Q1 2027 MM Forgings Ltd Earnings Call

August 17, 2026

Speaker #1: Ladies and gentlemen, good day and welcome to the Forgings Q1 FY27 earnings conference call, hosted by 361 Capital Market Private Limited. As a reminder, all participant lines will be in listen-only mode.

Operator: Ladies and gentlemen, good day, and welcome to MM Forgings Limited Q1 FY27 earnings conference call, hosted by 361 Capital Market Private Limited. As a 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 during this conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Dinesh Kumar from 361 Capital. Thank you, and over to you, sir.

Speaker #1: There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touchtone phone.

Speaker #1: Please note that this conference is being recorded. I now hand the conference over to Mr. Dinesh Kumar from 361 Capital. Thank you, and over to you, sir.

Speaker #2: Thank you, ma'am. Welcome to the MM Forgings Q1 and Q2 FY27 post-results conference call. From the management side, we have with us today Mr. Vidyasagar Krishan, Chairman and Managing Director, and Mr. Raghunathan, Chief Financial Officer.

Dinesh Kumar: Thanks, ma'am. Welcome to MM Forgings Limited Q1 FY27 post-results conference call. From the management side, we have with us today Mr. Vidyasagar Krishnan, Chairman and Managing Director, and Mr. Raghunathan, Chief Financial Officer. I will now hand over the call to Mr. Vidyasagar Krishnan for the opening remarks, to be followed by question and answer session. Over to you, sir.

Speaker #2: I will now hand over the call to Mr. Vidyasagar Krishnan for the opening remarks, to be followed by the question and answer session. Krishnan, over to you, sir.

Speaker #3: Good afternoon, everyone. Thank you all for joining us on Forgings' Q1 FY27 results call. We have seen considerable improvement in the markets as far as Q1 is concerned, and we see the same optimism continuing through the rest of fiscal 2027.

Vidyashankar Krishnan: Good afternoon, everyone. Thank you all for joining us on MM Forgings' Q1 FY27 results call. Basically, we've seen considerable improvement in the markets as far as Q1 is concerned, and we see the same optimism going through the rest of fiscal 2027 and going into calendar 2027 as well. With strong momentum from both domestic as well as export markets, particularly the USA. We've seen growth in the US market, and also the CV market, the CV tractor, and passenger car market in India are all running pretty hot. As a result, MM Forgings has posted a total sales of INR 427 crores as against INR 369 crores for the corresponding period in the previous year. Our EBITDA stands at 82% gross, and INR 75 crores net of other income. At 18% net of other income, as against 16%, sorry, 19-odd percent considering other income as well.

Speaker #3: And going into calendar '27 as well, with strong momentum from both domestic as well as export markets—particularly the USA. We've seen growth in the US market, and also the CV market. The CV, tractor, and task car markets in India are all running pretty hot.

Speaker #3: As a result, your forgings has posted a total sales of ₹427 crore, as against ₹369 crore for the corresponding period in the previous year.

Speaker #3: Our EBITDA stands at 82% gross, and 75, 82 crores gross, sorry, and 75 crores net of other income. At 18% net of other income, as against 16%, sorry, 19 odd percent, considering other income as well.

Speaker #3: Excluding other income, EBITDA stands at 18%. Revenue growth has been almost 16%. EBITDA has grown by the same 16%, and PBT has grown by 30%.

Vidyashankar Krishnan: Excluding other income, EBITDA stands at 18%. Revenue growth has been almost 16%. EBITDA has grown by the same 16%, and PBT has grown by 30%. All this is excluding the sale of assets. We have sold land in the Oragadam area of Chennai. We have sold and realized INR 60 crores as net profit, INR 58 crores net of taxes, INR 64 crores gross. That is the profit on sale of asset, not gross. Profit on sale of the asset. All that has not been factored into these EBITDA numbers, naturally, being one-time gains. Domestic sales stands at 63.5% and exports at 36.5%, as against 61% and 39% in the corresponding period last year. India accounts for 63.5%, US 18%, South America 4%, Europe 14%, and others, about 1% of today's sales breakup. Commercial vehicle stands at 71%, passenger car 14%, and agri and off-highway 14% of overall sales. Balance 1% is others.

Speaker #3: All this is excluding the sale of assets. We have sold land in the Oregadam area of Chennai. We have recorded an unrealized ₹60 crore as net profit.

Speaker #3: ₹58 crores net of taxes, ₹64 crores gross. That's the profit on sale of assets, not gross. Profit on sale of the assets. All that has not been factored into these EBITDA numbers, naturally, being one-time gains.

Speaker #3: Domestic sales stands at 63 and a half percent, and exports at 36 and a half, as against 61 and 39 in the corresponding period, the last year.

Speaker #3: India accounts for 63.5%, US 18%, South America 4%, Europe 14%, and others about 1% of today's sales breakup. Commercial vehicles stand at 71%, passenger cars 14%, and Agri and off-highway 14% of overall sales.

Speaker #3: Balance 1% is others. 67% is machined, 33% is directly forged. Our heavy forgings constitute 42% of our sales, as against 43% in the previous year under reference.

Vidyashankar Krishnan: 67% is machined, 33% is directly forged. Our heavy forgings constitute 42% of our sales, as against 43% in the previous year under reference. Sales per ton has gone up from INR 193,000 to INR 202,000, meaning INR 2.02 lakhs, versus INR 1.93 lakhs in the previous quarter. So these are some of the brief numbers that we have prepared for you. We have this as a PPT that will be mailed out to all of you by end of this meeting. With these opening remarks, I would like to throw open the floor for questions, and would be happy to answer whatever I can in the best possible time.

Speaker #3: Sales per ton have gone up from 193,000 to 202,000, meaning 2.02 lakhs versus 1.93 lakhs in the previous quarter. So, these are some of the brief numbers that we have prepared for you.

Speaker #3: We have this as a PPT that will be mailed out to all of you by the end of this meeting. So, with these opening remarks, I would like to throw open the floor for questions and would be happy to answer whatever I can in the best possible time.

Speaker #1: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may please press star and one on their touch-tone telephone.

Vidyashankar Krishnan: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may please press star and one on their touchtone 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 question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Mumuksh from Anand Rathi Institutional Equities. Please proceed with your question.

Operator: Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may please press star and one on their touchtone 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 question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Mumuksh from Anand Rathi Institutional Equities. Please proceed with your question.

Speaker #1: 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 question.

Speaker #1: Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question is from the line of Mumuksh from Anand Rathi Institutional Equities.

Speaker #1: Please proceed with your question.

Speaker #2: Yeah, thank you, sir, for the opportunity, and congratulations on a good set of results. Firstly, sir, we have seen good growth coming back in the first quarter.

[Analyst] (Anand Rathi Institutional Equities): Yeah. Thank you, sir, for the opportunity, and congrats on a good set of results. Firstly, sir, we have seen a good growth coming back in Q1 quarter. Just if you can give a view for the full year, what kind of a growth we expect in the domestic and exports market, and particularly for the US market. Also I think very interestingly this time you mentioned a very good mix of machining in the quarter. So what led to the notable jump in the machining mix?

Speaker #2: Just if you can give a view for the full year, what kind of growth we expect in the domestic and exports market, and particularly for the US market.

Speaker #2: And also, I think, very interestingly, this time you mentioned a very good mix of machining in the quarter. So, what led to the notable jump in the machining mix?

Speaker #1: Hello, sir. Are we there?

[Analyst] (Anand Rathi Institutional Equities): Hello, sir. Are you there?

Operator: Hello, sir. Are you there?

Speaker #3: Oh, yeah, sorry. I was muted. I muted the phone. So, we did about 1,600 crores last year. We can expect the same 18-odd percent growth for this year also.

Vidyashankar Krishnan: Yeah. Sorry, I was muted. I muted the phone. We did about INR 1,600 crores last year. We can expect the same 18-odd percent growth for this year also. So we should be looking at turnover in the region of around INR 1,800 to INR 1,900 crores. Regarding machining mix, a lot of money has been invested by the company in the last three years in machining, and that has led to a higher machining mix as a percentage of sales.

Speaker #3: So, we should be looking at turnover in the region of around ₹1,800 to ₹1,900 crores. Regarding machining mix, a lot of money has been invested by the company in the last three years in machining, and that has led to a higher machining mix as a percentage of sales.

Speaker #2: And just on the machining mix, should this current run rate of 67% continue for the rest of the year, sir?

[Analyst] (Anand Rathi Institutional Equities): Just on the machining mix, should this current run rate of 67% continue for the rest of the year, sir?

Speaker #3: Yeah, I think it should hover in the 65 to 68 range.

Vidyashankar Krishnan: Yeah. I think it should hover in the 65% to 68% range.

Speaker #2: Got it. So, sir, also, I think this quarter, particularly, gross margin has seen a notable improvement sequentially—almost more than 350 to 370 bps.

[Analyst] (Anand Rathi Institutional Equities): Got it. So sir, also, I think this quarter, particularly gross margin, I have seen a notable improvement sequentially on almost more than 350 bps. Is it part of the reason being a better machining mix and exports mix, sir?

Speaker #2: So, is part of the reason due to a better machining mix and exports mix, sir?

Speaker #3: We've heard, yes, we've had overall realization go up, Mumuksh, this quarter. So, that would definitely result in better gross margin.

Vidyashankar Krishnan: Yes, we have had overall realization go up, Mumuksh, this quarter. So that would definitely result in a better gross margin.

Speaker #2: Got it. And just on the employee and other expenses, which had increased Q1 over Q4—any reason for the increase? And how do you see the run rate for those expenses, sir?

[Analyst] (Anand Rathi Institutional Equities): Got it. And just on the employee and other expenses, which had increased Q-on-Q. Any reason for the increase? And how do you see the run rate for those expenses, sir?

Speaker #3: The increase has been steep in Q1, largely because in the reference period last quarter, we had not given an increment, and that was done only in the subsequent quarter.

Vidyashankar Krishnan: The increase has been steep in Q1, largely because last quarter, the period under reference, we had not given an increment, and that was done only in the subsequent quarter. So this quarter, effectively, at this time, we had given increment in first quarter itself, so right from 1 April. So that is one reason why there is a significant increase in personal cost, relatively speaking. Plus, we also added some numbers, but overall, now numbers and increments increases have stabilized. So right through the year, these kind of numbers should hold.

Speaker #3: So this quarter, effectively, at this time, we had given the increment in the first quarter itself—so right from 1st of April. That is one reason why there is a significant increase in personnel cost, relatively speaking.

Speaker #3: Plus, we also added some numbers, but overall, now numbers and increment increases have stabilized. So, right through the year, these kind of numbers should hold.

Speaker #2: Got it, sir. Sir, lastly, just on the debt reduction plan—with the lime sale now—how do you plan to further reduce the debt?

[Analyst] (Anand Rathi Institutional Equities): Got it, sir. Sir, lastly, just on the debt reduction plan with the land sale now, how do you plan to further reduce the debt? Can you also update us on the interest run rate expected ahead with the change on the interest rate policy, which we had done earlier?

Speaker #2: And could you also update us on the interest run rate expected going forward, with the change in the interest rate policy which we had done earlier?

Speaker #3: We hold that last year, FY26 opening, the debt was around ₹750 crore—net debt, term debt at least, or gross debt, sorry. That will remain at those levels.

Vidyashankar Krishnan: We hold that last year, FY26 opening, the debt was around INR 750 crore, net debt. Term debt at least. Gross debt, sorry. That will remain at those levels. Sorry. Gross debt stood at INR 750 crores. That will hold at those levels for this year also, approximately. So we would be repaying about INR 170 crores this year, the same would be drawn back as further loans for future investments, for investments being made in this year. So gross debt will remain at approximately the same levels.

Speaker #3: Sorry, gross debt stood at ₹750 crores. That will hold at those levels for this year also—approximately. So we would be repaying about ₹170 crores this year, and the same would be drawn back as further loans for investments being made in this year.

Speaker #3: So gross debt will remain at approximately the same levels.

Speaker #2: Got it. So, broadly, capex would also be around ₹170 crore, sir?

[Analyst] (Anand Rathi Institutional Equities): Got it. So broadly, CapEx would be also INR 170 odd crores, sir?

Speaker #3: Yes, approximately 150 odd crores.

Vidyashankar Krishnan: Yes. Approximately INR 150 odd crores.

Speaker #2: Got it, sir. Thank you. Thank you so much for the opportunity, sir. All the best.

[Analyst] (Anand Rathi Institutional Equities): Got it, sir. Thank you. Thank you so much for the opportunity, sir. All the best.

Vidyashankar Krishnan: Thank you.

Speaker #3: Thank you.

Vidyashankar Krishnan: Thank you, sir.

Operator: Thank you, sir.

Gautam Kishan B. Mehra: Thank you, sir.

Speaker #1: Thank you, sir.

Speaker #4: Thank you, sir.

Gautam Kishan B. Mehra: The next question is from the line of Ramesh from SJ Investments. Please proceed with your question.

Speaker #1: The next question is from the line of Ramesh from SJ Investments. Please proceed with your question.

[Analyst] (SJ Investments): Hi, sir. Thank you for the opportunity. You mentioned that some tailwinds from the US side. Could you elaborate further on what exactly you mean by those tailwinds? Is it in the commercial vehicle sector only or other sectors also?

Speaker #2: Thank you, sir. Thank you for the opportunity. You mentioned some tailwinds from the US side—could you elaborate further on what exactly you mean by those tailwinds? And is it in the commercial vehicle sector only, or in other sectors as well?

Vidyashankar Krishnan: For us, it is the commercial vehicle sector. The CV market, particularly Class 8 trucks in the US, is moving quite strongly. We see huge traction there.

Speaker #3: For us, it's the commercial vehicle sector. The CV market, particularly Class A trucks in the US, is booming quite strongly. So we see huge traction there.

[Analyst] (SJ Investments): Got it, sir. Overall, in terms of, let us say, CapEx, we have done a huge CapEx cycle already, and you are mentioning the CapEx cycle will further continue. Could you explain on why are we investing so much, and are we increasing our capabilities? What exactly is happening in terms of our CapEx building?

Speaker #2: Got it, sir. And overall, in terms of, let's say, capex—we've done a huge capex cycle already, and you're mentioning that the capex cycle will further continue.

Speaker #2: Could you explain why we are investing so much, and are we increasing our capabilities? What exactly is happening in terms of our capex building?

Vidyashankar Krishnan: Of course, we are increasing our capabilities across a wide spectrum of machined products. That is where much of the CapEx.

Speaker #3: Of course. We are increasing our capabilities across a wide spectrum of machined products. That is where much of the capex is going.

[Analyst] (SJ Investments): Okay, sorry.

Vidyashankar Krishnan: Is into machining. Plus, we are also adding a few equipment into our forging repertoire, if I can use the word. We are adding the 16,500 ton press, which will go into production by end of this fiscal in Q4. We also have a 4,000 ton press that has gone into production in the last couple of weeks. So these are the basic additions on the forging side, apart from a little bit of debottlenecking and replacement CapEx cycle coming in on the forgings side.

Speaker #2: Okay, sorry.

Speaker #3: Is into machining. Plus, we are also adding a few pieces of equipment into our forging repertoire, if I can use the word. We're adding the 16,510 press, which will go into production by end of this fiscal in Q4.

Speaker #3: And we also have a 4,000-ton press that has gone into production in the last couple of weeks. So, these are the basic additions on the forging side.

Speaker #3: Apart from a little bit of de-bottlenecking and the replacement capex cycle coming in on the forging side,

[Analyst] (SJ Investments): Got it, sir. So right now, in terms of machining capacity, where are we at? With expectations, where do you want to end up in terms of capacity at MM Forgings for Machining?

Speaker #2: Got it, sir. So right now, in terms of machining capacity, where are we at? And with the expectations, where do you want to end up in terms of capacity, at least in machining?

Vidyashankar Krishnan: Machining is a very mixed bag. I did not get your name.

Speaker #3: Machining is a very mixed bag. I didn't get your name.

[Analyst] (SJ Investments): Ramesh, sir.

Speaker #2: Ramesh, sir.

Vidyashankar Krishnan: Ramesh?

Speaker #3: Ramesh.

[Analyst] (SJ Investments): Yes.

Speaker #2: Yes.

Vidyashankar Krishnan: Yeah. Hi, Ramesh. Machining is a mixed bag. It is very difficult to quantify the machining capacity outright in numbers. What happens is that if you look at numbers alone, a small product with huge numbers in machining would overshadow a much bigger product with much less numbers. But the bigger product would be more value add and probably also more bottom line accretive. So it is tough to give a single number that will quantify the machining side. And one good thing at this point of time from April onwards itself, I should have made that in the opening remarks, April onwards itself, I am happy to say that all the cells at MM Forgings, machining and forging, are running to the fullest of capability. Note the word capability, not capacity. So April and May were down, were hampered by an availability of labor, which was prevalent right across the country.

Speaker #3: Yeah, hi, Ramesh. I didn't get—machining is a mixed bag. It's very difficult to quantify the machining capacity outright in numbers or in, you know... What happens is that if you look at numbers alone, a small product with huge numbers in machining would overshadow a much bigger product with much less numbers.

Speaker #3: But the bigger product would be more value-add and probably also more bottom-line accretive. So, it's tough to, you know, give a single number that will quantify the machining side.

Speaker #3: And one good thing at this point in time, from April to June onwards itself, we have—I should have made that in the opening remarks.

Speaker #3: From April onwards itself, we should have run all—I'm happy to say that all the cells at Forgings, Machining, and Forging are running to the fullest of capability.

Speaker #3: Note the word 'capability,' not 'capacity.' So April and May were down, were hampered by an availability of labor, which was prevalent right across the country.

Vidyashankar Krishnan: We were not new to it, alone to it. The rest of the country was also a part of the shortage of labor, and ours was no different in April and May. June was a lot different. We were able to bounce back with new hires, largely local, and also a little bit of migrant, and ensure that we were up trumps in June.

Speaker #3: We were not new to it. Alone in it, the rest of the country was also a part of the shortage of labor, and ours was no different in April and May.

Speaker #3: June was a lot different. We were able to bounce back with new hires, largely local, and also a little bit of migrant, and ensure that we were up trumps in June.

[Analyst] (SJ Investments): Got it.

Vidyashankar Krishnan: From July onwards, we see that our capability has gone up considerably. Now it is hardly for want of manpower. Few cells have technical issues hither and thither, not much, but a little bit. Let us say the last 7% to 10% here and there. We are now working on harnessing those and debottlenecking, I would say 10% to 20%, not just 7%. I would say it would go between 15% to 20%. There is a good growth potential further ahead, and we are pushing those numbers from July onwards.

Speaker #2: Got it, sir.

Speaker #3: And going forward from July onwards, we see that our capability has gone up considerably. Now, it's hardly for want of manpower. A few of the cells have technical issues here and there—not much, but a little bit.

Speaker #3: Let us say the last 7 to 10 percent here and there. So, we are now working on harnessing those and de-bottlenecking. I would say 10 to 20 percent, not just 7 percent.

Speaker #3: I would say it would go over between 15 to 20 percent. So, there is good growth potential further ahead, and we are pushing those numbers from July onwards.

[Analyst] (SJ Investments): Got it, sir. Sir, in terms of automation, I understand that we are building capacities in machining and forging. Automation also, are we investing in and how much have you invested so far in the last four years?

Speaker #2: Got it, sir. So, in terms of automation, I understand that we're building capacities in machining and forging. So, in automation also, are we investing, and how much have we invested so far in the last four years?

Vidyashankar Krishnan: Automation has been largely in the last couple of three quarters only. Overall, I would estimate that our investment in automation is about INR 7.5 crores to INR 10 crores.

Speaker #3: Automation has been largely in the last couple of, three quarters only. So overall, I would estimate that our investment in automation is about ₹7.5 to ₹10 crores.

[Analyst] (SJ Investments): So going forward, do we expect a lot more going towards this instead of other capacities?

Speaker #2: In terms of going forward, do we expect a lot more to go towards this instead of the rest of the capacities?

Vidyashankar Krishnan: Absolutely. This number should triple. If not reach about INR 40 to INR 50 crores by end of this fiscal. At least it should be in the region of INR 30 crores.

Speaker #3: Absolutely. This number should triple, if not reach about 50 crores—40 to 50 crores—by the end of this fiscal. At least, it should be in the region of 30 crores.

[Analyst] (SJ Investments): Got it, sir. You mentioned that INR 150 crores are of investing this year. So when do you think we will start-

Speaker #2: Got it, sir. So you mentioned that ₹150 crores are for investing this year. So when do you think we’ve started?

[Analyst] (SJ Investments): Sorry to interrupt, Ramesh, sir. May we request that you return to question queue for follow-up?

Operator: Sorry to interrupt, Ramesh, sir. May we request that you return to question queue for follow-up?

Speaker #1: Sorry to interrupt, Ramesh sir. Maybe request that you return to question Q for follow-up.

[Analyst] (SJ Investments): Yes, sure. Thank you.

Speaker #2: Yes, sure. Thank you.

Vidyashankar Krishnan: I will answer this question so that it will benefit everybody else. We would expect this to result in increase in turnover in about two years from now, one to two years from now.

Speaker #3: Yeah, I'll answer this question so that, you know, it can benefit everybody else. We would expect this to result in an increase in turnover in about two years from now.

Speaker #3: One to two years from now.

Vidyashankar Krishnan: Thank you, sir. The next question is from the line of Nipun from CD Research. Please proceed with your question.

Operator: Thank you, sir. The next question is from the line of Nipun from CD Research. Please proceed with your question.

Speaker #2: Got it.

Speaker #1: Thank you, sir. The next question is from the line of Nipun from CD Research. Please proceed with your question.

[Analyst] (CD Research): Hi, sir. Are you facing any pressure from the government to boost our export?

Speaker #3: Yeah. Hi, sir. So, are you facing any pressure from the government to boost your exports? Sorry? Yeah. Are you facing any pressure from the government to boost your exports?

Vidyashankar Krishnan: Sorry?

[Analyst] (CD Research): Yeah. Are you facing any pressure from the government to boost your export?

Vidyashankar Krishnan: No, nothing specific.

Speaker #3: No, nothing specific. Okay. Okay. Because I was asking because there are a lot of exporting and our export ratio export numbers have been reasonable right across time.

[Analyst] (CD Research): Okay. Because I was asking because there was a lot of

Vidyashankar Krishnan: We want exporting and our export numbers have been reasonable right across time, though in percentage terms, exports have topped. That is because domestic has grown. You know all that.

Speaker #3: Though in percentage terms, exports have topped. That's because domestic has grown. You know that. You know all that. Yeah, yeah, yeah. Okay. Yeah, yeah, yeah.

[Analyst] (CD Research): Yeah. Okay. Thank you. I had that question. Okay.

Speaker #3: Okay, okay, okay. Thank you, sir. I had this question already. Okay, thank you, sir.

[Analyst] (CD Research): Thank you, sir. Ladies and gentlemen, the line for the management seems to have disconnect. Please hold while we reconnect them. Ladies and gentlemen, the line for the management has been reconnected. The next question is from the line of Naveen Vijay from NS Capital. Please proceed with your question.

Operator: Thank you, sir. Ladies and gentlemen, the line for the management seems to have disconnect. Please hold while we reconnect them. Ladies and gentlemen, the line for the management has been reconnected. The next question is from the line of Naveen Vijay from NS Capital. Please proceed with your question.

Speaker #1: Ladies and gentlemen, the line for the management seems to have disconnected. Please hold while we reconnect them. Ladies and gentlemen, the line for the management has been reconnected.

Speaker #1: The next question is from the line of Navin Vijay from NS Capital. Please proceed with your question.

Naveen Vijay: Hi, sir. My first question is, where are you currently seeing momentum or new avenues for growth in the order book? We recently had a power backup company secure a large order from hyperscalers. Just wanted to know if we are positioned to supply crankshafts for such OEMs.

Speaker #2: Hi, sir. My first question is: Where are you currently seeing momentum or new avenues for growth in the order book? We recently had a power backup company secure a large order from hyperscalers.

Speaker #2: Just wanted to know if we are positioned to supply crankshafts for such OEMs?

Vidyashankar Krishnan: Naveen, yes, the hyperscaler business is petering out into the domestic forging market, and there is a strong demand from such companies. You are right.

Speaker #3: Navin, yes. The hyperscaler business is tapering into the domestic forging market, and there is strong demand from such companies. You are right.

Naveen Vijay: Thank you, sir. My second question is on the power and fuel cost still being elevated despite the addition of green power.

Speaker #2: Thank you, sir. My second question is on the power and fuel cost, which is still elevated despite the addition of green power. Could you please quantify what has led to this?

Naveen Vijay: Could you please quantify what has led to this?

Vidyashankar Krishnan: Yeah, there has been a huge increase in fuel costs in Q1 on account of the West Asian conflict. So that has been, of course, after Q1, it has reasonably stabilized. So that is the reason why power and fuel has gone up.

Speaker #3: Yeah. There has been a huge increase in fuel costs in Q1 on account of the West Asian conflict. So that has been, of course, over after Q1, and it has reasonably stabilized.

Speaker #3: So that is the reason why power and fuel have gone up.

Naveen Vijay: Got it.

Vidyashankar Krishnan: Plus, we are taking the rising EV power costs due to the policy of the Tamil Nadu government. But that has not come in Q1 of this year.

Speaker #2: Got it. Got it. Got it.

Speaker #3: Plus, the second trend is rising EV power costs due to the policy of the Tamil Nadu government. But that has not come in Q1 of this year.

Naveen Vijay: Got it.

Naveen Vijay: The new government annual increase in TN EV costs.

Speaker #3: The new government in annual increase in TNEB costs.

Naveen Vijay: Got it, sir. Another small bookkeeping question on the depreciation. It has gone up 20% year-on-year. Just wanted to know which facilities or product lines are seeing bulk of these capital additions.

Speaker #2: Got it, sir. Got it. Another small bookkeeping question: The depreciation has gone up 20 percent year on year. Just wanted to know which facilities or product lines are seeing the bulk of these capital additions?

Vidyashankar Krishnan: Largely forging and machining CapEx. Machining CapEx, I would say, mostly.

Speaker #3: Largely forging and machining CAPEX. Machining CAPEX, I would say, mostly.

Naveen Vijay: Okay, sir. We could see the machining share go up very nicely. My last question before I join

Speaker #2: Okay, sir. Okay, sir. We could see the machining share go up very nicely. My last question before I join.

Vidyashankar Krishnan: That is the intent.

Speaker #3: That is the intent.

Naveen Vijay: Yeah. My last question before I join back in the queue is on Abhinava Risers, sir. We had customers getting added on. Just wanted to get an update on how many customers that we are billing and the pipeline, and an overview on that, sir.

Speaker #2: Yeah, yeah. My last question before I join back in the queue is on Abhinava Raisal, sir. We had customers getting added on. Just wanted to get an update on how many customers we are billing and the pipeline, and an overview on that, sir.

Vidyashankar Krishnan: Yes, sure. Abhinava Risers is on the cusp of getting its first business. It has gotten its first business, and I am thrilled to say that we are into initial phases of SOP, start of production. We are producing parts between production and sample stage, I would say a ramp-up stage. That is real good news for us.

Speaker #3: Yes, sure. Abhinava Raisal is on the cusp of getting its first business. It has gotten its first business, and I'm thrilled to say that we are into the initial phases of SOP.

Speaker #3: Start of production. And we are producing parts at a between production and sample stage, I would say, a ramp-up stage. And that is real good news for us.

Naveen Vijay: Thank you, sir. I will join back in the queue.

Speaker #2: Thank you, sir. I'll join back with you.

Naveen Vijay: Thank you, sir. The next question is on the line of Manas Jain from Sanjay Jain Family Office. Please proceed with your question.

Operator: Thank you, sir. The next question is on the line of Manas Jain from Sanjay Jain Family Office. Please proceed with your question.

Speaker #1: Thank you, sir. The next question is from the line of Manas Jen from the Sanjay Jain Family Office. Please proceed with your question.

Manas Jain: Hello, sir. Good set of numbers. Actually, we are shareholders of our company for last 30 years continuously. It has been a very privilege to be a part of this company for the last 30 years. I had just two questions, sir. I remember seeing two, three conference calls back, and you also alluded to it, saying that the trailer tractor is reducing the front axle demand. I just wanted to understand, is MM Forgings looking at entering the trailer axle suspension assembly? I understand the process might be different and the customer segment is also different, but some of the forging companies have started doing this in order to negate that business loss. I wanted to understand if we are considering in that direction.

Speaker #2: Hello, sir. Good set of numbers. Actually, we have been shareholders of the company for the last 30 years, continuously. So it's been a privilege to be a part of this company for the last 30 years.

Speaker #2: So, I had just two questions, sir. I remember seeing—two or three conference calls back—you also alluded to it, saying that the Taylor tractor is reducing the front axle demand.

Speaker #2: So, I just wanted to understand—is Forging looking at entering the trailer axle suspension assembly? I understand the process might be different, and the customer segment is also different.

Speaker #2: But some of the forging companies have started doing this in order to negate that business loss. So I wanted to understand if we are considering moving in that direction.

Vidyashankar Krishnan: Not at this moment, Manas.

Speaker #3: Not at this moment, Manav.

Manas Jain: Okay.

Vidyashankar Krishnan: Not at this moment.

Speaker #2: Okay. Any particular reason, sir? Is it margin-dilutive to our existing business? Is that one of the reasons?

Manas Jain: Any particular reason, sir? Is it margin dilutive to our existing business? Is that one of the reason?

Vidyashankar Krishnan: One would be, yes, it is margin dilutive. Second, we have enough on our hands in terms of growth, managing debottlenecking, and ensuring that there is further this thing of improvement on EBITDA and costs. This quarter has been struggling to just keep supplies going.

Speaker #3: One would be, yes, it's margin-dilutive. And second, we have enough on our hands in terms of growth, managing debottlenecking, and ensuring that, you know, there is further improvement in EBITDA and costs.

Speaker #3: So this quarter, we have been struggling just to keep supplies going. We now have to galvanize ourselves on cost reduction. There is a lot to do in the current business.

Manas Jain: Okay.

Vidyashankar Krishnan: We have to now organize ourselves on cost reduction. There's lot to do in the current business.

Manas Jain: Okay.

Vidyashankar Krishnan: Yes.

Speaker #2: Okay, thank you, sir. Second question, sir— I think I saw...

Manas Jain: Thank you, sir. Second question, sir. I think I saw.

Vidyashankar Krishnan: Without getting stuck here, we have to ensure that we are moving along in this line of business first.

Speaker #3: Without getting stuck here, we have to ensure that we are moving along in this line of business first.

Manas Jain: Okay, fair enough.

Vidyashankar Krishnan: Which we have now. The traction is there very clearly, and we need to carry this to its logical conclusion across the spectrum of the business itself. I am talking with the.

Speaker #2: Okay. Fair enough.

Speaker #3: If we have now, the traction is there very clearly, and we need to carry this to its logical conclusion across the spectrum of the business itself.

Speaker #3: I'm talking with the.

Manas Jain: Okay. Second question, sir. I remember I had seen some interview of two months back on one of the media channels where you said, subject to any QIP, you might want to do a INR 400 crores growth CapEx. I just wanted to understand, I know it is very far stretched, but I just wanted to understand where are we targeting, like existing product, existing business, or we are looking at non-auto industrial, or we are also evaluating non-ferrous products such as aluminum, titanium for aerospace. I am just trying to understand where our existing machining and engineering capabilities can be leveraged. So where are we looking at for that INR 400 crores of growth CapEx?

Speaker #2: Okay. Second question, sir. I remember seeing an interview about two months back on one of the media channels where you said, subject to any QIP, you might want to do a ₹400 crore growth capex.

Speaker #2: So I just wanted to understand—I know it's a bit far-fetched—but I just wanted to get clarity on where we are targeting. Are we looking at existing products and existing businesses, or are we also looking at non-auto industrial, or even evaluating non-ferrous products such as aluminum and titanium for aerospace?

Speaker #2: I'm just trying to understand where our existing machining and engineering capabilities can be leveraged. So, where are we looking at for that ₹400 crore of growth CAPEX?

Vidyashankar Krishnan: First and primary, we would be looking at our own business.

Speaker #3: First and primarily, we would be looking at our own business. Mainly, we look closely at steel forgings—that's the primary zone. The second would be anything else in the metalworking space.

Manas Jain: Okay.

Vidyashankar Krishnan: Mainly the hot closed die steel forgings.

Manas Jain: Okay.

Vidyashankar Krishnan: That is the primary zone. The second would be anything else in the metalworking space.

Manas Jain: Okay. In the?

Speaker #2: Okay. Indeed?

Vidyashankar Krishnan: In the metalworking space, means metal machining.

Speaker #3: In the metalworking space, this means metal machining, machining assembly, and value-added parts.

Manas Jain: Okay.

Vidyashankar Krishnan: Machining, assembly, value-added parts.

Manas Jain: Okay. But non-auto would be the industrial, maybe one of the application you might be looking at.

Speaker #2: Okay. Okay. So, non-auto—would industrial be one of the applications we might be looking at?

Vidyashankar Krishnan: Definitely, 100%.

Speaker #3: Definitely. 100 percent.

Manas Jain: Okay. Got it. Got it, sir. Thank you.

Speaker #2: Okay, got it. Got it, sir. Thank you.

Vidyashankar Krishnan: Thank you.

Speaker #3: Thank you.

Vidyashankar Krishnan: Thank you, sir. The next question is from the line of Suraj from Catamaran. Please proceed with your question.

Operator: Thank you, sir. The next question is from the line of Suraj from Catamaran. Please proceed with your question.

Speaker #1: Thank you, sir. The next question is from the line of Suraj from Katamaran. Please proceed with your question.

Suraj Malu: Hello, sir. Thank you for this opportunity. Sir, first question is, of the CapEx of INR 150 crores, what percentage or what amount would be replacement CapEx and what percentage would be new CapEx?

Speaker #3: Hello, sir. Thank you for this opportunity. First question is: of the CAPEX of 150 gross, what percentage or what amount would be replacement CAPEX, and what percentage would be new CAPEX?

Vidyashankar Krishnan: Sorry, Suraj, can you repeat?

Speaker #3: Sorry, Suraj, can you repeat? Of the ₹150 crore gross CAPEX that we plan to do, what amount would be the replacement CAPEX and what amount would be for new machineries and equipment?

Suraj Malu: Of the INR 150 crore CapEx that we plan to do, what amount would be the replacement CapEx, and what amount would be for new machineries and equipment? Growth CapEx.

Vidyashankar Krishnan: Roughly about 30 to up to 50 crores will be replacement CapEx.

Speaker #3: Growth CAPEX, roughly about 30 to 50 crores, and up to 50 crores will be replacement CAPEX.

Suraj Malu: Got it.

Vidyashankar Krishnan: Replacement or debottlenecking.

Speaker #2: Got it.

Speaker #3: Replacement.

Suraj Malu: Got it. Sir, on the current gross block of roughly INR 2,100 crores, what is the peak revenue that we can generate?

Speaker #2: Got it.

Speaker #3: And then, on the current gross block of roughly ₹2,100 crore gross, what is the peak revenue that we can generate? Close to that number? And then one last question.

Vidyashankar Krishnan: Close to that number.

Suraj Malu: Got it. And sir, one last question. What was our revenue from the US market in the base quarter? Like last year, same quarter.

Speaker #3: What was our revenue from the US market in the base quarter? Like last year, same quarter. One sec, I will give it to you.

Vidyashankar Krishnan: One second. I will give it to you. Percentage terms, 18% in this quarter, versus almost 16% in the previous financial quarter.

Speaker #3: In percentage terms, it's 18% this quarter versus 15%, compared to almost 16% in the previous reference quarter.

Suraj Malu: Got it. Thank you very much.

Speaker #2: Got it, sir. Thank you very much.

Suraj Malu: Thank you, sir. The next question is from the line of Subrata Sarkar from Mountain Infra Company Limited. Please proceed with your question.

Operator: Thank you, sir. The next question is from the line of Subrata Sarkar from Mountain Infra Company Limited. Please proceed with your question.

Speaker #1: Thank you, sir. The next question is from the line of Subratra Sarkar from Mountain Infra Company Limited. Please proceed with your question.

Subrata Sarkar: Hello. Am I audible?

Speaker #4: Hello. Sir, am I audible?

Subrata Sarkar: Yes, sir.

Operator: Yes, sir.

Suraj Malu: Yes.

Vidyashankar Krishnan: Yes.

Speaker #1: Yes, sir.

Speaker #3: Yes.

Subrata Sarkar: Great. Sir, kindly can you share what is the, in terms of volume, what is our current this quarter, whatever we have done? What is our expectation in terms of volume share? Last year, what kind of volume we are doing. Sir, one, two clarification. I understand and I also follow your company for a long time. Sir, we are operating at a relatively much lower capacity utilization. Still, sir, we are continuously doing our CapEx. In that case, sir, can you guide us, what can be the top level or what can be the peak CapEx that we can do, or what is the next one or two years, in which direction we want to make the CapEx and why, basically? Despite having such an underutilized capacity as of now.

Speaker #4: Yes. Sir, kindly can you share with what is the in terms of volume, like what is our what is our current this quarter, whatever we have done and what is our expectation in terms of volume share?

Speaker #4: Last year—corresponding to last year—what kind of volume were we doing? And sir, one rather quick clarification. I understand, as I have also followed your company for a long time.

Speaker #4: Sir, we are operating at a relatively much lower capacity utilization. But still, sir, we are continuously doing our CapEx. So in that case, sir, can you guide us, like, what can be the top level—like, what can be the peak CapEx that we can do? Or what is the next one or two years, in which direction do we want to make the CapEx, and why, basically?

Speaker #4: So, despite having such an underutilized capacity as of now, and vis-à-vis, sir, how much does that, in that case, we need to additionally take or reduce, or whatever?

Subrata Sarkar: And vis-à-vis, sir, how much debt in that case we need to additionally take or reduce or whatever, sir? Two, three years roadmap, if you can share it.

Speaker #4: Could you please suggest a two-year roadmap?

Vidyashankar Krishnan: Okay. Can I get your name please?

Speaker #3: Okay. Can I get your name, please?

Subrata Sarkar: My name is Subrata Sarkar from Mountain Infra Finance, sir. We also following your company for a very long time and we have enough faith on you. That's why, sir, we ask you to come back, roadmap.

Speaker #4: My name is Subrata Sarkar from Mount Infra Finance. So, we also follow your company for a very long time. And we have enough CAPEX on it.

Speaker #4: So that's why, sir, we're asking for some help—a roadmap.

Vidyashankar Krishnan: Your first name, Subrata, is it?

Speaker #3: Your first name, Subrato, is it?

Subrata Sarkar: Subrata. Yes, sir. Subrata Sarkar.

Speaker #4: Subrata, yes. Subrata.

Speaker #3: Subrata.

Speaker #4: Sarkar.

Vidyashankar Krishnan: Sarkar. Okay.

Speaker #3: Sarkar. Okay.

Subrata Sarkar: Yes.

Speaker #4: Yes.

Vidyashankar Krishnan: We see the capacity utilization is going up considerably, Subrata. Last year we did about 78,000 tons of sales. Now we have done about 20,000 tons in Q1. We expect Q2 and beyond to be much better. Should hover at around 24,000 tons for each quarter, 23,000 to 25,000 tons minimum in Q2 and beyond. As discussed or as we have been guiding, we would expect to cross the 90,000 ton mark in this year. Next year, challenge the 110,000 ton mark. The momentum is on and we see traction in moving our outputs to 100,000 tons plus. We will currently from Q2 and onwards, we should be almost at a 100,000 ton per annum range.

Speaker #3: We see that the capacity utilization is going up considerably, Subrata. So last year, we did about 78,000 tons of sales. And this year, we have done about 20,000 tons in Q1.

Speaker #3: We expect Q2 and beyond to be much better. It should hover at around 24,000 tons for each quarter—23,000 to 25,000 tons minimum in Q2 and beyond.

Speaker #3: So, as we have discussed and as we have been guiding, we would expect to cross the 90,000-ton mark this year. Next year, we aim to challenge the 1 lakh or 110,000-ton mark.

Speaker #3: So the momentum is on and we see traction in moving our outputs to 1 lakh tons plus plus. So we are current we will currently, from Q2 and onwards, we should be almost at a 1 lakh ton per annum range.

Subrata Sarkar: Annual range.

Vidyashankar Krishnan: Maybe just a little more. Capacity utilization is going up. I am happy to say that. From 80,000 tons this year we should be 90 plus with a run rate definitely of 100,000 tons per annum.

Speaker #3: Maybe just so, capacity utilization is going up. I'm happy to say that from 80,000 tons, this year we should be 90,000 plus, with a run rate definitely of 1 lakh tons.

Subrata Sarkar: Okay.

Speaker #3: Per annum.

Speaker #4: Okay. Okay.

Vidyashankar Krishnan: Maybe even end the year with much more than 100,000 tons. Things hold, we should be able to push the run rate beyond 100,000 tons. Our internal target continues to hit 27 and then 30,000 tons per quarter.

Speaker #3: Maybe, maybe they'll even end the year with much more than 1 lakh tons. If things hold, we should be able to push the run rate beyond 1 lakh tons.

Speaker #3: Our internal target continues to hit 27,000 and then 30,000 tons per quarter.

Subrata Sarkar: Okay, sir. Sir, a small clarification. In that case, whatever revenue growth we are expecting almost entirely from volume growth itself?

Speaker #4: Okay, sir. Sir, a small clarification—in that case, whatever revenue growth we are expecting is almost entirely from volume growth itself.

Vidyashankar Krishnan: Correct. The consequence to that is the next part of your questions is where are we investing in? We are largely investing in the machining side and this year about INR 50 crores on debottlenecking, mostly on the forging side. A little bit of that INR 40 crores will be forging, INR 10 crores will be debottlenecking on the machining side. This debottlenecking will result in greater utilization and more machined products going to customers. That is the plan.

Speaker #3: Correct. So, the consequence to that is the next part of your question, which is: where are we investing in? We are largely investing on the machining side.

Speaker #3: And a little bit on not a little bit. This year, about 50 gross on debot making. Mostly on the forging side. So and a little bit of that 40 gross will be forging, 10 gross will be debot making on the machining side.

Speaker #3: So, this debottlenecking will result in greater utilization and more machined products going to customers. That's the plan.

Subrata Sarkar: Thank you. Sir, most of the CapEx for next 2, 3 years will be from our internal accrual sir or we will take some additional debt?

Speaker #4: Thank you. And sir, most of the CAPEX for the next two to three years will be from our internal accruals, sir? Or will we take some additional gross?

Vidyashankar Krishnan: No, we do not plan to increase debt beyond these levels. INR 750 to 800 crores is where gross debt levels will stand at this point of time. If turnover increases rapidly.

Speaker #3: No, we do not plan to increase debt beyond these levels. 750 to 800 gross—that is, gross debt—levels will stand at this point of time.

Speaker #3: If turnover increases, definitely yeah.

Subrata Sarkar: Sir, last question.

Speaker #4: Okay. Sir, last slide.

Vidyashankar Krishnan: I will answer it. Once turnover increases reasonably and EBITDA along with it, at that point alone, we could consider raising gross debt levels. Otherwise, I would like to see it capped around these levels, give or take INR 50 crore. Not give or take, give 50.

Speaker #3: I'll I'll I'll yeah. If turn once turnover increases reasonably, and debit along with it, at that point alone, we could consider raising gross debt levels.

Speaker #3: Otherwise, I would like to see it capped around these levels, give or take 50 gross. Not give or take—give 50. At this point, given the hunger for capital, we may not be able to reduce the borrowings.

Subrata Sarkar: Okay.

Vidyashankar Krishnan: At this point, hunger for capital, we may not be able to reduce the borrowings, but we want to maintain it as we have announced for quite a few quarters.

Speaker #3: But we want to maintain it, as we've announced for quite a few quarters.

Subrata Sarkar: Okay. Sir, last clarification. Whatever funds we will be receiving because of this land sale, what will be the utilization of that, sir?

Speaker #4: Okay. Sir, last clarification: whatever funds we will be receiving because of these land sales, what will be the utilization of that, sir?

Vidyashankar Krishnan: Go again, Subroto.

Speaker #3: Go again. Subrata?

Subrata Sarkar: Yes. Sir, this quarter, we have sold our land and we have realized some money, sir. So what we will do with this?

Speaker #4: Yes. Sir, we have this quarter, we have sold our land. And we have realized some money, sir. So what what is what we will do with this, sir?

Vidyashankar Krishnan: That will be used to reduce our working capital and our capital borrowings.

Speaker #3: Huh. That will be used to reduce our working capital, our CAPEX, and our capital borrowings.

Subrata Sarkar: Okay. Perfect. Thank you, sir.

Speaker #4: Okay. Okay. Perfect. Thank you, sir.

Speaker #2: Thank you, sir. The next question is from the line of Nishant from Sridev Abrasives. Please proceed with your question.

Subrata Sarkar: Thank you, sir. The next question is from the line of B from Shri Dev Abrasives. Please proceed with your question.

Operator: Thank you, sir. The next question is from the line of Mishan from Shri Dev Abrasives. Please proceed with your question.

[Company Representative] (Shri Dev Abrasives): Hello, sir.

[Analyst] (Shri Dev Abrasives): Hello, sir.

Speaker #3: Hello, sir. Hello. Hello. Yes, sir, I have a question about current capacity utilization.

Vidyashankar Krishnan: Hello.

[Company Representative] (Shri Dev Abrasives): Hello. Yeah, sir. I have a question about the current capacity utilization.

[Analyst] (Shri Dev Abrasives): Hello. Yeah, sir. I have a question about the current capacity utilization.

Vidyashankar Krishnan: Yes.

Speaker #4: Yes.

[Company Representative] (Shri Dev Abrasives): How do you plan to increase it, sir? Do you have any plans of capacity expansion in the near future?

[Analyst] (Shri Dev Abrasives): How do you plan to increase it, sir? Do you have any plans of capacity expansion in the near future?

Speaker #3: And how do you plan to increase it, sir? Like, do you have any plans for capacity expansion in the near future?

Vidyashankar Krishnan: I just answered that now, Brajesh, when I answered Subroto. Last year we did 78,000 tons approx. of sale. This year in Q1, 20,200 tons.

Speaker #4: I just answered that now, Nishant. When I answered Subrata—so, last year we did approximately 78,000 tons of sales. This year, in Q1, 20,200 tons.

[Company Representative] (Shri Dev Abrasives): Yeah

[Analyst] (Shri Dev Abrasives): Yeah

Speaker #4: And from Q2 onwards, we expect to strike somewhere between 23,000 and end the year at about 25,000-plus tons.

Vidyashankar Krishnan: Q2 onwards, we expect to strike somewhere between 23 and end the year at about 25 plus thousand tons.

[Company Representative] (Shri Dev Abrasives): Okay. One more question, sir. Are we catering to any EV business, sir?

[Analyst] (Shri Dev Abrasives): Okay. One more question, sir. Are we catering to any EV business, sir?

Speaker #3: Okay, and one more question, sir. Are we catering to any EV business, sir?

Vidyashankar Krishnan: One second. It should mean a run rate of 1 lakh tons a year, that should set the tone for FY27 to reach 1 lakh to 110,000 tons.

Speaker #4: One, one sec. It should mean an a run rate of 1 lakh tons a year. And that should set the tone for FY27 to reach 1 lakh 10,000 1 lakh to 1 lakh 10,000 tons.

[Company Representative] (Shri Dev Abrasives): That is it.

[Analyst] (Shri Dev Abrasives): That is it.

Speaker #4: So, the capacity utilization thing is behind us.

Vidyashankar Krishnan: Capacity utilization thing is behind us.

[Company Representative] (Shri Dev Abrasives): Okay. And one more thing, sir. Are we catering to the EV business, sir? Two-wheelers or three-wheelers?

[Analyst] (Shri Dev Abrasives): Okay. And one more thing, sir. Are we catering to the EV business, sir? Two-wheelers or three-wheelers?

Speaker #3: Okay. And one more thing, sir. Are we catering to the EV business, sir, two-wheelers or three-wheelers?

Vidyashankar Krishnan: You say from the EV sub or you are talking from the parent company?

Speaker #4: Are we catering from you? You say from the EV sub, or are you talking from the parent company?

[Company Representative] (Shri Dev Abrasives): No, sir. From the parent company, sir.

[Analyst] (Shri Dev Abrasives): No, sir. From the parent company, sir.

Speaker #3: No, sir. From the parent company, sir.

Vidyashankar Krishnan: From the parent company. Okay, fine. That is an easier question to answer. Yes, we are serving products to EV customers or not EV customers, that go into electric vehicles across several platforms. But not two-wheeler, four-wheeler.

Speaker #4: From the parent company, sir.

Speaker #3: Okay. Thanks.

Speaker #4: That's an easier question to answer. Yes, we are serving products to EV customers or that go to non-EV customers—that go into electric vehicles across several platforms.

Speaker #4: But not two-wheeler. Four-wheeler.

[Company Representative] (Shri Dev Abrasives): Okay. Thank you, sir.

[Analyst] (Shri Dev Abrasives): Okay. Thank you, sir.

Speaker #3: Okay. Okay. Thank you, sir. Thank you, sir. One line of products goes for export, another line is going domestic. Thank you, sir. That's right.

Vidyashankar Krishnan: One line of products goes export, another line is going domestic.

[Company Representative] (Shri Dev Abrasives): Thank you, sir. That's all.

[Analyst] (Shri Dev Abrasives): Thank you, sir. That's all.

[Company Representative] (Shri Dev Abrasives): Thank you, sir. The next question is from the line of Rajesh Maru from MoneyCurve Analytics. Please proceed with your question.

Operator: Thank you, sir. The next question is from the line of Rajesh Maru from MoneyCurve Analytics. Please proceed with your question.

Speaker #2: Thank you, sir. The next question is from the line of Prajesh Maru from Money Curves Analytics. Please proceed with your question.

Rajesh Maru: Yeah. Good evening, sir. Thank you for the opportunity and great set of numbers. One of my questions has already been answered. I have one more clarification. Sorry if this is a duplicate question. We are setting up our large base of 16,500 tons. And you have already said that its revenue will creep in in next two years. Do we have plan to move towards hyperscaler or any other segment like defense or anything, which you are looking to explore the opportunity with this kind of capacity, sir?

Brajesh Maru: Yeah. Good evening, sir. Thank you for the opportunity and great set of numbers. One of my questions has already been answered. I have one more clarification. Sorry if this is a duplicate question. We are setting up our large base of 16,500 tons. And you have already said that its revenue will creep in in next two years. Do we have plan to move towards hyperscaler or any other segment like defense or anything, which you are looking to explore the opportunity with this kind of capacity, sir?

Speaker #4: Yeah. Good evening, sir. Thank you for the opportunity and great set of numbers. One of my questions has already been answered. I have one more clarification.

Speaker #4: Sorry if this is interesting. Question. We are setting up our large base of 16,500 tons, and you have already said that its revenue will creep in over the next two years.

Speaker #4: Do we have plans to move towards hyperscalers or any other segment, like defense, or anything else you are looking to explore as an opportunity with this kind of capacity, sir?

Vidyashankar Krishnan: We are definitely moving into businesses that support hyperscalers. No doubt. We see that right in front of us, and a lot of business is coming our way. But with regards defense, it is a mixed bag. It is a mixed bag because once we get into the business of defense, it won't stop with just serving the Indian market. We will start looking at capacity utilization. A line may not fill up entirely with the business from Indian defense. So immediately we look at what we can do outside of the country. And that is something which at a personal level, I am not so inclined to do.

Speaker #3: We are definitely moving into businesses that support hyperscalers, no doubt. We see that right in front of us, and a lot of business is coming our way.

Speaker #3: But with regards to defense, it's a mixed bag. It's a mixed bag because once we get into, you know, the business of defense, it won't stop with just serving the Indian market.

Speaker #3: We will start looking at capacity utilization. Align may not fill up entirely with the business from Indian defense, so immediately we'll look at, you know, what we can do outside of the country.

Speaker #3: And that's something which, at a personal level, I'm not so inclined to.

Vidyashankar Krishnan: Thank you, sir. The line for the current participant has dropped. Should we move to the next?

Operator: Thank you, sir. The line for the current participant has dropped. Should we move to the next?

Speaker #2: Thank you, sir. So, the line for the current participant has dropped. Should we move to the next?

Vidyashankar Krishnan: Yeah, of course. He will join back if it is required.

Speaker #3: Yeah, yeah, of course. He'll join back if required.

Vidyashankar Krishnan: Okay, sir. The next question is from the line of Ramesh from SG Investments. Please proceed with your question. Mr. Ramesh, your line has been unmuted. Please proceed with your question. As there is no response, we will move to the next question. The next question is from the line of Suraj Malu from Catamaran. Please proceed with your question.

Operator: Okay, sir. The next question is from the line of Ramesh from SG Investments. Please proceed with your question. Mr. Ramesh, your line has been unmuted. Please proceed with your question. As there is no response, we will move to the next question. The next question is from the line of Suraj Malu from Catamaran. Please proceed with your question.

Speaker #2: Okay, sir. The next question is from the line of Ramesh from SJ Investments. Please proceed with your question. Mr. Ramesh, your line has been unmuted.

Speaker #2: Please proceed with your question. As there is no response, we'll move to the next question. The next question is from the line of Suraj Malu from Catamaran.

Speaker #2: Please proceed with your question.

Suraj Malu: Thank you very much. Sir, can you help us understand why did other expenses increase by 35% year-on-year?

Speaker #4: Thank you very much. Sir, can you help us understand why other expenses increased by 35% year on year?

Vidyashankar Krishnan: You give me a few minutes, I will come back to you on that.

Speaker #3: You'll give me a few minutes. I'll come back to you on that.

Suraj Malu: Sure, sir.

Speaker #4: Sure, sir.

Vidyashankar Krishnan: Okay. I do not have the slide with me. One second. My team is throwing it up. Hold on.

Speaker #3: Okay, I don't have the number right in front of me. One sec. My team is pulling it up. Hold on, hold on.

Suraj Malu: Sure.

Speaker #4: Sure.

Vidyashankar Krishnan: Yeah. Your other expenses will be a combination of a couple of things. One is fixed, what is attributable to the regular other expenses coming in the P&L. It will also have a component of it is export expenses relating to freight. Freight has risen sharply. I am hearing some echo.

Speaker #3: Yeah. Your other expenses will be a combination of a couple of things. One is fixed, and the other is what is attributable to the regular other expenses coming in the P&L.

Speaker #3: And it'll also have a component of it, which is export expenses relating to freight. Freight has risen sharply.

Speaker #4: I'm hearing some echo.

Suraj Malu: Yes, sir. We can hear you.

Speaker #3: Yes, sir, we can hear you.

Vidyashankar Krishnan: Other expenses, what we call as the traditional other expenses, the fixed overheads of running an organization like starting from rent up to fax and paper and computer, IT, blah. That runs at an increase of around 10%. From 8 crores it has gone up to 9 crores.

Speaker #4: And other expenses, what we call, as you know, the traditional other expenses. The fixed overheads of running an organization, like starting from rent up to fax and paper and computer IT, blah, blah.

Speaker #4: That runs at an increase of around 10% from 8 crores; it has gone up to 9 crores.

Suraj Malu: Got it. Understood, sir.

Speaker #3: Got it.

Speaker #4: The biggest question, in a quick nutshell: the biggest jump in other expenses is around ₹4 crore to ₹4.2 crore, as seen in the published results. Of that, export expenses alone account for ₹4 crore.

Speaker #3: Got it.

Speaker #4: Understood, sir.

Vidyashankar Krishnan: That is largely due to rates going around the Strait of Hormuz, for obvious reasons.

Speaker #3: That is largely due to freight going around the Straits of Hormuz, for obvious reasons.

Suraj Malu: Understood, sir. Sir, can you help us understand why is the revenue from Europe declining for us? Because US has grown, domestic business has grown.

Speaker #4: Understood, sir.

Speaker #3: Sir, can you help us understand why the revenue from Europe is declining? Because the US has grown, and domestic business has grown as well.

Vidyashankar Krishnan: Europe has de-grown volume? Surprise for me. I don't think so.

Speaker #4: Europe has only grown in volume supplies. I don't think so.

Suraj Malu: Last year was. Because if you look at the last four quarters, like in Q2 FY26, we were INR 82 crores from Europe, which became INR 89 crores, then dropped to INR 68 crores, and now INR 59 crores.

Speaker #3: Because if you look at the last four quarters, like in Q2 of FY26, we were at ₹82 crores from Europe, which became ₹89 crores, then dropped to ₹68 crores.

Speaker #3: And now 59.

Vidyashankar Krishnan: Basically, Europe is a stable market, and goes reasonably up and down in tune with demand. Nothing noteworthy from Europe in terms of, you know. No business has been lost. That much I can say very clearly. It is just customer demand that is going up or down.

Speaker #4: Basically, Europe is a stable market and growth is reasonably up and down in tune with demand. Nothing noteworthy from Europe in terms of—you know, no business has been lost.

Speaker #4: That much, I can say very clearly. It's just customer demand that's going up or down.

Suraj Malu: I see. Because, sir, in general we hear that European forging shops are shutting down, so that should be a large opportunity for us, right? And it should reflect in the growth.

Speaker #3: I see. Because, sir, in general we hear that European forging shops are shutting down. So that should be a large opportunity for us, right?

Speaker #3: And it should reflect in the growth.

Vidyashankar Krishnan: Yes, overall the trend continues.

Speaker #4: Yes. Overall, the trend continues.

Suraj Malu: Okay. Sir, in terms of machining, what percentage of our gross block would be the CNC machines?

Speaker #3: Okay. Sir, in terms of machining, what percentage of our gross block would be CNC machines?

Suraj Malu: Ladies and gentlemen, the line for the management seems to have dropped. Please hold while we reconnect them. Ladies and gentlemen, the line for the management has been reconnected. Thank you, and over to you, sir. Suraj sir, your question is answered?

Operator: Ladies and gentlemen, the line for the management seems to have dropped. Please hold while we reconnect them. Ladies and gentlemen, the line for the management has been reconnected. Thank you, and over to you, sir. Suraj sir, your question is answered?

Speaker #2: Ladies and gentlemen, the line for management seems to have dropped. Please hold while we reconnect them. Ladies and gentlemen, the line for management has been reconnected.

Speaker #2: Thank you, and over to you, sir. Suraj sir, your question is answered.

Suraj Malu: No. My question was, how many CNC machines do we have, and how much does that amount to of the INR 2,100 crore gross block?

Speaker #4: No, my question was: how many CNC machines do we have, and how much does that amount to out of the ₹2,100 crore gross block?

Vidyashankar Krishnan: Oh. A tough question, Suraj. I don't have that number across the board. It will run into hundreds, that I can tell you. We will note it down, and we will come back to you on this.

Speaker #3: Oh, a tough question, Suraj. I don't have that number across the board. It'll run into hundreds, that I can tell you. I'll note it down.

Speaker #3: We'll note it down, and we'll come back to you on this.

Suraj Malu: Sure, sir. Thank you.

Speaker #4: Sure, sir. Thank you.

Vidyashankar Krishnan: I can tell you what it constitutes. One sec. I can tell you what our investments in machine shop constitutes out of the 2,100. If you give me a minute, if you give me a few, this thing, I can locate that sheet for you. That is possible.

Speaker #3: But I can tell you what it constitutes. One sec. I can tell you what our investments in the machine shop constitute out of the 2,100.

Speaker #3: If you'll give me a minute—if you'll give me a little, this thing—I can locate that sheet for you. That is possible.

Suraj Malu: Indeed, sir.

Speaker #4: Yes, sir. Yeah.

Vidyashankar Krishnan: One second, hold on. I will get back to that answer. We have the data, just fishing it out.

Speaker #3: One second. Hold on.

Speaker #4: I'll get back to that answer. We have the data, just fishing it out.

Suraj Malu: Sure, sir. Sir, two quarters ago, you had mentioned about reaching INR 3,000 crores in revenue by FY30. Do we still look to that number?

Speaker #3: Sure, sir. Sir, two quarters ago you had mentioned about reaching ₹3,000 crores in revenue by FY30. Do we still look to that number?

Vidyashankar Krishnan: Yes.

Speaker #4: Yes.

Suraj Malu: All right, sir. Thank you very much.

Speaker #3: All right, sir. Thank you very much.

Suraj Malu: Thank you, sir. The next question is on the line of Gautam Kishan B. Mehra from 361 Capital. Please proceed with your question.

Operator: Thank you, sir. The next question is on the line of Gautam Kishan B. Mehra from 361 Capital. Please proceed with your question.

Speaker #2: Thank you, Sir. The next question is from the line of Gautam Kishan B. Mehra from 361. Please proceed with your question.

Gautam Kishan B. Mehra: Thank you for the opportunity. Good afternoon, sir. Trust you are well. Congratulations on a great set of numbers. Sir, as we move

Speaker #1: Thank you for the opportunity. Good afternoon, sir. Trust you are well. Congratulations on a great set of numbers. Sir, as we move—very well, sir.

Vidyashankar Krishnan: How are you?

Gautam Kishan B. Mehra: Very well, sir. Thank you. Sir, as we move from 20,000 tons per quarter to 25, and eventually to 27, 30,000, where do you think or believe your maximum growth could come from? Is it the Indian markets or the European markets or the American markets, or a combination of all?

Speaker #1: Thank you. Thank you. Sir, as we move, you know, from 20,000 tons per quarter to 25,000, and eventually to 27,000 or 30,000, where do you think or believe your maximum growth could come from?

Speaker #1: Is it the Indian markets, or the European markets, or the American markets, or a combination of all?

Vidyashankar Krishnan: Well, combination of all. First answer will be combination of all. India today being 63% of our sales, naturally will carry a lot of the tailwind. We are also getting a lot of order wins on the export side, so that also augurs well. Overall, I would say numbers should go across the globe. See, the point is, Garvit, many customers are also setting shop in India, so global customers. So some amount of global business is becoming Indian business.

Speaker #4: Combination of all. The first answer will be a combination of all. India today, being 63% of our sales, naturally will carry a lot of the tailwind.

Speaker #4: We're also getting a lot of order wins on the export side, so that also augurs well. And overall, I would say numbers should go up across the globe.

Speaker #4: See, the point is, Gautam, many customers are also setting up shop in India—global customers. So, some amount of global business is becoming Indian business.

Gautam Kishan B. Mehra: Right, sir. Just a small follow-up. Sir, of the last, say, three, four cycles, do you think the combination of all three regions of yours, this is the highest growth you could see? The current cycle?

Speaker #1: Right, sir. And just a small follow-up. Sir, if you know the last, say, three or four cycles, do you think the combination of all three regions of yours—this is the highest growth you could see?

Speaker #1: The current cycle?

Vidyashankar Krishnan: Please repeat, Gautam.

Speaker #4: Please repeat Gautam.

Gautam Kishan B. Mehra: Sir, we've had multiple cycles over the last 20 years. The current combination of business being great from India, Europe, and America, do you feel the current scenario is the best in the last three or four cycles that we've seen?

Speaker #1: So, you know, we've had multiple cycles over the last 20 years. The current combination of, you know, business being great from India, Europe, and America—do you feel the current scenario is the best in the last three or four cycles that we've seen?

Vidyashankar Krishnan: I think so.

Speaker #4: I think so.

Gautam Kishan B. Mehra: Perfect.

Vidyashankar Krishnan: We haven't seen this level of, what shall I say, strength in demand across all customers. At some point of time, some customer, some region or the other has been moribund. But this time around, as I told a few minutes back, every cell, every machining line is running to the fullest of its capability. We have tons to go in terms of productivity improvement, at least from my vision. So we are working, and my team is working really hard on that. We have a lot to do on the productivity side, even at these levels. So that's the headroom that we have. But having said that, today, every line is virtually running at its reasonable fullest. But that can be pushed by another percent easily.

Speaker #1: Perfect, sir. Thank you.

Speaker #4: We haven't seen this level of, what shall I say, strength in demand across all customers. At some point of time, some customer, some region or the other, has been moribund.

Speaker #4: But this time around, as I mentioned a few minutes back, every cell, every machining line is running to the fullest of its capability.

Speaker #4: We have, we have tons to go in terms of productivity improvement, at least from my vision. So we are working, and my team is working really hard on that.

Speaker #4: We have a lot to do on the productivity side, even at these levels, so that's the headroom that we have. But having said that, today every line is virtually running at its reasonable fullest.

Speaker #4: But that can be pushed by another percent easily.

Gautam Kishan B. Mehra: Understood, sir.

Speaker #1: Understood, sir. This is.

Vidyashankar Krishnan: In some cases, it takes a lot of work, but that work is anyway a must. It is unavoidable, and it must be done to improve the overall asset utilization of the organization. Wherever, during such quests, we find that we have to debottleneck or replace, we are also considering that.

Speaker #4: Okay. This takes a lot of work. But that work, anyway, is a must—it's unavoidable. And it must be done to improve the overall asset utilization of the organization.

Speaker #4: And wherever during such quests we find that we have to de-bottleneck or replace, we are also considering that.

Gautam Kishan B. Mehra: Great, sir. Thank you, and we look forward to fantastic numbers in FY27 and FY28. Congratulations once again.

Speaker #1: Great, sir. Thank you. We look forward to fantastic numbers in FY27 and FY28. Congratulations once again.

Vidyashankar Krishnan: Thank you.

Speaker #4: Thank you.

Vidyashankar Krishnan: Thank you, sir. The next question is from the line of Brajesh Maru from MoneyCurve Analytics. Please proceed with your question.

Operator: Thank you, sir. The next question is from the line of Brajesh Maru from MoneyCurve Analytics. Please proceed with your question.

Speaker #2: Thank you, sir. The next question is from the line of Prajesh Maru from Money Curve Analytics. Please proceed with your question.

Rajesh Maru: Thank you for this opportunity again, sir. In last two, three calls, you had consistently said that we have taken some cost-saving measures in terms of saving the power and fuel cost, in terms of interest cost, as well as labor cost by putting robotics. If I am right, in one of the institutional calls, you had said that you are also incrementally trying to use AI to become more efficient on the ancillary functions of the company. Given all these things, sir, with the volume going up, do you see any headroom for EBITDA margin to expand from current 18% level, sir? If yes, then what kind of margin we can see, sir? Thank you.

Brajesh Maru: Thank you for this opportunity again, sir. In last two, three calls, you had consistently said that we have taken some cost-saving measures in terms of saving the power and fuel cost, in terms of interest cost, as well as labor cost by putting robotics. If I am right, in one of the institutional calls, you had said that you are also incrementally trying to use AI to become more efficient on the ancillary functions of the company. Given all these things, sir, with the volume going up, do you see any headroom for EBITDA margin to expand from current 18% level, sir? If yes, then what kind of margin we can see, sir? Thank you.

Speaker #1: Thank you for this opportunity again, sir. In the last two or three calls, you have consistently said that we have taken some cost-saving measures in terms of saving on power and fuel costs, as well as interest cost and labor cost by implementing robotics. If I'm right, in one of the institutional calls, you had also mentioned that you are incrementally trying to use AI to become more efficient in the ancillary functions of the company.

Speaker #1: So, given all these things, sir, and with the volume going up, do you see any headroom for EBITDA margin to expand from the current 18% level, sir?

Speaker #1: And if yes, then what kind of margin can we expect, sir? Thank you.

Speaker #4: Thank you. Thank you. Can I get your name, please? Again?

Vidyashankar Krishnan: Thank you. Can I get your name, please, again?

Rajesh Maru: My name is Brajesh Maru, sir.

Brajesh Maru: My name is Brajesh Maru, sir.

Speaker #1: My name is Prajesh Maru, sir.

Vidyashankar Krishnan: Oh, Brajesh, you were there a few.

Speaker #4: Oh, Prajesh. You were there a few, yes, sir, sounds earlier—or just before Gautam, actually. Yes, Prajesh, there is a scope for EBITDA improvement.

Rajesh Maru: Yes, sir.

Brajesh Maru: Yes, sir.

Vidyashankar Krishnan: Rounds earlier, just before Gautam, actually.

Rajesh Maru: Yes.

Brajesh Maru: Yes.

Vidyashankar Krishnan: Yes, Brajesh, there is a scope for EBITDA improvement. I would be naive to say that there is no scope or that we have reached peak EBITDA. There is a scope, and we have to work on it to get to, I would say, I hold to previous, our target would remain a 20% plus goal. We have to squeeze out another 2% to 3% from the system.

Speaker #4: I would be naive to say that, you know, there is no scope or that we have reached peak EBITDA. There is scope.

Speaker #4: And we have to work on it to get to, I would say, all the previous, this thing. Our target would remain a 20-plus goal.

Speaker #4: We have to squeeze out another two, three percent from the system. Thank you. One percent is it's I can I have the clear visibility for one to two percent.

Rajesh Maru: Okay, sir. Thank you, sir.

Brajesh Maru: Okay, sir. Thank you, sir.

Vidyashankar Krishnan: 1%, I have the clear visibility for 1% to 2%, but I would say 2% to 3%, that should be our goal, and that's aligned for the team.

Speaker #4: But I would say 2% to 3% should be our goal. And that's balanced for the team.

Rajesh Maru: Thank you, sir. Thank you so much.

Brajesh Maru: Thank you, sir. Thank you so much.

Speaker #1: Thank you, sir. Thank you so much.

Rajesh Maru: Thank you, sir. The next question is from the line of CA Garvit Goyal from Serene Alpha Analytics LLP. Please proceed with your question.

Operator: Thank you, sir. The next question is from the line of CA Garvit Goyal from Serene Alpha Analytics LLP. Please proceed with your question.

Speaker #4: Thank you so much.

Speaker #2: Thank you, sir. The next question is from the line of CA Gharvik Goyal from Sirini Alpha Analytics LLP. Please proceed with your question.

Garvit Goyal: Hello, am I audible?

Speaker #1: Hello. Am I audible?

Garvit Goyal: Yes, sir.

Operator: Yes, sir.

Speaker #2: Yes, sir.

Speaker #4: Yes, sir.

Garvit Goyal: Sir, my question on working capital side, like in last 2 years, we see the working capital around 30% of the revenue. In FY24, this is about 23%. In given standalone revenue, any operational contract around 4094. Have we able to convert this cash in trade receivable and other in Q1 FY24? Is there any working capital intensity still there, or we can come with 23% as we part performance?

Speaker #1: Sir, my question on the working capital side: in the last two years, we have seen working capital at around 30% of revenue, and in FY24, this is about 23%.

Speaker #1: So, in the given standalone revenue, any operational contract around 4,094 — have we been able to convert this cash into trade receivable and others in Q1 FY24-27?

Speaker #1: And is there any working capital intensity still there, or can we come with 23% as we passed performance?

Vidyashankar Krishnan: Very good question, Garvit. We are working on this increase in working capital, and it is our endeavor to bring it down. That's the goal. No doubt about it.

Speaker #4: Very good question, Gharvik. We are working on this increase in working capital, and it is our endeavor to bring it down. That is the goal.

Speaker #4: No doubt about it. By cutting down on inventory, and to answer a previous—I don't know, you asked this question about AI?

Garvit Goyal: Okay.

Vidyashankar Krishnan: By cutting down on inventory. To answer a previous, I do not know, you asked this question about AI?

Garvit Goyal: No, sir. My question on working capital.

Speaker #1: No, sir. My question was on working capital.

Vidyashankar Krishnan: Rajesh Maru asked it. Yeah.

Speaker #4: Prajesh Maru asked it. Yeah.

Garvit Goyal: Yeah. Yeah, sir.

Vidyashankar Krishnan: I didn't answer that question, Rajesh. I'm sorry. One sec. Using the two together, we are using AI tools to identify where the inventory is getting stuck. Believe me, in the last seven to 10 days, it's become a revelation on stuck inventory. So many teams are now, a rapid action force has been formed to dissolve this inventory, if I can use the word, literally. Push it out from us. It means money which customers want. Second is to get down our money that is stuck in goods. So point well taken. That is one of our goals for the months to come. In answering this, I also would say that Brajesh's question on AI tools, that we are using those effective quite. We've started using at least to crunch the data and see the insights are amazing, really amazing.

Speaker #1: Yeah.

Speaker #4: Yeah, sir. I'm sorry. One sec. Using the two together, we are now using AI tools to identify where the inventory is getting stuck. And in the last delivery, in the last seven to ten days, it's become a real—it's become a revelation on the stuck inventory.

Speaker #4: So, many teams are now in place. A rapid action force has been formed to dissolve this inventory, if I can use the word—literally push it out from us.

Speaker #1: It means.

Speaker #4: Which customers want, and second is to get down our money that is stuck in goods. So, point well taken. That is one of our goals for the months to come.

Speaker #4: And in answering this, I would also say—regarding Prajesh's question on AI tools—that we are using those effectively. We've started using them, at least to crunch the data, and the insights are amazing.

Speaker #4: Really amazing, because it's able to map down and say: this is the data, these are the parts, these are the particular part numbers which are required and in stock, and we need to push these.

Vidyashankar Krishnan: Because it's able to map down and say, "This is the data. These are the parts. These are the particular part numbers which are required and in stock, and we need to push these." So it's giving a lot of insights to the management team. I hope in the next few weeks we should see, not I hope, I expect over the next few weeks this to start yield results. What we want to do as a result of this is to convert our WIP to the barest minimum, say, a week's time, and move everything else as finished goods. Overall, there would be a reduction in inventory numbers, but not to insanely low levels.

Speaker #4: So it's giving a lot of insights to the management team. And I hope in the next few weeks we should see—not I hope.

Speaker #4: I expect, over the next few weeks, this to start yielding results. And what we want to do as a result of this is to convert our WIP to the barest minimum.

Speaker #4: Say a week's time, and move everything else as finished goods. Overall, there would be a reduction in inventory numbers, but not, you know, to insanely low levels.

Vidyashankar Krishnan: But at some point, I would focus on getting that inventory to a bare minimum in WIP terms, means work in process terms, and push the numbers on, convert all that into what we call as RFD, or ready for dispatch.

Speaker #4: But at some point, I would focus on getting that inventory to a bare minimum in WIP terms—meaning work in process terms—and push the numbers to convert all that into what we call RFD, or ready for dispatch.

Garvit Goyal: Okay. Okay, sir. Note to here, sir. That's all my questions.

Speaker #1: Okay. Okay, sir. Good to hear, sir. That's all my questions.

Garvit Goyal: Thank you, sir. The next question is from the line of Priyankar Sarkar from Square 64 Capital Advisors LLP. Please proceed with your question.

Operator: Thank you, sir. The next question is from the line of Priyankar Sarkar from Square 64 Capital Advisors LLP. Please proceed with your question.

Speaker #2: Thank you, sir. The next question is from the line of Priyankar Sarkar from Square 64 Capital Advisors LLP. Please proceed with your question.

Priyankar Sarkar: Hi, sir. Good evening. Congratulations on a good set of numbers.

Speaker #1: Hi, sir. Good evening. Congratulations on a good set of numbers. Sir, just one basic question: Is there any update on the enabling QIP resolution that the board had passed a few months back?

Vidyashankar Krishnan: Thank you.

Priyankar Sarkar: Sir, just one basic question. Is there any update on that enabling QIP resolution that the board had passed a few months back?

Vidyashankar Krishnan: Yes, I answered it a few rounds back. The QIP is largely centered around a sharp opportunity that we might see in market. Certainly it is on the cards, and we are mulling it. At an appropriate time, we would definitely consider it.

Speaker #4: Yes, I answered it a few rounds back. The QIP is largely centered around a sharp opportunity that we might see in the market, so it is certainly on the cards and we are mulling it.

Speaker #4: At an appropriate time, we would definitely consider it.

Priyankar Sarkar: Sure, sir. Thank you very much, and wish you all the best.

Speaker #1: Sure, sir. Thank you very much, and wish you all the best.

Vidyashankar Krishnan: Thank you.

Speaker #4: Thank you.

Vidyashankar Krishnan: Thank you, sir. The next question is from the line of Nitya from KK. Please proceed with your question.

Operator: Thank you, sir. The next question is from the line of Nitya from KK. Please proceed with your question.

Speaker #2: Thank you, sir. The next question is from the line of Nithya from KK. Please proceed with your question.

[Analyst] (KK): Yeah. Hi. My question has been answered already. Thank you.

Speaker #1: Oh, yeah. Hi. Hi. My question has been answered already. Thank you.

Vidyashankar Krishnan: Oh, okay.

Speaker #4: Oh, okay.

Vidyashankar Krishnan: Thank you, sir. The next question.

Operator: Thank you, sir. The next question.

Speaker #2: Thank you, sir. The next question.

Vidyashankar Krishnan: Yeah, please go on. You could identify the next caller, please. One of the data that was required was, what is our CapEx in the machining side, and where have we put the money in? So overall, we have invested about INR 1,100 crores in the machining side, of which in the last five years, we have put in INR 625 crores, and last 10 years, the number is about INR 1,000 crores. So INR 100 crores prior to 10 years has now become INR 1,000 crores in the last 10 years. And of that INR 1,000, INR 625 crores has been invested in the last five years. I hope I am clear. Just repeating the numbers. About INR 1,100 crores overall on the machining side, of which INR 100 crores dates back beyond 10 years, INR 1,000 crores is for the last 10 years. I am giving approximate numbers, okay? All rounded off last five, 10, 20 crores.

Speaker #4: Yeah, please go on. Before you identify the next caller, one of the data points that was required was: What is our capex on the machining side?

Speaker #4: And what are we—where have we put the money in? So overall, we have invested about ₹1,100 crores in the machining side, of which in the last five years, we have put in ₹625 crores.

Speaker #4: And in the last ten years, the number is about 1,000 crores. So, 100 crores prior to ten years has now become 1,000 crores in the last ten years.

Speaker #4: And out of that ₹1,000 crores, ₹625 crores has been invested in the last five years. I hope I'm clear. Just repeating the numbers: about ₹1,100 crores overall on the machining side, of which ₹100 crores dates back beyond ten years.

Speaker #4: 1,000 crores is for the last ten years. I'm giving approximate numbers, okay? All rounded off—the last ten, five, ten, twenty crores. So, 1,000 crores for the last ten years.

Vidyashankar Krishnan: INR 1,000 crores for the last 10 years, and of this INR 1,000 crores, INR 625 crores in the last five years.

Speaker #4: And of this ₹1,000 crores, ₹625 crores in the last five years.

Vidyashankar Krishnan: Sir, should we take next question? The next question is on the line of Ramesh from SJ Investments. Please proceed with your question.

Operator: Sir, should we take next question? The next question is on the line of Ramesh from SJ Investments. Please proceed with your question.

Speaker #2: Shall we move to the next question? The next question is from the line of Ramesh from SJ Investments. Please proceed with your question.

[Analyst] (SJ Investments): Thanks, sir. Thank you for the follow-up. As you already alluded to the fact that you spent around INR 1,100 crores over the last 10 years cycle. Just trying to understand, how did the capacity develop? About 10 years ago, how much was the capacity versus what is it today in machining today?

Speaker #1: Thank you, sir. Thank you for the follow-up. So, as we already alluded to, the factory is centered on south—₹900 crores over the last ten years, right, sir?

Speaker #1: So, just trying to understand: how did the capacity develop over ten years ago? How much was the capacity? Was it what it is today in machining?

Vidyashankar Krishnan: Machining capacity is extremely difficult to pin down in terms of numbers or in terms of tons, because I can tell you there is one part that is very heavy and requires relatively less machining. There is another family of parts, very popular, today accounts for about a good portion of our sales, which is heavy and requires extensive machining. Then there are light parts that require less. We will try to quantify this over a period of time. Give us a couple of months. I noted down from the first question that Mumuksh himself has asked. Right from there, this question is persisting. We have a number tracker, but that number tracker is of no use to you guys. We need to quantify machining capacity. We will work on it and come back to you with a method of quantifying our own machining capacity.

Speaker #4: Machining capacity is extremely difficult to pin down in terms of numbers or in terms of tons, because I can tell you there is one part that is very heavy and requires relatively less machining.

Speaker #4: There's another family of parts—very popular today—and it accounts for a good portion of our sales, which is heavy and requires extensive machining. Then there are light parts that require, you know, less. We'll try to quantify this over a period of time.

Speaker #4: Give us a couple of months. I'll note it down from the first question that Mr. Mumuk has asked. So, right from there, this question has been persisting.

Speaker #4: We have a number tracker, but that number tracker is of no use to you guys. So, we need to quantify machining capacity. We'll work on it and come back to you with a method of quantifying our own machining capacity.

Vidyashankar Krishnan: I'm sorry that we're answering such an important question with such a vague manner, but that's the way things stand. We'll apply our mind and try to bring some method to that madness, if ever we can.

Speaker #4: I'm sorry that you know we're answering such an important question with such a vague manner. But that is a that's where things stand. We will we'll apply our mind and try to put put bring some method to that madness.

[Analyst] (SJ Investments): Understood, sir. Got it, sir. That will be helpful.

Speaker #4: If if ever we can.

Speaker #1: Understood, sir. Got it, sir. That will be helpful. So, just...

Vidyashankar Krishnan: Yes.

[Analyst] (SJ Investments): Just

Vidyashankar Krishnan: Kind of.

[Analyst] (SJ Investments): And one more thing, sir. Coming to the American opportunity, right now contribution is around 10% or 15%, right? Where do you think this contribution from US is going to expand to in the next few years? Because you are very bullish about it, right?

Speaker #4: Kindly.

Speaker #1: And one more thing, sir. Coming to the American opportunity, right now our contribution is around 10% or 15%, right? Where do you think this contribution from the US is going to expand to in the next few years?

Speaker #1: Because you are very bullish about it, right?

Vidyashankar Krishnan: It is around 16% now, if I am not mistaken. And US should increase by around Should hold these levels, 18% now. It should maybe increase by a percent or two. Because the rest of the world is also growing. This time around, it is not just one zone that is growing in regards to the others. Every zone is reasonably growing, barring a little bit of a blip from Europe.

Speaker #4: It is around 16% now, if I'm not mistaken. And US should increase by around—should hold these levels at 18% now. It should maybe increase by a percent or two.

Speaker #4: Because the rest of the world is also growing. This time around, it's not just one zone that is growing in comparison to the others. Every zone is reasonably growing.

Speaker #4: Barring a little bit of a blip from Europe, so...

[Analyst] (SJ Investments): Got it, sir. I am actually-

Speaker #1: Got it, sir. Just one more thing for my understanding, sir. I'm trying to understand the market. Most of our exports go to Europe, right?

Vidyashankar Krishnan: Yes, sir.

[Analyst] (SJ Investments): Just one more thing, sir. Trying to understand the market. Most of our exports go to Europe, right? Just trying to understand, are forged products more used in Europe than US? Is that the fact or is it just the fact that we have a long relationship with the European customers than US customers? Could you explain? Trying to get the nuance of it.

Speaker #1: Just trying to understand, are Ford's products more used in Europe than in the US? Is that the fact, or is it just that we have had a longer relationship with European customers than with US customers?

Speaker #1: Could you explain trying to get the new answer?

Vidyashankar Krishnan: Forged parts are used in any economy. In any economy, forged parts are used. Without forgings, you do not have motion, as we know it today. As engineering stands today, forgings are at the center of where motion is, where transportation is. We know how both are so critical to any economy, right? What happens is that where these get consumed is the original equipment manufacturers or the tier ones. Where are they located? Therefore, it gets sent to those geographies. Obviously, it will be unwise to say that the rest of Asia is It will be downright foolishness to say rest of Asia is not at all into the transportation or the forgings market. The rest of Asia is huge. Japan, China, Korea. These are all traditionally closed markets, as India is.

Speaker #4: Ford's parts are used in any economy. In any economy, Ford's parts are used. Now, because without forging, you don't have motion, as we know it today.

Speaker #4: As engineering stands today, forging is already at the center of where motion is—where transportation is. So we know how both are so critical to any economy.

Speaker #4: Right? But what happens is that where these get consumed is the original equipment manufacturers or the tier ones. Now, where are they located? And therefore, it gets sent to those geographies.

Speaker #4: Now, obviously, it'll be unwise to say that you know the rest of Asia is it'll be downright foolishness to say rest of Asia is not at all into the transportation or the forging's market.

Speaker #4: The rest of Asia is huge: Japan, China, Korea. But these are all traditionally closed markets, as is India. So that is the reason why everybody looks at forgings, castings, and all.

Vidyashankar Krishnan: That is the reason why everybody looks at forgings, castings and all into Europe and Americas. This kind of metalworking is popular and strong in the Asian economies, and is declining in the other economies.

Speaker #4: Into Europe and the Americas, it is popular and strong in the Asian economies, and not, and is declining in the other economies.

[Analyst] (SJ Investments): Got it, sir. Basically, US and Europe is where these capacities are reducing, and our opportunity also lies there. I was just trying to understand a little bit more.

Speaker #1: Got it, sir. So basically, the US and Europe are where this capacity is reducing, and our opportunity also lies there. So I was just trying to understand a little bit.

Vidyashankar Krishnan: And also South America.

Speaker #4: And also South and West. It's also in South America. That list.

[Analyst] (SJ Investments): Yeah.

Vidyashankar Krishnan: Add also South America to that list.

[Analyst] (SJ Investments): Okay. South America also the capacities are declining.

Speaker #1: Okay. In South America, the capacities are also declining.

Vidyashankar Krishnan: For now, tough question to answer that. Brazil is fighting back. There are a lot of indigenous forgers now coming up in Brazil. A lot are coming up.

Speaker #4: That's not a tough question to answer, sir. Now, Brazil is fighting back. There are a lot of indigenous forgers now coming up in Brazil.

Speaker #4: A lot are coming up. So, it's quick to write off and say, you know, South America is a declining market. South America is another market where there is scope.

[Analyst] (SJ Investments): Okay.

Vidyashankar Krishnan: So it is quick to write off and say, South America is a declining market. South America is another market where there is scope. That much I can very clearly say.

Speaker #4: That much, I can very clearly say.

[Analyst] (SJ Investments): Understood, sir. I was just trying to understand the roots of why European customers are much bigger contribution in terms of our revenues. I am just trying to understand what exactly, why are Because usually it is otherwise around US's higher proportion compared to Europe.

Speaker #1: Understood, sir. Understood, sir. So, I was just trying to understand the roots of why European customers make a much bigger contribution in terms of our revenues.

Speaker #1: I was just trying to understand exactly why that is, because usually it's the other way around—US has a higher proportion compared to Europe.

Vidyashankar Krishnan: They are high-cost economies, high labor cost economies. Labor and cost pressures ensure that such businesses go out of those geographies.

Speaker #4: They are high-cost economies—high labor cost economies. So, labor and cost pressures ensure that such businesses move out of those geographies.

[Analyst] (SJ Investments): Got it, sir. But for us, how did-

Speaker #1: Got it, sir. But for us, how was it?

Vidyashankar Krishnan: Any of the duty imposed by the US government in recent times, none of the forging buyers in the US have balked as a result of that. Fortunately for MM Forgings, huge fortune that none of our contracts we bear the customs duty. That would have been hell otherwise. Since even though there is huge amount of duty imposed, customers are still buying, means that they are not able to. One, setting up these capacities is difficult. Setting up a forging capacity, getting hold of people to operate forging presses, and processing the parts, it is not easy. It is damn difficult. Even in India, forgings will be a sector that will be difficult to man in the next few years. Man or woman, I can use the word. Currently, we do have a significant portion of women coming into our workforce.

Speaker #4: Any of the duty posts by the US government in recent times—we, none of the forging buyers in the US, have balked as a result of that.

Speaker #4: Fortunately for forgings, it's a huge fortune that none of our contracts require us to bear the customs duty. That would have been hell otherwise. So, even though there is a huge amount of duty imposed, customers are still buying, which means that they are not able to—one, setting up these capacities is difficult.

Speaker #4: Setting up a forging capacity, getting hold of people to operate forging presses and processing the parts—it's not easy. It's damn difficult. Even in India, forging will be a sector that will be difficult to man in the next few years.

Speaker #4: Man or woman, I can use the word. Currently, we do have a significant portion of women coming into our workforce.

[Analyst] (SJ Investments): Understood, sir.

Vidyashankar Krishnan: Ultimately, the point of the matter is that these economies will find it difficult to. And also those skills get lost over a generation. If for 20 years you haven't forged, then getting the skills back is difficult. But you can also jump the skill game. Quick this thing in glances, India jumping the GSM bandwagon. We didn't go through the CDMA route and struggle on the mobile phone side, connectivity side. We straightaway jumped into GSM, and we leapt forward about 20 years. Like that, in the forging side, it is possible to somehow gain, but that will have to come in very restricted circumstances, where there is huge level of automation, and you have to pour in capital, which means that you need to have customers who are backing you to the hilt.

Speaker #1: Understood, sir.

Speaker #4: So, ultimately, the point of the matter is that these economies will find it difficult to—and also, those skills get lost over a generation. If for 20 years you haven't forged,

Speaker #4: Then getting the skills back is difficult. But you can also jump the skill gap quickly with this thing, in glances. India jumped the 3G, the GSM bandwagon.

Speaker #4: We didn't go through the CDMA route and struggle on the mobile phone side—the connectivity side. We straight away jumped into GSM, and we leapt forward by about 20 years.

Speaker #4: So, like that, on the forging side, it is possible to somehow gain. But that has to come under very restricted circumstances, where there is a huge level of automation.

Speaker #4: And you would have to pour in capital, which means that you need to have customers who are backing you to the hilt. So all these are, you know, strategic seismic shifts in the costing landscape.

Vidyashankar Krishnan: All these are strategic, seismic shifts in the costing landscape, which will be very difficult to unravel.

Speaker #4: Which will be very difficult to unravel.

[Analyst] (SJ Investments): Understood, sir. Just one last question. Just trying to understand. You mentioned that because of declining capacity, we are getting orders. Probably our main competition is China. So where do you think we are getting most of our orders? Is it because of the declining capacity or China re-sourcing?

Speaker #1: Understood, sir. So just one last question—just trying to understand. You mentioned that because of declining capacities, we're getting orders. So, probably, our main competition is China?

Speaker #1: So where do you think we're getting most of our orders? Is it because—is it declining capacity, or China resourcing?

Speaker #4: China resourcing: we are getting new orders also because customers there are growing their business, and they want to source from BCC or LCC—best cost countries or low-cost countries.

Vidyashankar Krishnan: We are getting new orders also because customers there are growing their business. They want to source from BCC or LCC, best cost countries or low cost countries for those respective parts. It is wrong to say that

Speaker #4: For those respective parts. So it's wrong to say, you know, that those markets are in pure decline alone. For all that you know, the US market may be growing also in forgings.

[Analyst] (SJ Investments): Okay

Vidyashankar Krishnan: those markets are in pure decline alone. For all that you know, the US market may be growing also in forgings. For all that you know, I have no clue. Many orders are coming our way across the global landscape because customers want to buy from India. See, ultimately

Speaker #4: For all that you know, I have no clue. But many orders are coming our way across the global landscape because customers want to buy from India.

[Analyst] (SJ Investments): Got it.

Speaker #4: See, ultimately.

Vidyashankar Krishnan: the need to at an entrepreneur or at an organization level to service a business at 18% EBITDA will be a lot higher than servicing a same business at 5% EBITDA.

Speaker #1: Got it.

Speaker #4: The the N2 at a at an entrepreneur or at an at an organization level to service a business at 18% EBITDA will be a lot higher than servicing a same business at at 5% EBITDA.

[Analyst] (SJ Investments): Yes, sir. Fair enough. Yeah.

Speaker #1: Yes, sir. Fair enough.

Vidyashankar Krishnan: Right. So that need to makes for customer satisfaction.

Speaker #4: Right. So that N2 makes for customer satisfaction.

[Analyst] (SJ Investments): Got it, sir.

Vidyashankar Krishnan: This is my perception over the last 15, 20 years.

Speaker #1: Got it, sir.

Speaker #4: This is my perception over the last 15 to 20 years. That will be very difficult to say.

[Analyst] (SJ Investments): Sir, just one.

Vidyashankar Krishnan: That will be very difficult to say.

Speaker #1: Okay. How much more expensive would it be compared to China?

[Analyst] (SJ Investments): Okay. How much more expensive would it be compared to China?

[Analyst] (SJ Investments): Sorry to interrupt, Ramesh, sir. We will take this as a last question from you.

Operator: Sorry to interrupt, Ramesh, sir. We will take this as a last question from you.

Speaker #4: Sorry to interrupt,

Speaker #2: Ramesh Sir, we'll take this as the last question from you due to time constraints, sir.

[Analyst] (SJ Investments): Yeah, sure.

[Analyst] (SJ Investments): Due to time constraint, sir.

Operator: Due to time constraint, sir.

[Analyst] (SJ Investments): That is fine. Thank you.

Speaker #1: That's fine. Thank you.

[Analyst] (SJ Investments): Thank you. Thank you, sir.

Operator: Thank you. Thank you, sir.

Speaker #2: Thank you. Thank you, sir. Ladies and gentlemen.

Vidyashankar Krishnan: Ramesh, you can send your question to us by voicemail or something, and we will try to answer it for you.

Speaker #4: I want mail or something and we'll try to answer it for you.

Vidyashankar Krishnan: Ladies and gentlemen, that was the last question for today due to time constraint. I would now like to hand the conference over to management for closing comments.

Operator: Ladies and gentlemen, that was the last question for today due to time constraint. I would now like to hand the conference over to management for closing comments.

Speaker #2: Ladies and gentlemen, that was the last question for today due to time constraints. I would now like to hand the conference over to management for closing comments.

Vidyashankar Krishnan: Thank you all for participating with your time and as usual with your intuitive questions, which have given us a bit more of insight into our own business. Hopefully, we will see more of this as we go on. I expect that MM Forgings would do strong in the quarters to come, with about targeting 25,000 tons of sales at a bare minimum in the coming two to three quarters. Reach that and then look beyond to touch 27,000 and then 30,000 tons every quarter, thereby quickly galloping to a capacity utilization of around 120,000 tons, backed up by strong machining exposure. As we see, most of the orders that we are getting now are all machined and very few are as forged. That in turn means that capital requirements are more.

Speaker #4: Thank you all for participating with your time and, as usual, with your incisive questions, which have, you know, given us a bit more insight into our own business.

Speaker #4: And hopefully, we'll see more of this as we go on. And I expect that forgings will do strong in the quarters to come, with a target of about 25,000 tons of sales.

Speaker #4: At a bare minimum, in the coming two to three quarters, reach that and then look beyond to touch 27,000 and then 30,000 tons every quarter.

Speaker #4: Thereby, quickly galloping to a capacity utilization of around 1,20,000 tons, backed up by strong machining exposure. In fact, most of the orders that we are getting now are all machined.

Speaker #4: And very few are as forged. So that, in turn, means that capital requirements are higher. So as we move forward, we see challenges on the cost side.

Vidyashankar Krishnan: As we move forward, we see challenges on the cost side, and we also need to do some trimming internally in terms of both costs as well as working capital and inventory, which all came up over the last few months internally as well as in this meeting. Thank you all for your wonderful participation, and looking forward to posting better numbers and much more growth in the quarters to come with the hard work of the team and, of course, God's grace. Thank you all. Jai Hind.

Speaker #4: And we also need to do some trimming internally, in terms of both costs as well as working capital and inventory, which all came up over the last few months.

Speaker #4: Internally, as well as in this meeting, so thank you all for your wonderful participation. Looking forward to posting better numbers and much more growth in the quarters to come.

Speaker #4: With the hard work of the team, and of course, God's grace. Thank you all. Jai Hind.

Vidyashankar Krishnan: Thank you, sir. On behalf of 361 Capital Market Private Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines. Thank you.

Operator: Thank you, sir. On behalf of 361 Capital Market Private Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines. Thank you.

Speaker #2: Thank you, sir. On behalf of 361 Capital Market Private Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.

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Q1 2027 MM Forgings Ltd Earnings Call

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