NRB Bearings Ltd — Q4 FY26

NRB Bearings Ltd Q4 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=SLSrrcNQv1o Published: 2 days ago

0:00 Ladies and gentlemen, good day and welcome to the NRB Bearings Limited Q4 FI26 earnings conference call. As a 0:08 8 seconds reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance 0:17 17 seconds during the conference call, please signal an operator by pressing start then zero on the touchstone phone. I now hand the conference over to Mr. Dakarpen 0:26 26 seconds from Ernst and Young. Thank you and over to you sir. 0:29 29 seconds Uh thank you Ruja. Good afternoon to all the participants in this call. Before we proceed to the call, let me remind you that the discussion may contain 0:37 37 seconds forward-looking statements that may involve known unknown risks, uncertainties and other factors. 0:44 44 seconds It must be viewed in conjunction with our business risk that could cause future result performance or achievement to differ significantly from what is expressed and implied by such publication statements. 0:54 54 seconds Please note that we've made the results in the same are available on the company's website. In case you're not received the same, you can write to us and happy to send the same over to you. 1:05 1 minute, 5 seconds So take us through the results and answer your questions. Today we have the top manager of lyrics limited uh represented by Sarpina Ziri, vice chairman and managing director. 1:16 1 minute, 16 seconds We will start the call with a brief overview of the quarter gone past and then conduct the Q&A session. With that said, I will now hand over the call to Hartina Ziri. Over to you, ma'am. 1:29 1 minute, 29 seconds Good afternoon everybody. 1:33 1 minute, 33 seconds Thank you for joining us today for NRB bearings final year 25 26 and quarter 4 1:43 1 minute, 43 seconds earnings conference call. I'm sorry I have a little bit of a sore throat today. So, please pardon me if I clear 1:50 1 minute, 50 seconds my throat or take a break for a little bit of water. 1:56 1 minute, 56 seconds I must say it's always good to connect with all of you. These conversations have been extremely helpful to us not 2:03 2 minutes, 3 seconds just to share our performance but also to explain how we think about the business, how we allocate capital, how we prepare NRB for the next phase of 2:12 2 minutes, 12 seconds growth. And today I would like to take a little bit of your time and not restrict 2:19 2 minutes, 19 seconds myself only to numbers because I believe that context is very important. 2:26 2 minutes, 26 seconds Let me start with the financial performance for the quarter and for the full year. At a consolidated level for 2:34 2 minutes, 34 seconds quarter 4, revenues from operations grew 13% yearonear to INR 372 crores. 2:45 2 minutes, 45 seconds IITA increased by 17% yearonear to INR 74 crores delivering a healthy IITA margin of 19.5%. 2:56 2 minutes, 56 seconds Profit after tax for the quarter stood at 42 crores. 3:02 3 minutes, 2 seconds For the full year, revenue from operations grew 11%. 3:07 3 minutes, 7 seconds To 135 crores, IITA increased by 19% yearon year to 267 3:17 3 minutes, 17 seconds cr and margins expanded to 19.5% from 18.3 3:24 3 minutes, 24 seconds in this financial year. profit after tax increased by 77%. 3:31 3 minutes, 31 seconds That's basically the entire profit after tax and it is now 146 cr 3:38 3 minutes, 38 seconds margins and ebida margins have improved steadily and this is not because of any one single factor. 3:48 3 minutes, 48 seconds It's the outcome of several structural initiatives. These include a higher use of solar energy leading to lower passing 3:56 3 minutes, 56 seconds power and fuel costs, higher automation reducing dependence on labor, continuous improvement in yield and renegotiated 4:06 4 minutes, 6 seconds vendor costing across material components, logistics, insurance across all elements of material related cars. 4:17 4 minutes, 17 seconds I will pause here and say clearly that we are satisfied with the quality of growth. We believe 4:26 4 minutes, 26 seconds that it's important to deliver growth at an accelerated pace and we are working on that as well. This is a year where 4:35 4 minutes, 35 seconds growth is not the outcome of one-off benefits. 4:39 4 minutes, 39 seconds Gloes come from volume, from growth of market share across segments, from spreading our capacities 4:47 4 minutes, 47 seconds and from improvements in product mix as well as sustainable internal efficiency improvements. 4:55 4 minutes, 55 seconds Essentially, our growth is a result of a very comprehensive operational improvement plan. 5:03 5 minutes, 3 seconds Now let me touch upon the operating environment during the financial year 26. 5:09 5 minutes, 9 seconds I don't believe this has been an easy year globally for any of us. But despite challenges arising from geopolitics, 5:17 5 minutes, 17 seconds logistical disruptions, energy availability challenges and uncertainty in overseas 5:25 5 minutes, 25 seconds markets. We've not seen much material impact on our domestic business. 5:32 5 minutes, 32 seconds While export demand was impacted, NRB and its subsidiaries remain more resolent than many of those around us. 5:42 5 minutes, 42 seconds Our international business did grow over the previous year to a little over 4%. Our global 5:50 5 minutes, 50 seconds customers have continued to honor their production schedules and commitments. 5:55 5 minutes, 55 seconds This quarter like others we were impacted by sudden challenges that emerged unexpectedly 6:02 6 minutes, 2 seconds during due to the middle Middle East situation. 6:08 6 minutes, 8 seconds However, this was not unique to NRB. It was industry-wide. It was countrywide and all over the world everyone was 6:18 6 minutes, 18 seconds affected. However, India was particularly affected by the gas shortage. The ensuing 6:26 6 minutes, 26 seconds product mix changes which we faced from customers who were struggling as they adapted to the constraints in the supply 6:34 6 minutes, 34 seconds chain but good supply side situations from certain suppliers who 6:42 6 minutes, 42 seconds were carrying adequate inventory and also a fairly healthy demand surge. 6:49 6 minutes, 49 seconds We actually came up to the challenge We believe better than most. But to some 6:58 6 minutes, 58 seconds extent, the situation did reduce our original business plan for the quarter. 7:03 7 minutes, 3 seconds From an operational standpoint, we feel we handled the situation effectively without disruption because we did not 7:12 7 minutes, 12 seconds stop our customer lines. At no point at no point did we fail to meet key customer commitments. 7:21 7 minutes, 21 seconds That for us is non-negotiable. 7:25 7 minutes, 25 seconds This brings me to one area that often draws attention and that attainment of reposition. I would like to clarify how 7:32 7 minutes, 32 seconds we approach it internally. We have strategically position inventory across India and key global locations such as 7:40 7 minutes, 40 seconds Germany and the United States to ensure responsiveness and resilence. This approach allows us to absorb logistics 7:48 7 minutes, 48 seconds volatility, adapt quickly to changes, and maintain customer schedules, reliable delivery even during a crisis or a disruptive situation. 8:00 8 minutes For several products, we are 100% or near 100% suppliers to international customers, 8:08 8 minutes, 8 seconds making it critical that we never become a bottleneck in their production plans. 8:13 8 minutes, 13 seconds Similarly, our situation on share of business it's extremely high and at most companies for the product that we are 8:22 8 minutes, 22 seconds leaders of it is even 60 to 70% with certain products being 100%. Our inventory strategy therefore supports 8:31 8 minutes, 31 seconds uninterrupted supply even under stress global supply chain conditions. 8:37 8 minutes, 37 seconds Nevertheless, we believe that there was and will continue to be scope for improvement and our inventories at the 8:45 8 minutes, 45 seconds end of the year were in fact lower by over 20 crs even though our sales rose significantly. 8:52 8 minutes, 52 seconds NRB's improved inventory position is close to optimal at this point especially considering the global disruption. 9:01 9 minutes, 1 second This as we mentioned is deliberate reflecting our flexibility, strong processes and strong customercentric 9:08 9 minutes, 8 seconds philosophy. More importantly, this optimized inventory position is linked to the value we deliver. This also 9:16 9 minutes, 16 seconds enables us in turn to secure appropriate value and pricing. 9:25 9 minutes, 25 seconds In fact, this is the comprehensive result of our R&D and new product capabilities, our ability to adapt to 9:33 9 minutes, 33 seconds customer demand collectively across all areas that the customer 9:40 9 minutes, 40 seconds considers importance for a key supplier partnership. Over time, this reliability and consistency and world-class 9:48 9 minutes, 48 seconds engineering capability of for the launch of next generation platforms have strengthened our customer 9:56 9 minutes, 56 seconds partnerships led to an increase of share of business and share of wallet and reinforce pricing discipline across cycles. This 10:05 10 minutes, 5 seconds also gives us tremendous opportunities in the new products that we launch within the automotive sector. Apart from 10:13 10 minutes, 13 seconds our new initiative in the industrial space, when it comes to growth, we internally 10:20 10 minutes, 20 seconds track performance over longer periods rather than reacting to quarter and quarter movements. Firstly, our business has inherent seasonality. 10:32 10 minutes, 32 seconds Secondly, there are different customer specific ordering platforms in different parts of the world that we serve. 10:41 10 minutes, 41 seconds Add to that the layer of complexity of forex movements, particularly on the export side and 10:48 10 minutes, 48 seconds sometimes on the import side. For this reason, a year-to- date and full year lens gives a much more accurate picture 10:56 10 minutes, 56 seconds of how our business is truly progressing. Viewed this way, FY26 reflects steady broad-based growth 11:05 11 minutes, 5 seconds driven by volume expansion, as I mentioned, and a healthy mix of both domestic and global programs adding to NRB's portfolio. 11:16 11 minutes, 16 seconds This approach helped us stay focused on sustainable execution rather than get sidetracked by short-term fluctuations. 11:26 11 minutes, 26 seconds On capacity, there is a question around utilization. While reported utilization 11:33 11 minutes, 33 seconds is roughly 85%, in reality effective utilization at several of our plants is much closer to full when you take into account the demand variation. 11:45 11 minutes, 45 seconds want to adjust also for maintenance shift patterns, changeovers and 11:52 11 minutes, 52 seconds generally the demand pattern from different segments. 11:58 11 minutes, 58 seconds We have identified bottlenecks at specific plants. 12:02 12 minutes, 2 seconds To address this, we have already initiated roundtex. 12:06 12 minutes, 6 seconds Machinery orders have been placed. In fact, most recently, machines have started to arrive. 12:13 12 minutes, 13 seconds respect commissioning of major enhancements projects starting from June July and 12:20 12 minutes, 20 seconds continuing through this financial year and beyond up to the first quarter of 2028. 12:28 12 minutes, 28 seconds You will start seeing partial benefits initially from the current quarter and more 12:38 12 minutes, 38 seconds during the rest of the year. Operational efficiency and improvements in quality which have already quick kicked in will 12:46 12 minutes, 46 seconds have their own positive impact and you will see our growth trajectory rise. 12:53 12 minutes, 53 seconds Beyond automotive I want to spend a little time about diversification because this expansion into industrial space is also very close to my heart. 13:03 13 minutes, 3 seconds We're extremely enthusiastic about our foray into niche and profitable opportunities in the industrial friction 13:12 13 minutes, 12 seconds solution arena. This is not about entering commoditized industrial bearings. 13:19 13 minutes, 19 seconds This is about high-end specialized application specific industrial friction 13:26 13 minutes, 26 seconds solutions where NRB's engineering depth gives us an edge in segments such as 13:32 13 minutes, 32 seconds construction equipment of highway industrial gearboxes, switch gears and power generation. These are all global 13:41 13 minutes, 41 seconds and growing exponential segments and new customers such as Semens have been added. New aerospace 13:50 13 minutes, 50 seconds wins include prestigious confidential platforms of Hindustan aeronautics and national aerospace laboratories. We are 13:58 13 minutes, 58 seconds choosing to focus on those which we can build the future on. Acquisition of Mahan tools is progressing as planned. 14:09 14 minutes, 9 seconds Operational transition is ongoing including purchase order migration compliance alignment and customer 14:17 14 minutes, 17 seconds integration. They have an order book close to 50 cr now and we expect full operational control between midappril and May. 14:26 14 minutes, 26 seconds Before closing I'd like to briefly outline why we believe NRB is competitively well positioned. 14:34 14 minutes, 34 seconds Navy's always operated with a mass customization mindset. Our 14:41 14 minutes, 41 seconds start and history in needle bearings and cylindrical bearings particularly makes this a mindset edge. 14:51 14 minutes, 51 seconds In fact, this gives us an edge beyond in a world which is moving closer and closer to what we do best. 15:00 15 minutes In fact, the demands that you see and the kind of global situations in the 15:08 15 minutes, 8 seconds industrial and automotive space are suited for a supplier with our core competencies. 15:17 15 minutes, 17 seconds Starting with smaller volumes, moving rapidly to mass customization at breakneck speed with constant changes in 15:24 15 minutes, 24 seconds the pecking order of which technology is going to prevail is something we handle exceedingly well. 15:32 15 minutes, 32 seconds We work traditionally with customers that have a 3 to 5 year time frame well ahead of the next platform launch. There are many changes that take place. 15:44 15 minutes, 44 seconds Sometimes the platforms exponentially are successful. Sometimes there are 15:51 15 minutes, 51 seconds changes. In fact, this time gets compressed sometimes and moved the other way at other rate 16:00 16 minutes and adaptability is key. These are the hallmarks of NRB. This is what gives us 16:07 16 minutes, 7 seconds a differentiated positioning right from design to delivery. 16:16 16 minutes, 16 seconds pairings are co-designed at the platform level with the application data coming in from 16:23 16 minutes, 23 seconds our customers. We sit on the drawing board. We brainstorm future technologies that do not exist 16:32 16 minutes, 32 seconds like the new steering that Magna is going to supply to the entire table of BMW 16:40 16 minutes, 40 seconds which makes them all our customers deeply deeply embedded and makes us difficult to replace. 16:54 16 minutes, 54 seconds We compete on engineering capability. We compete on flexibility. And we compete by driving this with an immensely 17:03 17 minutes, 3 seconds disciplined processoriented approach. 17:07 17 minutes, 7 seconds We do not work on commodity pricing and short-term solutions. 17:15 17 minutes, 15 seconds Whether it's ICE, whether it's hybrid, whether it's E, whether 17:23 17 minutes, 23 seconds the power generation is hideout tomorrow, whether it will be wind 17:29 17 minutes, 29 seconds energy, our bearing content per vehicle and per product remains largely value 17:39 17 minutes, 39 seconds neutral. That is our model and we have ensured that specific applications such as for 17:48 17 minutes, 48 seconds example EV specific bearings are priced in a manner to maintain our 17:55 17 minutes, 55 seconds existing margin profile. In that sense, we remain ED agnostic 18:03 18 minutes, 3 seconds in the sense that we are supplying both I would say applications 18:11 18 minutes, 11 seconds across technologies in all the spaces that we serve and there is not much pricing differential when we enter any 18:21 18 minutes, 21 seconds kind of segment. We believe we are one of the most risk mitigated companies today when it comes to 18:29 18 minutes, 29 seconds the concept of pricing and future profitability. 18:35 18 minutes, 35 seconds To summarize, financial year 26 has been a year of strong and disciplined execution. Margin improvement has been 18:43 18 minutes, 43 seconds driven by structural actions, discipline capacity expansion, and thoughtful diversification. Our capital allocation 18:51 18 minutes, 51 seconds remains prudent. Our focus remains on long-term, sustainable, profitable growth. Most importantly, what gives me 18:58 18 minutes, 58 seconds the greatest confidence is our people across plants. 19:04 19 minutes, 4 seconds most importantly at our customers in our R&D and our supply chain. 19:14 19 minutes, 14 seconds Our team, our employees continue to demonstrate 19:20 19 minutes, 20 seconds agility, discipline, commitment, and incredible collaboration within 19:29 19 minutes, 29 seconds and outside as members of cross functional teams that brainstorm 19:37 19 minutes, 37 seconds how to deal with the constantly changing situation while staying processoriented or with our supply chain partners or with our customers. 19:49 19 minutes, 49 seconds Thank you our investors and analysts for your trust and engagement. 19:55 19 minutes, 55 seconds With that, I will pause here and open the floor for your questions. Thank you for your patience and listening to me. 20:05 20 minutes, 5 seconds Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchstone 20:14 20 minutes, 14 seconds telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a 20:23 20 minutes, 23 seconds question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. 20:43 20 minutes, 43 seconds The first question is from the line of Ragunan Nanel from Noama Research. Please go ahead. 20:50 20 minutes, 50 seconds Good evening ma'am. Congratulations on strong set of results for FI26. 20:55 20 minutes, 55 seconds Thank you for the detailed opening remarks. Uh firstly in your opening remarks you mentioned international 21:03 21 minutes, 3 seconds business grew at 4%. Uh would you be referring to the standalone business uh that within standalone uh exports has 21:13 21 minutes, 13 seconds grown at 4%. Would that be the right understanding? 21:17 21 minutes, 17 seconds Uh no we always look at consolidated because it's you know intercomp sale it's inter subsidiary sale and if we 21:25 21 minutes, 25 seconds give you those figures you'll get very confused. It's much more consistent for us just to talk about what we call international business 21:33 21 minutes, 33 seconds which is total international customers which are overseas supplied irrespective of from where we supplied them and which 21:40 21 minutes, 40 seconds subsidies at a consolidated does that explain 21:46 21 minutes, 46 seconds so basically the challenge that was the growth figure we had which was not 21:53 21 minutes, 53 seconds um necessarily very satisfying as I said But considering all the changes in the world, I mean it was positive. 22:03 22 minutes, 3 seconds True. Ma'am, uh for the standalone business, would it be possible to indicate how much was the growth in 22:10 22 minutes, 10 seconds exports and aftermarket for full year FI26? 22:16 22 minutes, 16 seconds See for exports we don't like to give the figure out separately because it causes a lot of confusion as I said 22:24 22 minutes, 24 seconds because there are a lot of interco company subsidiaries we have step down subsidiaries under the holding company 22:32 22 minutes, 32 seconds you know the structure right I can explain the structure if you like would you like me to do that uh no ma'am and how 22:39 22 minutes, 39 seconds yeah so exactly so I really think that just experts won't give you a good picture you know I think it'll will actually give a confusing picture and we 22:47 22 minutes, 47 seconds also have other subsidiaries that supply like SNL for example. So therefore what 22:53 22 minutes, 53 seconds I would uh like to focus on is fundamentally that okay the replacement 23:00 23 minutes market grew 10%. Am I right? I just want to cross check with my CFO. That's my memory. 23:07 23 minutes, 7 seconds Um correct am I right? My memory said that replacement do 10%. 23:18 23 minutes, 18 seconds So even replacement also grew 4%. Okay. So my error replacement also grew 4%. 23:26 23 minutes, 26 seconds No Ted ma'am. 23:28 23 minutes, 28 seconds I think the last quarter has been extremely challenging for most companies in the replacement and distribution 23:34 23 minutes, 34 seconds space and we to be honest devised our plan and decided that we would focus more on OEMs. As you know, we are one of 23:43 23 minutes, 43 seconds the rare companies that does not have uh virtually any pricing differential when you look at the cost part. 23:51 23 minutes, 51 seconds I have explained this in the past, but essentially to handle the replacement market is extremely expensive. There are 23:59 23 minutes, 59 seconds lots of discount structures and the way we calculate it is the final impact. 24:07 24 minutes, 7 seconds Secondly, secondly, we're not into commoditizing. 24:11 24 minutes, 11 seconds So the prices that we command at the OEMs, it's not the traditional model, you know, which is similar for commodities bearings or the tire 24:20 24 minutes, 20 seconds industry or something. You lose money when you send to the OEM and then you make four times as much money when you sell in the replacement market, which is the situation with some of our 24:29 24 minutes, 29 seconds competitors. Uh that's not how our model is. 24:36 24 minutes, 36 seconds Well noted, ma'am. And how do you see the outlook for exports and aftermarket for FI27? 24:42 24 minutes, 42 seconds Do you think directionally uh uh directionally do you think there is an improvement expected? 24:50 24 minutes, 50 seconds Yes, we expect 10 to 14% growth in our international business this year as per our current business plan. 25:01 25 minutes, 1 second So last year there was 4% growth. Here we expect 10 to 14 maybe even 15. 25:09 25 minutes, 9 seconds Well noted ma'am. Uh my second question was on the capex part. Uh what is the capex expected for fi27 given that you 25:18 25 minutes, 18 seconds are looking at a good growth and uh you have also indicated in the uh BSC filings that uh there will be an 25:26 25 minutes, 26 seconds expansion happening. So for FI27 would 80 cr be a good estimate as to No it'll be closer to 120. It'll be 25:35 25 minutes, 35 seconds closer to 120 and the reason for that is we're also looking at land. Got it. 25:42 25 minutes, 42 seconds Sorry to interrupt you Mr. Evan and then yeah I'll come back in the queue. I'm just clarifying on the question on keek 25:51 25 minutes, 51 seconds side uh 120 how would it be distributed between standalone and subsidiaries? 26:02 26 minutes, 2 seconds I think I'm getting an indication of more questions and this is again as I'm saying we fundamentally drive reason consolidation. 26:11 26 minutes, 11 seconds So I mean it we don't like to give out too many numbers which are not in the public domain that are necessarily being 26:19 26 minutes, 19 seconds watched by our competitor especially since we are performing at this point. Sorry to interrupt. May we request Mr. 26:28 26 minutes, 28 seconds Ragun to please rejoin the queue. We have participants waiting for the turn. 26:32 26 minutes, 32 seconds Thank you. We'll move to the next questions from the line of Verle Ray from Kamaka Wealth Management. Please go ahead. 26:40 26 minutes, 40 seconds Uh hi, congratulations on great set of numbers. Uh can you please throw some light on capabilities of Mahan Tool 26:48 26 minutes, 48 seconds Rooms? What exactly they do they produce in aerospace segment? Where do they lie in the value chain? what certifications do they have? 26:58 26 minutes, 58 seconds Um, so basically they manufacture products in what we call mission 27:04 27 minutes, 4 seconds critical areas. Okay. For the highest performing 27:10 27 minutes, 10 seconds aircraft that are used by Indian defense systems. The reason this is very 27:17 27 minutes, 17 seconds interesting for us is because they are very similar to focus that we have as a company on commercial aircraft. So this 27:25 27 minutes, 25 seconds is landing gear components. This is the fuel injection system. This is the doors. I mean literally what saved the 27:33 27 minutes, 33 seconds lives of the pilots and what made our strikes successful. They were at the forefront of that. They also make a 27:43 27 minutes, 43 seconds product called rod end which is similar to one of the bearings that we uh are 27:50 27 minutes, 50 seconds focusing on uh that it's not a bearing but it's a similar product. So interestingly even though they 27:58 27 minutes, 58 seconds manufacture more for Japan 28:02 28 minutes, 2 seconds the applications are similar to what our long-term goal and plan for estate is. 28:15 28 minutes, 15 seconds So currently if the order book is 100% towards defense would they need to apply for more certifications in order to supply to commercial aerospace how are 28:25 28 minutes, 25 seconds we planning this do we need more time yeah so they're already in the process of the certification 28:33 28 minutes, 33 seconds that means they already are in the process of the certification and our products will also be covered in the certification what we've developed 28:41 28 minutes, 41 seconds that was the reason that we looked for a company that was in process of the certification ation rather than the company that already had it. Does that 28:49 28 minutes, 49 seconds make sense? That means in the next 6 months they'll be getting the certification and our products will also be included into that. 28:58 28 minutes, 58 seconds Sorry to interrupt. May we request the participant to please rejoin the queue. 29:02 29 minutes, 2 seconds Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants, we would request you to please limit your 29:10 29 minutes, 10 seconds question to two per participant. The next question is from the line of Nitesh Rea from Chris Capital. Please go ahead. 29:18 29 minutes, 18 seconds Hi, thank you for the opportunity. Um, just uh ma'am in your opening remarks you said that um you we've added Seammens as a customer. Just could you 29:26 29 minutes, 26 seconds share some more information regarding this? Is it is it for Mahant is it for NRP? uh you know which application product you know size of the contract 29:34 29 minutes, 34 seconds timeline just uh some color on that and sorry we do not share that information and often we are also not 29:41 29 minutes, 41 seconds permitted to share with our customer confidentiality contract there and just one last bookkeeping in Mahan told me you said the order book 29:49 29 minutes, 49 seconds has now reached 50 crores right yes this is executable over the next 12 months 12 to 18 months 29:57 29 minutes, 57 seconds no no no it doesn't work like that in a Yes, it means the significance of that is when we 30:06 30 minutes, 6 seconds announce the acquisition they had an order book of 25. 30:10 30 minutes, 10 seconds The pace depends on H. 30:14 30 minutes, 14 seconds The pace depends on how much they scaled that means enhanced 30:22 30 minutes, 22 seconds pace will will depend on whether a particular landing gear on one aircraft for example is rolled out right across. 30:28 30 minutes, 28 seconds Okay. and how fast. But these are concrete orders. The exact pace is not something that we can predict. But it 30:37 30 minutes, 37 seconds gives you an idea of how much business has been signed up depending on whether the um defense 30:45 30 minutes, 45 seconds organization slows down or moves up and from every angle that we can see defense rollout is speeding up. Now the 30:54 30 minutes, 54 seconds additional business that we got is indicative of the fact that HL has not 31:02 31 minutes, 2 seconds just endorsed but has heartily endorsed this change of man to rule being a 100% 31:09 31 minutes, 9 seconds subsidiary of NRB and in this short span of time the order book is doubled. So that was the significance of that. 31:17 31 minutes, 17 seconds Thank you. The next question is from the line of Lakshmi Naran from Tonga Investment. Please go ahead. 31:24 31 minutes, 24 seconds Yeah. Uh thank you three questions. Uh uh just want to understand uh what is the mix of uh revenues by application. 31:33 31 minutes, 33 seconds Uh the second question I have is that uh uh is the values accident related volume loss is completely uh uh recovered uh 31:42 31 minutes, 42 seconds now because I think last year we carried some amount of uh uh lost opportunity. 31:48 31 minutes, 48 seconds And uh the third question is that uh can you just uh help me understand uh uh the inventory carrying levels how does it 31:56 31 minutes, 56 seconds differ between uh domestic business and international business because I believe that international business the uh inventory days are slightly longer. Uh so these are my questions. 32:08 32 minutes, 8 seconds Okay. So let me start by the segmentation that you mentioned 32:13 32 minutes, 13 seconds uh to MC applications for 32:20 32 minutes, 20 seconds the uh one second. Do you want to know the pi 32:28 32 minutes, 28 seconds of the different segments just for clarification? 32:34 32 minutes, 34 seconds Excuse me. 32:42 32 minutes, 42 seconds Something like that. 32:43 32 minutes, 43 seconds Yeah. Do you want to know for example now how much are uh two wheeler and three wheeler businesses and how much are 32:50 32 minutes, 50 seconds No no no no no I'm not looking at two wheeler three. I'm looking at more from an application point of view. It could be uh uh industrial transmission or it 32:59 32 minutes, 59 seconds could be uh cylindrical. The way in which as an organization you define So that is not something that we give 33:06 33 minutes, 6 seconds out but I can give you a rough indication. This used to be very important to people when EV was happening and they would ask us how much 33:14 33 minutes, 14 seconds is an engine. Okay. And I would say that apart from two and three wheelers we are not much in the engine applications. 33:22 33 minutes, 22 seconds Uh we are in transmission drive line chassis and in steering. 33:29 33 minutes, 29 seconds We are not much in real applications and there in lies a huge opportunity for us because there are two kinds of opportunities for us if that is really 33:38 33 minutes, 38 seconds you know the uh end goal of your question. One opportunity is that we are in and I'm going kind of you know 33:47 33 minutes, 47 seconds picturing a vehicle and telling you that we are increasingly in steering and we are really launching some of the most prestigious steerings in the world. When 33:56 33 minutes, 56 seconds it comes to transmission it's very interesting. I was recently going to buy a car, okay? And I might answer this as a story. Um, and I said, "Look, I only 34:05 34 minutes, 5 seconds want to buy a car that has my dad." So, the company was like, "You need to get a prestigious car." I'm not a very high 34:13 34 minutes, 13 seconds profile person, but the company was the car needs to continue to be a prestigious car. So, I said, "Okay." And I can tell you that every single 34:21 34 minutes, 21 seconds Maybback has my bearings in the transmission. And then it goes down to all the S-Classes and the CLX and the 34:28 34 minutes, 28 seconds CLA and the C. I mean, literally every Mercedes from one to the um Maybach has us in the transmission. 34:41 34 minutes, 41 seconds Then you flip over to J to BMW and you see the models that have that little I initial on it. Okay. All of them from 34:49 34 minutes, 49 seconds the one series, the two series, the four series, the five, the three, the eight, the 34:56 34 minutes, 56 seconds and you go on all the way to the 7L and they all have us in the transmission. 35:01 35 minutes, 1 second Increasingly in the next year as I mentioned when they change over their steering to the new platform of a highly 35:10 35 minutes, 10 seconds advanced E steering that is going to have our bearings starting 35:17 35 minutes, 17 seconds as Magna rolls it out there we are in for example the transmission across that I mentioned through Z. So transmission, chassis, steering are our main states. 35:30 35 minutes, 30 seconds All kinds of uh electric motors in there and I mean the small ones like the locking systems and 35:38 35 minutes, 38 seconds like the um starters and things have a bend. Now you move to truck. When you look at truck, all the same footprint 35:47 35 minutes, 47 seconds that I mentioned just now as part of the vehicle is replicated. But we are also in very critical applications such as 35:55 35 minutes, 55 seconds what is known as a king bearing. When you see those huge trailers right on the road and you wonder how the cargo 36:03 36 minutes, 3 seconds doesn't get dislocated up, especially if you're seeing a container truck, it's NRB bearing that holds it together. 36:11 36 minutes, 11 seconds literally in every Mercedes and Mac and Freightlininer and Scanya and Volvo. I 36:19 36 minutes, 19 seconds mean this is a patented product that we make which is a combined cylindrical thrust bearing. It's very hard for me to give data on specific bearings because 36:27 36 minutes, 27 seconds sometimes what we engineer is like an amazing amalgamation of different kinds of bearings put together. So, I think that's the kind of space that we're in 36:36 36 minutes, 36 seconds when it comes to automotive. And literally, I mean, industrial bearings are going to go into uh they're going to 36:43 36 minutes, 43 seconds go into the electric grid. They're going to go into industrial gear boxes. 36:49 36 minutes, 49 seconds They're going to go into uh literally anything that takes cylindrical roller bearings. We are 36:57 36 minutes, 57 seconds increasingly developing our product range for construction and of highway as I mentioned uh and switch gears and the 37:04 37 minutes, 4 seconds electric grid transmission. So those are the areas of focus. I hope that answers your question very comprehensively. 37:11 37 minutes, 11 seconds Yeah. Yes. And the other question. 37:22 37 minutes, 22 seconds Thank you. The next question is from the line of Vun Jen from Dat Capital. Please go ahead. 37:29 37 minutes, 29 seconds Uh yeah. Hi, good afternoon ma'am. So uh I have a couple of questions on man tool room. So I think last quarter when the 37:37 37 minutes, 37 seconds acquisition was announced, it was told that the annual revenue run for this company is close to 2 kores. So in SI 27 37:45 37 minutes, 45 seconds uh how much will be the revenue they'll be able to execute out of their 50 K order book and is HL 100% of the order 37:53 37 minutes, 53 seconds book that's my first question so there two things on Mahan tool rooms 38:00 38 minutes if you have a little patience once we complete all elements of this uh transaction then we will be able to make 38:09 38 minutes, 9 seconds a very comprehensive business plan and we would be happy to give some insight into that approximately 6 months from 38:17 38 minutes, 17 seconds now it will be more meaningful. The two crores actually has no meaning because our idea we had a plan to set up our own 38:26 38 minutes, 26 seconds aerospace manufacturing facility. 38:30 38 minutes, 30 seconds I can tell you fairly candidly that we were carrying at that point of time 100 crores of RSQs from some of the names 38:38 38 minutes, 38 seconds that are the top three top four producers of aircraft and their components in the world. 38:48 38 minutes, 48 seconds However, the situation was that if you wanted to enter that business, it would have taken us four years even to be able to respond 38:56 38 minutes, 56 seconds to the RFQ because with a without a concrete AS um 9100 39:05 39 minutes, 5 seconds certification plan which is in uh a time bound manner can be shared. We 39:13 39 minutes, 13 seconds had no hope. Therefore, our aim was to buy a company that would give us the 39:20 39 minutes, 20 seconds people capabilities, the design capabilities, and the certification capabilities to take this business to the next level. 39:28 39 minutes, 28 seconds We also did not want to buy a company that didn't have the right culture and it was extremely difficult for us to 39:36 39 minutes, 36 seconds find a company that was doing such complex things but at a scale that we could take 39:43 39 minutes, 43 seconds to the next level and that is the entire reason why we acquired it. So if you have a little patience, trust me, we 39:51 39 minutes, 51 seconds saved three years and we were able to really be in a position to make that 39:59 39 minutes, 59 seconds concrete plan which typically people either go and acquire a business outright but we don't believe in 40:06 40 minutes, 6 seconds acquiring a business outright outright because the culture doesn't fit them because this requires a lot of innovation. 40:16 40 minutes, 16 seconds Uh sure ma'am and this is HL by right now 100% of the order book it is but it's not one division it's 40:24 40 minutes, 24 seconds literally every division you know HL is run in a manner where literally each division is like a company of its own so 40:31 40 minutes, 31 seconds this has multiple divisions of HL which are which are buying different different parts for different kind of technologies and aircraft. 40:42 40 minutes, 42 seconds Thank you. The next question is from the line of Radar Raha from Ithod Financial Consulting. Please go ahead. 40:52 40 minutes, 52 seconds Yeah, thank you for the opportunity ma'am. Am I audible? Yes, you are. 40:58 40 minutes, 58 seconds Thanks. Uh first question is uh is there a reason to believe that uh industrial segment would be margin accative to our 41:05 41 minutes, 5 seconds business and if yes by how much percentage? 41:11 41 minutes, 11 seconds So let me answer your question in a uh complicated manner. Will it be as or more profitable? 41:23 41 minutes, 23 seconds Depends. It definitely and and the reason I'm saying that is not because the industrial business we're targeting is not profitable, but 41:31 41 minutes, 31 seconds because the automotive business we're targeting is also very profitable. You get my point. It takes me back a little bit to that distribution angle where 41:40 41 minutes, 40 seconds people, you know, companies sell 6204 6203 standard commoditized ball bearings. They sell them even at a loss to a two-heer company and then sell them 41:49 41 minutes, 49 seconds at three times the price in the replacement market. That's not what we do. So the kind of kind of industrial 41:56 41 minutes, 56 seconds bearings we are focusing on are as profitable as what NRB currently makes which is at the end of the day a 18 to 42:05 42 minutes, 5 seconds 20% IITA margin is a requirement for us to focus in any area some of some of it 42:13 42 minutes, 13 seconds 30%. Yes and some of it might be 14%. 42:19 42 minutes, 19 seconds Will it average out to what we have over the next five years? Will it pan out and be in line with our aspirational goal of 42:28 42 minutes, 28 seconds maintaining profitability consistently between 18 and 21%? Yes. Does that answer your question? 42:37 42 minutes, 37 seconds Yes, ma'am. It does. Thank you. 42:41 42 minutes, 41 seconds The next question is from the line of Shreanch Katani from SG Securities. Please go ahead. 42:48 42 minutes, 48 seconds Hi, good afternoon ma'am. I had one question on the last quarter margin. So, we've never, you know, gotten below like 42:57 42 minutes, 57 seconds 60% gross margin. This is the first quarter like in a very long time. So, just trying to understand like uh what 43:04 43 minutes, 4 seconds caused the dip in the gross margins that we saw in this last quarter. 43:14 43 minutes, 14 seconds fundamentally only one reason for an exchange. 43:20 43 minutes, 20 seconds Got it. So that that's because of the uh imports that we do for our steel. Uh no actually it's a little bit more 43:28 43 minutes, 28 seconds complicated. It's one is the product mix. Okay. the impact on forex on certain products 43:37 43 minutes, 37 seconds had uh one high import component and secondly the cogs also gets converted into a uh rupee value. 43:48 43 minutes, 48 seconds So if there's a sudden change on the last day it can just be not reflective of how it would have been over a month. 43:59 43 minutes, 59 seconds Yeah. international entities their expenses got booked in a very non uh I would say 44:06 44 minutes, 6 seconds cons in a in a very strange manner because of the sudden change of the pricing on the last day. 44:15 44 minutes, 15 seconds Okay. So, so we should expect this to normalize something that you should worry about because if you look at the YCD, if you just consider that there was this crazy 44:24 44 minutes, 24 seconds spike on a particular day, it would have kind of the peaks and troughs get knocked out over a three-ear period uh sorry 3 month period. 44:36 44 minutes, 36 seconds Okay. Okay. 44:37 44 minutes, 37 seconds It was just this unusual situation of accounting practice. 44:42 44 minutes, 42 seconds We do not change accounting practice. we stay with the accounting practice that is proper for a long run and sometimes 44:49 44 minutes, 49 seconds you have a sudden an anomaly right I'll give you an example if for example your other income which is actually 44:56 44 minutes, 56 seconds operational other income like scrap sale doesn't happen because you decide you don't want to sell your scrap on the last day because you're not getting a good price why not hold it till next 45:06 45 minutes, 6 seconds month you understand where I'm coming from it's just that kind of unusual situation 45:13 45 minutes, 13 seconds it's not something that you need to worry about. It'll go back to what you're used to. Okay. Okay. That that's good to know. 45:21 45 minutes, 21 seconds And uh any you know for example if you're not adequately booked for that date you know you have a certain forex booking policy 45:29 45 minutes, 29 seconds you have a certain import export booking policy. So an aberration because of the exchange rate differential on the last day of the year. 45:38 45 minutes, 38 seconds Thank you. The next question is from the line of Dave Gulwani from KPMS. Please go ahead. 45:45 45 minutes, 45 seconds Thank you for the opportunity. Can you give the break up of the 120 kX? 45:54 45 minutes, 54 seconds Not beyond what we've already put in the public domain because if you see in the public domain we have already explained 46:01 46 minutes, 1 second the 200 CR capex which will happen over next 18 months and the various projects that it's two and in that last meeting 46:10 46 minutes, 10 seconds uh outcome we also announced that we will spend up to 40 crores on land. So I mean you know you need to factor all 46:18 46 minutes, 18 seconds that in that it's a total announcement of 240 crores to be honest it's not 120 120 is just for this year so it'll have 46:26 46 minutes, 26 seconds no meaning supposing I tell you these machines are coming but the furnace is coming in the next financial year in January because we don't need it till 46:34 46 minutes, 34 seconds now fundamentally it is 8 90% for machines and 10% for 46:42 46 minutes, 42 seconds infrastructure and building uh and land and what will be the maintenance capex 46:51 46 minutes, 51 seconds or or does this also include the maintenance capex? 46:54 46 minutes, 54 seconds The maintenance capex is part of our normal capex. Okay. uh we spend 10% of our turnover on a combination of 47:03 47 minutes, 3 seconds maintenance, quality, new product development and small small capex improvements which could be for balancing uh the lines. 47:16 47 minutes, 16 seconds Okay, thank you. 47:20 47 minutes, 20 seconds Thank you. The next question is from the line of Pavan Kumar from Ratnata Capital. Please go ahead. 47:28 47 minutes, 28 seconds Ma'am I wanted to understand u by when can uh we scale up our industrial business to a meaningful proportion of 47:35 47 minutes, 35 seconds our entire revenues that is like let's say some 20%. And also uh on the uh I 47:42 47 minutes, 42 seconds understand a substantial part of our exports is from euro so the US uh sorry Europe deal doesn't make any kind of difference 47:51 47 minutes, 51 seconds in terms of our competitiveness with respect to the other competitors. 47:56 47 minutes, 56 seconds What is the second question? I heard your first question. You want to know how long it will take for the industrial to be 20%. So it's very hard for me to 48:04 48 minutes, 4 seconds predict because you know this year the automotive industry just grew so exponentially right 48:11 48 minutes, 11 seconds our industrial business is already approximately 14 to 15%. 48:18 48 minutes, 18 seconds So if the automotive business had not grown so much, we would have been able to give more uh cap. See the industrial 48:26 48 minutes, 26 seconds business also includes tractors and farm equipment. You have to also keep that in mind, you know. Um and uh and uh and and 48:36 48 minutes, 36 seconds globally that is how it is because also the companies that make tractors and farm equipment like John Deere and uh you you know um they they also make road 48:46 48 minutes, 46 seconds rollers and they also make right cement concrete mixers and things like that. Uh so 20% I mean I can just give you a ball 48:56 48 minutes, 56 seconds back and say I'll do it in three years but what if the automotive industry just springs back then just because it's a pie right it might slow down. Yeah. 49:05 49 minutes, 5 seconds But if the automotive industry goes slower then automatically this grows faster but our aim is to have it as 20 49:13 49 minutes, 13 seconds 25% of our business if that's your question. 49:18 49 minutes, 18 seconds Okay ma'am. Uh and are the capacities between industrial and automotive are they funible or uh it doesn't work that 49:26 49 minutes, 26 seconds way at all. flexible between the capacity. Yes. Yes, they are. They are. 49:31 49 minutes, 31 seconds In fact, if you read our joint venture declaration, it says that uh 20% of the 49:40 49 minutes, 40 seconds capacity of the joint venture is I I'm not sure if it's in the public domain, but I think it is that 20% of the capacity may be used for automotive if 49:49 49 minutes, 49 seconds automotively suddenly requires it because even today 20% of our or 25% of our current automotive capacity is being 49:57 49 minutes, 57 seconds used. There is flexibility in the products we've chosen. 50:03 50 minutes, 3 seconds Thank you. The next question is from the line of Zakin Naser and individual investor. Please go ahead. 50:10 50 minutes, 10 seconds Uh ma'am uh congratulations on a very very healthy uh year ending for NRB. uh 50:17 50 minutes, 17 seconds if I may uh if we could uh shift slightly from the number part of it to uh see for the past 3 years from where 50:27 50 minutes, 27 seconds NRB was to how it looks today um it's been a it's been a drastic transformation what do you foresee the 50:35 50 minutes, 35 seconds company 3 years hence ma'am I mean if you could give a qualitative and what you would want NRB to seem or what what 50:44 50 minutes, 44 seconds what it you would want it to look like 3 years from now man. Thanks. 50:49 50 minutes, 49 seconds So as I mentioned in a 5year time frame we we would be around 2,500 crores. I did mention it as an aspirational goal 50:57 50 minutes, 57 seconds but to be honest more and more as we do our homework and we are seeing the business come in it is more and more becoming a concrete goal. So uh 51:07 51 minutes, 7 seconds definitely we see this number panning out 51:14 51 minutes, 14 seconds if we have strategic joint ventures that allow us to enter more import 51:21 51 minutes, 21 seconds substitution products in India which we are in discussion with uh all 51:28 51 minutes, 28 seconds over the world with some key players for uh bearings that are not really manufactured right Now in India because 51:36 51 minutes, 36 seconds with the BIS and the push of the government of India there's a huge opportunity and most of the multinationals they're selling this as 51:44 51 minutes, 44 seconds traded products uh because they cannot put capacity down wherein when they 51:52 51 minutes, 52 seconds already have excess capacity in some other part of the world but we are a company that can flexibly manufacture 52:00 52 minutes smaller volumes in a profitable way. So there's a huge opportunity to take this 52:07 52 minutes, 7 seconds 2500 crores in the next 5 years which as I said is an aspirational goal increasingly becoming a concretized goal to even more. 52:21 52 minutes, 21 seconds Fantastic. And then um see bearings again as you mentioned is a very specialized thing. I mean people like us 52:29 52 minutes, 29 seconds understand bearings to be a very commoditized product. So would would would you would you also go a step ahead 52:38 52 minutes, 38 seconds in uh maybe transforming NRB into a specialized fine engineering kind of a company? 52:45 52 minutes, 45 seconds Tell me more about what you mean exactly. 52:49 52 minutes, 49 seconds uh uh meaning that when you make a fine bearing I mean there is something which goes a little beyond the bearing 52:57 52 minutes, 57 seconds something which is attached to the bearing or something which which which pertains to the mechanism surrounding 53:04 53 minutes, 4 seconds the bearing. Now if you're talking about adjacent space, we already doing that. 53:09 53 minutes, 9 seconds For example, we make products that go along with bearings which other bearing producers don't make that makes the entire bearing more efficient and it 53:18 53 minutes, 18 seconds also makes it easier for our customer to buy it all. For example, for the tubular industry, NRB is one of the global leaders of a product called crank pin. 53:25 53 minutes, 25 seconds No other bearing companies made it. Some of them have started doing it only following us, but mostly they buy it out 53:33 53 minutes, 33 seconds or something. But we make it as a core in-house product because when you put the big end bearing with the crank pin 53:40 53 minutes, 40 seconds in the uh connecting rod application and the crankshaft and you get far more 53:49 53 minutes, 49 seconds high performance and less failure. So this is because a bearing company is making a product that a bearing company 53:56 53 minutes, 56 seconds doesn't generally make. Similarly, dumblers have to make a range of pins that they actually buy. for example from 54:04 54 minutes, 4 seconds random other companies that are from different different spaces saying that we want to buy all our high precision 54:10 54 minutes, 10 seconds products which are of varying caliber from NRB. So definitely the answer is yes to what you're asking. We're already 54:18 54 minutes, 18 seconds doing this and we'll do more and more of it. 54:21 54 minutes, 21 seconds Thank you. The next question is from the line of Samut Nakbar from Sadanu family office. Please go ahead. 54:32 54 minutes, 32 seconds Hello. Yes, please go ahead with your question. Yes. Am I audible? Yes. 54:38 54 minutes, 38 seconds Yeah. Yeah. Hi, congratulations ma'am for a a great year. So, uh I mean uh taking it forward from the previous participant only. I just had a couple of 54:46 54 minutes, 46 seconds questions. So u ma'am uh you have clearly explained how does the future look for us but right now being 54:54 54 minutes, 54 seconds conservative as well do you see any risk coming for us because we have been coming off a very prolonged period wherein we had a lot of headwinds 55:02 55 minutes, 2 seconds internally so do you see any risk coming in for us uh in the next 3 to four years uh which can derail our plan 55:11 55 minutes, 11 seconds I mean nothing beyond what other companies or the environment faces because we don't have any internal risk whatsoever. You know, we have completely 55:20 55 minutes, 20 seconds and totally free to grow as and how we want and we have me you know as a 55:27 55 minutes, 27 seconds significantly large probably you know uh owner and we have a board which is very 55:35 55 minutes, 35 seconds forwardlooking and I think that the world may have lots of challenges but I think we're in a better place to face 55:43 55 minutes, 43 seconds those challenges. We have a very very strong management team. So I think that 55:51 55 minutes, 51 seconds we should be able to navigate the challenges that the world throws. We also have a mindset that loves challenge 55:58 55 minutes, 58 seconds and a lot of resilence. A lot of resilence as you've noticed to spring back. 56:08 56 minutes, 8 seconds Thank you. The next question is from the line of Sakit Kapoor from Kapoor and Company. Please go ahead. 56:13 56 minutes, 13 seconds Yeah. No, sure ma'am. And thank you for the opportunity. Hope I'm audible. Yes, you are. 56:20 56 minutes, 20 seconds Yeah. Yeah. Ma'am, please in the backdrop of the current uh business environment and setups especially with 56:26 56 minutes, 26 seconds the type of uh shortages people are uh especially the equipment automotive 56:34 56 minutes, 34 seconds players are witnessing because of plastic and then the metal part and then the shipment issue. How are how is our 56:41 56 minutes, 41 seconds company as well as the product where we are in placed uh that that we may or may not be uh disturbed in terms of the 56:50 56 minutes, 50 seconds supply chain issues that automotive industry is currently uh facing. 56:57 56 minutes, 57 seconds We explained in the speech that we are in a better position than others to handle this and that's why our industry is optimized in this manner. 57:08 57 minutes, 8 seconds And then second question is ma'am secondly with with respect to the incremental volumes for for this current 57:16 57 minutes, 16 seconds year since you have mentioned that we are already running at optimum level so we are we anticipating any uh volume 57:23 57 minutes, 23 seconds growth uh for for for fi 26 2027 if you could just elaborate wherein uh what what should be mentioning in terms of the volume growth. 57:34 57 minutes, 34 seconds I already explained to you that our capacities have started coming in and we will be handling the market requirements. 57:47 57 minutes, 47 seconds Thank you ladies and gentlemen. That was the last question for today. I will now hand the conference over to management for closing comments. 57:58 57 minutes, 58 seconds Thank you so much. I really appreciate uh all the questions. They're extremely interesting and 58:06 58 minutes, 6 seconds have us thinking and energized and I also thank you for your patience. 58:14 58 minutes, 14 seconds Thank you. On behalf of NRB Bearings Limited, that concludes this conference. Thank you for joining us.