Pennar Industries Limited (NSE: PENIND) Q3 2025 Earnings Call dated Feb. 15, 2025
Corporate Participants:
Aditya Rao — Vice Chairman & Managing Director
Shrikant Bhakkad — Chief Financial Officer
Analysts:
Vikram Suryavanshi — Analyst
Unidentified Participant
Karthi Keyan VK — Analyst
Aniket — Analyst
Rahil Shah — Analyst
Ashish Soni — Analyst
Keshav — Analyst
Sunil Kateshiya — Analyst
Monish — Analyst
Hari Kumar — Analyst
Shrikhar — Analyst
Pratik — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Q3 FY ’25 Earnings Conference Call of Pana Industries hosted by PhillipCapital India Private Limited.
This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as on-date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in a listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistant during the conference call, please signal an operator by pressing star then zero on attachtone phone. Please note that this conference is being recorded.
I now hand the conference over to Mr. Vikram Suryavanshi from PhillipCapital India Private Limited. Thank you, and over to you, sir.
Vikram Suryavanshi — Analyst
Thank you, Muskaan. Good morning and very warm welcome to everyone. Thank you for being on the call of Tennar Industries Limited.
We are happy to have with us the management of Industries here today for question-and-answer session with the investment community. The management is represented by Mr Adity Rao, Vice-Chairman and Managing Director; Mr, Chief Financial Officer; Mr Manoj, Vice-President, Corporate Planning; and KM Sunil, Vice-President, Investor and Media Relations. Before we start with the question-and-answer session, we’ll have opening comments from the management.
Now, I hand over the call to Mr. Aditya for opening comments. Over to you, sir. Thank you.
Aditya Rao — Vice Chairman & Managing Director
Thank you, Li. Warm welcome to everyone joining us today for Industries 3rd-quarter investor conference call for the financial year ending March 2025. I’m grateful for the opportunity to speak with you on our performance and on our growth plans. First econ agenda overview. As always, we will begin with our Q3 performance. We will cover revenue, growth, profit before-tax, working capital and our strategic growth initiatives. Post this, Mr, our CFO, will provide a detailed analysis of our financial results. After this presentation, we will open the call to a Q&A from all our participants.
Let’s start with an executive summary of our Q3 performance. Our Q3 2025 saw us growing our revenue, PBT and cash-flow by double-digits. Our net sales grew by 12.75% to INR839.7 crores. Our PBT grew by 20.29% to INR39.78 crores and our cash PAT grew by 11.18% to INR47.72 crores.
Let’s talk about revenue growth. This trend in revenue and profit growth will continue with our growth vectors now starting to scale. Currently our PB India business, our US metal buildings business, process equipment and our body and white vertical are projected to grow well over the next few quarters and this will have the impact of bringing our revenue up. I hope I’m audible. There’s some disturbance on the line. We will continue. Please let me know if any of you find it hard to hear me.
Working capital, we are currently at 79 days in terms of revenue days. Our stated goal is to reach 60 days in the medium-term and 72 in the short-term and we’re working on to realize these goals. In conclusion, this completes my remarks on our Q3 performance.
I would like to hand the call over to our CFO for his detailed and answers. Thank you.
Shrikant Bhakkad — Chief Financial Officer
Thanks. Welcome to the shareholders and investors for the 3rd-quarter FY ’23 earnings call. Key matrices, the total income has grown from INR80 to INR846.45 crores from INR750.8 crores, up by 95.57 crores in terms of percentage, it is 12.73. EBT has increased to INR39.78 crores, up by 20.9%. We are at now at 4.74%, up from 4.44%, which is up by 30 basis-points. And PAT has increased to INR30.46 crores, now to 3.63%, up by 22 basis-points.
Revenue has grown in diversified engineering business as well as the custom design building solutions. And as a result, our blended revenue has grown by 12%. With our continued focus to improve margins and cut-down the sales with a lower-margin, you see the increase in the profitability of each of the businesses as well. The diversified engineering revenue for Q3 FY ’25 is at INR415.6 crores compared to INR380.6 crores, up by 13% and the custom design building solutions increased from 387.89 to INR441.29, up by 9%.
We are happy to inform that our ivory plant is now functional and started contributing to our revenue — Q3 FY ’25 and as we grow, this will further get scaled-up. We expect capacity in Q1 FY ’26. TV India has increased the order book. Now it is, I think INR100 plus crores and TV US it is at US 50 million-plus. And we are confident that revenue will be — revenue will increase and in the coming quarter. The other income includes deposits, income, income from mutual funds, road incentives, exchange fluctuations.
In terms of employee benches, in Q3 FY ’25, it is at INR89.95 crores compared to INR71.63 crores. The increases on account of increments bonus and the increase in the headcount and peak recruitment at our library plant. In terms of finance cost, consolidated Q3 FY ’25, we are at INR31.26 crores compared to INR31.47 crores. There is a decrease by INR21 lakhs. This is on account of better working capital management compensated by increase due to our long-term borrowings.
Total borrowings for the company is now at INR1,195 crores when compared to INR1,092 crores in March. Interest to net sales for Q3 FY ’25 is at 3.72% versus 4.23% of Q3 FY ’24. So there is a — there is a decrease in terms of the overall interest to net sales as a percentage and we now stand at 3.72%.
Depreciation and amortization has slightly reduced due to the decrease in the discontinued operations, whatever the businesses that we have sold and slightly increased in account of US account of the new plant in. Taxes increased from to 23.43 from 23.28% predominantly due to change in the mix of our supply at US subsidiaries. Please don’t certain tax is at 21% and sales tax AI varies from 5.7% to 25.6%. We expect the consolidated rate to be between 25% — 25% to 26% sir. Overall analysis, revenue has increased on all our business streams and at our geographies in India as well as the US due to increased revenues, there is a corresponding increase in PBT and PBT margins. We continue to maintain our.
With this, I hand over the call to the moderator for questions-and-answer sessions in the investor community.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press R in one on the telephone. If you wish to remove yourself from question queue, you may press R in two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles. The first question is from the line of Ish Mohit Ayura from. Please go-ahead.
Unidentified Participant
Hi, sir. Sir, my first question is that in-spite of a new plant commercializing, when do we expect to see some bit of operating leverage coming into play because our operating margins are still at 10%.
Aditya Rao
So do you mean EBITDA?
Unidentified Participant
Operating leverage, basically, when do you think basically your EBITDA margins will start increasing as the new plant is commercialized?
Aditya Rao
But so you would — what I would guide towards is a long-term sustained trend in the improvement of not just our EBITDA, but the contribution margin after variable, yes, EBITDA margin, PBT and PAT margins. So that is a trend we’ve been on and that will continue. We expect as our revenue scales and all the revenues added at an operating margin which is higher than our average that keeps falling down to down to EBITDA. So you will see our margins increase consistently and that’s the trend that we’ve been on for the past few quarters. So methodically, it will continue to increase.
Unidentified Participant
Right. And sir, just a second question is that I think we saw an announcement that you’re entering solar panel manufacturing. So what is the rationale behind it? Because from upfront, it seems to be a very commoditized industry and we were actually exiting all these low-margin businesses and now we have entered another one?
Aditya Rao
Okay. Yeah, I think it’s important to provide a narrative on this. So as you have rightfully shared, we have picked six verticals for the scale within. These are Hydraulics, our key engineered building business in India and in the US, our body and white components business, cubes vertical and also our engineering services market. Last one is process equipment. So these together will drive growth in the next few quarters in the next few years and we believe there’s enough gunpowder, large addressable markets, low market-share. So our ability to grow revenue should be quite good and consistent revenue profit growth and margin expansion with working capital efficiency being under control is the trend. That’s the plan that we have. Now, however, that leaves aside a lot of these what we call the legacy revenue streams, legacy businesses. It includes the solar business, our water treatment chemicals business, water EPC business and several others.
What we decided to do is one thing to do would be to just stop those revenues and we’ve in effect done that. But I think there’s also a better way for us for the company to realize some value. So this is our attempt to realize value out of our — out of our IP, out of our pre-qualification, sort of our presence in the sectors and even the human resources and human capital we have in these businesses. So we incorporated JV, we have tried partner with Zetwork for this. Zetwork has majority and what we are doing is transferring our know-how, our assets, our customers and our order backlogs into that business vertical and that business will be done separately. And over-time, addition can be taken on how we would want to do it.
But effectively, this is a mechanism for us to realize value out of our — out of our capabilities and pre-qualification and assets that we have rather than just have value destruction where we just stop those revenue streams because the fundamental nature here is to maximize value for. So without any substantial investments with only a transfer of our existing capabilities and assets, if we can realize better value out of this and it would be at a place where we are minority shareholders, then it makes sense for us to do this. So that’s the rationale behind this.
You mentioned soda modules as a commoditized business. I would — in my opinion, it’s a scale business, but we are now a minority investor in a joint-venture, one which would be guided by network as a majority partner. We are a major investor and our hope is that as that company scales, realizes value. And we hope to replicate this model for other businesses which are not being prioritized. We don’t want to grow them in, but we do want to realize value. That’s the rationale behind this.
Unidentified Participant
And sir, what will be the capital invested from our side into this business?
Aditya Rao
INR18 crores is the capital investment.
Unidentified Participant
Okay, okay. Thank you, sir.
Aditya Rao
Thank you.
Operator
Thank you. The next question is from the line of Karthi from Suyash Advisors. Please go-ahead.
Karthi Keyan VK
Yeah. Good morning, Aditya. A couple of questions. One is, in your US business, A, how is your supply-chain structured given the changes being proposed, especially with reference to Mexico, Canada and some of these other countries?
Aditya Rao
Could you — could you — the voice is a little muffled. Could you repeat that question?
Karthi Keyan VK
Is it any better now?
Aditya Rao
Not very audible.
Karthi Keyan VK
I’m sorry. Is it any better now?
Aditya Rao
Go ahead.
Karthi Keyan VK
Yes, I’m so sorry. So I wanted to ask you, how is your supply-chain in the USA organized? Do you see an opportunity to increase sourcing from India because of the changes proposed in terms of duties? And based on whatever data you have today, what would be the advantage that may accrue to you from this proposed change?
Aditya Rao
So our supply chains typically do not — the vast majority of it is already localized. So for our India revenue streams, most of the procurement is in India, our Europe revenue streams, most of it is Europe. And for the US almost entirely it is now in the US. We are not looking at the supply-chain arbitrage. I think the way the world is going, I think duties, tariffs, all of that will remain the dominant standard by which you know the supply-chain efficiencies, which were there earlier will not be there in the longer-term. I think we’re much better served localizing supply-chain of.
So in that trend, I think in India for most of our procurement is in India, some special grades, special kinds of components we do have coming in from China and that will continue. But where possible from a — I would say our target would be more than 70%, 80% for it to be local. In the US, it’s a much higher number we only buy our US revenue streams, vast majority of it is US-based.
Karthi Keyan VK
So you’re referring to both the engineered buildings as well as the tube side.
Aditya Rao
I’m sorry, could you say that again?
Karthi Keyan VK
I was saying you are referring to both the engineered buildings as well as the tubes businesses, right, in USA. I’m specifically referring to US business.
Aditya Rao
I mean, I’m talking about the entire revenue stream. So the US is, let’s say, it’s about $100 million-plus revenue P&L for us. The vast majority of that supply-chain will be US-based. In India, for example, let’s say, we are at $300 million, right, let’s say about INR2,500 crores. The vast majority of that will be India source.
Karthi Keyan VK
But the other question and then I’ll join back-in the queue would be, in terms of — I’m sorry, I lost track of what you’re saying. So I’ll let me get back-in queue and not raise that. Thank you.
Aditya Rao
Okay. Yes. Please do join back when you have your question. It will be.
Karthi Keyan VK
Yeah, yeah, sure. Thank you. Thank you.
Operator
Thank you. Next question is from the line of Aniket [Phonetic] from ABM Capital [Phonetic]. Please go-ahead.
Aniket
Hello. Am I audible?
Aditya Rao
Yes, please go-ahead.
Aniket
Thanks for taking my question, and congratulations on a good set of numbers and the progress you’ve made over the last few quarters on your strategy. My first question is, sir, can you tell us, in this quarter, what is the percent of revenue that is from what we might call as deprioritized or sort of old business that you sort of want to wind-down.
Aditya Rao
I understand. I request our CFO to answer the question. We do have that exact number.
Shrikant Bhakkad
We have 65% from our prioritized business and from the non- prioritized business, it is 35%. And as the time goes up, this will continue to decrease the non- prioritized businesses.
Aniket
Got it, sir. And our thinking would be to take it to zero in the next two years. Is that — is that a fair timeline or would it be faster, slower.
Shrikant Bhakkad
Over next five years, yes, it would drop to zero, one-way or another.
Aniket
But in two years, sir, do you think it goes down to like 10% just from just approximately, what’s your directional sense?
Aditya Rao
We do have an internal projection, but you should expect substantial declines year-on-year on this. So I can’t give you a number for what it will be at two years, but it will not be at 35. It would be substantially lower than that.
Aniket
Understood, sir. Got it. And secondly, sir, can you quantify how much did libraryly contribute this quarter?
Aditya Rao
So this quarter was not very-high at all. To my knowledge, the revenue or the library would have been somewhere between INR20 crores INR25 crores, sir, but we are now scaling up that business. I think you will see really hit high-capacity utilization in-between Q4 and Q1, that is the current quarter and the next quarter. But of that PV is scaling. We also have capacity increases in our existing other two plants as well. So, I think overall, what’s going to happen is you will see strong high-growth in PEV and that’s a combination of better capacity utilization at all of our plants. And will complete — will come into its own in the next few weeks, a couple of months.
Aniket
Got it, sir. And the last question, sir, if I may. We had talked about your finance cost as a percent of revenue around 3.5%, 3.75% this year. Now with the rate cycle changing and so on, where do you think this goes in the next couple of years?
Aditya Rao
You should target in terms of the overall finance costs comprised of in the interest on borrowings, which are from the working capital as well as from the term-loan. Our rising holders are comfortable as I have said in my earlier calls as well at 3% on the borrowings for the working capital and 1% for the term-loan. So it will be range between 3.8% to 4%.
Aniket
Got it, sir. Perfect. Thanks a lot and all the best.
Operator
Thank you. The next question is from the line of Rahil Shah [Phonetic] from Crown Capital. Please go ahead.
Rahil Shah
Hi, can you hear me?
Aditya Rao
Yes, please go-ahead.
Rahil Shah
Yes, hi. So firstly, do you see any major impact on these US tariffs and duties that they have been imposing on a business how so ever?
Aditya Rao
We don’t see an impact at all. As I mentioned, the vast majority of our supply chains are localized. So we do not ship a lot of material for — I mean, let’s talk about PGI’s revenue in the US, which would be the most relevant because the tariffs are being imposed potentially by the US or on other countries, including India versus tariffs. The $100 million-plus revenue that we have there and one that is growing quickly as well with our order backlog also doing quite well now, very, very little, maybe less than $10 million is supplied from India. So we do not anticipate any shock either to revenue or to your margin because of the supplies.
Rahil Shah
Okay. And secondly, can you guide us in terms of your outlook for the next quarter and the next year in terms of revenue and EBITDA margins.
Aditya Rao
So we don’t provide guidance here, but I think we can commit that we will — quarter-on-quarter, you’re going to see revenue growth and profit growth. I think that’s a trend that’s been there for four years, but I think in the last two, 3/4, we had maybe 1/4 which where we did not have growth because we decommissioned our legacy revenue a lot quicker. I think we are being a lot more smart about it. I think it’s important for us to have revenue growth, profit growth, margin growth and also ensure that the deferred has views are revenue streams are removed.
So we worked out a model to do that. So I think we’re quite confident in projecting revenue growth quarter-on-quarter and profit growth. So that’s what I have to give you and we have aggressive long-term plans. We certainly don’t want to don’t want to be in a place where revenue stagnates at any in any period of time. But over the next four, five years, we expect to have sustained high-growth in all of these metrics.
Rahil Shah
And what will be driving — which verticals you like relying on heavily, which will drive this growth for you?
Aditya Rao
Yeah. So as I had mentioned, our group sectors are two engine building line, body and white process equipment, engineering services and hydraulics business. So in all of those businesses, our market-share is small. Let me explain why that’s a good thing in this scenario, because if we were the largest market — largest player, if we had market-share of say 15% or 20%, it becomes difficult to scale revenue in that business at any rate higher than the market growth rate. However, in engineered buildings in India, we are number four and in the US, we are probably number 10. In hydraulics, we are number six in India globally. We probably are nowhere near the larger players. The same argument goes for process equipment, the same argument goes for. So the same argument goes for body. The people we are competing against are all people with sometimes tens of thousands of crores of revenue in the case of BIW.
So the market is never going to prevent us from growing. Our job is simple, expand our market-share from where it is right now, which is in some cases as low as 1.5%, 2%, but in some cases, it’s up to 5%, 6%, get that up to maybe not even 10%, 7%, 8% and just build-up the asset-base to do that and that will give us revenue growth, profit growth and we can do it capital efficiently — quite efficiently. So current gross revenue base of about INR4,000 crores can be scaled quite frankly indefinitely. It’s not — the market may do well or not do well, but our growth — our growth trajectory will continue to be there because of this dynamic. Low market-share, good market presence, however, from a capability for standpoint, from a customer standpoint. Combine that with an asset acquisition strategy and of course, generating profits, capital and you will have an automatic growth plan. So, that’s our base business plan and we’ve been on that plan for the last many years and it seems to be working.
Rahil Shah
Okay, thank you for that detailed explanation. I wish you all the best.
Aditya Rao
Thank you.
Operator
Thank you. The next question is from the line of Ashish Soni [Phonetic] from Family Office [Phonetic]. Please go-ahead.
Ashish Soni
Sir, just regarding the solar business, so you are forming a joint-venture. So is it like margin-accretive for us better than what we were doing earlier? I’m just trying to understand and you said you might reduce it to 10% overall and low-margin business. So do we want to like developing partners? What’s your thought process about other business also?
Aditya Rao
So I — your voice was very muffled, but let me repeat your question and you can confirm with how captured it. I am audible to you. So you had asked about the solar business. How does that affect our margins now with the — I assume you’re talking about the JV because there is —
Ashish Soni
Correct.
Aditya Rao
Anymore. Yeah, I can answer that question. Yeah. So the joint-venture is set-up to take — to do solar modules, solar, model systems, components and others, right. So this tends to be a, let’s say, a 5%, 6% PBT business, business globally, not very dissimilar from our net margins, but obviously, we don’t want to stay at 5%, 6%. So because we have a minority shareholding, this doesn’t consolidate line-by-line with our — with our P&L and balance sheet. What effectively happens is after we report all of our numbers, there will be a line called minority interest and the power share of the profit will be added to that. So it will expand our margins.
But obviously, I mean, I don’t want to give you the picture that it is going to be tremendously valuable. But effectively think of it as a way to monetize our capabilities. It’s not going to add to revenue, it’s not going to really add to our operating margins. But we do expect substantial profitability to come from it, but that’s — it just — it doesn’t impact our margins. It comes in as a minority interest flow. Does that?
Ashish Soni
Yeah. Other thing is whether you’re going into solar cell or only modules. I’m trying to understand that also a bit because cell is a different ball game altogether compared to module.
Aditya Rao
So I think that’s a call that we will take or network and us will have to take. But as of right now, there are no declared plans to business. I think it’s a much higher capital investment paradigm and right now we have — we don’t have launch.
Ashish Soni
And you indicated your other low-margin business you want to hive off like similar to this. So anything in-progress for other low-margin business like water treatment chemicals or whatever right now in works, I mean, you might do something in next two, 3/4.
Aditya Rao
So we will continue to work on the paradigm and as when and when these would be premature to talk about it right now. But what I can share is, it’s the model we want to use for all the other deprioritized businesses, realized value from our assets. And when — as and when we complete these engagements with other partners who will take the responsibility of growing these businesses from us. We will share that with you.
Ashish Soni
And last question, CapEx plan for next year and I think land sale, do you want to consider that in next two, 3/4?
Aditya Rao
So our capex for next year, we have not yet chosen. Our budgeting is done, yes, but we do have to look at some long distribution projects which come in, which take about a year to implement. So we don’t have a capex budget for last year for you, but this year, it was about INR100 crores. I can tell you the number this year. And a project is substantially higher than that even before the 4th-quarter is closed. So we are improving our debt-equity.
Ashish Soni
And landfill and that’s another question I asked?
Aditya Rao
In land scale, we currently have nothing to share, but again, similar to realizing value, we have a large land asset bank and we will look to monetize it as over-time. But right now we have nothing to share.
Ashish Soni
Thanks and all the best.
Aditya Rao
Thank you.
Operator
Thank you. The next question is from the line of Keshav [Phonetic] from Luxon Investors [Phonetic]. Please go-ahead.
Keshav
Hi, sir, in the prefab space, if I look at our recently listed Indian payer, they have hardly any charges coming out of bank guarantees. They have hardly any debt on their books, very-high turns on total capital employed with — they have a sizable contribution from customer advances. I couldn’t find any data on retention money, but overall terms inclusive of everything is pretty high. So can you help understand what would be the way forward for us? Can we match those metrics? How will that happen? Why isn’t that not the case even at the scale we’re at because we’ve grown pretty fast to a number three, four position.
Aditya Rao
I’m sorry, I did. The voice again was muffled. I apologize, maybe there’s something wrong with the connection line, but could you repeat your question, sir? And if possible, if you could do it a little more slowly so we can understand. My apologies.
Keshav
Okay. Is it audible now?
Aditya Rao
Not really, sir, but go-ahead.
Keshav
So sir, in the pre-Fab space, if I compare our business to the recently listed Indian peer, I see that they don’t have a lot of — any charges out of bank guarantees. They don’t have any debt on the books. Their asset turns are pretty high on the overall capital employed. So I was just trying to understand what’s the way forward for us if we can match those kinds of metrics, how will that happen? Because we’ve pretty close to the scale and we’ve grown pretty fast, but we are incurring a lot of these charges that are making our PEPS business not as capital-efficient.
Aditya Rao
Understand. So good question. So yes, the other listed players, specifically, for example, I think also has listed, they tend to have balance sheet, which don’t have a lot of debt which we haven’t had a lot of debt. And the way we approach it is what is our working capital, right? And working capital can either be financed through debt or through equity. So if you look at working capital, they tend to have about 45 days and for us, we are closer to 60 days. The treatment of bank guarantees and other financial instruments such as LCs may be different. It may show-up not as debt. So that’s something that we do have to be conscious of. It may be netted off before that for other companies and I wouldn’t want to presume that is what they’re doing. But we do know that this is an industry which calls for a certain amount of inventory to be held and a certain amount of accounts receivable. And of course, there are current liabilities which offset that to an extent, including advances.
So you are right in that we have historically not been an capital deployer in the engineered building space. Our working capital days were at 110, 120 also three, four years ago. But over the last three years, we brought that down to 60 days and we have every intention of reaching where our competitors are in terms of — in terms of the working capital number of these. Now as to how that working capital is finalized, is that done through equity, is that done through, through debt to LCs and non-cash, and it’s primarily non-cash. That’s the statement of choice. I think what’s important is we bring in enough scale so that at the PBT level, we match-up. But whether we are we are using LCs or we are using equity to give back to finance raw-material to finance other current assets, may not be a higher-return in the equation as per me. So I think we are hard at-work to improve our operating margins. We are hard at-work reducing our working capital days. The combination of these two things should bring our net margins into — into — to my knowledge, I think some of our competitors are at 7% or 8% and we are at 4.5% to 5%. That is under it. Yeah. So we will look to improve that. So we have about 100, 200 to 50 basis-point improvement to be made. And we know where that’s going to come from and we will go-ahead and get those — get those numbers. Now, of course, this refers to the pre-engineered space in India, our margins in the US are obviously higher than what our competitors in India have right now. So that there may not be a margin issue there in the US. Or it has improved days in the US is only 15 days, which is much better than any of our competitors here in India.
Keshav
Sure, sir. So this improvement to 7%, what’s the timeline we are deciding for this to happen?
Aditya Rao
Yeah. So as I mentioned, if you talk specifically of the PEV space, it shouldn’t take that long. If you’re looking at the company as a whole blend also, I think our stated goal is to get to higher than 7%. We have 10% targeted. We will not promise you a timeline in which we are doing it, but you will just look at what we have done rather in the last two, three years, you would have seen our margins come up from 1%, 2%, 3% all the way up to 4%, 5% and that trend will continue. So the matter of the next one, two, three years, you will see us meeting, let’s Call-IT, benchmark market rates in all of our businesses from a net profit percentage — margin point-of-view, and that’s something that we have we have planned for.
Keshav
So — and sir, what’s the reason for not being able to scale the tubes business in general, because we’ve been flat in five years from 2019 to 2024 and how should it fare going-forward?
Aditya Rao
So tubes, we will have — we are currently at a place where addition of capacity, specifically in a large-diameter tubing project, that is what is going to add capacity that’s what’s going to add revenue and that’s potentially what’s going to add margins. It’s a little bit of an outlier in terms of our overall business profile. If you see all the other businesses we spoke of, whether it’s free engineered buildings, body and, hydraulics, services, there’s a good amount of either engineering or product development in the value stream chain.
What those things tend to do is they tend to protect your margins. Now is perhaps much more of a commodity business, right? So you need scale in order to be able to hit the higher numbers. And a lot of — and the largest tube company I can think of, they tend to have hyperscale EBITDA margins less than 10%, but they have really good capital efficiency. So they’re doing a fantastic job growing their business in a capital-efficient manner, but margin is not a priority for them.
So our rollout for tubes would have to be based on the high-margin niche market opportunities such as large-diameter tubing, such as patient tubing. So it will take time to grow tubes. And I think as a company, we are going to be patient about how we are going to scale this business up. But the way forward is on large-diameter tubing and unfortunately, that’s it takes time to get that capex done. So which is why I’m not using that as a primary growth vector in the near-term. Medium-term, we will be able to do what’s needed in that business. But right now, I’m not guiding you to growth in our business.
Keshav
Okay. Thanks for the clarity, sir. And thirdly, just wanted to understand what the scale of our body and white business is currently?
Aditya Rao
Could you say that again, sir?
Keshav
I wanted to know the scale of the body and white business currently.
Aditya Rao
Body and white. So body and white business is currently comprised of orders from Stellantis, Hyundai, Kia, we just added and a few others. From a revenue standpoint, are we segmental? Okay. We can’t give a segmental breakup, but how can I answer scale question? It’s — we expect it to be a INR1,000 crore business potential exists in that business over the next few years. And we already well-above INR100 crores in that business.
Keshav
Okay. So sir, just I was trying to understand it from the capital allocation point-of-view because we’ve in the past descaled multiple verticals. So what’s the rationale for this foray because I assume the ability to penetrate the value chain is — would be one of the metrics. So where we are currently and how confident are we that we’ll be able to scale this business profitably.
Aditya Rao
So our confidence in being able to scale is high for that mentioned and I won’t react to the whole thing, but just low market-share, good market presence from a technology capability, customer point-of-view and just add assets on them. So that’s a model that we have seen for ourselves and globally seems to work-out. So that is what it is. So our confidence is quite high and all of our businesses are at a case right now where we are — there’s no business which we are trying to grow, which we are not able to grow. So that is that doesn’t exist. It’s really a question of us perhaps deciding whether we want to invest now invest a little later in some other businesses.
So once that plan is there, it’s really a question of how much capex and how much are you deploying. So typically, all of these businesses as a blend come to about INR5 to 6 asset multiple. So if we invest INR100 crores, you tend to get INR600 crores in terms of revenue as a blend, of course, to all of these businesses. Some of them are lower that BRW is about INR3 or 3.5 and some of them are a lot higher. It tends to be about 8, 7.5%, 8%. But as a blend, I think we will be able to hit those six, seven numbers from a capex point-of-view. And for our growth plans, which is double-digit scaling, we don’t need to invest a lot. We don’t need to raise maximum amounts of debt. So our debt-equity will probably come down over the next few years. And overall, as we said, as has mentioned, interest cost as a percentage of — also remains stable. So we don’t — we don’t need — need — I don’t think we have a — we’ll have a problem getting up — getting the capital we need for. We should be able to get that done through internal accruals and a little bit of working capital debt.
Keshav
Sure, sir, just a follow-up, a small follow-up. So the rationale to get into BI body and right, were there any synergies involved because I’m just trying to wrap my head around the entire solar and?
Operator
Not audible properly.
Aditya Rao
So voice is very low.
Keshav
Is it better?
Aditya Rao
She also saying.
Keshav
Okay, let me join back. Let me join back the queue.
Aditya Rao
Now could you repeat the question?
Keshav
Yes. So I was just — it was a small follow-up on the body and white business. Where I wanted to understand if we had any synergies to the legacy businesses we’ve had because we’ve done solar and water EPC in the past and we are trying to — or we’ve gotten out of them. So I’m still trying to understand because our prefab business is growing very handsomely and otherwise we have a few cash-generating verticals also. So just from an investor’s point-of-view that whether we are in the right business as a company, if we talk about body and white, if you can sort of talk about those things from a synergy point-of-view and our know-how point-of-view.
Aditya Rao
No, I can address that. So the choices we have made about what businesses to grow, the vast majority of them and almost all of them is really about metal processing technology. So Pennar at its core has two strengths: engineering, which has include design, detailing product development and metal processing technology, manufacturing technologies. These include role forming, fab, and fab, machining, robotic welding, robotic assembly. So when you put all of these metal processing technologies together, based on requirements in big sectors such as automotive and energy and equipment, process equipment, you tend to get these revenue streams, these markets that you can build-up. So BIW sits quite squarely in that.
The base technologies in BIW are things just hot stamping, something that maybe only two or three companies in India have. We also have a other laser welding, laser assembly, somewhat of automation technology. So putting all of those two things together means that we’ve done a lot of the hard work-in BIW. Scaling it, we believe will be very, very easy. I think there are BIW companies in India, which are over INR10,000 crores. So I think getting from where we are right now to INR1,000 crores over the next two, three years should not be a challenge from a market perspective and they’re quickly picking-up customers. Stellantis was our only customer. Now we have four and we are quite confident that with the — even with the change in — with from internal combustion vehicles to electric vehicles, we are seeing a fair amount of interest. We picked-up orders from TI for the project as well for their electric vehicle project. So I believe our ability to scale this business is quite good.
And most importantly, in reference to your question of whether it’s a core capability, whether it ties in well. It ties in well with our other capabilities in metal processing and also in-product development. Our PIW design is also a strong capability that we have and we are currently executing body-in-wide design projects also, not even necessarily manufacturing, but the product development for many companies. So yes, it’s a core — it’s a core capability for and one I’m sure we’ll be able to use to grow.
Keshav
So thanks a lot for all the elaborate answer, sir. I’ll come back-in the queue.
Aditya Rao
Thanks,.
Operator
Thank you. The next question is from the line of Vikram from PhillipCapital Private India Limited. Please go-ahead.
Vikram Suryavanshi
Yeah. Sir, just a quick question, sir. What would be our long-term debt now? I think total is around INR1,195 crore.
Aditya Rao
Yeah, INR237 is our long-term loan.
Vikram Suryavanshi
237 and inventory would be how much?
Aditya Rao
I’m sorry.
Vikram Suryavanshi
Inventory, because I think the last few quarters…
Aditya Rao
INR890 crores.
Vikram Suryavanshi
And I missed the total working capital days 79.
Aditya Rao
It’s a little bit higher than we had wanted because we are ramping-up for growth, so we had to acquire, but it’s 79. Our expectation is to get to 72 quickly and 60 beyond. Right now, we are at 79 for the whole company.
Vikram Suryavanshi
Understood. And this solar, sir, what I understood because I clearly got your strategy to monetize the assets where — which are not focus area. But as a JV partner and as you rightly said, it is a scale business. So if that JV has to scale-up, then there will be also capital commitment proportional delay required from us as a partner or is there any way where we may not be investing or how that arrangement is there or will that network will act as a supplier to main other companies where it may not scale-up here would be under point. So just I’m not able to get a clarity on terms of when it is a scale business, how capital commitment would be from our side going-forward?
Aditya Rao
We only have INR18 crores of capital commitment. We have no further capital commitments to the JV. That is all that has been decided. But even that commitment itself puts us at the JV itself should generate well over INR1,000 crores in revenue from that capital commitment, because it’s not just our network it’s also putting capital in and this existing capabilities that both companies have. So it will be high in terms of revenue. It may not be massive from a profit margin point-of-view, but it will be profitable.
Going-forward, I think depending on the choices they make, either the company will raise or I mean the JV itself will raise or there may be other partners who are brought in. We are not afraid of dilution. I think what’s important is that the vast majority of fundraising, cash equity, debt, profit, internal accruals go towards growing Pennar industry verticals, the five verticals that. So we don’t anticipate that we’re quite certain, in fact, I can make a stronger statement that the joint-venture will not be a cash or for. What we are putting in very limited amount of money. And even with that, we are realizing a lot from a — from a value point-of-view. And the scale of it, network and we will work with network to scale the company, but they are not massive capital contributions that either one of us is looking to make.
Vikram Suryavanshi
I think thanks for that clarification. And in PEV, last quarter, we have seen a couple of execution delays from PEV business side. So how outlook is — are we seeing that picking-up or still there are some execution delays?
Aditya Rao
Yeah. On a similar sequential-quarter basis, I think the current quarter, 4th-quarter PEV is doing really well. The trend is expected to continue into Q1 of next year. I think as I had mentioned on the previous question, this is on the back of really capacity utilization increasing and capacity in our other plants also increasing. We’ve increased a little bit of capacity at our other two plants as well. So, yes, our order book is large right now. We need to do a better job converting it to revenue.
Our customers also will not be happy if we just have a large order book and don’t convert it to revenue. There’s a lot of pressure on us to execute quickly and we are hard at-work to increase that. I have no doubt that you will see strong high-growth in PEV quarter-on-quarter for the next two quarters sequentially also. So we’re in a good place. I think we just need to execute better.
Vikram Suryavanshi
Understood. And last question on engineering business, what was the revenue for nine months, particularly what we do outsourcing for UVC in terms of design engineering?
Aditya Rao
Yeah, what is our revenue per? So we don’t have that breakup right now, but I’ll get that number to you.
Vikram Suryavanshi
Okay. Thank you very much.
Operator
Thank you. The next question is from the line of Sunil from Tanush Investments. Please go-ahead.
Sunil Kateshiya
Sir, am I audible?
Aditya Rao
Yeah.
Sunil Kateshiya
Okay. Sir, just wanted to understand by any plan you are planning to reduce debt over a period of five years down the line or maybe after reaching a certain point of time and margins.
Aditya Rao
So what’s your question, are we looking to replace debt? Is that?
Sunil Kateshiya
Yeah, I’m asking, are we any — by any chance we are planning to reduce debt levels over a period of five years down the line considering the revenue growth?
Aditya Rao
As you discussed the long-term debt for the company is 2237, our EBITDA is far higher than that. There’s a lot of non-cash debt, which is going to be there with us no matter what as we grow. So to buy raw-material, we had to give LCs. So our business model calls for that being there. So as had mentioned, the risk management of this is that we make sure that our total interest cost doesn’t — and our total debt-equity, right? Both of those stay-in control. So as long as it’s around 3.75%, we are not concerned. It is a necessary part of our business model that we will have non-cash debt, that we will have those working capital instruments, BGs and others.
So we’ll have to use them and that will increase — that is something that we need to be okay with. It’s backed by — by a substantial amount of current assets. So we don’t see it as an issue. So that is on the on our working capital debt. Now from a growth perspective, debt-equity is something we have to watch for. I think 0.7% is what we would like to target. We are right now around there, it’s maybe a little higher, but I think by the end-of-the year within the next few quarters, it gets back to that. So long-term steady-state, expect 0.7% from us from a debt-equity point-of-view and that includes all of that, obviously, right? I mean, do bear in mind, a lot of this is non-cash short-term debt, which is necessary. So it’s not necessarily a bad thing, it’s an indication of our revenue growth.
Sunil Kateshiya
Yeah. Thank you. And we are entering into the new solar panel. By what period we will do breakeven. I mean, number of years we can think of putting the capex in mind and all.
Aditya Rao
We should have a very quick breakeven. We expect that assuming that the JV does INR1,000 crores and these are forward-looking statements, but I’m just broadly indicating you the capacity that we have and what we are able to see. So once that goes going and that should happen in the next few months, 5% is the expected profit. So if you take our share of that, then from a minority interest point-of-view, we should breakeven very, very quickly.
Sunil Kateshiya
Thank you so much. That’s all from me side. All the best.
Operator
Thank you. Ladies and gentlemen, in order to ensure that management is able to address questions from all the participants in the conference, please limit your question to one question per participants. Do you have a follow-up question? We request you to rejoin the queue.
The next question is from the line of Monish [Phonetic], an Individual Investor. Please go-ahead.
Monish
Am I audible?
Operator
Yes, sir.
Monish
Yeah. I have small questions, multiple questions. One is, are you looking at adding the plant capacity in PB in Western India? And second, what is the status of the tube business?
Aditya Rao
Yes, we are looking to add capacity in Gujarat, that is a stated goal in for pre-engineering. Pre-engineering and structural steel, yes, we are looking to add. That’s answer number-one. Your next thing was on our tubes business.
Monish
Yes, sir.
Aditya Rao
Yes, it’s stable. I think there’s growth vectors that are possible. The large-diameter project conclusion will bring about revenue growth.
Monish
About in a in this quarter so when we are expecting the — ramping-up the capacity and.
Aditya Rao
It will not be in this quarter, sir. I think these are long gestation projects, so it will take us time to complete that project.
Monish
Okay. And sir, Gujarat plant, when we are expecting to commission or setting up the plant?
Aditya Rao
I believe our current plan calls for it to be — that to be initiated in the next financial year and it doesn’t take long to complete.
Monish
Okay, sir. Thank you, sir.
Operator
Thank you. The next question is from the line of Hari Kumar [Phonetic] from an Individual investor. Please go-ahead.
Hari Kumar
Yeah. Good morning, ma’am. I’m audible, sir?
Operator
Yes, sir.
Aditya Rao
Yes, please go-ahead. Yeah, my two questions, sir. One is regarding this hydraulic business we are putting up in the US. Is it a manufacturing or a trading firm? And what do you see the potential for that in the US? And the second question, sir, this recent 10% tariff on China, will it some opportunities for the tubes and hydraulic exports? And the third one, sir, regarding this network, what is it bringing to the table, like is it bringing a manufacturing plant or is it bringing capital like can you throw some light on that sir?
Hari Kumar
Okay. I’ll try to go through them in investor financial periods also. So what are you incorporating as an NLC in the US just step-down is from a revenue standpoint, all of our hydraulics business currently is US-based. So no change there in terms of just a structuring thing where we’re putting it under an NLC for better revenue recognition, better order purposes. It’s a standard model when you have multiple revenue streams in the US and we’ve — we’ve — we’ve just incorporated — we just implemented that. So there’s no new company in the US.
The second question, the tariffs, as I mentioned right now, we don’t anticipate that affecting us from a revenue or a profit standpoint or an operating margin standpoint in any way. All of our supply chains are heavily localized. There is some — there is some India to US, there is some US to India, there is some China to India. And we will take that into our pricing and increase or adjust pricing as necessary and make sure that there’s no revenue or margin impact. So — but we don’t believe that to be able to do. That mean I was just — I want to asked, there’s any positive surprises that would come about, any negative ones.
Aditya Rao
So sorry, your voice is very muffled. I apologize. I clearly have a problem with the line but…
Hari Kumar
I’m asking for any positive surprises from this tariff sir, not any negative ones, but are we expecting any positive surprise?
Aditya Rao
From the tariffs?
Hari Kumar
Yes, sir.
Aditya Rao
No, sir. No positive tax.
Hari Kumar
Okay, okay. Okay.
Aditya Rao
No negatives or positives is what I would say. Okay. Thank you. And your last question, is that work. Our module capacity of about 1.6 gigawatts comes online in a few months driving our revenue up and we hope to have a good breakeven.
Hari Kumar
So what are they bringing to the table, sir?
Aditya Rao
I’m sorry, sir.
Hari Kumar
What are they bringing to the table? Zetwork.
Aditya Rao
Zetwork is bringing — both Zetwork and Pennar are combining our order books, our production capacities, scaling up those production capacities and human capital in terms of teams, sales, engineering and manufacturing.
Hari Kumar
Okay. Thank you very much.
Aditya Rao
JV works in an autonomous body. It’s a — as I want to be clear, it’s a minority investment for Pennar. It’s the majority is that to our controlled entity and they will consolidate all of their financials with the talk. Good me.
Hari Kumar
Thank you. Yeah.
Operator
Thank you. The next question is from the line of Aniket [Phonetic] from ABN Capital [Phonetic]. Please go-ahead.
Aniket
Hi, sir, thanks again for taking my question. I just had a couple of sort of follow-up questions on the debt borrowing side. As you — Adity, as you think about this business over the next two, three years, right, and obviously at sort of 3.75% to 4% of revenue as a substantial sort of cost item. Do you feel there is an opportunity for us over-time to be able to get better credit rating and then eventually sort of not need LCs or BGs and we can use commercial paper or working capital borrowing or something like that. Is that at all possible in an industry like this? And a bookkeeping question around that is what is the sort of marginal cost of borrowing for you today?
Aditya Rao
Good question. We are right now at A as a credit rating and A1 for our working capital. We intend to ramp that up. We want to get to AA where commercial paper becomes possible. That’s the stated goal. We are working with the credit rating agencies in terms of what they would like to see. And I think the path we outlined out gets us there. So that is our goal to do that and at that point of time, refinance for lower, which has an impact of also reducing interest, increasing our profit, which further improves our credit rating. That is something that just like our margins are improving, we’ve also been on a credit rating improvement.
We used to be at BBB and we’ve been able to get to A and A1 and we will look to continue to improve that. The usage of LTs and we, I think if it’s properly used, I think the credit rating agencies aren’t bothered too much, it? It’s not the LCs that bother them. I think debt equities, gearing, leverage, those are the things that we need to work on. And we know where they want us to be and our goals are to reach those. So we do want ratings we can’t commit to this obviously in a certain timeframe. It’s an assessment that we will have to make, but we know what we need to do to move direction and we are hard at-work to achieve that.
Aniket
Makes sense, sir. What’s the current marginal cost of borrowing there, if you can share.
Aditya Rao
10% quarter, 9.5%, 9.8%. 9.8%.
Aniket
Got it, sir. Congratulations again and all the best. Thank you.
Operator
Thank you. The next question is from the line of Keshav from Investors. Please go-ahead.
Keshav
Hi, sir, in the PEPS business, can retention money percentage overall come down going-forward as our scale and credibility grows further or is it given for the industry?
Aditya Rao
And retention should move down. Our goal — you’re talking about our pre-engineer and business, I assume?
Keshav
Yes. Yes, sir.
Aditya Rao
Yeah. So our retention used to be 10%. We are not — unless it’s a very, very good customer, like a really large customer, we are looking at 5%, but our end goal is to make that 0%. How successful we’ll be, I don’t know, but I can assure you, our goal is to not let that number go above 5% again. So — but yeah, to some extent, it is the nature of the least.
Keshav
Okay. And sir, we’ve had provisions for bad debts to the tune of INR10 crores to INR20 crores every year. Would you be able to help with what the source of these debts would be and if we’ll be able to arrest this leakage also going-forward?
Aditya Rao
We are talking about that also yeah. So we have significant buffers in-place for that. We review these at the audit company-level and at the Board level and our current provisioning, right, which has been removed from P&L itself on our AR is close to INR90 crores and that number will go up. I mean, typically, we follow the ECL method, expected credit-loss method. So there’s more than enough buffers within the company for any potential write-offs and we don’t expect anywhere near those write-offs. So there’s enough ample security in the company to safeguard our current assets like our receivables. So we’re not too worried about that at all.
Keshav
Sure, sir. Thank you. That’s all from me. Thank you.
Operator
Thank you. The next question is from the line of Shrikhar [Phonetic], an Individual Investor. Please go-ahead.
Shrikhar
Yeah, am I audible, sir?
Aditya Rao
Yeah, please go-ahead.
Shrikhar
Sir, it’s regarding our capability in PEB, taking larger projects like which involve substantial design and engineering like a semiconductor plant like is our PEB division you know, capable enough to take such large orders, sir?
Aditya Rao
We are currently undertaking orders for semiconductor. We have for the — for Tata electronics, we are building plants for them, which will — which are in the semiconductor business.
Shrikhar
Thank you, sir. Next one is regarding asset building, sir.
Operator
So we said that you have to limit your question, please. And the second one. Thank you.
Shrikhar
Yeah, this is the second one.
Aditya Rao
Go-ahead please, sir. Yeah, we’ll my apologies.
Shrikhar
It’s regarding our asset building, sir. So we said that we are going to double our production capacity like one year back we just said this. And now though the revenue has — I mean, not the revenue, but the raw-material cost has come down a little bit, not a little bit, but substantially. So we are hovering around that INR160 crore INR180 crore kind of revenue run-rate on a — like a quarterly run-rate, sir. So are we tying for like higher run-rates going-forward because of this increased capacity? And also you have said that you’re going to come up with a new greenfield capacity in the US.
Aditya Rao
Yeah. So let me explain this better. Good question actually. So, as we have stated is a major growth vertical for us, but the revenue has appeared. What has happened in fact is our capacity and our production have actually increased by a lot. In fact, our — we’ve had double-digit growth in our production and capacity. However, the selling price has declined by a lot in the US over the last one year. Now it’s back on the way up. So you have a double impact now where capacity is much higher and raw-material price — selling price also increasing. So you should — you will look at — you will see growth quarter-on-quarter in our US business as well. Right now, we are projecting growth quarter-on-quarter.
Shrikhar
And the other question is regarding the greenfield capacity, sir, which we are trying to?
Aditya Rao
That capacity, sir?
Shrikhar
The greenfield capacity now US regarding the PEB sector, you just sent in the last con called a new plant, a new plant in.
Aditya Rao
Yeah, we have — you plant that new plant to come up in the next year as if we have the clarity, we will be able to give you more details, but it would be the similar range that we have added the capacity priority.
Shrikhar
Thanks so much.
Aditya Rao
Thank you.
Operator
Thank you. It’s a request to all the participants, please limit a question to one question per participant. Do you have a follow-up question, we request you to rejoin the queue. The next question is from the line of Rahul Shah from Crown Capital. Please go-ahead.
Rahil Shah
Hi, sir. Thank you for the opportunity again. So just one question and it’s two-parts there. Please address them both. Earlier in one of the questions in the answer, you had mentioned that you’re looking at a double-digit scaling. So can we expect a 25% or 30% CAGR for the next three years? And in one of the calls earlier, you had mentioned PBT margin of 7% can be achieved soon. Can we expect them in FY ’26 or it will be later? Thank you. These are my questions.
Aditya Rao
So we will not be able to give guidance on our exact PBT percentage as — and also the CAGR. CAGR, right, CAGR growth rate. What we have — what we have gone and record and what we’re going to keep is double-digit, now double-digit obviously is a very wide range but — but yeah, I think you can refer to your past for what’s going to happen in the future. We have aggressive growth plans and we believe that our capital investments will allow us to grow and scale. So the exact percentage CAGR growth and profitability and the margin at which it grows, you will see margin expansion, you will see profit growth at double-digits. So do give us that leeway to adhere to those things, but yeah, obviously, we would want it to be as high a double-digit rate as possible.
Rahil Shah
Okay. And it will be sequential also, right, sequential growth will be there.
Aditya Rao
Yes, sequential growth. Yes, yes, 100%.
Rahil Shah
Okay, sir. No wrong. Thank you and all the best.
Operator
Thank you. The next question is from the line of Pratik [Phonetic], an Individual investor. Please go-ahead.
Pratik
Hello.
Operator
Hello.
Aditya Rao
Go-ahead.
Pratik
Am I audible?
Operator
Yes, sir?
Pratik
Yes. Yeah. You mentioned that the execution part was a challenge. So can you throw some light where the challenge is because the order flow is not a challenge. So I would want to understand where — what challenges are you facing in terms of execution it is on the shop floor or is it on something else?
Aditya Rao
I’ll try to be as transparent as I can on this. The underestimated the local issues we face. We have now solved for them. So we’re in a much better place than we were a few months ago, but we — this was our first North Indian plant. It took us a little bit of time. That’s that let me put it that way. I mean we would like to be as transparent as possible, but I think that’s those issue and we are solved for that. The other issues are pretty simple. They all manpower related setting up SOPs for factors of production and we tend to have those kind of issues. It just took us some time to then it’s usually taken for us because we have 30 manufacturing plants and it was — it was tough to do it. But the hard work is behind us, the difficulties are behind us. We are in a great place right now to scale Ali. All the factors of production in-place, it’s been loaded with a good order book and consequently, you will see very good revenue growth in TV EV India in the next couple of quarters.
Pratik
Okay, got it. And just follow-up, does this process or does this learning path help you in your future plans as well? Newer plants.
Aditya Rao
I’m sorry, so could you repeat the question? Sorry, it was muffled. We’ll look at the audio, but if you could repeat it.
Pratik
Yeah. So the challenges that you faced currently in the North Indian plant, would that be a template that you can use for your future new plants as well to overcome challenges?
Aditya Rao
Yes,. I don’t think Gujarat will have any problem because we have operated a plant in Gujarat before in Baroda. We have taken a large plant on lease. So we didn’t — we did not have those issues. So we don’t anticipate that this issue specifically that we face would come up, but it will be — I believe there is learnings that’s been that we had and I’m sure we will be better placed for our next plant in North India.
Pratik
Perfect. Thank you.
Operator
Thank you. The next question is from the line of from Aurum Capital. Please go-ahead.
Unidentified Participant
I just wanted a clarification. Are we investing INR18 crores on INR80 crores in all these supplies?
Aditya Rao
Could you repeat the question? We — which seem to have significant order.
Unidentified Participant
So are we investing INR18 crores on JV.
Aditya Rao
INR18 crores in the JV. One of your that’s it from.
Operator
Thank you. As that was the last question for the day, I now hand the conference over to the management for closing comments. Over to you, sir.
Aditya Rao
Thank you to everyone attending the call. We have taken note of all the questions and we will work to implement our plan and deliver growth and capital-efficient profitability. Thank you so much for your support and your guidance.
Operator
Thank you. On behalf of PhillipCapital India Private Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you.