutes, 9 seconds for uh uh gear uh divisions like I just want to uh you could share that uh product mix side uh what's the mix 21:18 21 minutes, 18 seconds between uh standard products and customized products in this quarter. 21:24 21 minutes, 24 seconds See uh that information is always given to you. However, you have to understand a product mix also means that it depends 21:34 21 minutes, 34 seconds on the order type of the size ratios and the requirements the uh turnover in 21:44 21 minutes, 44 seconds after sales products etc etc. Okay. and the type of gears given even in whether 21:52 21 minutes, 52 seconds they are worm, helical, planetary couplings. 21:56 21 minutes, 56 seconds Okay. Uh so various kinds of uh variables are there. However, as I told 22:01 22 minutes, 1 second you the uh the margins that we have kept in various products at the end of the 22:10 22 minutes, 10 seconds year they will all even out to achieve our annual targets that we are extremely confident of. 22:18 22 minutes, 18 seconds It may even further improve more which is a possibility. 22:23 22 minutes, 23 seconds So uh please be rest assured that the margins will be made. Okay sir. Uh sir we are targeting 50. 22:32 22 minutes, 32 seconds Would you like to would you still like to get the uh uh breakup if you want we can always give it to you of the and customuilt gears? 22:44 22 minutes, 44 seconds Yes sir. 22:46 22 minutes, 46 seconds Yeah. uh see catalog products it is 54%age and engineer products it is 46%age for Q 22:53 22 minutes, 53 seconds Q2 okay sir thank you sir so my next question regarding aftermarket international expansion I think we are 23:02 23 minutes, 2 seconds targeting 50%age of uh international revenue by F30 and right now our US service team is in place and uh we also 23:10 23 minutes, 10 seconds planned for Europe and I just want to understand uh what is the go-to market strategy for a milling international uh 23:17 23 minutes, 17 seconds service and repurchasement contracts and uh is any targeted uh uh revenue contributions from international 23:25 23 minutes, 25 seconds services uh side the next 3 to 5 years time frame. 23:34 23 minutes, 34 seconds Uh see basically I would put it this way that our strategy 23:41 23 minutes, 41 seconds is that we go and try to get orders into 23:49 23 minutes, 49 seconds areas and territories where we have not yet focused much on which is South 23:56 23 minutes, 56 seconds America, uh certain countries of Europe, 24:03 24 minutes, 3 seconds uh part of a small part of Middle East and so forth. Okay, including the fact 24:11 24 minutes, 11 seconds uh that Russia also has a good in the future etc. So uh there are various 24:19 24 minutes, 19 seconds areas that we would like to penetrate further. Uh the geopolitical situation right is 24:27 24 minutes, 27 seconds is not helping the uh business environment. We all know there are wars going on uh which is slowing down the situation. 24:39 24 minutes, 39 seconds Quite often projects are being held up. 24:42 24 minutes, 42 seconds Uh certain projects are also getting cancelled. Luckily uh we have been the 24:48 24 minutes, 48 seconds kind where our projects have not yet got any of them have got cancelled. So, but the scenario still seems to be dull and 24:57 24 minutes, 57 seconds slow and we are hopeful that uh we will be able to uh 25:04 25 minutes, 4 seconds reach our targets by the end of FY30 which is uh I'm sure will put the entire 25:13 25 minutes, 13 seconds company in a very different position because we will be able to gain the strength of 25:22 25 minutes, 22 seconds able to cater to any recessionary ary trend uh for years to come. 25:32 25 minutes, 32 seconds Okay sir. Sir that OEM business side I think they are targeting 7 million euros in this year and uh I just want to 25:39 25 minutes, 39 seconds understand on the customer onboarding side is there any concerns about margin dilutions uh to onboard uh new OEMs uh 25:49 25 minutes, 49 seconds because uh OEM contracts are uh typically competitive 25:55 25 minutes, 55 seconds uh we have considered all this situation uh we are not expecting that what we 26:02 26 minutes, 2 seconds have committed uh those margins we will be able to maintain and uh though uh the uh tariff 26:11 26 minutes, 11 seconds scenario in United States is fluctuating wildly dayonday basis however we are 26:18 26 minutes, 18 seconds confident that we will be able to achieve the margins that we have committed. 26:26 26 minutes, 26 seconds So my last question under descent side uh uh that P7 Bravo projects it's nearly around 1,000 crores kind of 26:34 26 minutes, 34 seconds opportunities and what is the current status of this order and uh what kind of timeline and uh for the official tenders 26:43 26 minutes, 43 seconds and uh uh like uh and what kind of margins uh this kind of uh large events 26:50 26 minutes, 50 seconds projects uh uh as of now see uh the the P17 alpha 27:00 27 minutes is just more or less about to get commissioned. 27:05 27 minutes, 5 seconds Uh normally what happens is uh the ships once they are launched and they go 27:12 27 minutes, 12 seconds through the exercise of uh uh you know trying out all the 27:20 27 minutes, 20 seconds equipments and testing all the equipments and once they are satisfied with the performance of the ship after 27:27 27 minutes, 27 seconds which uh they will uh normally go in for the uh active 27:34 27 minutes, 34 seconds uh order uh ordering of the ship as well as the equipment 27:41 27 minutes, 41 seconds which will happen uh for the P7 beta or Bravo and uh they will place orders with 27:50 27 minutes, 50 seconds the shipyards. We are expecting as of now that in the third quarter of this year uh the tenders would be floated. 28:01 28 minutes, 1 second Yeah. 28:03 28 minutes, 3 seconds for the ships. After which once the shipyards get the order they will then 28:10 28 minutes, 10 seconds uh contact us for the uh requirement of the gearboxes 28:19 28 minutes, 19 seconds exponential. expecting we are expecting that by Q3 Q4 of FY2026 28:28 28 minutes, 28 seconds that is uh next year the orders for P17 Bravo would get finalized. 28:47 28 minutes, 47 seconds Thank you ladies and gentlemen. In order to ensure that the management will be able to address questions from all the 28:54 28 minutes, 54 seconds participants in the conference, kindly limit the questions to two per participant. Should you have a follow-up question, please join the queue again. 29:03 29 minutes, 3 seconds The next question is from the line of Raja from Enum AMC. Please go ahead. 29:10 29 minutes, 10 seconds Uh hello sir. Uh thank you for the opportunity. Um my first question was sir in the defense sprint uh there was 29:17 29 minutes, 17 seconds this P7 large order that you mentioned about and there was another order uh 29:23 29 minutes, 23 seconds relatively of smaller size around 2 200 kores uh about which we mentioned in the earnings call post Q1 results sir. So any update on that order? 29:34 29 minutes, 34 seconds Yeah that is regarding the uh aircraft carriers. 29:40 29 minutes, 40 seconds Okay. Uh The aircraft carrier uh the one that has already been launched has been quite successful. 29:50 29 minutes, 50 seconds So it had been also used in the uh recent war that we had with INS Vikrant which we had with Pakistan. 30:00 30 minutes However, it was not fully in action where uh you know none of the aircraft from there into uh the foreign territories. 30:11 30 minutes, 11 seconds uh what we find is that they will go in for this requirement very shortly. Uh 30:18 30 minutes, 18 seconds the duration time duration uh that we expect would be either the last quarter 30:25 30 minutes, 25 seconds of this year which would be last quarter FY 26 or the first or second quarter of uh FY27. 30:39 30 minutes, 39 seconds Okay sir. Got it. Uh, another question was sir uh uh during the previous call you 30:46 30 minutes, 46 seconds mentioned that there was some pain point in the sugar sector when it comes to in the domestic space when it comes to ordering. So any progress that has 30:55 30 minutes, 55 seconds happened uh in the sugar sector on orders uh this year the order inflow from sugar 31:03 31 minutes, 3 seconds has been much less. It has been a bit dull. Uh however we see uh good number 31:10 31 minutes, 10 seconds of inquiries which have come up uh for the next coming which means for the next crushing season which would happen in FY27. 31:21 31 minutes, 21 seconds Okay. The deliveries would take place uh practically by September FY27 31:29 31 minutes, 29 seconds and uh we are hoping that we should be able to back good number of orders for that requirement. 31:36 31 minutes, 36 seconds uh which would get finalized in a month or two. Okay. 31:44 31 minutes, 44 seconds Thank you very much. Thank you. 31:50 31 minutes, 50 seconds Thank you. The next question is from the line of CA Garvit Gold from Envis Analytics Advisory LLP. Please go ahead. 32:00 32 minutes Hi. Hello. 32:02 32 minutes, 2 seconds Yes, you are. Good evening sir. Uh my question uh is on this ship building part only. Uh where we in last quarter 32:10 32 minutes, 10 seconds we talked about uh 200 play order and now we are saying uh Saturday is happening and uh now the order will be coming uh more uh more towards the end 32:18 32 minutes, 18 seconds of this financial year. So is there any specific reason that the orders are getting delayed? That is one and secondly uh uh are you anticipating any 32:27 32 minutes, 27 seconds big order from uh any maring side of the port? 32:31 32 minutes, 31 seconds That's my first question. Yeah. Uh first uh the 32:39 32 minutes, 39 seconds projects normally when it happens with uh the defense units normally gets 32:47 32 minutes, 47 seconds delayed. Okay. Because there are too many agencies to coordinate with. It is the Indian Navy then uh the uh shipyards. 32:58 32 minutes, 58 seconds Okay. the inspection agency which would be a separate uh agency then a certified 33:05 33 minutes, 5 seconds body and so forth. So uh it takes a huge amount of coordination to get everyone 33:11 33 minutes, 11 seconds together and and finalize orders and therefore they do get delayed by two or 33:17 33 minutes, 17 seconds 3 months very easily. Uh they are right now uh delayed. There is a project which 33:26 33 minutes, 26 seconds is likely to happen soon. How soon that we do not know but uh they are NGMV 33:35 33 minutes, 35 seconds uh which is yeah it is called the next generation missile vessel. So that hopefully would 33:44 33 minutes, 44 seconds get finalized soon. And uh right now we are also uh manufacturing gear units for 33:51 33 minutes, 51 seconds uh the new generation uh petrolling vessels opbs as they call it uh ngopbs. 34:01 34 minutes, 1 second So uh these are the orders which are uh right now hot and we believe that soon 34:09 34 minutes, 9 seconds they will get finalized especially the NGNP. 34:16 34 minutes, 16 seconds Got it sir. And secondly you mentioned uh the international market uh order procurements are getting delayed. So in 34:24 34 minutes, 24 seconds this environment uh what is giving us the confidence that uh H2 will uh give us the recovery and we will be able to 34:31 34 minutes, 31 seconds meet our target because uh environment is still tough right? So uh can you put some color on that? 34:40 34 minutes, 40 seconds See the uh pending order position is quite strong. The inquiry levels are 34:46 34 minutes, 46 seconds also quite good and the body language of the uh customers who have given us 34:54 34 minutes, 54 seconds inquiries they seem to be telling us that hey look here we want to finalize the order soon. So that is giving us the 35:02 35 minutes, 2 seconds encouragement and confidence that we will be able to achieve our target. 35:08 35 minutes, 8 seconds So there can be the chances like they can further delay uh these uh uh deliveries uh maybe because of the environment right 35:18 35 minutes, 18 seconds there's always a possibility but uh we are reasonably confident because the orders that we have on hand uh they have not stopped us from execution. 35:29 35 minutes, 29 seconds The political scenario also seems to be such that the wars seem to be ending 35:37 35 minutes, 37 seconds uh especially the one in the Middle East as well as the uh Russian war people 35:43 35 minutes, 43 seconds seem to be getting fed up and wanting to bring it to a positive conclusion. So uh 35:51 35 minutes, 51 seconds rather than the situation deteriorating we believe that the uh situation will be improved and therefore we are not uh 36:01 36 minutes, 1 second worried that any of the orders would further get delayed and the guidance which we are targeting 36:09 36 minutes, 9 seconds uh we need to do uh from 1500 PR in H2 which essentially means the quarterly runway to 800 PR. So uh can you tell us 36:18 36 minutes, 18 seconds like uh is it going to be a uniform execution or uh we should expect like uh uh in the range of 650 700 Q3 and rest will be in Q4. 36:29 36 minutes, 29 seconds See we have done a fair good amount of capex uh and the new equipments have already 36:38 36 minutes, 38 seconds started arriving. They are a lot of them have started uh producing for us and we are reasonably confident that with the 36:47 36 minutes, 47 seconds capacity increase that we have had uh and the new equipments which are performing well uh we should be able to 36:56 36 minutes, 56 seconds achieve our targets uh with reasonable confidence. 37:01 37 minutes, 1 second Uh no sir I'm trying to understand like is it going to be a uniform in Q3 and Q4 or uh it will be like Q3 will be a 37:08 37 minutes, 8 seconds little less than Q4 and Q4 will be a major happened in the last year. 37:16 37 minutes, 16 seconds See uh Q3 normally has more holidays that is number one. The other thing is normally it 37:24 37 minutes, 24 seconds uh when you try to increase the production and output it slowly and gradually increases. So uh always Q4 uh 37:34 37 minutes, 34 seconds values are always higher than Q3 I presume would be also the trend this 37:41 37 minutes, 41 seconds year. However we are keen that we would try as much as possible to increase our 37:49 37 minutes, 49 seconds turnover in Q3 so that Q4 becomes more and more comfortable. 37:56 37 minutes, 56 seconds Understood. last uh is quite often difficult and one last question you mentioned to 38:04 38 minutes, 4 seconds one of the parties just in between sir uh we would request you to rejoin the queue for the followup question. Thank you very much. 38:15 38 minutes, 15 seconds The next question is from the line of Kash Javi from MK Investment Managers. Please go ahead. 38:21 38 minutes, 21 seconds Um thank you so much sir for the opportunity. Um first of bookkeeping bookkeeping question on the international subsidiaries uh you know 38:29 38 minutes, 29 seconds if you can give some number for H1 uh in terms of revenue how it has uh you know probably grown and what have been the 38:37 38 minutes, 37 seconds margins there. Uh and second question is you know on the overall export side I know there has been a significant amount 38:44 38 minutes, 44 seconds of discussion here um but my question is that between 2024 to 2029 or 28 over a 38:53 38 minutes, 53 seconds period of 5 years we are committing about 750 uh sorry about 650 crores of capex and uh you know we are doing that 39:01 39 minutes, 1 second even at accelerated depreciation given that that cap coming from uh operating leases. So uh one uh you know it seems 39:10 39 minutes, 10 seconds like the confidence on that export business seems to be extremely high over a uh let's say next about 3 4 years. So 39:17 39 minutes, 17 seconds you know where does that come from on the longer term and to suffice for that accelerated depreciation should one assume that uh the ITA margins on now 39:26 39 minutes, 26 seconds export business is going to be uh probably a bit higher than what we are doing today given that it will have to be an engineered product. 39:37 39 minutes, 37 seconds uh see uh I will put it this way our export margins have always been better than the domestic margins. That is number one. 39:47 39 minutes, 47 seconds Number two is that these commitments or these targets that 39:53 39 minutes, 53 seconds we have taken are the targets which in the long term are very strategic for the 40:00 40 minutes company as a whole. The reason being that if we are able to achieve our targets by FY30 which we are reasonably 40:10 40 minutes, 10 seconds confident of doing so, it will help us hedge against recession especially domestic recession because what would 40:19 40 minutes, 19 seconds happen is that while the inflow of orders out here reduce the orders from 40:26 40 minutes, 26 seconds the uh international market would help us in sustaining not only the turnover 40:34 40 minutes, 34 seconds at the top line but also the bottom line the margins the EITA margins that we are talking about and that is extremely 40:43 40 minutes, 43 seconds important for us to uh achieve and therefore there is a lot of focus the entire organization is focusing more on 40:52 40 minutes, 52 seconds exports and also seeing to it that the exports are coming from various territories different territories from South 41:01 41 minutes, 1 second America, from the Middle East, from Africa, uh the Far East, etc., etc., so that uh 41:09 41 minutes, 9 seconds you are able to automatically hedge against ups and downs in the economic activities globally. 41:21 41 minutes, 21 seconds Have I answered your question or should I? uh say I understand that sir but uh you know uh 41:28 41 minutes, 28 seconds when does that u given the fact that 650 crores of commitment and accelerated depreciation because of operating leases 41:36 41 minutes, 36 seconds um this has to come sooner than later right and as of today at least in the numbers uh you know they they don't give that kind of confidence which is why you 41:44 41 minutes, 44 seconds know this this question keeps coming up again and again because uh depreciation uh is is going to be an issue if if if 41:53 41 minutes, 53 seconds that does not happen and particularly once we spend another 400 crores uh which is why so 41:59 41 minutes, 59 seconds see first of all you have to understand that this capex is coming all from internal across 42:07 42 minutes, 7 seconds that is number one number two is the capex that we are doing are for various 42:14 42 minutes, 14 seconds reasons it is not only enhancement of capacity but it is also to take care of the uh 42:24 42 minutes, 24 seconds wear and tear that has happened to the machine tools where we have not done keex in the past. Okay. It also helps 42:31 42 minutes, 31 seconds you in improving your quality and improve your productivity. 42:38 42 minutes, 38 seconds So uh that is that is a necessity and that happens with all engineering industry. That is number one. Number two 42:47 42 minutes, 47 seconds is the margins that we have committed year on year since the last 3 years or last 42:56 42 minutes, 56 seconds four years. We have been able to maintain and we are confident that we will be able to maintain them. As long 43:03 43 minutes, 3 seconds as the demand is concerned, we are fully capable of rising to an occasion where if there is an increase in demand, we 43:11 43 minutes, 11 seconds would still be able to meet with it. So these are the strengths on which uh the company is is uh driving itself further ahead. 43:23 43 minutes, 23 seconds So I do not see why it is not giving you the confidence when the management is fully confident. 43:32 43 minutes, 32 seconds Kash you would like to further add points. Um this 400 crores of capex what are we 43:40 43 minutes, 40 seconds plan to do over a period of 3 years? No, not necessarily all the whole thing we don't plan to take it as an operating 43:47 43 minutes, 47 seconds list. Partly it will be that has been historically in the past 2 years if you see partly it will be funded by our own 43:54 43 minutes, 54 seconds internal occurrence and the balance we will take into the operating list. So that decide depending upon our requirement and what we would like to keep it as a reserve. 44:06 44 minutes, 6 seconds Okay. And uh some numbers on H1 on the subsidiary side. Um if if at all growth number also will do uh if not absolute topline number. 44:18 44 minutes, 18 seconds Yeah. 44:22 44 minutes, 22 seconds [Applause] 44:24 44 minutes, 24 seconds And and the margins also if possible. Can you repeat the question please? 44:28 44 minutes, 28 seconds Uh the revenue number for the subsidiaries and their margins. 44:33 44 minutes, 33 seconds Yeah. Yeah. Uh the revenue numbers for the quarter is 83 crores. Okay. 44:40 44 minutes, 40 seconds and the same quarter sorry H1 and the H1 last year uh 44:47 44 minutes, 47 seconds yeah just current year is 152 for uh 162 for the 44:59 44 minutes, 59 seconds current year H1 last year it was 188 last year it is 188 and the margin Okay, 45:09 45 minutes, 9 seconds sorry I uh I I could not catch that uh last bit. 45:17 45 minutes, 17 seconds Yeah, just so 180 became 156. Uh have I understood that correctly? 45:24 45 minutes, 24 seconds 162 162. Okay. And uh the margins 45:31 45 minutes, 31 seconds Yeah. just 45:47 45 minutes, 47 seconds percentage is what uh uh current year is. Current year it is 12%. Okay. 45:55 45 minutes, 55 seconds So compared to last year it's 15%. Okay sir. Thank you so much. Thank you. 46:05 46 minutes, 5 seconds Thank you. The next question is from the line of Pratikqatari from Unique PMS. Please go ahead. 46:13 46 minutes, 13 seconds Yes. Hi, good afternoon. Uh so first question on I mean we started this journey on onboarding OEMs I guess about 46:20 46 minutes, 20 seconds one and a half two years back and last quarter we had declared about 18 OEMs that we have uh onboarded. So one, how 46:28 46 minutes, 28 seconds has this journey been with them in terms of because we started first providing them with prototypes and then some commercial uh supply uh and then and 46:37 46 minutes, 37 seconds just some ramp up some conversation qualitatively, quantitatively uh how has that journey been until now? 46:49 46 minutes, 49 seconds Yeah. Uh see the pratik last year earlier this thing 18 OEMs is quart during this quarter there has been no 46:56 46 minutes, 56 seconds additions. Um however the progress on those things remains the same. We are developing various products and various 47:05 47 minutes, 5 seconds is in the operations also and should also be good from those OEMs. 47:12 47 minutes, 12 seconds Right. So one of the expectation was that once a year or two passes you were expecting that there'll be a sharp ramp up because they were testing waters with 47:20 47 minutes, 20 seconds us and once the confidence build up uh so are we seeing that or all of that seems delayed given the geopolitical situation. 47:30 47 minutes, 30 seconds Yeah. 47:30 47 minutes, 30 seconds Yes. Uh that is the situation. However, uh they are promising good number of orders because they have been uh most of 47:38 47 minutes, 38 seconds them are saying that they are satisfied with the product that we have delivered. 47:44 47 minutes, 44 seconds Uh they have put it on calls and uh they seem to be happy. Okay. So we we are now 47:53 47 minutes, 53 seconds uh you know kind of controlling them to give us more orders. So that is the scenario. 48:02 48 minutes, 2 seconds uh there are some way where we have received more orders but uh the I would 48:09 48 minutes, 9 seconds say there is nothing that we can uh say with uh confidence that these are large number of orders. We are expecting more 48:18 48 minutes, 18 seconds from them. Okay. Approximately uh a few few uh at least 30 40 crores is what we are expecting. 48:30 48 minutes, 30 seconds Correct. Correct. Correct. Uh and some one question to Niban in a cash flow statement we see this sorry to interrupt you between 48:38 48 minutes, 38 seconds it's my second question ma'am. Uh first was a followup. Yeah. So to Nan I mean in cash flow statement we see this 22 48:46 48 minutes, 46 seconds crores of uh FX loss. Uh if you can just highlight where does this get booked? Uh and what is this regarding 48:59 48 minutes, 59 seconds this relates to the unrealized when we translate our OCS accounts that relates to the unreed uh loss. So that is the reason. 49:09 49 minutes, 9 seconds So this will be under other comprehensive in the P&L. Yeah. Okay. Great. Thank you. 49:20 49 minutes, 20 seconds Thank you. 49:22 49 minutes, 22 seconds Thank you. The next question is from the line of Mayank Bandari from Asian Market Securities. Please go ahead. 49:31 49 minutes, 31 seconds Thanks for the opportunity. 49:34 49 minutes, 34 seconds Uh so this large order of 80 cr in power sector uh is this part of gear and gear or gear plus uh MH both? 49:44 49 minutes, 44 seconds Gears. And this is highspeed gears or uh 49:54 49 minutes, 54 seconds uh which type of gears? 49:56 49 minutes, 56 seconds Uh these are uh uh I would say customuilt gears required for a particular process. 50:08 50 minutes, 8 seconds So we are uh yet to qualify for the highspeed gears and how is our journey going on there? 50:16 50 minutes, 16 seconds highspeed gears. We have uh tested the gears uh given it to the uh desired uh uh client. 50:29 50 minutes, 29 seconds He has also witnessed it but he has not placed further orders on us. Some of the other he is uh he is dwindling. However, 50:39 50 minutes, 39 seconds we are trying to uh tell him that uh everything has been satisfactory. Now you need to place more orders on us. So 50:48 50 minutes, 48 seconds that is where the position lies. But uh we are reasonably confident that in a month or two you will receive some of this. 50:59 50 minutes, 59 seconds So this 80 cr of order like what would be the execution timeline or margin profile if you could highlight? 51:06 51 minutes, 6 seconds Uh it would be executed within 2 years. Okay. Within two years. 51:15 51 minutes, 15 seconds And on the defense side uh NGMP order uh is what you are expecting. Uh what would be the uh quantum of the order? 51:32 51 minutes, 32 seconds Difficult to tell you right now because uh uh it'll depend upon the entire pricing 51:40 51 minutes, 40 seconds structure that would be done. But it is an order that uh 51:46 51 minutes, 46 seconds would be uh reasonably uh good for the C uh for the uh company 51:53 51 minutes, 53 seconds to execute and uh we are looking forward to it. 51:59 51 minutes, 59 seconds I'm wrong this different thing. All right. 52:02 52 minutes, 2 seconds I'm sorry to interrupt you in between sir. I would request you to follow up. 52:06 52 minutes, 6 seconds I'm really sorry. I would request you to rejoin the queue for the follow-up question. Thank you very much. 52:13 52 minutes, 13 seconds The next question is from the line of Navli Naredi from Naredi Investment Private Limited. Please go ahead. 52:20 52 minutes, 20 seconds Uh thanks for the opportunity. Uh so my first question is uh as government is exploring the capabilities and looking 52:29 52 minutes, 29 seconds to become self-reliant in rare earths production. So what's our scope going forward in it? I mean do we have any scope in this line? 52:40 52 minutes, 40 seconds Uh we have not explored any rare earth situation as far as we are concerned. Uh 52:48 52 minutes, 48 seconds so we are into our own traditional equipments as of now. Uh however our 52:56 52 minutes, 56 seconds material handling equipments can be utilized for uh rare earth exploration. 53:04 53 minutes, 4 seconds All right. And uh my next question is uh since your investment uh total 53:10 53 minutes, 10 seconds investment is around uh 995 cr uh so how are you planning to deploy these funds 53:17 53 minutes, 17 seconds and yeah um these funds uh um we have part 53:24 53 minutes, 24 seconds in various instruments which has been explained the safer instruments and concerning the liquidity and uh safer 53:31 53 minutes, 31 seconds instruments various investments uh um it has been uh so like uh aren't you planning any 53:39 53 minutes, 39 seconds further acquisition or uh like uh any further uh acquisition I'm talking about 53:49 53 minutes, 49 seconds as of now there is nothing uh on the horizon uh however if anything comes up uh 53:56 53 minutes, 56 seconds naturally uh everyone will be informed about it uh all right thank you so much. 54:04 54 minutes, 4 seconds [Music] 54:08 54 minutes, 8 seconds Thank you very much ladies and gentlemen. That was the last question. I now hand the conference over to the management for closing comments. Thank you and over to you sir. 54:20 54 minutes, 20 seconds I would like to thank you all for joining this call and for your continued support. We are encouraged by the steady 54:29 54 minutes, 29 seconds momentum across both our gear and MG divisions. 54:34 54 minutes, 34 seconds We remain committed to consistent execution, prudent capital allocation, focusing on high growth segments, 54:43 54 minutes, 43 seconds position us well for sustained performance and we remain confident in our ability to build on this momentum. 54:52 54 minutes, 52 seconds strengthen our market leadership and continue to delivering value to our stakeholders and we will continue to focus on maximizing value. 55:04 55 minutes, 4 seconds Thank you once again for your participation and trust in us. Should you have any further queries, please feel free to reach out to our CFO Mr. 55:14 55 minutes, 14 seconds Nasiman Narakun. Thank you and have a great evening. Thank you all. 55:23 55 minutes, 23 seconds Thank you very much on behalf of MK Global Financial Services Limited. That concludes this conference. Thank you for 55:31 55 minutes, 31 seconds joining us and you may not disconnect your lines.