Elecon Engineering Company Ltd — Q4 FY26

Elecon Engineering Company Ltd Q4 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=Fub5wK_656g Published: 3 weeks ago

0:02 2 seconds Ladies and gentlemen, good day and welcome to the Eleon Engineering Companies Limited conference call hosted by MK Global Financial Services Limited. 0:10 10 seconds As a reminder, all participant lines will be in the listen only mode and there'll be an opportunity for you to ask questions after the presentation concludes. Should you need assistance in 0:18 18 seconds your conference call, please signal an operator by pressing star and then zero on your touchstone phone. I now hand the conference over to Mr. Abishik Tapara, MK Global Financial Services Limited. 0:27 27 seconds Thank you and over to you. 0:30 30 seconds Good afternoon everyone. I would like to welcome the management and thank them for this opportunity. We have with us today Mr. Aayush Sha director, Mr. 0:39 39 seconds Chintan Sha, CFO, Mr. Deepak Dalwadi, head of Gare division and Mr. Koshik Patel, head of material handling 0:47 47 seconds equipment division. I shall now hand over the call to the management for their opening remarks. Over to you gentlemen. 0:55 55 seconds Thank you Abishek. 0:57 57 seconds Good evening everyone and a very warm welcome to Alicon Engineering's quarter 4 and FY26 earnings conference call 1:06 1 minute, 6 seconds joining me today are Mr. Deepak Balwari head of gear division Mr. Kchik Koshik Patel head of M division and we would 1:15 1 minute, 15 seconds like to welcome our CFO Mr. Chintan Sha who joined us uh recently. 1:21 1 minute, 21 seconds He brings ly 19 years of experience and we are confident that he will play an important role in driving Elicon's 1:28 1 minute, 28 seconds continued growth. The earnings press release and investation have been uploaded to the stock exchanges and are 1:35 1 minute, 35 seconds also available on our website. I trust that you have had the opportunity to review them. 1:42 1 minute, 42 seconds I will begin with a brief overview of the comp of the operating environment and our business performance following which Chintan will take you through the detailed financials. 1:53 1 minute, 53 seconds Eleon engineering marks a significant milestone this year as we celebrate 75 years of engineering excellence, 2:00 2 minutes innovation and strong customer partnerships. 2:04 2 minutes, 4 seconds Over the decades, we have had uh we have established ourselves as one of Asia's large largest and leading providers of 2:12 2 minutes, 12 seconds industrial gear solutions and material handling equipment supported by deep domain expertise and strong technical capabilities. 2:22 2 minutes, 22 seconds Our material handling equipment division continues to build strong momentum and remains a key growth driver for the company. 2:30 2 minutes, 30 seconds With a legacy of over seven decades, the division has developed specialized capabilities in designing and manufacturing large, complex and 2:39 2 minutes, 39 seconds high-capacity systems including conveyors, port equipment, feeders and other critical infrastructure. 2:46 2 minutes, 46 seconds These capabilities are limited to a select group of players in India providing ele with a distinct competitive advantage serving core 2:54 2 minutes, 54 seconds sectors such as power, steel, cement, ports, mining and fertilizers. The MH 3:01 3 minutes, 1 second business consistently de delivers customized highv value solutions that enhance our operational efficiency and reliability for our customers. 3:13 3 minutes, 13 seconds In the gear division, Eleon continues to maintain a leadership position in India's organized industrial gear market. We offer a comprehensive and 3:21 3 minutes, 21 seconds diversified portfolio ranging from heavyduty gear boxes to precision engineered components catering to 3:29 3 minutes, 29 seconds industries such as steel, cement, sugar, power, and marine. 3:35 3 minutes, 35 seconds Our continued focus on research and development ensures that innovation, product customization, and end-to-end 3:42 3 minutes, 42 seconds life cycle support remain central to our offerings. 3:46 3 minutes, 46 seconds With a strong domestic presence, an established distribution network, and long-standing customer relationships, 3:53 3 minutes, 53 seconds Elicon is well positioned to enter its next phase of growth and further strengthen strengthen its presence across key markets both in India and internationally. 4:05 4 minutes, 5 seconds Moving to segment wise performance, the gear division which accounted for approximately 63% of consolidated 4:12 4 minutes, 12 seconds revenue in Q4 reported revenue of 472 crores reflecting a decline of 21% year-onear. 4:21 4 minutes, 21 seconds This was primarily due to delayed order inflows, extended dispatch timelines, and customer-led deferment of deliveries 4:30 4 minutes, 30 seconds amid ongoing macroeconomic and geopolitical uncertainties. 4:36 4 minutes, 36 seconds While near-term performance was impacted by external factors, the underlying demand fundamentals remain intact. We 4:44 4 minutes, 44 seconds expect a gradual normalization in timing uh in timing difference for order flows and execution as market conditions 4:52 4 minutes, 52 seconds stabilize during the year. We secured a healthy inflow of orders across key sectors including power, steel, cement 5:00 5 minutes and material handling equipment. And as we are carrying a strong open order book for the next year supported by a strengthening demand environment and a 5:09 5 minutes, 9 seconds healthy project pipeline, we remain confident in gear division's ability to regain momentum and deliver improved performance going forward. 5:19 5 minutes, 19 seconds The MHE division, which contributed approximately 37% of the consolidated revenue in Q4, continued its strong 5:27 5 minutes, 27 seconds growth trajectory, posting a 37% year-on-year increase in revenue during the quarter. 5:34 5 minutes, 34 seconds This performance was driven by sustained demand across core sectors such as power, cement, mining, and ports along with consistent execution. 5:45 5 minutes, 45 seconds Looking ahead, we remain confident that the division will maintain its grow growth momentum supported by a healthy order book, strong sectoral outlook and continued customer engagement. 5:57 5 minutes, 57 seconds Despite a challenging environment, we delivered moderate consolidated revenue growth of 6% in FY26. 6:06 6 minutes, 6 seconds The underlying fundamentals across both dimensions remain strong. A robust order book and strong order execution 6:14 6 minutes, 14 seconds pipelines provide clear visibility for sustained growth in the coming financial year. 6:21 6 minutes, 21 seconds Telecom remains committed to its long-term growth strategy with a clear focus on portfolio diversification, expansion into new sectors and 6:29 6 minutes, 29 seconds geographies, and continuous strengthening of our engineering and execution capabilities. 6:37 6 minutes, 37 seconds As part of our strategy to expand into international markets, we are pleased to announce the recent establishment of a 6:43 6 minutes, 43 seconds step down subsidiary in Mexico, further strengthening our presence in the Latin American region. 6:51 6 minutes, 51 seconds On the domestic front, core sectors are expected to continue driving sustained capital investments and we are well positioned to capitalize on these 6:59 6 minutes, 59 seconds opportunities through our strong capabilities and market presence supported by strategic capital expenditure, strong in-house R&D, 7:08 7 minutes, 8 seconds differentiated product offerings and a proven ability to deliver customized highquality solutions. We are well 7:16 7 minutes, 16 seconds positioned to address the evolving and increasingly complex need of our customers. 7:22 7 minutes, 22 seconds We believe the current challenges are transient and do not alter or alter our long-term growth trajectory. 7:30 7 minutes, 30 seconds With this, I now hand over the call to our CFO, Mr. Chintan Sha, who will take you through the detailed financial performance for the quarter and fullear FY26. Over to you, Chinta. 7:42 7 minutes, 42 seconds Thank you, Aish. Uh let me give a quick walk through of the financial performance for Q4 and and then for the full year FI26. 7:52 7 minutes, 52 seconds Financial performance Q4 FI26 for the quarter ended March 2026. Our 7:59 7 minutes, 59 seconds consolidated revenue from the operation stood at 746 cr rupes compared to rupees 798 crores in the corresponding quarter 8:07 8 minutes, 7 seconds of the last year reflecting a moderate year-on-year contraction. 8:12 8 minutes, 12 seconds This quarter's performance was primarily impacted by slower conversion of the order pipeline into the revenue in line 8:20 8 minutes, 20 seconds with a broader industry trend of uneven execution cycles across all capital intensive sectors. Several customers 8:28 8 minutes, 28 seconds across key and user industries recalibrated the capex schedules leading to a shift in the dispatch directions 8:36 8 minutes, 36 seconds across the value chain. The underlying demand environment remains constructive. 8:43 8 minutes, 43 seconds Domestic market contributed almost 82% of the consolidated revenue while international markets accounted for 18%. 8:52 8 minutes, 52 seconds During the quarter, consolidated order in close stood at rupees 657 crores registering a year-on-year growth of about 1.9%. 9:03 9 minutes, 3 seconds Consolidated EIA for the quarter stood at rupees 158 crores with a margin of 21.2%. 9:11 9 minutes, 11 seconds Profitability was impacted by operating delage due to lower revenue conversion marginally higher employee cost along the change in the product mix. 9:26 9 minutes, 26 seconds Net profit for the quarter came in at rupees 108 crores translating into a fat margin of 14.5%. 9:34 9 minutes, 34 seconds This exclude the onetime impairment of goodwill of rupees 10 cror was recognized as an exceptional item. 9:41 9 minutes, 41 seconds We expect margins to improve gradually as execution accelerates and volumes pick up. 9:48 9 minutes, 48 seconds Now moving to performance for the year ended March 2026. 9:54 9 minutes, 54 seconds For the full year FI26 adjusted considered revenues stood at rups 2341 10:00 10 minutes crores compared to rups 2,227 crores in FI25. 10:07 10 minutes, 7 seconds This excludes realized arbitration award of rups 25 crores recorded in the first quarter of fi26 in the m divisions. 10:17 10 minutes, 17 seconds Adjusted IITA for FI26 stood at rupees 498 crores with margins of 21.3%. 10:24 10 minutes, 24 seconds Remaining broadly stable despite near-term execution volatility apart from arbitration realized as said 10:32 10 minutes, 32 seconds earlier additionally rupes 10 crores were recognized under other income as a part of arbitration settlement. 10:40 10 minutes, 40 seconds Furthermore, this year also included exceptional gain of rupes 80 crores below profit before tax representing 10:48 10 minutes, 48 seconds unrealized mark to market gain arising from the reclassification of investments as well as impairment of goodwill 10:58 10 minutes, 58 seconds impairment of good rupees 10 crores 102 crores recognized as an exceptional item including all exceptional and one-time 11:05 11 minutes, 5 seconds items reported p for f62 net rupees 341 crores 341 course. 11:13 11 minutes, 13 seconds Moving to segment wise performance. Uh starting with gear division. 11:19 11 minutes, 19 seconds The gear division contributed 63% of considered revenue in Q4 FI26 and continues to be the largest contributor. 11:28 11 minutes, 28 seconds Revenue for the quarter stood at rupees 472 crores compared to rups 597 crores in Q4 FI25. 11:37 11 minutes, 37 seconds The performance reflects a temporary gap between the order booking and deferment of deliveries driven by the phasing of execution in large industrial projects. 11:49 11 minutes, 49 seconds Importantly, demand fundamentals remain strong supported by sustained customer engagement and the healthy inquiry in pipeline across both domestic and overseas markets. 12:00 12 minutes EIT for the division stood at rupees 91 crores versus rups 147 crores in the same period last year with margins at about 19.3%. 12:10 12 minutes, 10 seconds Margins were impacted by low through output and changes in the product mix. 12:15 12 minutes, 15 seconds However, these are transitional factors and we are expecting the same to be normalized as an as execution improves. 12:24 12 minutes, 24 seconds Order intact remained strong at 550 crores during the quarter and the open order that we have is about 894 crores 12:33 12 minutes, 33 seconds as of March 31st 2026. This provides a good visibility for the coming quarter. 12:39 12 minutes, 39 seconds As execution timeline normalize and macro condition stabilize, we expect the gear division to return to a steady growth trajectory. 12:49 12 minutes, 49 seconds Moving to material handling equipment division. The MH division continued its strong growth momentum in Q4 FI26 12:58 12 minutes, 58 seconds reinforcing its role as a key growth driver. 13:02 13 minutes, 2 seconds Revenue for the quarter increased to rupes 274 crores from rups 200 crores in Q4 FI25 13:11 13 minutes, 11 seconds reflecting a robust growth of 36.8% yearonear. 13:17 13 minutes, 17 seconds This performance was driven by sustained demand across sectors such as power, cement and ports supported by both replacement demand and ongoing industrial infrastructure investments. 13:29 13 minutes, 29 seconds EIT for the division stood at rupees 62 crores compared to rupees 59 crores in the corresponding quarter of the last year reflecting stable profitability despite a dynamic revenue mix. 13:41 13 minutes, 41 seconds Margins remain healthy supported by a balanced contribution from equipment sales and aftermarket services. 13:48 13 minutes, 48 seconds Our inflow during the quarter stood at rupees 107 crores and the order book closed is at rupees 398 crores as of 13:57 13 minutes, 57 seconds March 31, 2026. This again provides a strong foundation for the continued growth. We continue to see uh the MH 14:06 14 minutes, 6 seconds division as a structurally high growth segment supported by long-term trends in the industry and automation and increasing focus on material handling efficiency. 14:16 14 minutes, 16 seconds Moving to balance sheet and capital allocation. 14:20 14 minutes, 20 seconds On the balance sheet front, we continue to maintain a strong financial position with a net cash balance of approximately 14:27 14 minutes, 27 seconds rupees 700 crores. This provides a significant strategic flexibility to pursue growth opportunities while maintaining financial decision. 14:38 14 minutes, 38 seconds The board has recommended a final division of 150% that is rupees 1.5 per equity share having a face value of 14:46 14 minutes, 46 seconds rupees 1 in. This is subject to shareholders approval. 14:51 14 minutes, 51 seconds While our performance for the year was below initial expectations. This was primarily due to geopolitical uncertaintities and unfavorable product mix and delays in customer deliveries. 15:02 15 minutes, 2 seconds Given the continued macroeconomic uncertaintity and limited near-term visibility, we believe it is prudent to adop a cautious approach. 15:12 15 minutes, 12 seconds Accordingly, we are holding our guidance for FI27 at this stage and we'll revisit our outlook once there is a greater 15:20 15 minutes, 20 seconds clarity and stability in the operating environment. 15:23 15 minutes, 23 seconds With that we conclude the detailed financial review and now open the floor for the questions. Thank you. 15:31 15 minutes, 31 seconds Thank you. We will now begin the question answer session. Anyone who wishes to ask a question may press star and one on the touchstone telephone. If 15:39 15 minutes, 39 seconds you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. 15:47 15 minutes, 47 seconds Ladies and gentlemen, we'll wait for a moment while the question Q assembles. 16:06 16 minutes, 6 seconds We have the first question from the line of NMS from an individual investor. Please go ahead. Hello. 16:15 16 minutes, 15 seconds Yes, please go ahead. 16:17 16 minutes, 17 seconds Uh thank you for the opportunity. My first question is uh the gap to M M 16:23 16 minutes, 23 seconds ratio was 63 is to 37 for quarter 4 as against historical trend of 75 to 25. Do 16:32 16 minutes, 32 seconds we expect this as per the trend going forward and it impact in the AITA margin? 16:39 16 minutes, 39 seconds Okay. 16:41 16 minutes, 41 seconds Uh just 16:52 16 minutes, 52 seconds no um going forward the ITA margin should not be affected. We still do expect uh further growth in the material 16:59 16 minutes, 59 seconds handling division going forward uh while the gear division grows as well. So the the mix might change further but we 17:06 17 minutes, 6 seconds don't expect the long-term the margins to uh vary. 17:13 17 minutes, 13 seconds Thank you. And my second question is uh can you give me the number of domestic and export split for G and MH 17:23 17 minutes, 23 seconds and we couldn't hear you very clearly. If you could repeat that please. So can you give me the domestic and export split 17:32 17 minutes, 32 seconds for gas and MHMD and engineered versus catalog mix for gas for quarter port. 17:42 17 minutes, 42 seconds So uh the uh mix of the engineers versus catalog is uh for the quarter is uh uh 17:48 17 minutes, 48 seconds CP is 55 that is the standard product and uh engineers product is 45 that is a catalog product uh sorry that is customized product. 17:58 17 minutes, 58 seconds And for the year uh FI26 catalog product is 55% versus incidence product is 45%. 18:07 18 minutes, 7 seconds Okay. And my last question is what issue is M MHME is facing since order flow 18:14 18 minutes, 14 seconds inflow for the quarter was at 10 quarter low. Thank you. That's my last question. 18:23 18 minutes, 23 seconds Uh it's a timing difference. In fact, we were expecting certain opportunity to be converted into order but it has been 18:32 18 minutes, 32 seconds deferred for Q1. In fact, in month of April, we have already received almost 18:39 18 minutes, 39 seconds more than 15 cr order. So, we are hoping that in April month itself we can uh mitigate 18:46 18 minutes, 46 seconds that gap it of Q4 which has been generated. Thank you. Thank you. 18:56 18 minutes, 56 seconds Thank you. We have the next question from the line of Bala Subramanyam from Arhan Capital. Please go ahead. 19:05 19 minutes, 5 seconds Good evening sir. Uh thank you so much for the opportunities sir. We have a kix program of 400 cr. Uh how much uh was 19:13 19 minutes, 13 seconds spent in FI26 and if you could share what is the capeex split between gear and uh MH and uh I'm trying to 19:22 19 minutes, 22 seconds understand on the ROC part also. So I think RC uh fallen from 29% in FI 24 to uh 20.4% in FI26. 19:32 19 minutes, 32 seconds So I'm trying to understand with higher KEX and lower margins uh like so that we can able to bounce back to at least 25% kind of uh level by FI28. 19:43 19 minutes, 43 seconds Uh so uh let let me take the lead on this question. This is Jan. Uh so we have capex plan as we just uh last 19:52 19 minutes, 52 seconds quarter we have published 400 crores between FI26 to FI28 we have roughly spent about 95 crores uh towards 19:59 19 minutes, 59 seconds different different categories out of that if you want to have a split uh gear has almost 80% uh spent uh and MG has 20:08 20 minutes, 8 seconds the rest of the spend coming back to your question on ROC from FI24 to FI26 20:17 20 minutes, 17 seconds It's a valid question. What we what I want to highlight right now is uh as we grow our base for equity and capital 20:26 20 minutes, 26 seconds employed increases and if you look at the quality of the total capital that we employ almost 800 crores of of the of 20:34 20 minutes, 34 seconds the balance that we have is parked into different form of investments. Uh now we have a policy of investments where we are very conservative in the investments 20:43 20 minutes, 43 seconds and so the yield on the investment is about 8%. So this is point number one. 20:48 20 minutes, 48 seconds Point number two, every year in last two years we have generated average cash post tax about 300 350 crores rupees. So 20:55 20 minutes, 55 seconds every every year we have added uh the new cash on the capital employed but to that extent our capex has not has 21:02 21 minutes, 2 seconds happened. So we have not increased our install capacity by way of increasing the capex. So uh as we move from this 21:09 21 minutes, 9 seconds year and next two years we will uh have our own capex. we will build the capability, increase the install capacity and have and we'll see the 21:17 21 minutes, 17 seconds results in terms of the revenue increase and the EBID increase improving the margins. Uh having said that this position of 750 800 crores that we have 21:25 21 minutes, 25 seconds as an investment uh uh it's a it's a good uh problem to have it that gives us a flexibility to remain open for our any 21:33 21 minutes, 33 seconds strategic investments uh as well as the expansion. We are just closely monitoring the macroeconomic conditions and uh and would like to continue with 21:41 21 minutes, 41 seconds the same approach at least for uh for some more time at till the time we have the clarity on on the expansions that we want to do. 21:51 21 minutes, 51 seconds Yes sir. 21:52 21 minutes, 52 seconds Sir on the defense side uh the one of the Navy order uh impacted our margins. 21:59 21 minutes, 59 seconds How about the future uh RSP also pushed out like Kobe by Q3, FI27 and I IA also in Q1 FI27. 22:09 22 minutes, 9 seconds So like whether we can able to win at least one or two orders uh Navy orders by FI27 22:16 22 minutes, 16 seconds and how long it will take uh to get a larger uh defense contracts and uh we have qualified uh for upcoming uh uh Navy orders. 22:28 22 minutes, 28 seconds Yeah. I am Deepak here. So uh for this financial year Q4 we are expecting a 22:35 22 minutes, 35 seconds very good order from the Indian Navy and uh that is a big order at this moment. 22:43 22 minutes, 43 seconds Okay sir and follow up on that I think it's a initial order uh we might have a lower margins maybe in upcoming uh 22:52 22 minutes, 52 seconds defense orders uh whether we can expect higher margins levels. 22:57 22 minutes, 57 seconds So as far as these are the project orders, so margins are all actually good 23:04 23 minutes, 4 seconds margins and uh for the small orders of course there will be a margin gap but for these kind of a big project orders there are a good margins. 23:13 23 minutes, 13 seconds Just to refine the answer, the first order that we executed and as we discussed in our last call, uh since the 23:20 23 minutes, 20 seconds first order has a lot of developmental initiatives and activities, we have a slightly lower margin as we communicated 23:28 23 minutes, 28 seconds last time at one or two% margin was lower. If you get the repeat order of the same uh uh grades that what we are 23:36 23 minutes, 36 seconds talking about then yes the margins will be good. Uh and in terms of timeline uh it's almost two years timeline we see. 23:44 23 minutes, 44 seconds Yeah, these kind of project orders are executed between two to three years. 23:51 23 minutes, 51 seconds Okay sir. So my last questions uh first thing about what is our current capacity utilization level in Q4 and uh secondly 24:01 24 minutes, 1 second uh I'm trying to understand our pricing power if you could uh rank your end markets uh power steel cement mining 24:08 24 minutes, 8 seconds defense sugar plastic and rubber by the pricing power side. So where we have seen more competitive uh pricing 24:16 24 minutes, 16 seconds pressure and where we are getting higher margins. 24:21 24 minutes, 21 seconds So so far capacity utilization is concerned we are at this moment with addition of capex is around 56 to 60% 24:31 24 minutes, 31 seconds utilization is there yes the second one 24:43 24 minutes, 43 seconds so hello so For answering your second 24:52 24 minutes, 52 seconds questions, our engineering product has a better margin than the catalog product. 24:56 24 minutes, 56 seconds So definitely we are going for the better more the engineering products. 25:04 25 minutes, 4 seconds Okay sir. Okay. 25:08 25 minutes, 8 seconds Thank you. We have the next question from the line of Raja from INAM AMC. Please go ahead. 25:14 25 minutes, 14 seconds Yeah. Uh hi sir. Am I aud? Yes we can hear you. 25:19 25 minutes, 19 seconds Yeah. Thank you for the opportunity. My first question was sir on the revenue front if we see uh on the export side 25:28 25 minutes, 28 seconds for the quarter we have largely uh maintained uh what was there in the same quarter last year but when it comes to 25:36 25 minutes, 36 seconds uh gears es especially in the domestic gears uh the revenue growth I mean the 25:42 25 minutes, 42 seconds revenues are down by 27%. So within gear statue in a domestic geography exactly where are we seeing such kind of delays 25:51 25 minutes, 51 seconds uh in dispatches where customers are not ready to take up the delivery. Can you be little specific uh in in in sharing your uh thoughts? 26:02 26 minutes, 2 seconds Uh we have faced uh these uh issues where the customers asked us to defer the delivery specifically in the steel 26:08 26 minutes, 8 seconds sector uh a little bit more. Another reason why also the uh there was a a reduction in uh the turnover is 26:17 26 minutes, 17 seconds specifically because we got the order booking a little bit later uh because everyone was trying to defer their uh 26:24 26 minutes, 24 seconds capex investments uh because of the current uh geop geopolitical scenario. 26:30 26 minutes, 30 seconds Hence the order booking was late so it couldn't be executed within the year but we expect it to uh to really improve in this water. 26:40 26 minutes, 40 seconds Got it. 26:42 26 minutes, 42 seconds Uh and this delay in orders was it specific to any large order or it was broad-based uh within this field sector you're talking about? 26:57 26 minutes, 57 seconds Uh it was not uh for a specific large order. It it was we saw it across the board. 27:04 27 minutes, 4 seconds Got it. Got it. Secondly sir uh on this Mexico part uh we are aware that uh the management was contemplating uh 27:13 27 minutes, 13 seconds investing or setting up some assembly center even before the tariffs kicked in. So today what is the scenario? Do we still attract 50% tariff or what kind of 27:22 27 minutes, 22 seconds strategy are we seeing uh to cater that kind of that that part of geography? 27:29 27 minutes, 29 seconds So right now uh in the USA we have the 50% tariff whatever we are exporting from India to our uh subsidiaries in USA 27:38 27 minutes, 38 seconds or to customers in USA. So that is uh attractive 50% because of section 232 27:45 27 minutes, 45 seconds uh but uh uh with establishment of this uh Mexico uh we will serve the Latin America uh and the uh tariff is not 27:54 27 minutes, 54 seconds applicable there. So we want to get the opportunity to establish and to supply uh the uh our products from there to the Latin America. 28:06 28 minutes, 6 seconds Okay. And will we be investing or incurring any capex uh in Mexico? 28:13 28 minutes, 13 seconds Not much. Uh uh right now we just established. So we will uh come back to you after uh some time. 28:21 28 minutes, 21 seconds Okay. Okay sir. And sir uh sorry to interrupt you Mr. Raj request to come back in the queue for follow-up questions. 28:29 28 minutes, 29 seconds Sure. Sure. Thank you. 28:31 28 minutes, 31 seconds Thank you. Participants are requested to kindly restrict your questions to two per participant. We have the next question from the line of Hersh Patel from Shale Share India Securities. 28:41 28 minutes, 41 seconds Please go ahead. Uh hello. Thank you so much for the opportunity. Uh I I wanted to just 28:48 28 minutes, 48 seconds wanted the update on export side. So how as we had planned like we would be ramping our export for to up to 50% in 28:57 28 minutes, 57 seconds next 3 to four years. So what would be the uh in current uh geopolitical scenario what would be our export mix 29:04 29 minutes, 4 seconds going forward and how would be our sustainable margins uh till FI 2728 29:13 29 minutes, 13 seconds uh if if we are focusing on more on domestic or export going uh going forward we still u this 29:22 29 minutes, 22 seconds year despite of the existing scenario we have managed to uh maintain uh at least uh what we were able to perform last 29:31 29 minutes, 31 seconds year. Uh so we expect going forward it will still improve. Uh we have some improvement in order booking in a few of 29:40 29 minutes, 40 seconds our entities while uh the Middle East obviously has suffered uh significantly. 29:46 29 minutes, 46 seconds So we still expect uh regardless of what the situation is that we will be improving going forward. 29:54 29 minutes, 54 seconds and uh the product mix uh I mean the EIDA that you asked regarding the product mix and export versus domestic 30:02 30 minutes, 2 seconds we expect it to uh not affect us that much going forward. 30:07 30 minutes, 7 seconds So what would be the sustainable margins which we would be focusing forward 30:14 30 minutes, 14 seconds right now we can't uh comment on that specifically because of the current scenario and uh it's it's currently 30:21 30 minutes, 21 seconds another changing scenario. So we cannot comment on it right now. We will assess the situation and get back once we have a better understanding. Uh one more one 30:30 30 minutes, 30 seconds more thing one more thing I wanted to ask going forward uh what kind of orders would be on gear side is it uh 30:38 30 minutes, 38 seconds customized gears uh or or catalog gears are uh are on a sale point for going uh 30:48 30 minutes, 48 seconds since last couple of quarters we are uh the mix has been on major way on catalog kind of 30:56 30 minutes, 56 seconds so major it will be from power industry and steel industry trees and cement. So that so major will be contribution for 31:04 31 minutes, 4 seconds engineering and customized product and catal product uh it will be 2 3% lower than the engineering product. 31:12 31 minutes, 12 seconds Okay. Okay. 31:14 31 minutes, 14 seconds And what would be the margins in this uh this industry in customized products we would be seeing? 31:20 31 minutes, 20 seconds See typically we do not uh reveal the margin profile. We give a broad range uh in terms of how the product is moving 31:28 31 minutes, 28 seconds and how it impacts our gross margin percentage. So September level product level and mix level margins we do not provide our comments. 31:36 31 minutes, 36 seconds Okay. Okay. Thank you. 31:39 31 minutes, 39 seconds Thank you. We have the next question of Kashab Zeri from MK Investment Managers. Please go ahead. 31:46 31 minutes, 46 seconds Um two questions from my side. Uh one is to you know the first one is to chintan uh on this um goodwill side there is a 31:56 31 minutes, 56 seconds comment number 8B in the um notes to accounts uh if you can explain that comment uh and also did we get any tax 32:04 32 minutes, 4 seconds benefit uh from that um goodwill write off uh that's the first question and second is to um Mr. Dalvadi um from the 32:14 32 minutes, 14 seconds G division side um or or even in fact if Mr. Aosian also throw some light. You mentioned that because of the 32:22 32 minutes, 22 seconds geopolitical risk there was some deferment of the order booking. Um but overall if you look at the geopolitical 32:29 32 minutes, 29 seconds risks that uh sort of rose only on the intervening night of 27 28th February. 32:35 32 minutes, 35 seconds So uh could one month make such a large difference? 32:42 32 minutes, 42 seconds Right. So uh let me take up the first question about the goodwill. 32:46 32 minutes, 46 seconds I think you're referring to note number 8. uh there's a detailed notes in the notes to accounts uh which he'll comprehensively cover but let me explain 32:54 32 minutes, 54 seconds to the entire large audience that we have uh this goodwill represented the goodwill that we acquired way back in 33:01 33 minutes, 1 second 201011 when Alicon did the acquisition of uh Benzers and radicon group uh in 33:08 33 minutes, 8 seconds the European region. Now what happens is over the last 15 years Alicon uh has done a uh integration of all these 33:16 33 minutes, 16 seconds business uh into the Alicon group of products and the geographies that we have it. Uh we do not have any separate structure the single team sales and 33:25 33 minutes, 25 seconds marketing and the operations team takes care of all the all the mix of the products that we have it. Uh so 33:32 33 minutes, 32 seconds eventually we realized that good as a standalone on these acquisition do not have much value in our financials. uh of course the business as a whole has uh uh 33:42 33 minutes, 42 seconds uh the valuation which which doesn't need to be like discounted right now but it has a good cash flow profitability and all but from a goodwill alone 33:49 33 minutes, 49 seconds standalone basis we do not see that uh you know the carrying amount should continue like this and that's the reason we did the empirement uh coming back to 33:58 33 minutes, 58 seconds your sub question about the tax deduction of this write off that we have done uh this goodwill uh was never into 34:05 34 minutes, 5 seconds the standalone financial it was always a part of our considered financial statements. Uh so as far as tax deduction is concerned, it will be in 34:12 34 minutes, 12 seconds the books of uh the the entity where this Google used to raise in UK. Uh as far as the tax deduction in the local 34:20 34 minutes, 20 seconds tax is concerned, there is a tax deduction which is being claimed every year and probably now only five years have left with only 13 million uh dollar 34:29 34 minutes, 29 seconds amount uh $1 million amount. uh so that's that's uh that's uh it's going to be uh you know deduct claimed as a 34:36 34 minutes, 36 seconds deduction in next 5 years time gradually so this is how the position is okay understood 34:43 34 minutes, 43 seconds uh uh regarding your question about the uh sorry if I got it right you were asking about um so my question was that you know the 34:51 34 minutes, 51 seconds geopolitical risks um you know the the major part of it played out uh um starting uh February 2728 35:01 35 minutes, 1 second um hang that one month has probably made a fairly large difference on the overall revenue side. Um so you know uh if you 35:10 35 minutes, 10 seconds can um so was this uh largely to do with the month of March or uh this played out 35:16 35 minutes, 16 seconds throughout the quarterly as you rightly said uh I think the news 35:23 35 minutes, 23 seconds about this disruption started coming in the last week of February and it got in intensified in the first week of March. 35:30 35 minutes, 30 seconds So the largest impact is in the month of March about 77 crores of the orders were in a different buckets uh uh like couple 35:39 35 minutes, 39 seconds of orders of 12 cr rupees which were ready for dispatch but it was on hold by the customer. We also had the order about 34 crores in the month of March 35:48 35 minutes, 48 seconds which were scheduled to be delivered but now it is to be delivered probably in April and if the situation is uh clarified in itself in the April itself. 35:58 35 minutes, 58 seconds uh we also had a 31 crores of the order which were which were scheduled to be dispatched in the March but the production was put on hold on immediate 36:07 36 minutes, 7 seconds basis and that's how we had almost 70 crores impact for this uh the event in the month of March and if you look at 36:14 36 minutes, 14 seconds your I I know what where you're coming from in in the December quarter itself we had lowered down our guidance and we we communicated that we are reducing uh 36:23 36 minutes, 23 seconds the revenue in the in the quarter ending March by at least 5%. So that's the guidance we already had uh released in the month of January when we were 36:32 36 minutes, 32 seconds talking about December quarter and March quarter. 36:35 36 minutes, 35 seconds Okay. Okay. Just one last question on the receivable side. Uh that number has gone up from 610 crores to about 720 36:42 36 minutes, 42 seconds crores. Um any particular reason for that? 36:49 36 minutes, 49 seconds If I look at versus September a increase of about 90 crores compared 36:57 36 minutes, 57 seconds to last year's uh balance sheet. If you look at it from 90 crores 70 to 75 crores is largely because of the sale 37:04 37 minutes, 4 seconds which has happened in the February and in the March which has not due even as on 31st March and about 15 crores is 37:12 37 minutes, 12 seconds overdue compared to the same bucket of the last year uh which is getting realized in the month of April. Okay. 37:19 37 minutes, 19 seconds Okay. Understood. Thank you. 37:23 37 minutes, 23 seconds Thank you. We have the next question online of Pratiki Kotari from Unique PMS. Please go ahead. 37:30 37 minutes, 30 seconds Yes. Hi. Good afternoon. Uh sir in in domestic gears we did highlight the uh delays in terms of from steel sectors. 37:38 37 minutes, 38 seconds If uh touch upon the various other sectors we cater to from sugar, power, cement. uh how are things panning out 37:45 37 minutes, 45 seconds there and uh uh because we see the order book kind of building up from 600 crores last year to 900. So uh are across 37:55 37 minutes, 55 seconds sectors is the execution uh expected to be delayed gradual? Uh let me just uh touch upon that. 38:04 38 minutes, 4 seconds Moving forward the ex executions are not being delayed because for the domestic now there is a visibility and we are 38:12 38 minutes, 12 seconds having a good uh orders in the on hand and at the same time good orders in the pipeline also. So we anticipate that 38:20 38 minutes, 20 seconds there won't be any delays in I mean uh deliveries for the power sectors and for the cements and steels because steals 38:28 38 minutes, 28 seconds also now expanding their uh all uh executions and powers of course they are 38:35 38 minutes, 35 seconds demanding the projects to be uh to be closed very fast. So they all are demanding. So I don't see any I mean 38:43 38 minutes, 43 seconds delays in delivery for the power sectors and cement uh steel sectors. And how about uh the cement sugar? 38:52 38 minutes, 52 seconds Cement is stagnant as such but even though we are getting good orders from the two three major contractors but 39:01 39 minutes, 1 second cement they are more in the brownfield projects than the green field. So they are moving at their own space and sugar 39:09 39 minutes, 9 seconds industries. Now because of this we are anticipating good orders from the sugar because now the gas and these petroleums 39:17 39 minutes, 17 seconds we are facing pro mean we may face problem from this war situation. So ethanol will be now on the demand. So we 39:25 39 minutes, 25 seconds are also anticipating good demand from the sugar also. 39:29 39 minutes, 29 seconds Correct. Correct. Uh so one on margin I mean usually our engineered products are in I mean when you look at the mix it's 39:36 39 minutes, 36 seconds usually in 50s I mean this I think was a different year where we saw it at 45%. 39:41 39 minutes, 41 seconds Uh so one if this goes back I mean why aren't we guiding that our margins will go back to the earlier numbers. 39:49 39 minutes, 49 seconds I mean we will m I mean we will sustain the margins but at this moment we are not I mean uh generally uh when we calculate the 39:58 39 minutes, 58 seconds margins uh uh what we projected uh at the beginning of the year we will calculate based on the EP and CP is the 40:05 40 minutes, 5 seconds 50/50 uh uh standard uh we consider uh but during the year uh the orders we received uh in the catalog product 40:13 40 minutes, 13 seconds because uh the delay from the customer side and uh uh of the projects they So catalog product order we received uh 40:21 40 minutes, 21 seconds much more uh than the NGS product uh in the beginning of the year and uh the second part of the year. So that's why 40:28 40 minutes, 28 seconds uh that educate educate in the same year but the EP products uh orders we have in hand uh uh on the 31st March of uh 2026. 40:39 40 minutes, 39 seconds So it may be educated uh next year sometime. Just to to clarify what Ashish is saying u what we are we are not 40:48 40 minutes, 48 seconds giving a clear guidance that we uh expect it to go up simply because of the current geopolitical scenario and we don't know how it's going to pan out. Um 40:58 40 minutes, 58 seconds but if uh if all the domestic orders go smoothly and what demand we are expecting uh comes in you're right uh 41:06 41 minutes, 6 seconds we'll be able to go back to the uh IIDA levels that we had suggested even earlier which is close uh which yeah 41:16 41 minutes, 16 seconds close to 22 to 24 22 to 24 and the last one keep so we see interrupt you 41:25 41 minutes, 25 seconds sorry I interrupt should kindly come in the followup in the queue for follow-up questions. 41:33 41 minutes, 33 seconds Done. Okay. 41:35 41 minutes, 35 seconds Thank you. We have the next question line of Aman Sony from Invest from Invest Analytics Advisory. Please go ahead. 41:44 41 minutes, 44 seconds Hi. Uh I'm a Yes, we can hear you. 41:48 41 minutes, 48 seconds Uh thanks for the opportunity. Uh first question uh do we have any applications or or the visibility from the nuclear 41:56 41 minutes, 56 seconds site sorry from the nuclear side? No wait. 42:04 42 minutes, 4 seconds Okay. And secondly, uh you are you are mentioning that visibility is there in the domestic market particularly from 42:11 42 minutes, 11 seconds the steel and the power and things are uh improving. Uh then I'm not able to understand why are we not giving any 42:18 42 minutes, 18 seconds clear guidance on that part maybe on the growth side and as well as the margins front 27. 42:27 42 minutes, 27 seconds Yes. So have a strong order book right but we have shown learning in last two quarters 42:34 42 minutes, 34 seconds where despite having order books there were delay in the schedules and all. So we have based on that learning decided 42:42 42 minutes, 42 seconds to stay at least for few months till the time we have a clarity in the situation that we have. 42:52 42 minutes, 52 seconds the it is uh the situation is quite fluid still at the moment while we see that it is there's a possibility that 42:59 42 minutes, 59 seconds everything will be smooth going forward again I believe yesterday or today we're seeing uh conflicting news and 43:06 43 minutes, 6 seconds conflicting information so this is the reason we we want to uh keep a hold on that for right now and uh once things 43:14 43 minutes, 14 seconds clear out we'll be able to give you much clearer at appropriate Got it. And uh because of uh all this 43:23 43 minutes, 23 seconds scenario uh in Middle East uh uh there must be some uh infra redevelopment requirement, right? So uh do people uh 43:31 43 minutes, 31 seconds see any history of that like uh some new orders may be coming in uh because of uh this infra redevelopment that will be required in Middle East. 43:42 43 minutes, 42 seconds Yeah, there is no doubt that there will be uh strong requirements going forward. 43:47 43 minutes, 47 seconds uh once everything clears out but uh which direction it is going in we're still not sure based on how the outcomes 43:56 43 minutes, 56 seconds go ahead. So while you're right there is possibility for a significant uptake in orders from the Middle East we can't 44:03 44 minutes, 3 seconds guarantee that uh which way it's going to go until uh the war is completed. 44:10 44 minutes, 10 seconds Got it. And regarding the defense orders specifically that aircraft carrier that we were expecting in FY uh 27 uh what is the current update on that sir? 44:23 44 minutes, 23 seconds Yes that's what I yeah so the cost um CPR has already got the orders from the 44:30 44 minutes, 30 seconds Indian Navy. So anytime in the Q1 or Q1 they are going to release the RFP and 44:37 44 minutes, 37 seconds then uh we are expecting orders to come by Q4 of this financial year. 44:43 44 minutes, 43 seconds So it is getting delayed right mean earlier I think you mentioned Q2 of April 27. 44:48 44 minutes, 48 seconds Yeah it is a little bit deferred from the uh defense. Okay. And what about the P7 alpha sir? 44:57 44 minutes, 57 seconds P7 alpha also they have differed but it may come in the financial lead of 28 45:04 45 minutes, 4 seconds around Q3 because even uh CPR have not received the RFQ. 45:14 45 minutes, 14 seconds Okay, got it. So on and all uh can we expect uh a marginal growth uh over 26 or there can be a scenario of degrowth as in 27? 45:27 45 minutes, 27 seconds No, we're not expecting any degrowth uh to happen uh compared to FY26. We're expecting growth. Uh the amount of 45:36 45 minutes, 36 seconds growth is currently what is under question but otherwise we we are expecting growth. 45:41 45 minutes, 41 seconds And how confident are we on the margins front like we will be able to at least maintain or grow from FY27 45:48 45 minutes, 48 seconds from FY26? We'll be able to definitely maintain or grow it. is uh we are expecting growth but the uh geopolitical 45:56 45 minutes, 56 seconds situation will uh control it a little bit. Uh what we are anticipating um there is going to be an increase in some uh raw material cost or logistic cost. 46:07 46 minutes, 7 seconds We are already uh filling that in into our uh new orders. So that shouldn't uh affect us. 46:17 46 minutes, 17 seconds And any kind of supply chain issue are you people observing right now because of uh this uh rate of hard work closer and all that can further lead to some 46:26 46 minutes, 26 seconds problems maybe in the margin front or the execution of the orders. 46:30 46 minutes, 30 seconds Uh generally uh for our domestic orders we don't see that happening only wherever there is something in the 46:38 46 minutes, 38 seconds Middle East we expect that to be affected. Uh so our overseas entity uh which is in UAE itself that one will be 46:46 46 minutes, 46 seconds affected but our other entities and domestically we we don't see affecting us. Got it sir. 46:52 46 minutes, 52 seconds Uh thank you very much sir and all the best for the future. 46:58 46 minutes, 58 seconds Thank you. We have the next question line of Ashwani Sharma from MK Global Financial. Please go ahead. 47:04 47 minutes, 4 seconds Yeah good evening sir. Uh sir my first question is on the inquiry pipeline which you indicated that we have a 47:12 47 minutes, 12 seconds healthy inquiry pipeline. Is it possible to quantify for both the segments gear and the MHC? 47:20 47 minutes, 20 seconds Yeah. So um as on Q4 FI26 uh the open orders that we had uh for 47:27 47 minutes, 27 seconds the gear division was about 894 cr rupes and uh and for the same period last year 47:35 47 minutes, 35 seconds what we had was about 583 crores. If I look at the MH division uh uh for the QZ 47:42 47 minutes, 42 seconds Q4 FI26 is roughly about 398 crores u versus what we had in Q4 FI25 as Q4 FI25 47:50 47 minutes, 50 seconds is 365 crores. uh that's how it's about totaling to about uh 1292 crores of open 47:57 47 minutes, 57 seconds order we have as on 31st March 2026 what is what we had uh as a open order about 48:04 48 minutes, 4 seconds 940 crores as a 31st March 2025 and basically this only gives us a confidence in lot of the questions that 48:11 48 minutes, 11 seconds being raised right now in terms of how do we maintain the margins or revenue so this is all about yeah so 48:18 48 minutes, 18 seconds I was referring to the inquiry uh pipeline which you know did not uh get converted which got deferred because of 48:26 48 minutes, 26 seconds the geopolitical reason uh okay yeah uh for M yes we have a good uh inquiry 48:34 48 minutes, 34 seconds inflow uh if I'm quantifying it is more than 1,000 K 48:42 48 minutes, 42 seconds more than 1,000 K inquiry we have right now for various sector and for the gear division it is I mean 48:51 48 minutes, 51 seconds very uh uh and so uh good news for all of us that in the first uh week itself we are having a whatever inquiry was in 49:00 49 minutes pipeline it is converted going to be converted in the order in one or two days time we got already got the alloy 49:07 49 minutes, 7 seconds so it's a very single largest big order ever got in the industrial gear business market so that is uh in few days you 49:15 49 minutes, 15 seconds will get the good news okay from the power sector 49:22 49 minutes, 22 seconds Okay. And secondly, uh since the deferred revenue when you talk about is it possible to quantify how much was that? 49:37 49 minutes, 37 seconds Uh we are at the last leg and we are having a LOI right now. We would like to publish further details uh once the things materialize. 49:46 49 minutes, 46 seconds Okay. So second question I had on the MHE. If you look at the growth trajectory of MH, I think it's been very very strong in the last four to five 49:54 49 minutes, 54 seconds years. Uh this year I think obviously there's some moderation in terms of order inflow and that we see in the order backlog as well. uh what kind of 50:03 50 minutes, 3 seconds growth one should you know estimate given the fact that you know power as a space is uh doing really great thermal 50:10 50 minutes, 10 seconds especially uh so from a from a estimation perspective what kind of growth we should you know assume going ahead let's say in the next two to three 50:18 50 minutes, 18 seconds years is it possible to quantify uh as I mentioned that we have a good 50:27 50 minutes, 27 seconds inquiry flow for MH we definitely that power sector is going to help us to 50:35 50 minutes, 35 seconds grow further. But at uh this point of time I can only assure you that whatever 50:41 50 minutes, 41 seconds the growth trajectory we have shown in last 2 three years we definitely we can 50:49 50 minutes, 49 seconds continue with the same space and this uh growth percentage. All right sir all the very best to you. 50:56 50 minutes, 56 seconds Thank you. Thank you. 51:00 51 minutes Thank you. We have the next question from the line of Patanjari Shivasan from Sundara Mutual Fund. Please go ahead. 51:10 51 minutes, 10 seconds Hello, thank you for the opportunity. I have couple of questions. So firstly, with respect to increase in prices of input costs, how how did it get passed 51:19 51 minutes, 19 seconds on with respect to the order book business because we would have taken the order sometime back, right? 51:26 51 minutes, 26 seconds In those cases, we would have already uh placed the orders or uh secured the prices for the raw material uh for once 51:36 51 minutes, 36 seconds as soon as we received the order because we were expecting this situation to uh take place. So to safeguard us, we had 51:42 51 minutes, 42 seconds already uh taken action as soon as we received the order and our execution cycle is also not 51:48 51 minutes, 48 seconds long. So uh means it will be taken care whatever orders are on hand we already 51:56 51 minutes, 56 seconds placed order and we are executing. So still the even suppliers are not in the position to claim what is they need 52:04 52 minutes, 4 seconds actually. So it is all for the pending order is it taken care. 52:09 52 minutes, 9 seconds So whatever information is there that is taken care of already is with respect to the order. So there will not be much impact in terms of margins whatever 52:18 52 minutes, 18 seconds existing business we have is that the correct way to understand. Yes. Yes. 52:24 52 minutes, 24 seconds Okay. And uh one more question with respect to our current order book gear and energy. Can you tell what would be the uh segments where we have a sizable chunk like top to three segments? 52:37 52 minutes, 37 seconds Power steel and cement and cement. These are the three main factors we are seeing. uh good demand. 52:46 52 minutes, 46 seconds Okay. And with within this you're saying there's a slowdown or something with respect to steel, right? Could you explain a bit on that? 52:55 52 minutes, 55 seconds There was a deferment of delivery um that was requested from the customer end. Uh the orders were uh the the 53:04 53 minutes, 4 seconds gearboxes were ready in that case. Uh but we couldn't uh deliver it to the customer and we couldn't invoice it because of that. So there are few cases 53:12 53 minutes, 12 seconds where there was deferment but uh it will be cleared in the Q1 and they will thank 53:21 53 minutes, 21 seconds this is a usual phenomena it can happen but uh specifically because of this geopolitical it was affected even more. 53:31 53 minutes, 31 seconds Thank you. 53:34 53 minutes, 34 seconds We have the next question from the line of Rohan from Invigen Capital. Please go ahead. Hello. Uh thank you for the opportunity. 53:42 53 minutes, 42 seconds So sir you mentioned that uh in sugar uh given the you know uh uh geopolitical issues related to the cool prices uh we 53:50 53 minutes, 50 seconds expect strong uh demand going forward and order inflow going forward. So can you explain a little bit more because uh what we are hearing from some other 53:59 53 minutes, 59 seconds players is that there is excess capacity built in in the country for ethanol. So so how should one look at it? Thank you. 54:10 54 minutes, 10 seconds No actually because of this uh war situation only we anticipate that if there is a it it continues still further 54:18 54 minutes, 18 seconds then there will definitely a lack of uh uh supply from the uh this uh for the 54:26 54 minutes, 26 seconds gases and the petroleum. So that's why we anticipate that there will be demand for the ethanol and we need to produce more and more ethanol. That is all anticipation. 54:37 54 minutes, 37 seconds Okay. Okay, understood. Thank you. 54:43 54 minutes, 43 seconds Thank you. We have the next question from the line of Manish Guer from Think Wise Wealth Managers. Please go ahead. 54:51 54 minutes, 51 seconds Yes. Uh thank you so much sir. Uh sir this is uh particularly for the uh gear business uh margins uh as you provided 55:00 55 minutes the the revenue mix for quarter 4 where catalog is 55 and engineer was 45 but s 55:09 55 minutes, 9 seconds if I look on yi basis and compared with Q4 of last year your catalog has actually come down from 60 to 55 and 55:18 55 minutes, 18 seconds your engineered products has improved from 40 to 45%. 55:22 55 minutes, 22 seconds uh so I just uh do do not understand why do there is a such a margin impact and 55:29 55 minutes, 29 seconds also related question which you earlier alluded to in terms of uh development 55:36 55 minutes, 36 seconds order from Navy which is being implemented and there is lower margin. 55:42 55 minutes, 42 seconds Uh so like what is the impact? What is the size of order and what kind of this development order are you referring to? 55:51 55 minutes, 51 seconds Is it something related to your uh P7 alpha orders or if you can highlight on 55:57 55 minutes, 57 seconds that and sir if you see your overall margins for the entire year from yes 56:03 56 minutes, 3 seconds business what we have reported in FI26 this margins are in fact lower than what 56:11 56 minutes, 11 seconds you have reported in FI22 in FI22 you were roughly at 20% margin and and which increased to 26% in FI 24 and now has fallen to 18.8%. 56:25 56 minutes, 25 seconds So how do we see this going forward? Sir would really appreciate if you can provide perspective on this. Thank you. 56:34 56 minutes, 34 seconds Yeah. Uh for the first uh your first question for the engineers product versus the catalog product. So this year 56:41 56 minutes, 41 seconds uh we had done uh the catalog product uh 55% and engineers product 45%. 56:47 56 minutes, 47 seconds uh uh we have uh better margins in the engineers product. Uh but this year we could not uh could not uh uh educate the 56:54 56 minutes, 54 seconds orders or we couldn't supply uh dispatch the orders to the customers because of the customers requirement. So uh the 57:01 57 minutes, 1 second margins are not reflecting in the our financials uh uh uh despite because we have the some inventory uh of the 57:10 57 minutes, 10 seconds engineers product. So it will uh and we have not uh uh invoiced uh during the quarter and during the year. So uh 57:18 57 minutes, 18 seconds because of that the margins has not improved uh this year uh against the last year. 57:26 57 minutes, 26 seconds So what is this number sir? How much of these orders? Earlier you had mentioned 77 crores. So uh I just want to 57:34 57 minutes, 34 seconds reconfirm how much of these orders are pertaining to uh uh G business and engineer products. 57:42 57 minutes, 42 seconds So almost uh 60% of the uh open orders we have in the engineers product uh but the inventory we have uh around 45 to 46 57:52 57 minutes, 52 seconds crores uh that uh includes uh uh the mar uh because we are valuating the inventory at the cost. So around 30% 58:01 58 minutes, 1 second margins uh uh 20 to 25 to 30% margins uh if uh we consider in the inventory when we are invoicing so that is not reflecting in the financials. 58:14 58 minutes, 14 seconds So okay okay and so just to complete my earlier question on the fiveear picture where your margins are lowest right now. 58:24 58 minutes, 24 seconds So ideally sir do you really expect that margin should revert to your mean level of 23 24% 58:33 58 minutes, 33 seconds uh now with your dispatch is improving you probably get a operating leverage uh 58:40 58 minutes, 40 seconds with the revenue growth uh so so uh in FI27 do you expect the margins to 58:47 58 minutes, 47 seconds improve sir it's if you see uh if you compare with the fi 2223 because the India in the 58:54 58 minutes, 54 seconds growth uh trajectory. So the uh capets was going on and it is also going on. So we we were got uh we we we were getting 59:02 59 minutes, 2 seconds the good orders in the insurance product. So that's why the margins was good that time. Uh now we are also getting the orders in the insurance 59:09 59 minutes, 9 seconds product but that was not reflected in the invoicing this year. So that's why the margin margins is not uh reflecting. 59:16 59 minutes, 16 seconds The second thing in R&D cost because we are developing some new products. If you see our investor presentation, we have taken the four patents and we are applied for the three uh more patents. 59:27 59 minutes, 27 seconds So we are also working on the R&D to develop new products and uh upgrade the existing products. So we are also 59:33 59 minutes, 33 seconds expending some uh cost there and what is it pertaining to the the 59:40 59 minutes, 40 seconds development orders sir what you referred to earlier in earlier calls also you had mentioned that there is a couple of percentage point margin impact due to 59:49 59 minutes, 49 seconds some orders related to navy. So if you can just clarify on this uh for the navy orders uh we will come back to you short. 59:59 59 minutes, 59 seconds Okay sir. Uh and last question on the uh MH margins sir um now how do we see that sustainable because now MH margins you 1:00:07 1 hour, 7 seconds are adjusting the interparty or sorry intersegmental uh number also and after that you are 1:00:14 1 hour, 14 seconds providing the margins in the presentation so so what is the sustainable margin for MH uh would it be 1:00:23 1 hour, 23 seconds at 22 23% uh going forward considering now that equipment contribution will increase and your spare parts may not 1:00:31 1 hour, 31 seconds grow in the same pattern as your equipment business. Yeah, considering the revenue mix as you mentioned the sustainable margin around 20 to 20 2% in between. 1:00:43 1 hour, 43 seconds Okay sir. Thank you so much. Thank you. Thank you. 1:00:48 1 hour, 48 seconds Thank you ladies and gentlemen. Due to time constraints that was the last question. I would now like to hand the conference over to the management for closing comments. 1:00:58 1 hour, 58 seconds Thank you all for taking the time to join our investor call today and for your continued trust and engagement. 1:01:05 1 hour, 1 minute, 5 seconds While the gear division experienced a temporary moderation in performance in FY26 due to execution timing factors, 1:01:12 1 hour, 1 minute, 12 seconds the underlying fundamentals of the business remain strong. 1:01:17 1 hour, 1 minute, 17 seconds At the same time, the MHE division continues to demonstrate consistent growth momentum and has delivered revenues ahead of the guidance set for 1:01:25 1 hour, 1 minute, 25 seconds the year supported by robust demand across key sectors and a strong execution pipeline. 1:01:33 1 hour, 1 minute, 33 seconds With two wellestablished divisions, the business remains structurally balanced and is not reliant on a single segment for the overall performance. Together, 1:01:41 1 hour, 1 minute, 41 seconds both the divisions position us well for sustained and resilient growth. Going forward, as pre previously communicated, we will 1:01:50 1 hour, 1 minute, 50 seconds not be providing forward-looking guidance for FY27. However, our strategic priorities remain unchanged, 1:01:57 1 hour, 1 minute, 57 seconds focused on disciplined execution, operational efficiency, prudent capital allocation, and strengthening our presence in high growth markets. 1:02:07 1 hour, 2 minutes, 7 seconds Despite near-term challenges, we remain confident in our ability to take advantage of long-term growth prospects and to deliver long-term sustainable value to all stakeholders. 1:02:18 1 hour, 2 minutes, 18 seconds Thank you once again for your participation and continued support. 1:02:21 1 hour, 2 minutes, 21 seconds Should you have any further questions, please feel free to reach out to our CFO. Thank you and have a great evening. 1:02:30 1 hour, 2 minutes, 30 seconds Thank you. On behalf of MK Global Financial Services Limited, that concludes this conference. Thank you for joining us.