Q1 2027 Shilchar Technologies Ltd Earnings Call
Speaker #1: Thank you, Niro. Welcome, everyone. Good afternoon, and thanks for taking out the time to join us today in the Q1 FY27 earnings conference call of Shilchar Technologies Limited.
Speaker #1: The investor updates—including the investor presentation—have already been uploaded on the stock exchange and on the company website. To take us through today's results, we have with us from the management team: Mr. Alay Shah, Managing Director; and Mr. Prajesh Purohit, Chief Financial Officer.
Speaker #1: We will start with a brief opening remarks on the quarterly performance by Mr. Alay Shah, followed by a Q&A session. I would like to remind you that anything and everything that is said on this call represents any outlook for the future that can be construed as a forward-looking statement, must be viewed in conjunction with the risk and uncertainties that we face.
Speaker #1: These risks and uncertainties have been mentioned in our annual reports. Over to you, sir.
Speaker #2: Thank you, Sam. And good afternoon, everyone. And thank you for joining us today. Before we open the floor for questions, I would like to walk you through our performance for the first quarter, 2027, and share some updates on our operations and ongoing projects.
Speaker #1: Please report everyone from operational.
Speaker #3: Sorry, can you interrupt you? Your voice is breaking.
Speaker #2: For Q1 FY27, Shilchar Technologies reported revenue for operations of Rs. 134.60 crores, and EBITDA for the quarter stood at Rs. 29.23 crores. The profit after tax stood at Rs.
Speaker #2: 20.86 crores. As you can see, the financial year 2027 has commenced on a softer note, the quarter was shaped largely by the continuing effect of the crisis in West Asia, which affected our Middle East exports directly, and through a sudden increase of price for certain raw materials which affected our domestic businesses.
Speaker #2: First on the exports front, the recovery has taken longer than we had originally expected, at the time of our Q4 call. Preliminary on account of a persistent increase in shipping costs through the first quarter.
Speaker #2: Container costs have risen between 3% to 5% for certain geographies, as compared to levels before the crisis. This has materially increased the landed cost of our customers and has led to a slower pickup in export dispatches.
Speaker #2: The increase in shipping costs is not limited to the Middle East, and the costs to North America have also risen significantly on account of ongoing geopolitical uncertainty.
Speaker #2: I would like to emphasize that this is a cost and logistic issue, and not a demand issue. And while most of our export terms are ex-works, there is a significant increase in the cost of procurement for our customers, and hence the deferment in orders.
Speaker #2: Underlying customer demand in both regions remains firm, but customers are currently lifting the bare minimum volume they need. On the domestic front, passing on the sudden escalation in commodity price for existing orders arising from the West Asia crisis has taken longer than anticipated.
Speaker #2: Negotiations with customers extended through much of the quarter, which resulted in slower dispatches in Q1. The situation was more severe in April and May and has eased off in recent months.
Speaker #2: The profitability margins for the quarter reflect both.
Speaker #3: Sir, sorry, to interrupt you. Again, we are losing your audio a bit. Can you repeat the last few lines?
Speaker #2: Okay. On the domestic front, passing on the sudden escalation in commodity price for existing orders arising from the West Asia crisis has taken longer than anticipated.
Speaker #2: Negotiations with customers extended through much of the quarter, which resulted in slower dispatches in Q1. The situation was more severe in April and May and has eased off in recent months.
Speaker #2: Profitability margins for the quarter reflect both of these factors, a lower export mix and partial pass-through of higher raw material prices. Looking ahead, we expect overall business momentum to be notably better in Q2 compared to the Q1.
Speaker #2: While exports may continue to see some impact from elevated shipping costs, if the situation in West Asia remains unchanged. We have better visibility on domestic side, which should support our top line.
Speaker #2: Our capex project, our expansion phase 3, which will add about 6,500 MBA capacity, remains on track for commissioning in April 2027. Civil Foundation work has been completed, PEB erection, and utility infrastructure work are progressing well.
Speaker #2: And all equipment has been ordered. Our annual outlook remains unchanged for financial year 2027, and we expect to operate our existing 7,500 MBA capacity at almost full utilization.
Speaker #2: And the new facility will drive the next leg of growth for financial 2028 onwards. We remain on track with our revenue ambition for the year, although the geographic mix may change if the situation in West Asia persists.
Speaker #2: Demand across our key domestic and export markets remains strong, and our overall business outlook continues to be robust. Thanking you all, and we can now, you know, open the floor for questions.
Speaker #3: Thank you very much. We'll now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchstone telephone.
Speaker #3: If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets, while asking a question.
Speaker #3: Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, you may press star and 1. To ask a question, the first question is from the line of Vinyl Shah from the Laland Bocha.
Speaker #3: Please go ahead.
Speaker #4: Will actually thank you for taking my question. Sir, I just wanted to know, like, can you.
Speaker #3: Vinyl, sorry to interrupt. Can you speak through the handset, please?
Speaker #4: Sure. Hello. Yeah. I management quantify the revenue loss for Q1, FY 2027 due to the shipment delays? And also, what is our revenue run rate for this year?
Speaker #4: You know, like, we are well into this year, so we would like to revisit our guidance of if the management would like to revisit their guidance of 800 crores of revenue.
Speaker #2: No, so like the projected
Speaker #3: Sir, sorry to interrupt you. Your voice is breaking terribly. Let me reconnect your line. Participants, please stay connected. Participants, please stay connected while we reach on the management back to the call.
Speaker #3: Sir, go ahead. You're reconnected.
Speaker #2: Can you hear me now?
Speaker #3: Yes, sir.
Speaker #2: Okay. You know, we are on the revenue.
Speaker #3: Ladies and gentlemen, thank you for your patience. Sir, please go ahead.
Speaker #2: Yeah. Sorry for the, I think there was some problem with the network. But like I said, once again, I'm repeating that for financial year 2027, we are on track with, you know, whatever we have targeted in terms of the top line.
Speaker #2: And we don't anticipate any problem in achieving that.
Speaker #4: No. And also, if you could quantify the revenue loss for this quarter due to the shipment delays.
Speaker #2: I mean, I would not like to put it as a revenue loss, but we could have done maybe around, you know, 30, 35 crore rupees worth of revenue.
Speaker #2: If this, you know, crisis would not have taken place.
Speaker #4: Okay. And sir, my second question is related to our margins. So, could you comment on the price revision done in this quarter and how much raw material cost increase have we been able to pass on to the customers?
Speaker #4: Because we see significant pressure on gross margins for the last two quarters.
Speaker #2: So, whatever, you know, orders we had during Q1, which were to be executed in Q4 and, I mean, whatever orders which we had on hand for which were to be executed in Q4 and Q1, we could pass on, you know, probably I would say about 50 to 60 percent of the price rise to the customer.
Speaker #2: But whatever we are executing now is all at the current market price. So, we don't expect any, you know, problem in achieving the EBITDA.
Speaker #4: Okay, sir. Thank you very much. I don't like the queue.
Speaker #3: Thank you. A request to all the participants, kindly limit yourself to two questions per participant. Next question is from the line of Adesh Gosalya from Spark Capital.
Speaker #3: Please go ahead.
Speaker #2: Yes. I hope I'm audible. And thank you for the opportunity. So, my first question, the geographical split, if you can just how much was the revenue from exports and going ahead, the visibility.
Speaker #3: Adesh, sorry to interrupt you. We lost your audio in between.
Speaker #2: So, am I audible now?
Speaker #3: Yes. Keep it just as it is. Go ahead.
Speaker #2: Yeah. So, I was asking about the geographic split in our revenue. Like, how much was from the domestic market and from the exports? Firstly, and going ahead, for the next FY 2027 or let's say for the next one or two quarters, what is the visibility from order book perspective we have right now?
Speaker #2: Regarding the geographic split, like, how much is from the export markets and how much is from the domestic market? And if you can share the order book number also.
Speaker #2: We have an order book of almost very close to 500 crores as of today. This is over and above whatever we have, you know, already shipped out till yesterday.
Speaker #2: So, we have a very strong order book. And a lot of new inquiries are on hand for which we are negotiating. So, we expect a, you know, more orders in coming days.
Speaker #2: Like I said in my opening remark, the geographical mix may change depending on the, you know, present situation. So, if the, you know, Middle East situation improves, and the shipping cost comes down, I think we will be back to our normal export what we were doing earlier.
Speaker #2: Okay, but as you said, the order book right now stands at around 500 crores. So, if you can share that, what is the split of that order book between domestic and exports?
Speaker #4: I would say it's almost like
Speaker #2: a, you know, 30 percent export and 70 percent domestic. As of now. And as you are saying, the geographic mix going ahead is going to shift.
Speaker #2: So, what are the new markets that you are targeting? And how are you looking at it? Or whether now for the, like, as of now, we are only focusing on the domestic markets.
Speaker #2: Yes. So, I mean, overall, we export, you know, everywhere. North America, Middle East, some what in Africa also. But to compensate, you know, the problem, we are concentrating on the domestic market and getting more orders from the local customers.
Speaker #3: Thank you. Adesh, I'll request to come back for a follow-up question. Participants, kindly limit yourself to two questions per participant and rejoin for a follow-up.
Speaker #3: Next question is from the line of Jithin Parmar from Aurum Capital. Please go ahead.
Speaker #4: Yeah. Good afternoon. And first of all, I would like to acknowledge the management that, you know, post the change in Fortunes in capital goods and transformers, the management has performed exceedingly well and really took advantage of the cycle.
Speaker #4: My question is specific to margins. This you have maintained the annual guidance for revenue. What about margins? Are we still looking at kind of the 30 percent margins?
Speaker #4: EBITDA margins which we have been doing historically? Or there will be some hit on that? And secondly, if you can throw some more color on the expansion we are doing, and we are going into 220 KV also.
Speaker #4: So, will that be lower margin business or that we can expect to, you know, have the same margins there too?
Speaker #2: So, you know, like I said earlier, if situation becomes normal and if our exports comes back online as per previous years, we are confident that we'll be able to maintain the same profitability.
Speaker #2: What we have done in previous years. But in case if that does not happen and if we are more relied on the local market, then there will be a slight dip in that.
Speaker #2: So, it depends, you know, going forward how the geopolitical situation I mean, takes the shape. And for project, new project, everything is on track.
Speaker #2: Construction is going on in full swing. All the machinery, everything, the orders have been placed. And we are all set to start the production from April 2027.
Speaker #2: So, we don't anticipate any delay matter of fact. We may complete the project slightly earlier than what we are you know, we have projected.
Speaker #4: And initially, you know, being new in the market, you know, our margins will be lower, mainly to, you know, create the references and to penetrate into the market.
Speaker #4: But going forward, again, we are going to have the same policy where we won't be able to we won't be doing any business with any state utility companies.
Speaker #4: And we will be concentrating more on the export market once we have enough reference within the domestic market. So, initially, there will be a low profitability, but going forward, then again, we anticipate better margins.
Speaker #4: Okay. So, my final question. So, we are moving slightly in higher class of transformers and any future plans, I know this expansion is underway.
Speaker #4: Obviously, I think it will be through internal accruals. Any further plans for because we have a lot of land in Gavasat. Any thought has been given on, you know, what next we want to do after this expansion comes in place?
Speaker #2: Yeah. So, we have, you know, purchased an additional about four and a half acre of land. And next to our land, it's a, you know, common wall.
Speaker #2: So, we are planning for further expansion in that particular area. I would not like to say anything on the type of product or type of, you know, KV class or the capacity.
Speaker #2: But we are working on that. And definitely, you know, once this expansion is completed or is near completion, we will be planning something additional.
Speaker #4: Great. Thank you so much. If I have further questions, I'll come in queue. Thank you.
Speaker #2: Thank you.
Speaker #3: Thank you. Participants, you may press star and one to ask a question. Next question is from the line of Aman Soni from 7 Alpha Investors.
Speaker #3: Please go ahead.
Speaker #4: Hello. Good afternoon.
Speaker #3: Aman, your voice is breaking. Can you speak a little louder, please?
Speaker #4: I'm audible now.
Speaker #3: Yes.
Speaker #4: Yes, sir. Sir, in our last 26 annual report, which was released on mid of July, highlighted a recovery from April onwards and we were very positive in our words for Q1.
Speaker #4: Which was already gone by then. While the recent quarter presentation indicates that the recovery in the export has taken longer than expected, due to persistently higher shipping costs during Q1.
Speaker #4: Could management help to quantify the impact of West Asia crisis and elevated freight costs on export revenue in FY27 and if it was like that, why we pictured it differently in annual report?
Speaker #2: I'm sorry. I'm not able to, you know, understand your question properly. But, you know, all our export orders 90 percent of them are based on exports.
Speaker #2: So, the shipping cost is not on our account. And if it increases, we don't pay anything from our side or it does not reduce our margin.
Speaker #2: But at the same time, from customer point of view, when they buy our product and if they have to pay higher shipping costs, it is costly to them.
Speaker #2: So, they right now and because of this, you know, warlike situation in Middle East, all the customers are going very cautiously. And whatever they need, in absolute term, only that much they are buying.
Speaker #2: And they are not stocking anything. So, of course, this has affected our business. And nobody expected that this, you know, Middle East crisis will go on for very long period.
Speaker #2: But it has. So, that has continued in the, you know, affecting our Q1. And we are hopeful that, you know, this ends soon and everything becomes normal.
Speaker #3: Thank you. Aman, I'll request to come back for a follow-up. Next question is from the line of Salil Desai from Silas Investment Managers. Please go ahead.
Speaker #4: Hello, Ajay Bhai. Sir, quick question on capacity utilization. So, where are we on this current journey to full utilization right now? So, what would have been, let's say, quarter one average utilization?
Speaker #2: So, like I said in my opening remarks, I mean, we are planning to utilize very close to 100 percent of our capacity for year 26, 27.
Speaker #4: Right. So, I was just asking if Q1 how far are you from 100 percent? Are you at 80, 90, 100 already?
Speaker #2: No, in Q1, I think we did only around 60, 65 percent of the capacity utilization.
Speaker #4: Okay. Understood. Great. And I just wanted to, you know, follow up on the question from the previous participant is that your annual report mentioned that things were normalizing, right, which was released in July, the annual report.
Speaker #4: But this quarter seems to have again been a little unexpected from dispatcher's point of view. So, what is the difference in what kind of changed what you're thinking would be the situation when you're writing the annual report versus what the reality turned out to be?
Speaker #2: Actually, annual report was prepared somewhere in, you know, early June. And then it went, you know, for the printing. And was circulated in July.
Speaker #2: But in June, we felt that this, you know, Middle East crisis will get over soon. There were, you know, few announcements by the, you know, concerned parties, concerned countries that, you know, the war is getting over and MOUs are being signed.
Speaker #2: So, that was the reason we said that. But unfortunately, that did not happen.
Speaker #4: Yeah. I think all of us were taken by surprise with that, right? That's all. So, thank you so much.
Speaker #2: All right. Thank you.
Speaker #3: Thank you. Next question is from the line of Abi Jain from AJ Capital. Please go ahead.
Speaker #5: Hi. Good afternoon.
Speaker #4: Hello.
Speaker #3: Abi Jain.
Speaker #4: Yeah. Hello.
Speaker #3: Yes, go ahead.
Speaker #4: So, my question is that last time around, I had checked with you that, you know, we were not able to ship our product from Middle East to domestic market because there was a lot of demand in domestic market.
Speaker #4: And you had said that, you know, the orders were already in the pipeline and they were already placed. And it's very difficult to do that within a quarter.
Speaker #4: But when we were starting in April, right, we already anticipated and we were everyone was seeing that this war is going on. So, just want to understand that why did we not proactively try to match that demand that was there domestically?
Speaker #4: And why did we still harbor on getting orders from Middle East? Because I see that there are two fronts on which we have lost out in this quarter.
Speaker #4: One is definitely that our capacities have been underutilized. So, that is A. And secondly, obviously, when we ship to domestic market, the margin takes a hit.
Speaker #4: But in our case, both have happened, right? Margins have also taken a hit. And we are underutilized. I mean, we were not able to ship to our potential, we were not able to utilize our capacity to a maximum in Q1.
Speaker #4: Can you help me understand that why didn't management not proactively, you know, ship the demand or ship the order base from Middle Eastern markets to domestic markets?
Speaker #4: Because if you look at your other competitors who are focused on domestic markets, they've been thriving. The Q1 numbers have been thriving. So, just want to understand.
Speaker #4: We took a margin hit also. And we also had a reduced optic of our orders in this quarter.
Speaker #2: Yeah. So, I mean, we were anticipating that from April onwards, the shipping will take place in the normal way. And actually, it started in a normal way in April.
Speaker #2: But then suddenly, you know, from end of April and from May, the shipping cost increased, you know, drastically. And that, you know, halted our exports.
Speaker #2: And these are the transformer what we make are all custom-made transformers. So, immediately, I mean, we took a proactive action. And, you know, shifted our focus from export to domestic.
Speaker #2: But then it takes time to get the orders. And then it takes time to, you know, execute. So, that has already started. And we are seeing that in Q2 now.
Speaker #2: So, I mean, it's not some, you know, off-the-shelf product where we ship the product, we get the order, and immediately we dispatch. I mean, these are all custom-made products.
Speaker #2: So, it takes minimum a lead time of about 10 to 12 weeks or even 16 weeks. But we did take a very prompt action in shifting the, you know, our focus from export to domestic.
Speaker #4: Yeah. No, that was the discussion last quarter also. Seeing the things that were on the annual, I think it would have been better to maximize our capacity utilization.
Speaker #4: But anyway, all right. Yeah. All the rest for the future. Thank you.
Speaker #2: Thank you.
Speaker #3: Thank you. Participants, can you limit yourself to two questions per participant? Next question is from the line of Aditya Dayal from Ziva Consultants. Please go ahead.
Speaker #5: I just have one question. This capacity that is going to come in April 27, will it take more time for the product prototyping or all those things are included so that the revenue will be visible from the new capacity after April 27?
Speaker #2: So, I have earlier mentioned that in my earlier call also that once the, you know, facility is ready for the production, we will start producing transformers what we are doing right now.
Speaker #2: And then slowly, you know, we will start not slowly, but aggressively we'll start marketing the bigger size of the product but, of course, the, you know, audit by customer, the approval process, the type testing, all those takes time.
Speaker #2: So, actually, the larger capacity transformer orders will come a little bit later. But production capacity will be utilized by, you know, producing the existing range of transformers.
Speaker #5: Sir, any time frame like when the prototyping done?
Speaker #2: Yeah. Once we start the production, it will be around three to four months.
Speaker #5: Okay. And currently, have you received any orders for the bigger or any request for like are they inquiring about the bigger transformers?
Speaker #2: Yes. We are already discussing with few customers on the bigger transfer.
Speaker #5: Okay. Thank you.
Speaker #3: Thank you. Next question is from the line of Komal Iyer. From NBG Investments, please go ahead.
Speaker #6: Good evening, sir. Do you think there is a pressure on the domestic transformer prices since the exports are not happening? So, are you experiencing a pressure in the domestic transformer market in the lower QE?
Speaker #2: No, there is no pressure of lower margins or anything on the domestic market. Domestic market is, you know, is normal what it used to be, you know, two years back and last year.
Speaker #2: And same thing is happening right now also. There is no change.
Speaker #6: Okay. So, what kind of product mix are you looking at for 800 crores? You said revenue. How much will be domestic and how much will be export?
Speaker #2: It's difficult to say right now. But as of today, based on current situation, the domestic sales will be higher than export. But in case situation change, then our focus will also shift from domestic to export.
Speaker #6: Okay.
Speaker #3: Komal, do you have any follow-up question? Thank you. Participants, do you may press star and one to ask a question? Next question is from the line of Sahil Mehta.
Speaker #3: Individual investor, please go ahead.
Speaker #4: Hello. Thank you for taking my question. I wanted to know, I wanted to know the revenue breakup between exports and domestic for this quarter and for quarter one 2026.
Speaker #2: I think I'll ask my CFO to send it to you if you just, you know, contact us by email. We'll provide this details to you.
Speaker #4: Okay, sir. Thank you. I have one more question. I want to ask about the inventory days and receivable days. For quarter one 27, again, those information
Speaker #2: we can provide you by email.
Speaker #4: Okay, sir. Thank you so much. All the best.
Speaker #3: Thank you. Next question is from the line of Ritesh Khanna. Individual investor, please go ahead.
Speaker #2: Yeah. Hello. Thanks for taking my question. So, my question is, sir, what gives you the confidence that we won't lose the export revenue service the requirements from our clients in this I mean, demand, let's say, value?
Speaker #2: That would be my first question.
Speaker #4: Yeah. So, we are
Speaker #2: very, very confident because it's not that, you know, our product is expensive or the customer has some, you know, cheaper source, you know, somewhere else.
Speaker #2: Because if the situation becomes normal, we are very competitive. Customer prefers us because of our quality and service and our shorter lead time. So, once the situation becomes normal, we will get back that business, for sure.
Speaker #2: And it's not that, it's not that customer is buying right now from somewhere else. They are just not, you know, purchasing and, you know, taking a very cautious step because of a lot of uncertainty.
Speaker #4: Okay. Sir, my second question would be, on a consolidated EBITDA basis, what would be the margin difference between domestic and international clientele?
Speaker #2: Again, it's difficult to say because, you know, our product is based on the project to project. But I would say the difference is about 10 percent.
Speaker #4: Oh, okay.
Speaker #2: Yeah.
Speaker #4: Okay. So, now that Q1 is behind us, so I wanted to understand what has the optic been for the last one and a half months or so.
Speaker #5: I cannot tell
Speaker #2: you that figure, but like I said, that, you know, we are on track to achieve the target what we have projected for the I mean, year 27, 28.
Speaker #2: And we will be we will be, you know, mostly utilizing the 100 percent capacity.
Speaker #4: Okay, sir. Thanks for taking my question, sir. That would be all.
Speaker #3: Thank you. Next follow-up question is from the line of Adesh Gosalia from Spark Capital Advisors. Please go ahead.
Speaker #4: Yeah. Thank you for the opportunity again. Just to continue my previous question that I was talking about regarding the, as you said, the order book right now stands at around 500 crores.
Speaker #4: And it is 70 percent domestic and 30 percent exports. So, firstly, what is the visibility like execution timeline you have? Like, this order book would order book would be executed over how long?
Speaker #4: And the kind of margin that you are looking since it is more domestic concentrated? So, only talking about the orders that you have in hand, what kind of margin profile do they hold?
Speaker #2: So, these orders are mostly for Q2, Q3, and some of them are for Q4 also. And like I said earlier, we are expecting more orders which will be again for Q3 and Q4.
Speaker #2: We are fully booked for Q2. And like I said earlier, about 30 percent is export and 70 percent is domestic. But if situation becomes normal, we will get more orders for the export also.
Speaker #4: No, no, sir. I was asking about the order book that you have in hand. So, what is the margin that you that you have?
Speaker #4: Like, what is the margin visibility only on the 500 crore order book? Since it is more domestic inclined, so there must be some sense on the, you know, the pricing that you have quoted and the margins that you will be generating because since our previous usual mix is 50-50 between domestic and export.
Speaker #4: So, that is the reason our margins have been so high. But now, since the mix is changing, so there must be some visibility you have on the margin front.
Speaker #2: Yeah. We do have visibility, but I mean, it is very difficult to tell you in terms of percentage. But these orders are at, you know, current raw material prices.
Speaker #2: So, they are good orders. And having a quite good margin, reasonable margin.
Speaker #4: Okay. So, should we take that Q1 margins would be continuing for Q2, Q3, or they will be higher than that?
Speaker #2: Yeah. It will be higher. I mean, we hope to achieve more EBITDA.
Speaker #4: Okay. Okay. And on the production front, how what what was the utilization of the production? Like, in some sense, you can quantify it, how much did we produce in Q1?
Speaker #2: I think I just said in the earlier, you know, one of the question that we have utilized about 60, 65 percent of the production capacity for Q1.
Speaker #3: Thank you. Adesh, I'll request to come back for a follow-up. Participants, please limit yourself to two questions per participant and rejoin. The next question is from the line of Harsh Singh from Samisha Capital.
Speaker #3: Please go ahead.
Speaker #4: Company audible?
Speaker #3: Yes, go ahead.
Speaker #4: Okay. So, thank you for taking my question. So, firstly, on the export side, sir, is it possible for you to tell us, firstly, beyond Middle East, have you seen any issue in exporting the other geographies that you export to?
Speaker #2: Sorry, can you repeat your question again, please?
Speaker #4: Sure, sure, sure. So, I was just asking, beyond Middle East, have you seen any issues in exporting to any other geographies that you export to?
Speaker #4: And if you could just give us the percentage breakdown of exports across geographies.
Speaker #2: No. Like I said earlier, I mean, you know, the overall shipping cost has gone up for all the geographies. So, we do export to, you know, North America.
Speaker #2: We do export to Africa, and Middle East. And because of the shipping cost, all overall, everything is, you know, affected.
Speaker #4: Understood. No other questions from my side. Thank you for the clarity.
Speaker #3: Thank you. Next question is from the line of Abdul Fateh from True Beacon Investments. Please go ahead.
Speaker #5: Hi. Good afternoon. I'm audible? Hello.
Speaker #3: Sir, this is a bit of background noise from your line.
Speaker #5: Can you hear me now?
Speaker #3: Yes, go ahead.
Speaker #5: Yeah. So, I was just looking at your order book at 500 crores. Assuming that if you're not able to service these orders because of the shipping costs, what are the chances that these orders may get canceled and these guys may have an alternate arrangement to get it from somewhere else?
Speaker #2: Like I said that, you know, the out of 500, almost 70 percent is local and 30 percent is export. And no orders are getting canceled.
Speaker #2: I mean, they are just getting pushed out. So, delivery may delay, but otherwise, there is no cancellation. And since our products are custom-based products, I mean, cancellation does not take place.
Speaker #5: Okay. Thank you. That is my question. Thank you so much.
Speaker #3: Thank you. Next question is from the line of Rakesh. And Visual Investor, please go ahead.
Speaker #5: Thank you for the opportunity. Sir, just I wanted to understand this margin thing, right? Just I wanted to understand how it exactly it works.
Speaker #5: Some of the geo orders, got canceled, that is the reason we went down such a drastically. Or is it because of the raw material?
Speaker #5: For the geo customer, I wanted to understand how exactly it will work out.
Speaker #2: From which customer? Sorry, I'm not able to understand.
Speaker #5: Geo customers means non-India customers. Right? Just I wanted to understand there was a huge dip in the margin, right? Why it went down so much?
Speaker #5: Because of the order cancellation? Or is it because of the raw material prices went up?
Speaker #2: No, it's because the shippings have not taken place due to the higher shipping cost.
Speaker #5: Okay. So, it means that order got canceled.
Speaker #2: No, they are not canceled. They are just pushed out.
Speaker #5: Okay. Pushed out in the sense that it will be resent back? Or how is that, sir? Just.
Speaker #2: No, no. The delay in delivery date. So, instead of now, you know, June, they want they'll take delivery in July or August, something like that.
Speaker #5: Okay. Okay, sir. Thank you.
Speaker #3: Thank you. Next follow-up question is from the line of Vinil Shah from Dalal and Rocha. Please go ahead.
Speaker #4: Yeah. Thank you for taking my question again. Sir, I just wanted to understand if my understanding is correct here. You explained that the order book of 500 crores will be immediately executed across Q2 and Q3.
Speaker #4: So, even if the situation improves, the incremental new orders which will get from export front will be executed in Q4 only. Am I right in the understanding here, sir?
Speaker #2: No, it doesn't work that way. Actually, I said that, you know, the 500 crores orders what we have, is for Q2, Q3, and some of the orders are for Q4 also.
Speaker #2: And this also includes the export orders. And if we get more export orders, they will be executed as per the customer's delivery requirement.
Speaker #4: So, we would already have the current order timelines as well for the domestic front.
Speaker #2: Yeah. I mean, but we we have ability to manage if we get the orders.
Speaker #4: But, sir, you already alluded that we are already working at almost 100 percent capacity for Q2. That's why this is the confusion I'm getting.
Speaker #4: Help me out here.
Speaker #2: No, it's not a confusion. These are the, you know, expertise what we have where we can execute if we get, you know, more orders at, you know, higher profit margin.
Speaker #4: Okay, sir. Thank you very much.
Speaker #3: Thank you very much. Ladies and gentlemen, as there are no further questions, on behalf of Shilchar Technologies Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.
Speaker #3: Thank you.
