Interarch Building Products Ltd (NSE: INTERARCH) Q3 2025 Earnings Call dated Feb. 05, 2025
Corporate Participants:
Arvind Nanda — Managing Director
Manish Kumar Garg — Chief Executive Officer
Analysts:
Dhruv Jain — Analyst
Yashovardhan Banka — Analyst
Ashish Konaje — Analyst
Tushar Raghatate — Analyst
Rohit Chaberwal — Analyst
Dhiral Shah — Analyst
Sanjay H. Parekh — Analyst
Richa Agarwal — Analyst
Saket Kapoor — Analyst
Prateek Bhandari — Analyst
Krupanshu Shah — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Interarc Building Products Q3FY25 earnings conference call hosted by Ambit Capital Private Limited. As a reminder, all participant clients will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Dhruv Jain from Amvid Capital. Thank you. And over to you sir.
Dhruv Jain — Analyst
Hello everyone. Welcome to Q3FY25 earnings call of Interding Products. From the management side today we have with us Mr. Arvind Nandav, Managing Director, Mr. Manish Kumar Garg, Chief Executive Officer Mr. Uspendra Kumar Pansar, Chief Financial Officer and Mr. Anu Chandani, President Corporate Finance and Strategy. Thank you. And over to you sir for your opening remarks.
Arvind Nanda — Managing Director
Thank you Dhruv. Thank you everybody for joining this call and taking your time out. I’m Arvind Nanda, M.D. of Interarch Building Products. So before we get to the other thing I’ll again because a lot of investors are new and lot of investors are coming in for the first time. I just wanted to take two minutes to explain what the pre Internet building industry is all about and where Interoc fits in. The pre engineered building industry it’s basically building made out of steel. But we are not classified as a fabricator or a steel structure company or a contractor etc. The pre engineered building, the principle basically behind pre unit building is the customer will come to us with his total requirement of whatever he wants. It could be a manufacturing plant, it could be a high rise building, it could be a warehouse, it could be a data center. He comes to us with his requirement on a technical basis that this is what I need. So the first stage that the pre internal building company gets involved in like Interop is the design and engineering of that building. So we must have excellent capabilities in house of design engineers and technical software and the senior engineering team to be able to convert their requirement into a design which is not only acceptable as per the codal requirements, but also a great value add. Because the customer doesn’t tell us to give a rate on a per kilo basis or a per square foot basis. It’s a lump sum building quotation that we give him. Therefore, it is very important for us to design and engineer these buildings very very well. And that is the key to a pre unit building. If a pre unit building company has good engineers and design, so you design the whole building very well, consequently your costing is good and your execution and production is better. So we design engineers the whole building. Then according to that, whatever steel requirements are there, we primarily use three different kind of steels. One is a HR plate. So we use a flat plate. We do not buy any ready made sections for the building. We make everything out of that plate as far as columns and beams are concerned. Then we have secondaries which come to us in coils, galvanized coils, or sometimes even pipes and rods, etc. And those we then roll form into the secondaries which hold the columns and beams together when the building is erected. The third part is the roof and wall cladding which is the final skin of the building which again comes in pre decided material, means it could be what kind of colors, what kind of coating, what thickness is, etc. But we buy it in coils and the full roofing, cladding, etc, is manufactured by us. So the full building is actually manufactured by us in our plant from basic raw material like plate, coil and you know, whatever little bit of accessories we. So the first part is design engineering. Then that design engineering team decides how much material of each type do we need. Then they decide what is going to be. The manufacturing cost with each building is very unique. We have no standard items, we have no standardized products to make. Every building is uniquely manufactured, designed and manufactured in house. So then what does it take to manufacture that? What is the costing of that manufacturing of that building? We take that then freighting it to site. And at site the whole building is assembled in a nut and bolt assembly form. No work is done at site as far as the building is concerned in terms of welding, cutting, drilling or painting. Even painted, also painting, also done in the factory. So everything was ready made in pieces, in transportable pieces to the site. And there it is just assembled like a nut and bolt assembly. No other work at the site is required except nut and bolt assembly, including the roof and wall cladding. So the costing of this whole thing is taken at the time of quotation and we give it to the customer as a lump sum price with a fixed schedule. We tell them, look, we will take three months, four months, five months, depending on the building and the complexity to execute this whole process project from beginning to the end and he will get his complete building at the end of the day. He doesn’t have to look at any other vendor, any other supplier buying any material etc. He orders a building on us like a product. So everything from design engineering to putting it up at site is the responsibility of the pre unit building company. So that is the major difference between us and any other contractor or fabricator or steel building supplier. Because they just do part of the work we do the complete building like our product. So therefore we become a one stop shop for the company. They deal with us. The design engineering, production defects or execution delays etc is all put on one company. They don’t have to run around in circles trying to get this work done. So it is very similar to buying a car today or ready made furniture or even ready made apartments and office blocks. As we buy, we buy it depending on the reputation of the company, the sizes that we want, the location that we need, and we decide to order it. And he will get that fixed price for the full term of the building. Therefore he doesn’t have to worry about any cost escalations or any delays. That is all our area of work. So consequently over a period of time, due to the complexity of the building, due to the size of the building, we would also say complexity of the clients. Because most of our clients are highly sophisticated and world class companies which are very, very concerned about safety standards, quality, standards, design, your execution dates, your supply date, scheduling, we are very concerned about that. So we are actually become like a capital goods partner with these companies. We do not consider ourselves, neither do they consider us as a vendor supplying some steel fabricated item, but as a first capital goods that they need for their product. Because if we cannot do the building according to their requirements, Today’s requirements of production or even building of warehousing are highly complex. These buildings are built at various different levels. Some of the building we have done industrial building go up to the height of 70 meters, which is like building 20, 25 story building with different weights of machinery, levels of machinery being installed at different levels. Heavy cranes, mezzanine, conveyor system, all these are a part of the building. We have to take consideration of all these items that they will be installing in that building as a part of their process of production. So whether it is conveyor system, whether it is your, even the solar systems installed on the building, we have to take consideration of those weight, et cetera. So we are very closely working with these companies, so they value us greatly and they go with the companies like Interact because of the value that we add to them. It is not L1 process, it is not the cheapest company will get the order or they just open tender and everybody quotes. But the client will first select the vendors or the partners that he wants, he feels are capable and able to do the work that he wants. So like in capital good, the ability and capability is far more critical. Like in machinery and other capital goods, the company has to also design, engineer, produce it and make sure that the product functions as the customer wants and not only function, but keeps giving him that output and keeps giving him that durability over many decades to come. So that is why we feel that we are a capital goods company with the. With these multinationals and large Indian concerns. Two, three other things that happen with pre unit building and with interarc is that we are also pretty much industry agnostic. The way we have built up our engineering and design department and execution and our production line. We are very much industry agnostic. We can work with any industry. We have worked with automobile, with oil and gas, with the data centers, with semiconductor industries, today with lithium battery, with your A grade warehousing, with all manufacturing industries. There’s nothing whether it’s a Coca Cola plant, whether it’s a Pepsi, the concentrate plant, whether it is machinery manufacturers like sms. There is no company in India that is existing here that we have not worked for. I would say so. Starting from reliance to the LNTs to ONGC to rail coach factories to the Terminal 3 airport that is made in Delhi. And we have done variety of building right from Fortis hospital building in Bangalore to malls, to stadiums, to schools, colleges, hospitals, homes. We are very much industry agnostic. We are very much building agnostic. It doesn’t matter to us what kind of building you want. We can do very wide building, meaning no central support, up to 120 meters, very high building. We have done already 70 to 80 meter high buildings with very heavy loadings with very heavy cranes on it. We have done schools, hospitals, add on to additional floors, homes, hill homes, farmhouses. So we are very much building agnostic also. And as interact we have also built ourselves to be very much geographically agnostic as well. We have done projects all over India. So it is not that we are limited to certain territories or certain states, but we have done work in the northeast. The recently announced project of Tata Microchip Semiconductors in Assam is what we are doing. We have done work for Berger and for hul very big projects in the northeast earlier. And there is no state in India that we have not worked in. Whether it’s in Jammu Kashmir, whether It’s in South Odisha, Bihar, Jharkhand, everywhere. So we are building agnostic. We are industry agnostic and we are very much geography agnostic. That is how we are trying to build up this company and our whole basis is how to build up a good relationship and good partnership with the world’s best companies which are working in India. Whether they are Indian companies, whether they are Indian consultants, whether they are foreign consultants and whether they are foreign companies which are coming into India. We want to be their first preference and top of their mind preference because that is how these projects get decided. Like I was saying, it doesn’t matter what your price is, it is your capability and your ability to do so. The history of Interoc has been where we have worked with all the top companies. We have done nearly every kind of building that can be done. So we become very much a part of the preference of customers. Because when they look at our history of last 25 years increasing at building and last 40 years in this field, they feel that we are the right company for them to do the job because we have already done something very similar and very close to their requirements earlier. So that is a position of Interact and that is what pre Internet building is all about. So I will not go much further in that. Pass it on to Manish, he will give you some idea further up and then we will go for question answers.
Manish Kumar Garg — Chief Executive Officer
All right, thank you. Good afternoon everyone. Taking it further from where Mr. Nanda left. We are today the fastest growing company in the organized re engineered building sector in India and we currently rank 2 in the overall scheme of things. Between FY15 and FY24 we successfully executed and completed over 600 projects. That demonstrates our extensive expertise and strong market presence. And in terms of PEB turnover we have secured the third position amongst integrated PEB players. We specialize in high quality pre engineered roofing and cladding systems tailored to meet diverse customer requirements. Interoc operates five state of the art manufacturing plants and four fully integrated pre engineered building facilities located in Tirupevambadur, Tamil Nadu where we have two facilities and then two in Pantanagar and Uttarakhand followed by Ativaram, Andhra Pradesh and Kicha, Uttarakhand where the new facilities have come up. Our facilities have a combined installed capacity as of today as 1 lakh and 61,000 metric tons per annum. And given that the utilizable capacity in our business typically ranges between 80 85% this translates to an effective 135,000 tonnes metric ton per annum of utilizable capacity to support future growth. We are currently expanding our facilities in Andhra Pradesh Ativaram which we call the Ativaram Phase 2 and Kitchen Line 3. Once completed sometime in Q1FY26, this expansion will add about 40,000 more metric tons to the installed capacity bringing our total installed capacity to 200,000 metric tons per annum adjusted to about 80 85% as utilizable capacity. Some of the recent developments at Interoc includes our R and D work done in Engineering department where we are trying to automate a lot of manual tasks to increase efficiency and productivity in the Engineering department also logistics being a very important part because you heard Mr. Randa saying we operate pan India. We are trying to add a lot of platforms which automate our logistic operational management and also the logistic partners who have their own fleet because we believe that that is going to be critical going forward to support our growth and we also are looking at capacity building through inducting the fresh talent into our engineering projects and design and we are also actively participating in upgradation of Indian codes to cater to pre engineered buildings. Specifically as of today our total order book stands at 1305 crores which reflects a very strong pipeline and sustained demand and we take pride in our diverse customer base wherein our repeat order percentage remains more than 70%. Some of the major orders that we procured in the past quarter and in past few years already Mr. Nanda explained, they are from the new age industries as well. We expect to continue growing at the pace that we have demonstrated. Looking ahead we are focused on expanding our footprint and diversifying our solutions to tap into emerging growth opportunities including expanding our operations manufacturing in Gujarat going forward to support our future growth wherein we already have secured a land which is registered in Keda so that to support the manufacturing setup for future we also have already diversified into future sectors like EV infrastructure, renewables, data centers, multi storey and our tie up with JSPN is making it far more possible for us to handle these kind of specialized sectors particularly the high rise and the heavy steel sector. Now I’ll come to the financial highlights for the quarter and coming to the then Q3 FY25 highlights are very pleased to report. The revenue for the quarter stood at 364 crores with a growth of 15% on a year on year basis. The business mix of end user industry was industrial and manufacturing predominantly at 86% and infrastructure including logistics at about 12% and other building at 2%. Our EBITDA for the quarter stood at 35 crores which is a growth of 28% on a year on year basis. Our EBITDA margins also saw an improvement and stood at 9.7%. Profit after tax for the quarter came at 28 crores with a growth of 28% on a year on year basis. Our total order book as I explained today stands at the unexecuted order book at 13005 crores. In terms of YTD 9 months. FY25 highlights. Our revenue stood at 990 crores with a growth of 9% on a year on year basis. Business mix I will be explained to you. On a year on year basis IT stands at 75% from manufacturing and 23% from infrastructure followed by 2% from other building types. Our EBITDA for the period came at 88 crores with a growth of 20% on a year on year basis. And our EBITDA margins for nine months FY25 came at 8.9%. Our profit after tax is 69 crores for the period with a growth of 23% on a year on year basis. With this, I would like to conclude the presentation and open the floor for questions and answers. Thank you.
Questions and Answers:
Operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask questions may press Star and one on their Touchstone telephone. If you wish to remove yourself from the question queue, you May press A Star and 2. Participants are requested to use handsets while asking questions. Ladies and gentlemen, we will wait for a moment while the question queue assembles. To ask questions, please press star and 1. The first question is from Yasho Vardhanvanka from Tiger Assets [Phonetic]. Please go ahead.
Yashovardhan Banka
Thank you sir. And congratulations on a fantastic execution. I just wanted to understand what is the attrition rate of our designers for this year.
Arvind Nanda
Attrition rates are pretty low generally in the company for design. I don’t know whether we have an exact figure. Manish, would you have an exact figure? But I think it’s. Personally I feel is very low.
Manish Kumar Garg
I don’t also have the exact figure but I can, I can say that for the recent period it is about 10% for engineering in particular.
Yashovardhan Banka
Okay, so that includes our designers, right?
Manish Kumar Garg
That is correct.
Yashovardhan Banka
Thank you. And so as I see we have I think secured around 405 crores in the last three months of orders. So sir, any major client may break through as in a big client where we can see sustainable repeat orders moving on.
Arvind Nanda
In the fall next three months.
Yashovardhan Banka
No sir. So the orders that we’ve secured of in the last three months here. Yeah, yeah.
Arvind Nanda
There were three or four major orders that we did get in this last three months. Two we had announced recently also. One from Tata projects for their Tata Agritas which is a battery lithium battery plant to be set up in Gujarat and a Tata Electronics project in Assam which they are going to make these semiconductor chips which also made a lot of news otherwise. So these two then I think recently we have also got a couple of more projects. One from I think Birla Copper for their plant and another one we are getting. I think there are about four major orders. I think Manish, which was the one that we got last.
Manish Kumar Garg
Yes. So Hindalco was the one that we got. Yeah, that is what is called Birla Copper. Yes.
Yashovardhan Banka
Okay.
Arvind Nanda
And one more we got recently, I think that is the prom which we just finalized from the solar company, Vikram Solar, I think.
Manish Kumar Garg
All right. Yeah, but that, that is.
Arvind Nanda
Not taken in this figure.
Manish Kumar Garg
Yeah, that is not taken.
Arvind Nanda
Yeah. So that I think probably might have come after the 31st of January. So we are. The bigger orders are coming from this renewable line. Our normal orders of warehousing and from the manufacturing industry are continuing. But these renewable sector and these new age sectors like semiconductors and all they require very large building and then you know, so therefore the value of the orders is also a little larger and we are concentrating a lot of energy onto these sectors now.
Yashovardhan Banka
Got it. So just a follow up to this. I mean the 1300 crore order book. What is the approximate execution timeline for this?
Arvind Nanda
I think Manish mentioned. See normally the order lines are getting shorter and shorter now. Normally people would have expected the large orders to be finished between 8 to 10 months. But now I think it has become 7 to 9 months for me. So I think the 1300 crore we have to finish in next 8 to 9 months. That is why we are little restricted also in taking more orders because we have to judge our capacity and our ability to execute as per customers requirement. So once we ramp up more capacity, I think we should be in a position to take more orders. But these have to finish in next eight to nine months.
Yashovardhan Banka
Got it sir. Thank you very much and all the very best. Thank you.
Operator
Thank you. Next question is from Ashish from Everflow Partners. Please go ahead.
Ashish Konaje
Hi. Thank you. Thank you for taking my question. So my first question had to do with. I wanted to understand what kind of an opportunity does the management see in the export business.
Arvind Nanda
We have exported in the past, but not too much. I would say on an average maybe we were doing about one building every quarter. Now we are doing about maybe one building every month. See the opportunity on export basically is how much concentration we pay on to exports. So since last year we have created a special export wing and concentrating a lot more on the export orders. And we feel that the opportunity coming up from the western countries and the neighboring countries, Western countries more so because they are all, they were earlier importing a lot of these kind of buildings from China. They want to now have an alternative source for their requirements. And then a lot of requirements were coming even to us and Canada, from Mexico or Canada. So we see a very good opportunity and we feel that we are now in a good position to exploit it. The figures might not be very relevant in terms of the total turnover in the next year or so, but I think next one year of our effort will show to us how much business we can get. But the kind of business pre engineered building is, it’s very difficult to get a very large chunk of your business from exports because of the design engineering. And then you need a local partner who will have the name and the trust of the client to get the building and then to be able to execute that thing. But that we cannot do. But I think the requirements are coming up Africa, neighboring countries, we are trying Sri Lanka, we have done a lot of buildings in Nepal. So I think the scope is there. But for the first time since last year we are actually concentrating on it. I can’t name any figures but I think maybe after another year you will have a more definitive idea. But we are certainly concentrating on it.
Ashish Konaje
Okay. So my second question had to do with in the domestic business for the large projects. How many people do you see bidding on these tenders? And what is the competitive intensity like? How is it affecting your margin?
Arvind Nanda
In the larger space, normally the customers would go by, like I said, ability and capability of the company to do it and history. I mean, how many projects like that you have done in the past similar because their timelines are very critical. Somebody wanted to make a semiconductor or a data center or making battery or solar cells. Timelines are very critical for them. So we rank pretty high in that capability and ability, preference of mind of the customer. In these projects, normally there are not more than two or three companies maximum, sometimes four. If the project is very large, they will divide it. Templar buildings can go to a third or fourth player. The most important competitor for us in this line is normally Kirby, which is a Kuwaiti company based in India, which is the number one company in India. Most of the orders would either go to them or to us or we share them for the larger one. But we have seen the other lower players, players who are less than our size or do not have the ability to do complex building. Taking a share of the simpler building in this project. Because each project like this could have 7, 8 building, 2, 3 could be very relevant, very large and very critical. And four, five could be smaller, like warehousing for storage of materials, storage of finished goods, etc. Etc. Going to other players. The competition is there. There is no doubt that competition is very severe. But I think the history that we have built up and the ability that we have shown in the past and the relationships we have built up because we have done work for these companies and these sectors like Tata Projects and Tata Group, we have worked with maybe 15, 20 of their companies in the past. So whether it is a Pepsi or a Coke or Reliance, we are doing Reliance Solar. We have been working with the Reliance group for last 40 years in their various projects, doing various things. So that has helped us in the thing. But yes, I think a lot of the margins we will have to create and make from internal working to make it better, to make it more efficient, to, you know, utilize our present resources for getting more orders so that the operational leverage also kicks in. We’ll have to learn to make more and more margins from inside, which we are very good at, increase our productivity, increase the output of our sales and project teams and the production. Otherwise I don’t think that we are going to have to rely on better margin from customers. The competitive environment is there, but certainly we will be able to hold and increase our margins going forward.
Ashish Konaje
Thank you. Thank you. That clears my question. Thank you.
Operator
Thank you. Next question is from Tushar Ragatate from Kamakhya Wealth Management. Please go ahead.
Tushar Raghatate
Good afternoon, sir, and thank you for the opportunity. So the recent which got lined and There is also one 40,000 ton capex lined up for Q1 FR26. Just wanted to know when are you seeing that CAPEX to get fully operational. And also the Gujarat Capex which is in pipeline. What Kanaj would be for that CapEx.
Arvind Nanda
This CapEx will come into play by the first quarter of FY26. It’s already in production. The building is coming up, the machinery is ordered so that the two lines coming up in Andhra phase two and Kichya phase three will be operational in the first quarter. The Gujarat one. We have the land and we start some development depending on the order intake and how. If the order intake carries on as it is today and the pipeline looks good. Our plan is to start it after the monsoons this year to go forward to the Gujarat plant but for production facilities also. I would like to inform everybody that we are also tying up. There are a lot of good companies which are doing production because they have set up very good PEB plants. A lot of these companies, I can’t name them, they couldn’t do the PEB business as such. But they have good plants. So we have tied up with two, three of them to give us the production facilities of theirs which are world class to work according to our system. So we are also tying up that. That in case we want to do the intake of orders faster and we are getting more orders so we don’t lose them. So that also we are doing as a outsourcing kind of a model. So we are working on that also. But our own CapEx will be. These two which we are doing by the first quarter will be operational fully and Gujarat should start in the third quarter of this year of the next.
Tushar Raghatate
I couldn’t get the answer. Like basically what I’m trying to understand to mention in the past that 40,000 tonnage capacity has a revenue potential of 500 crore. My question is like when do you see that Q1, Q1 FY26 CapEx to get fully utilized. That was my question actually.
Arvind Nanda
Okay. I. I think it will get utilized up to about maybe 75% in the next financial year. So that 500 crores for adding for this 70. Because the first quarter will be a little bit of trial production etc. So 75% in the financial and 100% in the following financial.
Tushar Raghatate
Got it. Next question is on the competitive intensity. So like as per the material capacity I’m considering so the Kirby capacity is near to 2 12,000. And the second computer comes the EPAC prefire which has 1 lakh 13,000 so our capacity 2 lakh pose the CAPEX so just wanted to know all have good revenues and margin more or less similar but in the case of in the working capital, they are working capital negative with 400 crore of cash. So just wanted to know our headroom to improve our working capital, what are our, you know, plans to improve our working capital going forward?
Arvind Nanda
See, our working capital requirements generally have been in the range of 20 to 25 days. So it’s reasonably good. And that is what we have managed to maintain is in spite of doing very large project where the working capital cycle goes a little haywire because of the milestones that these large companies put for payments, we always tend to controlling stock. We do get reasonable credit from even the steel companies by opening LC’s or open credit. So I think that we will be able to hold our working capital cycle to 20, 21 days. And I don’t think that working capital cycle, if I’m not mistaken doesn’t include our cash reserve. I think it is a debtors, the debtor, the customer advances suppliers and the stocks. So that is how we calculate the working capital.
Tushar Raghatate
Got it sir.
Arvind Nanda
And we have cash reserves of even now of nearly 300 crores. I don’t think we take that into the working capital cycle.
Tushar Raghatate
Got it? Got it sir. So just wanted to know the recent collaboration with jsw. So what’s the benefit of that? Any discounts we are getting in terms of large orders or what sort of benefit are you seeing due to this collaboration?
Arvind Nanda
The collaboration with GSPL Jindal only, but the Naveen Jindal Group. So it is nothing to do with the steel procurement. GSPL has a separate unit in which they do fabrication of heavy structures. You know the structures that you see in high rise buildings or data centers or even in the girders in the metro and the road. So they have very good facilities to do fabrication which they had originally set up for their own purposes to set up their own steel plants, but now they don’t need it fully. We have tied up with them that there are a lot of heavy engineered building structures. Even though the buildings can be very large and heavy in terms of weight, but each piece is light. So therefore what we have done with them is that we have tied up with them that when we get a contract like a microchip plant or a data center or even one of the lithium battery plants, these have requirements or 20, 30% of their requirements can be what we call heavy structure. So we are going to use them for the heavier structure production and joint marketing of other buildings like high rise buildings and data centers and commercial building malls. There we are going to do joint marketing, joint bidding and our engineering and design strength their production. And they also have a good history because they have worked on a lot of these these projects. So the collaboration is primarily for building, which we are not doing too much today, but we can do because more and more people are shifting to steel buildings for other usages, non industrial usages. So that is a tie up with jsps.
Tushar Raghatate
Got it. What would be your average average advance which you take from the customer for any project? Big size project which you execute.
Arvind Nanda
Normally for the bigger project we would take at least 20%. The small medium one can be anything between 10 and 20%. The 20 after the small medium. After the advance they have to pay in full before we deliver the material to them. And in the larger projects, the balance steel supply payment would come in with the, you know, on a milestone. We would supply, raise a bill and within 15 to 30 days we would get our payment of the supply of steel. The supply of steel would be fully covered by the time we finish our supplies. Advances being 10 to 20%.
Tushar Raghatate
All fixed contract. Right? The prices.
Arvind Nanda
Sorry.
Tushar Raghatate
The prices are fixed, right?
Arvind Nanda
Yeah, most of the prices are fixed. When there’s a longer term project, we do take variable pricing. So I think today would be maybe 30 to 40% of our projects would have variable pricing if the project stretches over eight to 10 months. But since the prices have been stable, more and more clients are insisting that we do not get into this variable pricing which means a lot of calculations every month to order. And we are also accepting since the steel prices have not really moved too much in the last eight to 10 months. But yes, otherwise a lot of our orders today are.
Tushar Raghatate
Thank you. So that was really helpful. All the best.
Arvind Nanda
Thank you very much.
Operator
Thank you. Before we take the next question, a reminder to participants that you may press STAR and one to join the question queue. The next question is from Rohit Chabriwal from Nivesha. Please go ahead.
Rohit Chaberwal
Hello sir. Thank you for taking my question. So my first question is on export side, right? So you said you are building one building per month in the export market. So I was wondering what kind of margins are we getting from this? Hello.
Arvind Nanda
Yeah, the margins are not that much different in exports to the local market. But they are much. They are a little higher. The payment terms are secure. And basically the advantage is that it’s only a supply job engine. You engineer, design the building and you supply it. There’s no further execution and then payments according to a schedule. And the payments are all against lc. And also I think it’s a different market that we need to get into. See, the margins are a little better than the local market, but not excellent. Because there’s a lot of freight cost. The freight rates have gone up a lot and a lot of our export is going to North America. And there the freight, you know, it’s adding a lot to the freight cost. But in spite of a little better margin and in spite of freight, we are still finding it very competitive. So we are looking at higher volumes from there for simpler buildings and utilize more of our production capacity and execute those orders. But overall margin is only slightly better. I would not say it is fantastically better.
Rohit Chaberwal
Okay, makes makes sense. And so my second question is again on the margin side. So currently we are doing high single digits margin. So how do you see that in coming quarters or incoming years is 9% or 10% sustainable margin? So I use expecting more or less from that.
Arvind Nanda
They are very sustainable. You know, a lot of the sustainability of the margin in our case depends on the volume of business that we do. So right now we are looking at volumes doing well. We have done well in the past three quarters, as you’ve seen, they’ve been rising. They are better than last year and they’re better than each past quarter. The order book is good, the pipeline is good. And so we do not see any problem right now, at least for the next three to four quarters in margin sustainability. Better margin. We are always trying. We are using a lot of better technology, making better use of people, making, getting, trying to get orders which have a little better margin because of volume. So better margin is always an endeavor that I think we can do. But what we are doing presently are certainly sustainable. I don’t see any problem in the next few quarters in these margins.
Rohit Chaberwal
Got it, got it. And so my next question is on capacity utilization. So it has been around 55 percentage or so in the last year and last two quarters. So what is your take on that? Would that, I mean would you see it increasing? And if yes, how, by how much percentage?
Arvind Nanda
Okay, I, I’ll let Manish answer that. Manish, can you take that question please?
Manish Kumar Garg
Yes sir. What is the percentage that you’re talking about? Which percentage?
Rohit Chaberwal
Capacity utilization? I’m talking about.
Manish Kumar Garg
Capacity utilization. Okay. So I think sir, our capacity utilization as I said, you know, there is, there is something which we call the installed capacity and then there is utilizable capacity. So we have what we call the, you know, the primary capacity that determines how we utilize the overall capacity. So when we reach. So we are already at about 80% of the capacity utilization. Okay. In the overall scheme of things. And going forward we started adding capacity only when we reached about 80, 85%, because in our kind of business, the kind of product mix is there. It’s not really dependent on the machine capacity determination. It’s not really a machine installed capacity. So going forward we do feel that we should be able to raise our capacity utilization of already, you know, utilizable capacity percentage by at least 3 to 4%. And we should reach to about 90% of the utilizable capacity next one year.
Rohit Chaberwal
Okay. Okay. What is the difference in difference of number between a utilizable and installed capacity at the at present?
Manish Kumar Garg
That is correct, sir. So our utilizable capacity in the pre engineered building business is about 80 to 85% of the installed capacity. That is the proportion which always that’s maintained between installed capacity and the utilizable capacity. So that’s the percentage even today.
Rohit Chaberwal
Okay, got it, got it. One last question I have. What is on top 10 customer revenue? I was wondering, so you are getting so many big ticket clients. Vikram Sola, you recently got. I was wondering what is the top 10 customer contributing to the total revenue on quarter, on quarter and on year, on year basis?
Manish Kumar Garg
I think I would have to first clarify and we have done that in the past as well that in our kind of business our top 10 customers, quarter, on quarter, year on year will keep changing. And because we are not a, you know, OPEX item, we are a Capex item. So our top 10 customers could be very different in FY24 than in FY25, than in, you know, FY19. But if you were to ask me that whatever the top 10 customers will be. So top 10 customers could be, let’s say, let’s say for FY25 it will be Reliance Startup projects and you know, let’s say four or five more next year it could be Aditya Birla and somebody else, you know, a year before it was Birla Open and Asian Paints. And also so they keep changing every year because we’re not an OPEX product. But yes, top 10 customers can give us revenue about 40 to 50%.
Rohit Chaberwal
And what about the recurring revenue you’re getting?
Manish Kumar Garg
Yeah, there is no recurring to that extent, sir. There is no recurring revenue because. Because Awarth is a project business and there is no reckoning revenue which is guaranteed from one of our customers. But what we can say is a recurring account. So for example Tata as a group will account for a certain amount of business over the years. Similar for reliable science and Aditya Birla Group and Pepsi and Coca Cola. But which year, how much we can’t say. But yes, overall they are our repeat customers. So for one year they may not order anything. But in the second year they could contribute 15% to my revenue depending on what their capex plans are. But this is what our business is sir.
Arvind Nanda
Only thing I would like to add is that there are some warehousing A grade warehousing companies that we deal with on a consistent basis like Indoor space and wellspan etc. Who keep giving us business every year. Of course it’s different warehouses, different regions but we do deal with them year to year every year so that we can say something like a consistent business more than anybody else.
Rohit Chaberwal
Got it. And what would the percentage be of the a warehousing that you’re talking about from the total revenue?
Arvind Nanda
I think what we are showing is infrastructure is primarily that warehousing sector about 23%. We have shown that as a, you know, the warehousing what we show as infrastructure is primarily the warehousing sector. A grade.
Rohit Chaberwal
Yes. Thank you so much. I really appreciate it.
Arvind Nanda
Thank you very much.
Operator
Thank you. Next question is from Dural from Philip Capital. Please go ahead.
Dhiral Shah
Hello. Yeah, good evening sir. Thanks for the opportunity Sir. As a nine month basis we have grown our revenue around 9 to 10% on a YUI basis. But what could be our corresponding volume growth?
Manish Kumar Garg
Volume growth? Volume growth on quarter, on quarter is about 11% sir. To be precise 10.8%.
Dhiral Shah
And so on the YUI basis.
Manish Kumar Garg
Why oh Y basis. I think it’s about the similar number sir. I don’t have it in front of me but that’s about I think again about 9.2 or 10% something of that sort.
Dhiral Shah
And so this will be for the Q3 FY25, right? And what will be the corresponding 49 month FY25?
Manish Kumar Garg
Yeah. So I will repeat sir, so that there is no confusion on a quarter on quarter basis. So September 24 quarter to December 24 quarter it is 11%. It is 11% volume growth. Now you are talking about the nine months to the nine months.
Dhiral Shah
Yes.
Manish Kumar Garg
That also is about the same sir.
Dhiral Shah
11%.
Manish Kumar Garg
Yeah.
Dhiral Shah
Okay. And so what is our current order with pipeline as on date.
Manish Kumar Garg
Order book. We confirmed it is 1305 crores of the order book right now.
Dhiral Shah
Order bid bid pipeline.
Manish Kumar Garg
Order bid pipeline. Mr. Nanda did explain. We our pipeline overall is 4,000 Crore which is distributed into two facets. One is two and a half thousand crores of confirmed bids. Those have been put for the job and one and a half thousand is which is under active discussion to be bid. That is how the 4000 crores of pipeline is distributed, sir.
Dhiral Shah
Okay. So lastly what will be the capex requirement for the Gujarat plant?
Manish Kumar Garg
I think similar, maybe, maybe about 80 to 90 crores.
Dhiral Shah
And we are looking to commence this capacity by Q3FY26 right post monsoon.
Manish Kumar Garg
Not I mean comments in the sense commence work on setting up the capacity.
Dhiral Shah
Okay so maybe this will start let’s say from next year.
Manish Kumar Garg
This takes time. So we will commence work probably that time. But yes, it will take some time to build that up.
Dhiral Shah
Okay. Okay. Thank you so much sir.
Operator
Thank you. Next question is from Sanjay Parikh from Soham Asset Managers. Please go ahead.
Sanjay H. Parekh
Yeah, congratulations on a fantastic set of numbers and emphasizing on sustainable long term growth rate and return issues. Sir, I have a question in a sense that when I see your capacity creation and you also mentioned in the call that you know the supply is an issue, why you’re not taking, I mean the order inflow that you would accept, you want to give them scheduled deliveries on time and hence, you know supply is a challenge is what I get to know. So do you think that you know the Gujarat plant could have in hindsight could have been earlier and would have led us to better growth or practically it’s not easy to set up plants. And what is your sense? That is the first question. The second question is what I’m trying to ask. Is it supply which is constraining you then demand because demand visibility we see is quite a lot. And is it also due to your conservatism that you did explain when we met. The second question is I had that you know you had a long term goal of doubling your turnover from in three to four years. Now let’s say if we take a base of 1400 crores this year, 1400-1450 when it comes this year. And then you spelled out that in 26 you’ll have 10 to 15% growth rate. Take that as well. Then for you to double in four years would mean 20% growth in the next three years. So do you think that we have you know the capacity and the get there. That’s the second and third of course you did mention that you know, the operating leverage. I mean generally as you said the margins are around 10, but as you said scale, can we look for a little better margins over longer term? These are three questions.
Arvind Nanda
So your first question is. You see the thing with pre Internet building is primarily that it is not just only factory related product. Like we mentioned earlier that the first stage of design engineering is very critical in pre engineered building. So to have a very good team of pre engineered building engineers, designers because we can’t even quote otherwise a very good team of salespeople based all over the place dealing with various clients. These two are very critical to even be able to deal with a client to even give him a quotation. So these two as we call a P engineered building as a four legged animal. So these are the first two legs which are very critical and these are totally people oriented. Of course technology is used a lot in the design engineering but very people oriented. Then comes the plant. Plant is also becoming more and more people oriented because you set up the plant then you also need the people and trained people to do it. And then the fourth of course is that we have to set up all these buildings at site. So therefore you need a very good project management as well as the erectors and builders that we outsource to were trained and certified by us. So all these four legs must move in, you know, move together simultaneously in great coordination. Then only can you execute a project project properly. So therefore while you are right that we could have done the Gujarat one first and then. But we need to move up all these four legs together. So what we are doing is. You are 100% right that why should one we give up an opportunity as we are getting better, we are outsourcing. I mentioned into answer to an earlier question also that we have started looking and confirming book quantities of the production facilities with other companies which are there in the country. Very, very very good factories. They couldn’t do the PEB business but they are very good in the factory. So we have tied up with them to overcome this thing that if we can get more orders as we get better in engineering and design and execution we can increase our orders beyond the capacity of our production also even if they are not set up so it can be a hindrance. But the bigger thing is also that the other three legs we have to get into coordination otherwise we will fall. Just setting up a good factory is not the solution to pre engineered building but all the things have to work together. So we have to be a little cautious because most pre engineered building companies which have failed in this country, and lot of them have failed. Very big companies, companies with a lot of money, companies with a very good reputation. All kinds of companies have failed in this was a very niche business and the focus has to be on executing every project very well and making sure that it’s fully coordinated. So that is the first. Yeah, we are, you know, like we are. We have found that land was a major issue when you want to set up a new plant. Land was the biggest hurdle. That took time. So we have started booking the land earlier, keeping it, which we were not doing earlier. So that is why we went in for production into Kicha, because we had spare land there. So we said, let’s put it up there. We had of course, land in Andhra, we already booked Gujarat. So we are very well prepared. But we have to be cautious that all the four legs move together and we are trying to move it faster and faster. Now your second question was on the question of sustainability of margins, I think.
Sanjay H. Parekh
Yeah. Second was that turnover doubling in three to four years. And third is sustainability of margins.
Arvind Nanda
That we are still aiming for that by 27, 28. We are hoping, I think even our next year’s objective is to increase the sales by 20% and continue with that 20 to 70% per year. So that in the next three to three years or now, well, three years left in the thing that we should achieve more or less the double the figure of our 24 figures, that is still on target. And I think the pipeline exists and I think we are preparing for that. So we are very well prepared to achieve that figure. We are not letting anything get in our way of that. Let’s hope everything continues to be good. We are trying to add many more types of buildings that we can execute, going to many new areas. Many new companies are tied up with gspl. On the other side, we are also tying up with some good engineering companies which already have the experience of building on which we don’t have the experience right now, like high rise, etc. So that their credibility combined with ours and our ability to execute ourselves as well as through JSPL will increase. So I think all these will come into play in the next three years and I think we are pretty confident that we’ll achieve that figure that we have, you know, said in the past that we will achieve. We are well on track and our preparations are going full steam on that margins. Yes, I think operational leverage can give us better margins, but it’s very difficult to say because at the same time you have to also prepare for higher turnovers and more sales going forward. So a little bit of expenses also go up. But we feel that operational leverage is a very critical aspect of our company, of this business. Because if the sales people, you don’t need to double your salespeople to double your sales or double your engineering department to double it Plants. Yes. It’s a production item, so you need to do that execution. Also, you don’t need to. So I think operational leverage will kick in and make it better. We have seen that in the last four or five years. Also as turnover increases, the operational leverage has kicked in. But frankly I would not like to commit anything as to how much it will be. But definitely it should be better.
Sanjay H. Parekh
Great, great. No commendable effort, sir. I mean absolutely a great thing. The way you’re managing it in terms of your asset turn and EBIT margins and return ratios of 23 to 25% is truly commendable. Thank you very much.
Arvind Nanda
Thank you. Our whole focus is to run the company well. That has been our focus from the beginning. And make sure that you have both customers relationships execute them properly. And we feel that all these other things ratios and profitability margin will follow. So run the company well and I think other things will come automatically. That is our motto.
Sanjay H. Parekh
Yes. Thank you, sir. Thank you.
Arvind Nanda
Thank you.
Operator
Thank you. Before we take the next question, a request to participants to please limit your questions to two per participant. The next question is from Richa, from Equity Master. Please go ahead.
Richa Agarwal
Thank you for the opportunity. So my question is when it comes to right to win a certain contract, apart from, you know, certain experience that we have with that player is location of the plant also something that is considered. For example, maybe we have a plant in Gujarat so it is more feasible to provide or cater to the niche nearby as compared to northeast. And going forward, when you consider setting up plants, would that be a factor? Second question is can you give me an estimate of what kind of capacity we are planning in Gujarat land and what kind of difference in capex is there when it comes to our brownfield versus greenfield capacity? So if you will answer these two questions and maybe I’ll come back.
Arvind Nanda
In our business it is very difficult to be near the customer. Your customer could be anywhere. We have Tata as a customer and they could be all over Tata Motors, we have done four plants for them all over India. But we find that every time we set up a new plant, once we reach an optimum capacity, it is good to move away because then you, you know, otherwise the shortage of people or the amount of people that you have at one location or you know, you do get some advantages in terms of freight or logistic cost if you move but only after the plant has reached an optimum size. It is not, does not make it worthwhile to have five plants running all over and all, you know, at half the capacity. So yes, every time we have reached a full capacity, we have moved. And that is why the next location is supposed to be Gujarat. And I think it will help us in the plant. There’s also a psychological part of the location is that people setting up more and more projects in Gujarat somehow feel happier, even if the cost is not an issue, that our plant is in Gujarat and it will be close by to their project. So if you have western Indian we have two in north, two in the south. I think it is always beneficial in that. I think your second question was about the cost of setting up the plant.
Richa Agarwal
Yeah, what capacity? And the greenfield versus brownfield estimate of Quebec for this capacity.
Arvind Nanda
Yeah. See normally we do not really a brownfield for us is only that we do it in phases like Andhra. When we bought and we planned, the plan was to do both the phases but one after the other. Because setting up two phases you suddenly need 700 people to be working in the plant. Why invest everything and then run them? Partly so we have never. The only brownfield that we are doing now is in Kicha. So for brownfield plant is much cheaper to do because the land is fully developed. The whole the development has already taken place. The management team doesn’t change. That is the biggest advantage in a brownfield plant. So that is why we have kept two in the north run by the same management team. And the new brownfield line also coming up there does not require any new management team. South also, while one is in Andhra, one is in Siri Peremudur. But they are not more than two, two and a half hours away. So the overall senior management team is the same. So the cost of brownfield is less in that sense. And then the greenfield or greenfield means total development as well as setting up a new management team. But at some point you have to go out to a new area. So the cost is slightly more in running it in the beginning. But once it achieves reasonably full capacity then I think they are all equally equal cost in running. So Gujarat will be the next one, you know, next greenfield plant. We feel the location will also be helpful. And maybe a lot of development is happening in Gujarat and Maharashtra. It will be a psychological advantage as well.
Richa Agarwal
And so what is the capacity that we are planning in Gujarat?
Arvind Nanda
Most of our plants are similar capacity. About 40,000 tons utilizable capacity and about 500 crores of building sales. So all the four plants are the same right. Now after the Andhra second phase is done, all four plants will be what? 500 crores each. And Gujarat will also be about 500 crores with 40,000 tons of buildings manufactured there.
Richa Agarwal
And so how much time does it take? If I got it right, you are planning to start production commencing setting up this plant in first quarter of FY26, right? Or is it third?
Arvind Nanda
Well, normally takes about nine months. So if you start in September, by sometime by first quarter, May, June, next year, June, July, we should be able to have it in production.
Operator
Thank you. A reminder to participants to please limit your questions to two per participant. The next question is from Saket Kapoor from Kapoor and company. Please go ahead.
Saket Kapoor
Yeah. Namaskar sir. And thank you for this opportunity, sir. Firstly sir, what is our current working capital requirement? To run the. To run with an order book of 1300 crores. And. And the big pipeline which you have spoken.
Arvind Nanda
Manish.
Manish Kumar Garg
So right now sir, we are operating at about 28 days. And our requirement is going to be approximately 30 days of working capital. Sir, 30 days of the sales will be our networking capital requirement.
Saket Kapoor
Okay. So as. As you said that we will be completing this into nine months. So in absolute number, what. What should is. What is the working capital?
Manish Kumar Garg
Absolute number? Absolute number will be 150 crores. Because 150. You know. 150 crores times nine is going to be that number. And about a month of net working capital we need so about 150.
Saket Kapoor
And currently what is our fixed cost per month or quarterly number?
Manish Kumar Garg
Approximately about 10%, sir.
Saket Kapoor
10% of our sales.
Manish Kumar Garg
Yeah.
Saket Kapoor
But sales would be a variable number. So I was just looking at the fixed cost to run the company on a consistent basis.
Manish Kumar Garg
So sir, actually what happens is that there are. There are certain proportions of the fixed costs which are not really fixed which will go up slightly as the turnover goes up. I would say that it used to be about 10%. They dropped to about 9.2%. So going forward if the turnover increases more than that then your fixed cost as a percentage could be slightly lower because of the operating leverage.
Arvind Nanda
But right now there are about a figure, I would probably say about 12 to 13 crore a month.
Saket Kapoor
12 to 13. Government. And lastly sir, in the. In the utilization of the IPO proceeds we have mentioned about upgradation of our manufacturing facility at Tamil Nadu and Pant Megar. That is to the tune of around 20 crores. So if you could just elaborate what kind of upgradation are we seeking and what kind of benefits we will be deriving post the same. And when will that be on screen?
Manish Kumar Garg
Both of them sir, right now are underway at Pantnagar as well as at Tamil Nadu. So at Pantanagar the upgradation actually consisted of setting up a automated short blasting line, adding a few new cranes and adding some new machinery for cutting and bending which gives us the efficiency of of operations and a more, you know, sustainable environment inside the plant. So they were like line balancing equipment. So they will, they will certainly give us a far more better productivity norms at those plants. And similar investments were planned in Tamil Nadu also with short lasting and a few new machines to balance the lines for upgradation.
Saket Kapoor
And when will this commission, sir?
Manish Kumar Garg
This, this should be commissioned by end of this quarter, sir, at quarter number four of this year. They are underway right now.
Saket Kapoor
And the efficiency in percentage terms, if you could just elaborate or.
Manish Kumar Garg
I would say, sir, they are more like, they are more like line balancing equipments. Frankly these are not really, I should say going to add capacity or something but I would say that they can increase 2 to 3% efficiency inside the plants.
Arvind Nanda
And also I think there’s a lot of improvement in quality and the customers change or requirements for their quality standards is becoming higher and higher. So I think more automation is going to be useful going forward and I think productivity increase. We are also looking at that the amount of skilled people, you know, highly skilled people required for our industry sometimes are not that easily available. So utilize the existing people to produce more in terms of whether it’s 2, 3% or if we are setting up new lines, how to utilize those people in the new lines by having lesser people in each line. We are looking at productivity and automation on all these aspects. Quality, faster production, more production per person. Because while we are expanding, it helps us to have less people per line. You know, let us say 550 people for production line. If I can reduce it to 140 and put my extra people in the new line, overall per person production also goes up. We are looking at all different angles because I think people is also going to be a major issue going forward. We are taking many steps to improve the quality. I mean improve the people, have training, have more people taken up at fresher levels. But I think highly skilled people will always have a training, will always have a shortage going forward. So looking at all these aspects, automation, more productivity, better quality. So we have to take consideration of all of them when we do these kind of upgradations.
Operator
Thank you. Participants are requested to please limit your questions to two per participant. Next question is from Pratik Bhandari from Artventures [Phonetic]. Please go ahead.
Prateek Bhandari
Yeah, hi sir, thanks for the opportunity. Can you tell me the average order value? Hello?
Manish Kumar Garg
Yeah.
Arvind Nanda
Yeah, yeah, yeah, we can hear you. So average order value.
Manish Kumar Garg
Okay, okay. Average order. Yes, average order value, sir, right now is 12 crores.
Prateek Bhandari
12 crores. Considering the fact that we have begged some big orders.
Manish Kumar Garg
Yes sir. The fact of the matter is that three years ago it used to be 4 crores, it moved up to 6 and a half crores to 9 crores and now it is 12 crores. So because of the fact that we are getting much larger orders than what we used to get earlier, the average order size has moved from 4 crores to 12 crores which is three times in last three years, sir. And that is really the result of the bigger orders that we get which are 50 crore plus kind of orders that we just explained to you. So 12 crores is a result of getting many big orders as well, sir.
Arvind Nanda
In pre unit building, another thing I would like to point out is that the small and medium orders in numbers are very critical because that they are the biggest beneficiaries of pre unit building. The large buildings use it for different reasons but the smaller and medium one are your ideal clients in the sense that they don’t really need to sometimes even go and get an architect or a consultant. They just come to a pre engineered building company. Their orders are maybe 2 crore to 10 crore and they are the biggest beneficiary. They are just outsourcing everything to a company like ours and getting the product, getting the factory built and getting it. So that will always be a very important bread and butter for any pre engineered building company. The larger order add to the value. When you want to grow faster then yes, naturally if I have 100 small orders contributing say about 6, 700 crores, I will need 15 big orders to contribute 60, 70 crores to reach 16, 1700 crore. The numbers. It seems a little odd but that is a basic bread and butter of a pre engineered building industry and we are always seriously concentrating on that also. And also big orders are a hit and miss thing. You know, I could be bidding for 10, sometimes I could get two, sometimes I could get five. But small orders is a continuous effort of our sales teams all over the country. We’ve got over 70, 80 salespeople set up in over 20, 25 locations. They are always looking for the small and medium orders in new industrial areas, among new factories. Coming up, 10,000, 20,000, 30,000 square meter buildings which may not sound very important or sound very impressive by name, but they are really the base and bread butter of most of the engineer building companies. It is critical to have that.
Prateek Bhandari
Got it. Also, can you tell me as to where you are anticipating to close your order book at by year end?
Arvind Nanda
See, we are right now, like I said, our order book is pretty, pretty limited and connected to our own capacities to execute because the order periods are getting shorter and shorter by the client. You know, it used to like last year, it is average large order could be finished in 10 to 11 months or 12 months and the customer was happy. Now suddenly it has become eight to nine months for most of the large orders. So we have to see what our capacity is. So I don’t see much change. Maybe from March onwards it might start picking up the order book because we’ll have increased capacities coming in place in April and May.
Prateek Bhandari
Okay. And my last question is on the guidance for FY26 both in terms of the revenue growth and the margins.
Operator
Participants, please stay connected. We seem to have lost the line.
Manish Kumar Garg
Yeah, FY26.
Prateek Bhandari
Yeah, guidance for FY26 both in terms of the revenue growth and the margins.
Manish Kumar Garg
I think Mr. Nanda had already mentioned about 15% during this call itself in the top line.
Prateek Bhandari
Okay. And margins being similar in the same range.
Manish Kumar Garg
Yeah, margins should be in the same range.
Prateek Bhandari
So considering the fact that even if we grow with a run rate of 15% from FY26, the long term target that we have set for ourselves to develop our revenue in the next four years seem to be unlikely.
Manish Kumar Garg
So I think, sir, we did provide a clarification to that, that now that we are building capacity, which we explained to you at Kacha and Andhra and then, you know, going forward, all these capacities, once they come on stream and we utilize them fully, our growth going forward in the years after FY26 could be greater than 15% to be able to achieve that doubling the turnover in four years, as we had said. So it could also be 20, 25% in those years.
Prateek Bhandari
Got it. Maybe because of the operating leverage kicking in.
Manish Kumar Garg
Yeah, yeah. Mainly because of the operating leverage and the new capacity is coming on stream.
Prateek Bhandari
Yeah, thanks a lot.
Arvind Nanda
We should be able to buy, I think by next quarterly call we’ll have better figures. I think we should be able to achieve higher than 15% in the coming year also. That is my estimate with all these capacities coming in but I think we’ll have a better idea by the next investor call that we grow. I think if we grow 20% next year then that would be better.
Prateek Bhandari
Got it. Thanks a lot sir. Thanks a lot.
Arvind Nanda
Thank you.
Operator
Thank you. Next question is from Kupanshu Shah from Thinkwise Wealth. Please go ahead.
Krupanshu Shah
Yeah, so because of our limited capacity, I just wanted to understand if we are losing some of the orders to say Kirby and if you could comment on their utilization capacity utilization as well. That was one. Secondly, I just wanted to understand the gross margin movement sequentially. Now implied realization growth is 2 to 3% but our gross margins have fallen. I would have assumed that larger projects got executed. So could you please explain that and do we have any commercial arrangements with jspl, the tie up that we’ve done? And lastly sir, on employee cost, basically what is the steady state run rate, quarterly run rate that we are seeing now that we have new plants coming up? Do we envisage hiring more senior designers and engineers thanks.
Arvind Nanda
In the losing of orders in terms of capacity. This thing I mentioned even to an answer to an earlier question that we have to move our capacity on all the four areas that we work in which is design, engineering, sales, production and execution at buildings. So yes, we will always be losing orders because we can’t move fast enough. But we have to move all the four parts of the company equally fast. So we can’t just move past in production and putting up factories and not having better design, engineering or sales outreach to be able to execute those orders at the site also. So I think we are moving pretty fast in the sense that three years ago we were only doing say less than half the turnover that we are planning for this year. So doubling the Turnover already in 3 years is pretty much faster than what we were doing earlier. And we are very much on track to achieve our targeted turnover by 2728 as we have mentioned earlier. So we are well on track of that. I don’t know whether we move faster than that or not. Lot depends on how much push we get from the customers. Also because we are also not only looking at internally organically growing very fast, but we have started tying up with companies outside of our unorganic growth. As I would call companies which have production facilities very well and they are only ready to do job work for us. Engineering companies which have the capacity to do work like what we want, but at a cost, then we outsource it. So we are fixing up all these angles so that we can grow faster, but we can’t just put up new plants and grow faster. That doesn’t make any sense. In our business, all the four legs have to grow equally fast. So I don’t think we will let any business go. But we as a company have to be capable of executing all these projects. Otherwise most of the companies have closed in this business because they took up more business than they could or they thought that they could do. And they closed because they couldn’t deliver on time. They did bad engineering, quality of the product became bad. Customers started imposing penalties on them or most of them didn’t get paid at the end of the day and they closed down. So clean unit building is a bit like making a car. You know, you can’t just make one item more and say I’ve made a car. So you have to get everything together and in the end you have to have a very satisfied or delighted customer because they are the people who want to keep coming back to you and keep recommending you to other people. It’s a little bit of a more niche business than just a factory. But we are on it. And like I said, I mean this is the target that we have today. We might change our mind by the end of the year or early next year seeing how things are. If last year you had asked me at the same time, I wouldn’t have given you the targets that I’m giving now. Our confidence level and our ability to do has grown in the last one year enormously. And we are working on it very hard to make it grow faster and faster. Your other questions, Manish, can you just take them?
Manish Kumar Garg
Yes sir. Could you please repeat the other questions sir that you wanted?
Krupanshu Shah
Yeah. Sequentially the gross margins have fallen and I think the realizations have increased. So I thought the product mix has skewed towards larger. So I would have assumed that gross margins would increase. So what was the reason for the gross margin decline sequentially? One second. Employee cost, steady state run rate quarterly because we are. Capacity is increasing. So are we going to hire more senior level engineers? And lastly the commercial arrangement with JSPL if any. Thanks.
Manish Kumar Garg
So sir, gross margins sequentially I would request you to please recheck. I think they have not fallen, they have actually grown. So I would request you to please recheck the numbers.
Arvind Nanda
Sorry to interrupt. Gross margins have actually improved 500 basis points.
Manish Kumar Garg
Yeah.
Krupanshu Shah
Okay.
Manish Kumar Garg
So gross margins actually have improved, sir. So that your question in terms of commercial arrangement with jspl, sir, this is more of. So there is no commercial arrangement as such. This is an arrangement to utilize both the parties expertise in taking the steel uses to the next level for a certain kind of buildings, which are right now not really very popular in steel like high rise and data centers and heavy steel structures wherein JSPL will contribute with their manufacturing expertise of the heavy members and interact contributes with their market reach. The deep penetration it has in this field, engineering as well as the erection part of it and the other facets, other particular building members that comes into this. There is no commercial arrangement as such. This is a cooperation arrangement to take the buildings to the next level. Steel building reaches to the next level, sir. And there’s nothing to do with the commodity purchase from gspl.
Krupanshu Shah
Right. And the employee cost, please. Thanks.
Manish Kumar Garg
Sorry.
Krupanshu Shah
Employee cost?
Manish Kumar Garg
Employee cost.
Krupanshu Shah
Yeah, so.
Manish Kumar Garg
Yeah, so employee costs are actually we had explained earlier in our kind of business before we actually. So actually you saw that in FY24 our overall cost of employees had actually increased significantly. Because in our kind of business the employees have to be, you know, be it engineering project, they have to be beefed up. That thing has to precede the actual manufacturing capacity. So as we build capacity in our other plants also you would see, you would see that going up in the proportion which is a little lesser than our turnovers. But yes, they will, they will increase to that extent because we are building capacity for doubling the turnover, as we said, three, four years down the line and people are very critical to it. So this is an ongoing process. But you may not see the blip that you saw a year ago.
Arvind Nanda
And also I think I would like to add that we are going in for a lot more technology use and automation going forward so that the employee cost should not go up as much as it was going up earlier. Not only because it’s not very easy to get good, trained, skilled employees is getting more and more difficult. We are concentrating a lot on that as well to make them more productive.
Krupanshu Shah
Okay, thank you so much, sir. Thank you.
Operator
Thank you very much. Due to time constraints, we’ll have to take that as the last question. I would now like to hand the conference back to the management team for closing comments.
Arvind Nanda
Thank you very much everybody for joining this call and taking out the time. I hope we were able to answer your question satisfactorily and through SGA or ambet. You can always reach out to us if you have any queries, you want, any individual calls, any more time from us. We are very open, we are very happy to explain our company, our business, our figures to everybody as a very transparent way. So please, reach out to us at any time you want. We are very, very available to you for this. Again, thank you very much. And all the best to all of you, too. Thank you.
Operator
Thank you very much on behalf of Ambit Capital. That concludes the conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines. Thank you very much.