V. Senthil: Thank you. Good afternoon, everyone, and thank you for joining LMW Ltd. earning call for Q2 FY26-27. We will have a brief about the overall performance of the company for the period ending September 2026, followed by an interactive session. I would like to clarify that certain statements made in the discussion of the conference will be forward-looking in nature. To begin with, let me explain the overall performance of the company, followed by the consolidated performance and the segment-wise performance. The financial results have been posted on the company website, and I hope you have had an opportunity to go through the same. The revenue for the quarter ended September 2026 is INR 1,153 crores, as against INR 815 crores for September 2025, which is an increase of around 30%.
V. Senthil: The company has achieved H1 revenue of INR 2,045 crores for the period, as against INR 1,537 crores for the corresponding previous period, which is a 30% increase in revenue. The PBT stands at INR 204 crores for the current period, as against INR 93 crores for the previous period. As we go into the division-wise, Textile Machinery Division for the quarter ended September 2026 has clocked in a turnover of INR 639 crores, as against INR 432 crores in the previous quarter, resulting in an increase of 32%. When compared to the quarter ended September 2025, the sales increase is 38%. TMD revenue for H1 stands at INR 1,121 crores, as against INR 876 crores for the corresponding previous period, resulting in an increase of around 28%. Profit for H1 stands at INR 48 crores, as against INR 2 crores for the corresponding period last year.
V. Senthil: With respect to the order book, we hold an order book currently of around INR 3,400 crores, of which an active order book is roughly INR 2,600 crores. With respect to sales, which has been clocked, the domestic versus export versus spares stands at 67% domestic, 8% exports, and 25% spares. The capacity utilization is around 60% in Textile Machinery Division. As I move on to LMW Holding, which holds LMW China and LMW Global at Dubai, the turnover for LMW Global stands at INR 100 crores for the half year ended September 2026, as against a comparative number of INR 71 crores for the half year ended September 2025. The order book in export is closer to INR 163 crores on hand for LMW Global. In LMW China, we have been able to clock a turnover of INR 36 crores, and for the comparative period last year, it stood at INR 41 crores.
V. Senthil: The order book stands at around INR 128 crores. As I move to Machine Tool Division and Foundry, the turnover in the Machine Tool Division and Foundry is INR 794 crores for the H1 ended 26 September, as against INR 555 crores for the corresponding previous period. Out of this, 9% relates to foundry turnover. The balance is towards Machine Tool Division turnover. We are operating at a utilization of around 75% to 80% at the Machine Tool Division. With respect to ATC, the turnover for the H1 stands at INR 135 crores as against a corresponding turnover of INR 97 crores in the previous year, H1. With this brief, I would like to stop, and we can start the discussion and the interactive session. Over to you, Mr. Samir.
Operator: Thank you so much, sir. Ladies and gentlemen, we would request people to please raise hands so that we can unmute you and we can have the queries discussed. Sir, we have Mr. Poojan Shah with the first question.
V. Senthil: Go ahead, Mr. Shah.
[Analyst 1]: Hi, Santhan sir. Am I audible?
Operator: Yes, sir.
V. Senthil: Yes, please.
[Analyst 1]: Yeah, okay. Santhan sir, my first question pertains to the ATC division. I just want to understand, we can do a revenue of INR 300 crores. I just want to understand, what is the current capacity and the peak revenue we can achieve from the current capacity? Second, we are investing INR 150 crores in this division. So what could be the peak revenue we can achieve, when we can expect the commissioning, and when we can reach the peak revenue for this specific division after the CapEx?
V. Senthil: Okay. You can please continue with all your questions, and then I will give a-
[Analyst 1]: Okay.
V. Senthil: Please continue.
[Analyst 1]: In the textile division, we also see that there is a free trade agreement which is getting concluded, and that is where the textile business is also booming. So that will ultimately flow to our order book as well. How are we seeing this division? Because last two years, our EBITDA margin has been negative in this segment, while currently, if you look at the last two quarters, we are a bit positive or at a break-even. So what are our more or less expectation in terms of EBITDA margin going forward specific for division when such a tailwind has been We are seeing such a good tailwind. We are also expanding machine tool division. So what are our core expectation of building such a What are the core aspiration to that, and how are we planning to scale this division going forward?
[Analyst 1]: I just want to also understand on the ATC division. So we are also associated with tier 1 players like Boeing or Airbus, but also wanted to understand, are we associated with new programs which can eventually contribute to our order book, which is right now a INR 1,000 crore order book, which can conclude to a INR 2,000, INR 3,000 in going forward basis? So how are we seeing this specific segment as well? These are my few questions. I will join back in the queue.
V. Senthil: Thank you. So I will take it up in terms of the same order what you asked. Let me start with ATC. ATC, from a capacity standpoint, we will be closer to 70% capacity utilization in this division. As you know, ATC is comprised of two divisions. One is metallics and composites, and the spare capacity available in the composites is little bit higher. The turnaround is mainly on account of we having good traction on the composite segment as well, apart from the metallic segment. For the numbers in question, yes, we will be the current capacity. Generally, the ratio of turnover to investment in this type of business is always closer to 1:1:1:1.23, depending again on the mix as to whether some of it is what type of material are we fully supplying the component with material costs, or are we only doing job work.
V. Senthil: Because in this business, you have a combination of job work and with material as well. That again depends on who we are operating with, domestic exports. There is a lot of combination of factors, so it will be very difficult to give you a particular number to say this is the number. Is that the right number for the current location. From the thumb rule, you can always calculate. With respect to the new investments, the new investments are yet to go in. I think we have discussed this right from Q3 of last year, where we had gone in for an investment, MOU signed up with the TN government. The work is going on with respect to the planning, et cetera.
V. Senthil: Yes, we will, at an appropriate time, we will be giving out the timeline on which this investment will become, I mean, the plant will basically get commissioned, et cetera. With respect to the type and nature of business, we do work with tier 1 and more to do with tier 2 as well. I mean, for example, we have engine. The way we look at it is we supply to engine parts, we supply special process, we supply structural. It goes into tier 2 for further supply into tier 1. That is the way it works. But very clearly, we have always had in the past, at least 90% exports and 10% focus on Indian ecosystem. Right now, this transition and the increase what you see is basically because of readdressing more of the Indian ecosystem.
V. Senthil: The stability in the business has always been the metallics with long-term contracts. This business generally comes with long-term contracts when you deal with the tier 1 and tier 2 players, and that has been quite good. There, the focus is to increase what we could serve them in terms of their wallet share, how much more we can serve these customers. Indian defense program and the domestic defense program is something which is definitely a value add for us as well. We do participate in a lot of tenders which do come through. We should also understand and appreciate the way the Indian ecosystem is going to develop is, yes, you get large contracts, not in few thousand crores, it is multiples of thousand crores.
V. Senthil: But the ecosystem is such that you would get a drop, I would say, it would filter down to many, many players. So if there is a INR 15,000 or a INR 20,000 contract which is given out by the defense, we are all in the same ecosystem where we are all able to chip in and contribute to that ecosystem from our side using our capacities. That is the way the Indian ecosystem currently is. It is not that one company or someone would be in a position to cater to the entire requirement just because one order is getting signed with them. I would say it is a very healthy ecosystem, and where everyone knows each other's capabilities and capacities, and we are ready to work with each other. That is with respect to the ATC division.
V. Senthil: Textile division, I think it is well noted that this year has been quite good in terms of an uptick, what we see in the textile machinery division. But the fact also remains that from a government standpoint, a lot of new policies have also been announced. I think the Karnataka government has introduced a INR 4,000 crore textile policy. The textile ministry as such is trying to develop very focusedly exports with closer to 5,000 to 10,000 new exporters over next couple of years. On top of it, things like a New Zealand FTA policy, which supports the end customer's customer or the customer's customer, is definitely positive. However, we are very much aware that at this point in time, the challenges what we face are probably, we are in quite a few uncharted territories.
V. Senthil: I mean, to mention a few, how the second order impact of the war, because of which the material cost, all that is going to impact. I think these are all, we have to wait to see how these things play out. We are still very cautious. Yes, we have seen the numbers go up, but I would say we are still cautious as to how these rollouts would continue to happen over the next six months. As you know, all the commodity prices have gone up. The availability of electronics have become a challenge. There is a lot of work which currently, which everyone as an OEM supplier, we have to do to ensure a proper ecosystem and a very strong supply chain is functional right now to ensure that we are able to deliver. I think those are the challenges within the textile division.
V. Senthil: You have mentioned the word tailwind. I think that would be a word which would be more suitable to machine tool division rather than textile division at the moment. Going to machine tool division, yes, it is doing well. We are seeing consistently orders, order inflow happening. The industry as such is also growing quite well. The aspiration there is definitely, if you see the growth pattern as of now, I think it is closer to a 50% growth for the current year. There are a lot of positive signs, which we have again mentioned even in the previous call as well, which, for example, the China plus one, which we spoke about few years back, today we are actually seeing it happening on the ground. Similar to that, the demand as such is also good.
V. Senthil: The upgradation of machines are happening because people are wanting to upgrade into much more modern machines. There is a lot of demand being created, which is there in the ecosystem, and that is where we have increased our capacities a couple of years back. What we see now is, we have to further increase our capacities, and that's what we are in the process of doing. Like I always maintain here, for us, the capacity is nothing but enough space available for us to machine and assemble. It's much more in a short span of time, we can always ramp it up. As we touch 80% kind of a utilization, then we always look at how to keep it at 80% and keep increasing the capacity, which is what we are doing now. Thank you. I hope you have answered the question.
V. Senthil: Over to you, Mr. Sumit.
[Analyst 1]: Sir, I have some follow-up questions. Should I ask, or shall I join back in the queue?
V. Senthil: I think you should join back in the queue.
[Analyst 1]: Okay then. Okay.
V. Senthil: Thank you. Thank you very much.
Operator: Next we have Mr. Jay Unadkat.
[Analyst 2]: Thank you. Hope I am audible. I had two different questions, one related to the capacity expansion that is happening in yarn in specific. Santosh sir, if I may, the capacity expansion that is getting announced across textile companies is more towards garmenting, fabric, and technical textile area, right? Nobody focusing on really advancing larger capacities in yarn. I am looking to understand that is there a possible situation where there is a significant demand-supply mismatch that can happen? This is specifically more pronounced given the situation of Bangladesh in terms of geopolitics, cost of energy, as well as the recent events where they have had difficulty in being able to keep their share in terms of exports as well, right? If there is one on that, then we will move to the machine tool ATC part later.
V. Senthil: Well, you can give us the questions, Jay, then I will answer them together. Please go ahead.
[Analyst 2]: Sir, on machine tooling, we are advancing capacity at a slower, more cautious pace given what we are experiencing in the textile division, or this is the kind of visibility we have, given the statements that you made of experiencing China plus one as well as upgrades and continuous demand. Is this a more calibrated expansion, or is this something which reflects a cautious approach towards expansion, if I may read through it? If there are any sectors which are specifically driving this shift of demand, since you know the segment from which the demand is coming or the end user. If there is a specific sector you can highlight, it will be of help. Finally, sir, on the ATC division, where on the annual report there was a mention of saying that we have capabilities of being able to deal with metals like titanium.
[Analyst 2]: Now, to the best of my understanding, there are very severe limitations of the number of players that are available in India to be able to do titanium forging or having titanium capabilities of being able to maneuver through that metal. Sir, I wanted to understand if this is an area of focus in the future, if there is any kind of significant expansion of this capability that the company is undertaking, and what is other than the fact that there is a couple of lines mentioned around this in the annual report, if you can.
V. Senthil: Yeah. Thank you for the question, Jay. I mean, from a textile machinery division, see, you would like to again look at the fact that over a period of the 2 years of downturn, some amount of spindles are shut, right? I mean, the numbers are varying probably, or we are talking about 8 million plus kind of scenarios. But yes, there is some amount of spindle have got shut. Yarn is a commodity, and it is a global commodity.
[Analyst 2]: Correct.
V. Senthil: The demand from both China and Bangladesh has been quite strong because of the obvious reason. One, China demand has been growing. Bangladesh, because of its own challenges of local spinning, I think they have, and to some extent, some financial constraints, the demand is actually quite subdued. Local spinning demand is subdued, but the yarn buying is quite good. Yes, I mean, your analysis to say that at some point, are people not investing enough into spinning? I think I am with you there. But at the same time, the fact that we have been able to or taken orders, if you see in the month of, I think it is Q4 of last year, we were able to get some decent orders inside the system. Even this quarter, if you see the numbers, our net order inflow is up by around INR 200 odd crores.
V. Senthil: I think this is an indication. When we actually look at the flow of order book, it is closer to 70% is basically project orders. There are cases, the fact remains that people who are placing these orders are very clear, and they are all project orders. They are looking to expansion to a larger extent, because 60% to 70% is still majority of them are going that way. But the pace at which this is going to get added is, of course, a question. On top of it, the challenges, as you know, from a cotton price standpoint, from a synthetic fiber standpoint cost, I think there are a lot of factors right now playing. But ultimately, the garmenting and the fabric people are doing well, and government is looking at very positively the incentives again.
V. Senthil: It has also given us cotton import duty exemptions between 1 June to 31 October. I think there are enough positive things out there to help sustain the growth momentum which is expected of the industry, right? I think that is the way we would look at it. Last point on that, yes, from 45 to 50 million odd spindles, moving up to 70 million spindles or whatever the numbers are, would eventually happen. Again, we also maintain the path that, okay, by when? The pace is a question. But industry is going through both the positives and negatives of it as we speak. We hope for more positives than the negatives, honestly. Now, coming to machine tool division, both are independent.
V. Senthil: The way we are expanding, I think what has come out is basically a statutory requirement because we have a unit, it was not used, but as per the norms, we are supposed to identify it as a third unit because we are going to do our assemblies there. I think as per the exchange requirements, we had to file the filings which said that we are getting into another smaller unit. But basically, it is a unit which is already existing, fairly large space, where we can quickly ramp up the numbers. So, it is not a calibrated expansion, it is a planned expansion. This has nothing to do with the way TMD is growing. These are totally independent businesses, totally independent drivers for the business. With respect to the sectors, surprisingly, auto sector is still predominant one.
V. Senthil: It is still a little bit, I would say, a little bit upwards of 50% is where we are delivering into. Rest of it, the entire sector, be it defense, be it EMS, be it tooling, everything is expanding. I think the way I would look at it is, what types of machines are going there? Is it more turning centers? Is it more machining centers? Because of the kind of order flow, there is more machining centers which are kind of increasing in its footprint for us, right? For us, the ratio of machining centers to turning centers, machining centers are able to generate more turnover, have a little bit more growth than turning centers. But all sectors are growing. With respect to ATC, see, we are not into forging. When we say metallics, we are into basically machining, special process, et cetera.
V. Senthil: Our spares were quite steady, and it remains the same. We will and will continue to invest as we see fit, if we are able to recover. It makes sense for us to invest long term for a particular project in metallics division or composites division. The future focus is to ensure that we continue to ramp this up. As I said, our focus in the past couple of years from the turnaround point of view was always on exports, but today we are also looking at Indian defense, and we will continue to do these investments as we go forward. Thank you. Over to you, Mr. Samir.
Operator: Thank you so much, sir. Next we have Mr. Manish Goyal to go ahead with the next questions. Yes, Manish.
Manish Goyal: Yeah. Thank you so much, sir. Sir, just to continue on TMD, the exchange filings says we are increasing capacity by 10% on a base of 6,750 machines, and the capacity utilization is at 90%, which is mentioned over there. What we mentioned in your opening remarks is that we are at 75% to 80%. Just want to clarify on that aspect, number one. We are investing INR 10 crores towards that. That was the first question, sir. I would also like to ask as to why we are probably looking at such a small capacity increase in machine tool when the demand, when we are growing at 50% and the competition on other side has been increasing capacity significantly. If you can highlight on that. What would be now our mix between machining centers and the turning centers?
Manish Goyal: That is first set of questions if you can give us perspective on the TMD side. Sir, just to clarify this revenue breakup in textile machinery, what we are providing, it is for standalone numbers, right, sir? What you gave in the opening remarks, it is for Q2 or it is for H1? Maybe if you can give us the respective numbers as well. That was one. Even for LMW Global and LMW China, the numbers were for H1, what you gave, and maybe if you can share the quarterly numbers. Also, what is the PAT level numbers, the profit or the loss number?
Manish Goyal: In respect to this, sir, last year, as per annual report, what we see is that LMW Global seems to have incurred a fairly large loss number of some INR 29.5 crores on a INR 184 crores revenue. Was there any particular reason for such a large loss last year, and how should we look at in the current year for the overseas operation for both UAE and LMW Global and China operations? One more clarification, sir, on the spares business, what we probably shared the number, it is for domestic spares, right, sir? The breakup does not include. Basically, what components we send to our overseas subsidiaries.
V. Senthil: I understand.
Manish Goyal: Where is it included? Is it part of the exports or it is part of the spares, if you can clarify that? Sir, in annual report, sir, what we probably see is that investments has increased in overseas, basically LMW Holding from INR 206 crores to INR 377 crores. Are we probably investing more in terms of capacity creation or working capital? If you can give us perspective on that as well, sir. Sir, there is a land parcel development, basically land parcel of 4.2 acres, which is mentioned in annual report, and we have entered in JV with one entity called M/s. Infinium Developers, on basically development on revenue sharing. What could be the potential value for this, and over how many years should we be able to realize that?
Manish Goyal: Sir, in ATC, what would be our order book now, and how would the breakup of that order book between metallics and composites look like? Sir, annual report mentions that in TMD. Let me first complete ATC. ATC, sir, again continuing with the order book details, it is mentioned that the growth driver for us would be defense sector across spanning drones, missiles, radar systems, apart from export-led commercial business. What in particular we will be looking for this defense sector, like considering drones, missiles, and radar system? Would it be structural parts or electronic components? What would be the areas we will be looking at in this? It also talks about composites probably looking at more complex aerospace and space programs. Maybe if you can give us perspective, what kind of opportunities we have.
Manish Goyal: And we have also mentioned that we probably look for further margin expansion in ATC from probably what we have seen the already improvement to 22% in the segmental numbers. Sir, in TMD, should I ask later, sir? There are so many questions, sir.
V. Senthil: No, no, please. Go on, Mr. Manish. I am noting it, not an issue. I will miss it.
Manish Goyal: So in TMD, sir, there is mention about good demand for robotic auto-piecing, as there is a labor shortage and especially in export markets like Turkey. How is this particular product picking up? Also, if you can give us perspective about Lakshmi Winder, how has it ramped up in terms of demand and how should revenues look like? In MTD, I have already asked the question, sir. That is it, sir. Thank you so much.
V. Senthil: No, no, that is fine. That is fine, Mr. Manish. Always welcome. I will do the same order. MTD, we will have to understand, capacity ramp up first. The fact that the amount is very small is nothing to do with the area or what we are trying to do. It is a clear immediate requirement to ramp it up, and we have got place there. Like I was just mentioning, it is a statutory requirement. We have to declare in GST, we have to declare in a plethora of government agencies as to what our new division is. We could as such occupy that new location and put out everything, but that is why there is a very small amount, very, very small minor amount which is going there. But there is enough place for us.
V. Senthil: There is a place for us, and we believe very clearly in repurposing all our. Using it in. So that is what we are trying to do in here. As we hit that 80%, 85% mark, we will keep expanding our capacities. So, linking the numbers to the INR 10 crore, I think, is not perhaps the right way to look at it. It is that we would like to do a very quick ramp-up is what we are trying to do here, and there is an ecosystem around this. It is just not.
Manish Goyal: Right
V. Senthil: INR 10 crores. There is a fairly large ecosystem around it. With respect to turning centers, machining centers, it is around 22%, 23% to 24% machining centers and 76% turning centers. Textile machinery division, the numbers of what we have given is standalone, which is basically 67% domestic, 8% exports, and 25% spares. The spares are purely domestic spares, and export here includes OEM and what we export to our subsidiary abroad. With respect to the turnover, the turnover which I mentioned, which is INR 100 crores, is again, I did make mention, that is for the H1 ended. I mean, you may have to just to look at the last, this one, I had to reduce it. I do not have the number right away with me. INR 36 crores is for the LMW China.
V. Senthil: Yes, there is a loss, and as whatever kind of look at it, the markets where we operate has had its challenges, and it continues to have its challenges. The two countries which are doing well, and India being one of them, and of course, China, there is spindleage addition, but we have not been able to add as much in terms of top line there. But the rest of the markets where we generally operate, be it Bangladesh, Turkey, et cetera, has had its challenges. But the idea basically there is that, like I mentioned, we now have an order book, an active order book, which I gave out around 300 odd crores of order book is available. INR 163 and INR 128 crores of order book is available. So that will be due for execution over the next six months and little bit more than six months.
V. Senthil: So idea there would be to recover as much as what we have lost. Of course, these are expensive locations. We have our offices all over, which all comes under the LMW Holding company in Dubai. So that is the reason for the loss. It is the fact that we are unable to absorb because top line has not come through. But there has been, over the last few months, a decent amount of order book being built up, which will get delivered. With respect to the overseas holding and investments, the idea for us is kind of to create an external arm, and as what we have done is to bring all foreign entities under one entity. We had invested initially to buy off LMW India, subsidiary LMW China is to be subsidiary of India. We had invested initially to make that transfer, and we got that money back.
V. Senthil: We had sent in whatever the amount we had mentioned, I think it is 200 odd crores we had sent in, but that money was actually used to buy the subsidiary, and then that money was brought back. Only now we have started actually doing the investments. The idea is to create not only a capacity, but also to create a possibility for us to look at expanding and making our presence stronger. For example, to give a very basic example, for us, the reach to Africa as a subcontinent, that is, be it Egypt, Kenya, where we operate, is much more easier from Dubai rather than from our current location, right, from Coimbatore. The flexibility the international operations gives is quite good, and we are trying to leverage that. Of course, the markets have also expanded.
V. Senthil: Machine tool division, till the war had started, we were having some traction in terms of export into the GCC market, especially where pumps and valves and the oil and gas segment is very, very strong. We were having a good traction of our machines going inside, which was a new market where we are exploring. There are multiple advantages to it, but these are a couple of them. The land parcel of the 4.2 odd acres, Infinium, I think the realization probably is around 25% of that is what we will realize. In terms of a value, I will like to put it around anywhere from INR 20 to INR 24 crores value. In terms of timeline, it will be anywhere from 24 months to 30 months is timeline which we are looking at. But already it is in place and just giving the door-to-door timeline.
V. Senthil: Some realization would come through this year and some realization will come through next year. Moving on to, yes, with TMD, you had 2 other questions in terms of the robotic auto-piecing. Yes, robotic auto-piecing is a manpower-saving thing, and generally considering the pricing of these automation solutions, these things are absorbed initially at a very high-cost country like Turkey, right, where the cost of a mill worker goes up upwards of $1,000. So in these locations, it makes a lot more sense for it to be absorbed to start with. But as we know, a country like right now, Turkey is actually having its own challenges and there is not much investment going in there because of, for the last couple of, I would say, 2 years or so.
V. Senthil: But these machines are there with our customers and being accepted, but the automation will take time, but the solution is out there right now for the customers to adopt if required. Auto Winder has had a start. It is there. It has been sold to a few customers in South. I think the ramp-up would probably happen by next year in terms of more deliveries. But as of now, it is a well-accepted machine, and it is right now being given only to the South at the moment. Now going on to ATC, the order book still remains the same number. It is around 1,000 odd crores. The percentage of metallics versus composite is around 30% on composite side and 70% would still be metallics.
V. Senthil: With respect to the question on the defense drones, radar systems, missiles, et cetera, from ability to address the customer's ask, I mean the client, we have everything from structural, assembly, special process, et cetera. Of course, except the electronics alone. Like I already mentioned to the first question, when a defense program comes out, there is enough for us to address, and we have enough capabilities to address various parts of it. It could be a sub-assembly, it could be a machining, it could be a special process which we could address. Thank you. I think I have covered all the questions. Over to you, Mr. Sumit.
Operator: Thank you so much for answering that one. Thank you. The next queries would be raised by Mr. Manish Shah.
[Analyst 3]: Hello, sir.
V. Senthil: Yes, Mr. Manish, please go on.
[Analyst 3]: Yeah, sir, about autoconer, sir, can you give us a thorough idea about what is the market size in India? What is the percentage of imports and what is the scope for LMW in that? Another thing is in machine tools.
V. Senthil: Yeah.
[Analyst 3]: Can we have a brief overview of what is the 2, 3-axis machining and things, this part, and whether we are going for the five-axis thing, where we are there on that? What is the total market size in India? What are the imports of it, and what is our market share? Something to throw light on that. Yeah, that is all, sir.
V. Senthil: Okay. See, autoconer market size. Autoconer, first of all, is an imported machine, right? It is not manufactured in India, and we are the first ones from an Indian context to manufacture the Lakshmi Winder, which is the last of the spinning process, which is a packaging machine actually. From a textile machinery investment standpoint, if you invest in a spinning mill, autoconer would, I mean, or Lakshmi, the winding segment would account for around 25% to 30% of the entire cost of investment, right? That is the thumb rule which we all follow. So yes, you are looking at probably INR 1,500 plus crores to start with in terms of the market which is available immediately or a little bit more as well. I mean, now all the prices are all. There is a pricing impact, there is a currency impact because everything is imported, you know.
V. Senthil: So yes, there is a fairly large market, and it is a market which is falling within our segment of spinning. That is where we have introduced these machines, and they are available at the moment for. It is commercialized and available with everyone. With respect to the five-axis, I think a very interesting question. Predominantly, the industry as such was and is still predominantly on up to four-axis. The demand for five-axis comes in when you would like to do multiple of settings and machinings, but all at one shot. Right. Now we see because of the availability of labor, technically people want a single solution. There is a gradual increase in the demand percentage. But traditionally, if you see, it used to be less than 5% of the market would be a five-axis machine.
V. Senthil: But now we are of the opinion that for a period of time, this would, of course, increase because of the reasons what I just now mentioned. That is about it. Over to you, Mr. Samir.
Operator: Thank you so much for helping us with the answers on those. The next questions would be raised by Mr. Suraj Malu. Suraj ji, let us proceed.
[Analyst 4]: Thank you, sir. Sir, I had two questions. One is, what is the potential for the J2 machines or other SKUs that we sell for the EMS business? Secondly is, like recently there was a change in the articles of association, right, where we laid out like many verticals with pharmaceuticals, specialty chemicals, electric vehicles, electronics manufacturing, robotics. Can you help understand what are the plans here?
V. Senthil: Can you kindly repeat the first question, please? I could not get that.
[Analyst 4]: Sir, it was on the potential for the J2 machines that we sell or any other SKUs that we have built specifically for the EMS business.
V. Senthil: Okay.
[Analyst 4]: What is the potential for that?
V. Senthil: Okay. Yeah. I mean, from the articles of association, like we mentioned, it is an enabling resolution. We are, as what we see fit, looking at all possibilities, all opportunities out there. That was an enabling resolution. When anything concrete evolves, of course, we will be informing, and you will all be informed. With respect to the EMS machine, I think it is basically specifically for EMS segment. The machines are doing well. I mean, it is not only for the EMS, it also goes into tooling segment, which is for EMS. That is where I did mention that this forms part of the machining center family, right? It is not a turning center, it is a machining center family. Fairly good demand and offtake, and it is a part of a regular product of a new NPD. That is about it. There is a family.
V. Senthil: Again, if you go, you can go to our website. These machines are all available. There is a lot of data on our website on these machines. You will start with a smaller table size, and then it also grows to a particular little bit larger table sizes. All that information is available online with respect to this machine and the capabilities, of course. Thank you. Over to you, Mr. Samir.
Operator: Sir, thank you so much. I believe Mr. Poojan Shah has a follow-up question.
[Analyst 1]: Yeah. Thanks for the opportunity, sir. Just want to understand, as we have mentioned in the ATC division that we are right now at a capacity utilization of 70%. Assuming, considering that scenario, we can do a peak revenue of INR 370 crores to INR 400 crores. Once you expand with INR 150 crores as well, given the context, the asset turn could be 1.2, 1.3, assuming on a higher side, that could do an achievable of INR 200 crores. Sir, just want to understand on the incremental order inflow, are we able to cater? Because we already have an order book of INR 1,000 crores, which obviously should be completed in 3 to 3.5 years. But then incremental order inflow from tier 1, tier 2 suppliers or any specific program, are we able to cater then to the specific things?
[Analyst 1]: Because ultimately, the capacity will also take time to come up and ultimately contribute to the revenue. Second, we also sustainably think that 20% to 23% EBITDA margin is easily doable in this segment going forward. Third, I just want to understand, sir, in the terms of defense order book for ATC, which are the programs we have been associated? Is it BrahMos? Is it more on the missile side? It is more on the sub-missile assembly? How is the program has been built upon?
[Analyst 1]: Just want to also understand, when we have also mentioned about the cost escalation in our textile machine division, which is, and that is why we have been cautious, but also want to understand that what is the pass-through we have been expecting going forward in terms of price escalation whenever we are planning to do or we have already done in terms of price hikes or specific hikes and then discounting method? Just want to also understand, you have also mentioned about this machine tooling system. We have seen a very such a tailwind in each and every segment, but we have also seen many of the companies have also expanded their capacity. Obviously, a few people have expanded in 3-axis versus few people have expanded in the 5-axis segment.
[Analyst 1]: I also wanted to understand on a broader aspect, do you feel there would be a demand-supply issue which might be eroding our margins? Second, once we are building up our five-axis, do we see a shift in margins from going to a 10% kind of EBITDA margin to roughly say 15% to 20% kind of a margin in five-axis? Because it is a high-value, low-volume kind of a product.
V. Senthil: Okay. I think you have worked out some certain numbers. I think it is a fair point to you. I think I cannot comment on the numbers what you worked out, but ballpark figure might seem right. With respect to incremental order flow, there is very clear plan where we can only take orders which we can execute. Because generally, we cannot take orders which we can not execute because there is enough penalties available in this contract clauses. So, as we pick up orders, we ensure that we have enough capacities and we continue to add capacities to match that. I am not clear on your systemic 3% EBITDA question, so I will leave it out. We cannot answer what different specific programs we are associated with, but everyone knows what the programs are out there for picking up, but we cannot specifically get into every program.
V. Senthil: Cost escalation pass-through, yes, we do pass through some of it. I mean, it is a system. I mean, most businesses in terms of foundry, in terms of ATC, we got clauses, contract clauses, all that happens. With respect to specifically on OEM, no, I think for us it is a fixed price. It is one of our for the entire domestic industry for TMD. As of now, there is no pass-through, but it is an active discussion internally. Whilst at the same time, a lot of effort is going internally to have control on the cost. There is a lot of VAVE our team does, a lot of effort which is being put to ensure that we maintain the margins in these divisions. Absolutely spot on with respect to MTD. Five-axis machines are high value, low volume.
V. Senthil: Yes, the ideal scenario is when we place our machines against the imported machines, you expect to get more value for the machines and thereby a higher margin. But like I said, we will see two things happening in machine tool division. We have got enough volume has to still flow through, right? As you increase volume, you will see incremental operational efficiencies coming through and higher margins also coming through. Okay. Thank you. Over to you, Mr. Samir.
Operator: Thank you so much, sir. Next we have Mr. Mahendra Jay.
[Analyst 5]: Hello.
Operator: Yes, sir.
[Analyst 5]: Yes, sir. I am audible?
V. Senthil: Yes, Mr. Mahendra. Please go on.
[Analyst 5]: Thank you. Thank you, sir. Sir, I just want to understand in aeroplane business, exactly, sir, are we in commercial plane also? As there is a huge demand in aerospace in all parts. So are we involved in all? What kind of parts and engine parts are we in like that? That is my to understand just aeroplane business, what we are into there. Secondly, sir, in future, I mean, in next 2, 3 years, are we planning to divest this textile business upon some value we will pick up in other businesses as they are high-valued business? And third question is, sir, are you planning anything to increase your shareholding in company as we are going into very high-end margin business in future? Are you really planning to increase your stake? Only three business.
V. Senthil: Well, I think two of the questions is not something for me to answer, Mr. Mahendra, but I will take the first question. Yes, we are in commercial planes and we are in defense. Defense even externally, in exports and also, of course, all commercial planes are exports, right? And the answer to that is yes. The other two is not something which I can answer, but thank you for the questions. Over to you, Mr. Samir.
Operator: Sir, thank you so much. Sir, we have two follow-up questions.
V. Senthil: Yeah, please do. I think we can see two hands. Please go on.
Operator: Sure. We would request Mr. Jayakant to please proceed.
[Analyst 2]: Thank you again. Since I will be very quick if possible. Sir, if I look at it on the reverse basis, thank you again, yes, that machine tool gives a certain number, right? If we had to look at it that way and reverse match it, can the asset turn this time around be a significantly higher number, which requires, let us assume, a lower CapEx to deliver better asset turn efficiency? Is that the way to look at it? Because, again, I am just trying to decipher the sorry, three data points you put together. You answered to somebody on five-axis that demand is improving. You also suggested that the industry demand is positively moving. You suggested we are at 80% to 90%, let us assume, the press note and what you mentioned on the call is a combination of 80% to 90% utilization.
[Analyst 2]: Then this does not exactly come to the math of you delivering a 25% growth next year. Is it that this net expense that we are incurring in CapEx will have a significantly higher effector?
V. Senthil: I think, let me answer it like this, right? The capacity, what I think they have mentioned is a capacity of what we actually sell. It is very easily possible for us to make multiple of that, doing the right methodology. Now, if it were to go back to this small addition and say, "Okay, is this addition going to give" If your question is this addition going to give me the 25% growth next year? Will it come? Will it not come? I think there are a lot of things we do, and I don't think it is practical for us to explain everything, though, at the moment. Having said that, you can always turn on the tap with the multiple shifts, right? The same holds good.
V. Senthil: This is a business where it is more into more of assemblies, so it is possible for us to scale. There is absolutely no issues on that. What we'll have to understand is, this particular investment, what we declared is basically for a particular type of machine which is going to go into that particular location, which will be kept separate from a manufacturing standpoint for various reasons. So, that is where this very small amount was spent to just take over a site, and that site is all ours. It's not that it is an external. Everything is available. We just have moved into it. That is the only reason. Otherwise, from a growth point of view, yes, we are quite focused and the industry is growing, you would see, and we would like to ensure that we grow way beyond what the industry grows.
V. Senthil: That is the idea. Okay? Thank you. Over to you, Mr. Samir.
Operator: Thank you so much, sir. Another follow-up question from Mr. Manish Shah.
V. Senthil: Yeah.
[Analyst 3]: Machine tools only, sir. Sir, wanted to have a brief idea, sir, what is the market size in India? What is the import as of now? What is our market share, and how much growth you are anticipating for the overall market?
V. Senthil: Okay. I would say currently, it is in the range of 17,000 to 18,000 machines. See, again, the market, if you take our addressable market versus the overall market, probably the overall market, if in terms of value, you put it at $2 billion or $2.5 billion, our addressable market size would only be a particular range of machines, which is, like I said, up to four-axis, 4.5-axis machines. Again, not very large machines. The sizes will be a little bit smaller. That is why it is very difficult to put a clear correlation and say, "Okay, this is the market size for particular" Because market size is there. But you will have to build out machines for that.
V. Senthil: To give you an example, if I have to build out a four-meter base, a four-meter table machine, then I can address a particular market size out of the $2.5 billion. I will be able to address a particular segment of that market. But I today do not make a four-meter table size machine, right? Market size is, yes, we can take it at around $2.5 billion, almost in terms of value, closer to 45% to 50%, or even, sorry, in terms of volume, 40% to 45% I would say is in terms of value would be still imported. In terms of volume, will be still imported. In terms of value, probably around 50% or 55% would be imported in nature, right?
V. Senthil: One thing is, these imported machines are going down as such because all of them are today available in India, manufacturing in India, and supplying within India. So that is also a thing you will have to take into account. As the imports go down, probably imports will go down less than 50% in terms of value, but it is being replaced with the manufacturers being available in India to supply to the Indian market. The market is growing, so everyone is there in India, both from the East and the West. Thank you. Over to you, Mr. Samir.
Operator: Thank you so much, sir. Just wanted to confirm if we have time for more questions, sir?
V. Senthil: I think there are no hands raised, right?
Operator: No, sir. At the moment, we do not have any.
V. Senthil: Then we can close it. Thank you.
Operator: I believe Mr. Jay has a question. Mr. Jay just raised a hand.
V. Senthil: Yeah, please go on.
Operator: Mr. Jay, we can go ahead with your final question, sir.
[Analyst 2]: Thank you again, and sorry for this, Ankur. Sir, on the textile division, if I look at it on a like-to-like basis, when we did a similar revenue 2023, our margins were significantly superior to where we are today. Is there necessarily a price hike that is underway there, or is it fair to assume that the margins in that business, despite having premiumized the product portfolio and focused on services, will remain low margin this cycle around?
V. Senthil: I think I tried answering that question when it was asked by Mr. Puchan.
[Analyst 2]: Sorry, sorry.
V. Senthil: Yeah. Where I was very clear that, yes, the costs are hitting us, and I think the discussion on price is always there. It is on the table. But right now, the unprecedented level of cost increase, availability, so if you look at copper, aluminum, we just look at, apart from steel, which is probably coming much later, the availability of electrical electronics, it is a very tough situation out there. It is not very easy, so the costs are all going up, right? You are seeing this in every other component, every other product, every other item what you probably use and buy. So yes, the discussion there is how do we make it? Price is a discussion, but at the same time, like I mentioned, a lot of VAVE is being done.
V. Senthil: We continue to work on what is possible and in our control to get control on the cost. So, yeah. We have to basically wait and see where it is going to end up, right? That is what I started off with saying that very tough situation to predict anything with the tariffs, with the geopolitics, and the cost associated with it, at the second order of cost, which is flowing through to every one of us.
[Analyst 2]: Correct. Thank you.
V. Senthil: Thank you. Thank you. Over to you, Mr. Samir.
Operator: Thank you so much. Mr. Manish has his hand raised.
V. Senthil: Yeah, please go on. Please go on.
Operator: Sure, sir. Mr. Manish, over to you, sir.
Manish Goyal: Yes, sir. Thanks a lot. Just to clarify, this revenue breakup for TMD, what you gave, it was for Q2 or it was for H1?
V. Senthil: H1, Mr. Manish.
Manish Goyal: Okay. On the margins front, sir, one observation that what we see is that our other expenses, increase in other expenses is much lower than the growth in revenue, particularly in Q1 and Q2, and even it was visible last full year as well. Is it a function of change in the mix where we have strong revenue growth from machine tools and ATC, which are traditionally higher margin business for us as compared to textile machinery, and that is what it is leading, or there has been benefits of some cost control initiatives which we have taken in last couple of years? That was my second question. Last question, what is the CapEx plan for the current year, and what is it pertaining to? Thank you, sir.
V. Senthil: Yeah. So first one was on H1, which I mentioned.
Manish Goyal: Yeah
V. Senthil: fixed cost, I think I remember you did ask me last quarter also exactly the same question, why the fixed cost is not going up versus your turnover. Absolutely, you are right. It is a lot of effort, and it is a lot of effort from our side, knowing what we know, seeing what we see, and what is happening out there, and the way the markets are there, and like I already explained, where the Bangladesh, all the export markets, there is a lot of effort goes into us trying to rein in cost and do something internal, which is what is in our control. So absolutely, yes, it is both on fixed cost, and also this does not come with just cost control. It comes with a lot of digitization, automation. A lot of effort goes into trying to keep it at the level.
V. Senthil: Some portion of it also has helped in the COGS, and the fact that you see a COGS, but not significantly increased COGS when the costs have all gone up. You know what the prices have gone up as. So that is a function of the VAVE effort which we do, right? With respect to CapEx, yes, the idea is to invest as similar to what we have in terms of depreciation. However, the slight change what we have adopted is in certain cases, which will, I think, as the machines will roll in, CapEx will roll in, what you will see at the end of the year, there will be some leased assets also will be coming in, because we feel there are enough opportunity for us to leverage and get maximum usage of his assets, because the way the business operates are also changing.
V. Senthil: You get a five-year contract on an ATC, absolutely right, and we need to deliver everything, and we need to invest everything, and we need to make that return within that set period. So there is a way which we are going to operate, which we are operating already. From a CapEx point of view, it will be similar to what the depreciation will be having in the current year. Okay. Thank you. Thank you, Mr. Sameer. Over to you. Sorry. Thank you, Mr. Manish. Over to you, Mr. Sameer.
Operator: Thank you so much, sir. Sir, at the moment, we do not have any hands raised for further queries or questions, sir.
V. Senthil: You can close the meeting, please.
Operator: Sure, sir. Thank you so much, everybody, for joining this meeting. Thank you so much, everybody.
V. Senthil: Thank you. Thank you, Samir, and thank you, everyone, and wishing you all a happy new year for 2027, and we will see you for the Q3 next year. Thank you.
Operator: Thank you so much, everybody. Thank you.
