Aeroflex Industries Ltd (NSE: AEROFLEX) Q3 2026 Earnings Call dated Jan. 29, 2026
Corporate Participants:
Asad Daud — Managing Director and Chairman
Analysts:
Unidentified Participant
Raman Venkata Kerti — Analyst
Viraj Parikh — Analyst
Pritesh Chheda — Analyst
Arjun Katechia — Analyst
Presentation:
operator
Sa. Sa. Ladies and gentlemen, good day and welcome to Aeroflex Industries Limited Q3FY26 earnings conference call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touch tone phone. Please note that this call is being recorded. I will now hand the conference over to Mr. Asad Daud, Managing Director for their opening remarks. Thank you. And over to you sir.
Asad Daud — Managing Director and Chairman
Thank you so much. Good morning everyone. I welcome you all to Aeroflix Industries. Limited Q3FY26 earnings call. Joining us today are members of our senior management team along with representatives from Strategic Growth Advisors who’s an investor relation partner. I hope that you have had the opportunity to review our financial results and. The investor presentation which is available on. The Stock Exchange and also on the company’s website. I’m pleased to report that in the. Last quarter which is Q3FY26, it was. Another strong quarter for us which was marked by our highest ever quarterly revenue. Our highest ever EBITDA and pat. This performance was driven by our continued focus on value added products and our. Expansion into high new and high growth. Applications which includes products for data centers and AI infrastructure. Despite the tariff related headwinds, our quarterly export business grew 30% on a Y. And Y basis which reflects a strong customer stickiness and our execution capabilities. Overall, we delivered an ebitda margin of. 23.5% which reflects the scalability of our. Business and also the benefits from an. Improved the product mix. We added 1 million meters of capacity. In this month which takes our total installed capacity to 17.5 million meters per annum. The balance 2.5 million meters will be commissioned in a phased manner and is expected to be completed by Q2 of the next financial year. During the quarter we achieved several important operational and strategic milestones. A key strategic highlight for the quarter was our entry into the high performance liquid cooling solutions for data centers. We completed the first commercial dispatch of the advanced flow control components and SKID. Assemblies for the liquid cooling application and. To support the rising demand that we. Are witnessing, we are expanding Our skid assembly skid assembly capacity to 15,000 units. Per annum and the same is expected. To be completed by June 2026. This expansion is fully aligned with the growing opportunities that we see in the global data center and the AI infrastructure space. To strengthen US assembly operations, we are also setting up a new plant at Chacan in Pune. This facility will act as a supportive unit to augment the production capacity at our existing plants. Also, we continue to strengthen the production. Of our assemblies section and during the. Quarter we added six new assembly stations thereby increasing the total number of assembly stations to 46. As part of our ongoing focus towards. Efficient capital allocation and based on the. Updated market assessment and the phased demand. Visibility and also on optimization of our internal resources and capital, we have decided to rationalize the capital expenditure for the. Miniature metal bellows project from the earlier planned outlay of Rupees 23 crores to Rupees 10 and a half crores. Accordingly, the proposed installed capacity for this. Particular project would be revised from 240,000. Pieces per annum to about 60,000 pieces. Per annum and this would be sufficient to meet the near term demand for. The miniature metal bellows. While it also allows us to scale. Up in a phased manner as the volume increases, the lower upfront investment also. Helps us to reduce the project gestation. Risk and also enables faster payback. The balance funds will be utilized towards other ongoing expansion projects where we feel we have the demand visibility and also. Our execution timelines would become stronger. The ongoing investments in the process or automation which includes both robotic and automated. Welding stations and an annealing plant are progressing as planned and with the targeted completion by the end of this calendar year. These initiatives are aimed at improving the throughput and also enhancing consistency and helping. Us to penetrate into mission critical business segments. Our subsidy hider generated revenues of 8.5. Crore rupees in this quarter as compared to approximately 2.9 crore in the same quarter in the previous year and we. Expect high day as the contribution to. Continue scaling over the next few quarters. Now to talk about our financial performance. In Q3 our total income stood at 121 crores which is a growth of. 21% on a Y and Y basis. Our EBITDA stood at 28.5 crores which. Is 28% on a growth on a Y and Y basis and our EBITDA margin stood at 23.6%. Our PAT stood at 16 and a. Half crores which grew at 8% on a YMY basis with a margin with. A PAT margin of 13.5%. Our cash PAT increased to 22.75 crores which reflects a strong cash generation and operating performance. For the ninth month our total income. Stood at 317 crores. Our EBITDA was 7070 and a half crores with a margin of 22.2%. Our PAT stood at almost 38 crores with a margin of approximately 12% and on a nine month basis. Our contribution of the value added products which includes the assemblies, fittings, bellows and skid assemblies now contribute 54% of our total sales. The outlook for the remaining quarter of this financial year is very good. We are supported by a healthy order. Book so strong customer relationships and increasing. Penetration in global data center and AI infrastructure market. With a strong cash generative business model. With our deep engineering capabilities and a high focus on value added solutions and products, we are poised to sustain a growth momentum and deliver long term share value to our shareholders. Thank you everyone for joining today’s earning. Call and we will now open the floor up for questions. Thanks a lot.
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 star and one on their touchstone telephone. If you wish to remove yourself from the question queue you may press star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Raman KV from Sequin Investment. Please proceed.
Raman Venkata Kerti
Hello sir, can you hear me?
Asad Daud
Yes, I can hear you.
Raman Venkata Kerti
So congratulations on good set of numbers. I have few questions. My first question is with respect to the liquid cooling skid system as we have a exclusive agreement with a US based company. I think I just want to understand two things. Are we going to pay some royalty to use their, how do I say royalty to them or is it like a revenue share model between the both of the company and on the unit economics. If you can explain the unit economics of this liquid cooling skate system that would be helpful.
Asad Daud
So in this there is no royalty.
Asad Daud
Or you know, that we pay to them.
Asad Daud
It’s.
Asad Daud
It’s a normal buyer, seller, you know, transaction.
Asad Daud
Although we have signed an agreement with.
Asad Daud
Them for exclusivity of you know, for.
Asad Daud
The next five years. This is for just the India market, it does not include the overseas market and also it’s in terms of the so.
Asad Daud
So that is answer to your first.
Asad Daud
Question with regards to your second question in terms of the unit economics. So it works on a. So we you know, receive the orders from them, you know and then we accordingly manufacture the products and, and then supply to them.
Asad Daud
So that’s how the entire, you know, the business model works.
Raman Venkata Kerti
So I just want to understand that now, now I, I think you have around the capacity with respect to. This is 2,000 cases and you’re expanding it to 15,000 cases.
Asad Daud
Cases.
Asad Daud
Yeah.
Raman Venkata Kerti
And assembly.
Asad Daud
Yeah, yeah.
Raman Venkata Kerti
Assemblies. Yeah. And the capex for this was around 100 crores. And you said you can do 300 to 350 crores of revenue at peak utilization. If this is my understanding. So if my understanding is right, your per piece realization is around 3 lakhs.
Asad Daud
The capex is less than, the capex.
Asad Daud
Is less than 100, you know, crores. Okay, okay, understood sir.
Raman Venkata Kerti
So when I come to the realization, your realization is around 3 lakhs per piece at peak utilization.
Asad Daud
Yeah.
Asad Daud
Is my understanding that’s assuming 80%. That’s what utilization?
Asad Daud
Yeah, yeah.
Raman Venkata Kerti
Now I just want to understand. Let’s say there is a data center that we are that needs to be constructed. Let’s say it’s a 100 crores worth of data center project. How much out of that will be your liquid cooling system? Skid. I just want to understand the total addressable market for with respect to this particular business.
Asad Daud
So obviously it depends a lot on.
Asad Daud
The, you know, on the, on the entire layout of the project where it.
Asad Daud
Is being know built, what is the megawatt of the project, how many floors and how much is the space. Because ultimately liquid cooling also depends on how much megawatt is being, you know, you know, put on a particular, you.
Asad Daud
Know, on a particular piece of land. You know, if I may say so.
Asad Daud
Also it varies from you know, operator to operator. So for example, data center built by.
Asad Daud
X, you know, would have a different.
Asad Daud
Design for liquid cooling as compared to a data center built by say Y or, or a data center built by you know, Z.
Asad Daud
Because each one, you know, wants to have their own proprietary technology for this particular, you know, this particular investment.
Asad Daud
Last to again tell you about the global market size for the liquid, liquid cooling right now the global market size.
Asad Daud
As it stands currently it’s about almost.
Asad Daud
Close to 3 billion. Right. And it is, it is growing at.
Asad Daud
An of about 33% on you know, every year.
Asad Daud
I’m talking about the international market right now that is poised to increase to.
Asad Daud
About 21 billion over the next six to seven years.
Asad Daud
Right. So that is the, the market size of the total liquid, the cooling. So, so then you can actually divide that by the data center market. So you, so you’ll get an idea.
Asad Daud
About how much is the liquid cooling market as compared to the total data center market.
Raman Venkata Kerti
Understood sir. And so with respect to high dare, what’s our current capacity utilization and are we planning to have any further capex with respect to this?
Asad Daud
Yeah. So at high dare, so hidear actually works on CNC machine. So most of the products at at Hidear are.
Asad Daud
So we are all in the in.
Asad Daud
The process of increasing our capacity in Hydair as well. The same is poised to be announced very soon. Right now we are working at. So in terms of the capacity in terms of number of pieces, if I can say as per the number of pieces, we are running at about 70 odd percent capacity utilization.
Asad Daud
But obviously we plan to add a.
Asad Daud
Few more machines and a few more new machines which will help us to increase our capacity on our existing machines as well. With that we expect Hide Air to.
Asad Daud
Grow over the next year or so. So Hyder Capex is planned soon. I will be able to share the numbers in due course of time.
Raman Venkata Kerti
And so initially in previous calls you mentioned that higher at your optimum capacity can do 45 to 50 crores of annual revenue. Is my understanding correct?
Asad Daud
Yes, that’s correct.
Raman Venkata Kerti
Okay, and so my final question is with respect to export, what percentage of your total revenue is exports? And if you can bifurcate the export like where it comes from, how much is usa? How much is EU and will the current FTA signing with EU and UK will beneficial, will be beneficially for you in terms of growing your export order book.
Asad Daud
So right now about 74% of our total business, you know, comes from export.
Asad Daud
And you know, out of that almost.
Asad Daud
90%, 85 to 90% comes from the.
Asad Daud
EU and the, you know, USA.
Asad Daud
So if I talk about EU and USA combined, they contribute around 85% of our overall exports business. Now definitely with the, with the, the.
Asad Daud
FTA which is, which was announced a.
Asad Daud
Couple of days back, definitely we are.
Asad Daud
Going to see over the, you know.
Asad Daud
Over the next couple of years higher.
Asad Daud
Traction coming in, you know, from the EU sector. If you see in this quarter itself.
Asad Daud
Our total exports have grown by about.
Asad Daud
30% and out of that EU was.
Asad Daud
A major contributor in that. So obviously in the last quarter there was no fta.
Asad Daud
But we strongly feel that, you know, with this FTA being, you know, signed and obviously it will come into, you.
Asad Daud
Know, into operations in the next few.
Asad Daud
Quarters, we definitely feel that it’s going to be a big, you know, a.
Asad Daud
Big boost for us also considering that the fact that it will also make.
Asad Daud
Our products even more competitive in the.
Asad Daud
EU market, especially in terms of competition.
Asad Daud
From players or manufacturers built out of Turkey who are getting, you know, duty free material to be exported to eu.
Asad Daud
So that would be very beneficial to us as well. So yes, definitely with the eu, you.
Asad Daud
Know, would be the, I would say.
Asad Daud
The, the strong growth Area for us in the near future.
Raman Venkata Kerti
Understood sir. So just a follow up, 85 to 90%. Can you just give a split with respect to only EU and only USA if possible?
Asad Daud
So the EU right now is about 30% and the USA is about 55%.
Raman Venkata Kerti
Thank you sir, I’ll join back into you. Thank you so much.
operator
Thank you. The next question is from the line of Viraj Parikh from Carlalian. Please proceed.
Viraj Parikh
Good morning sir. Am I audible?
Asad Daud
Yes.
Viraj Parikh
Yeah. So just my first question is a follow up on the previous participant. I mean you know, more than the quarterly revenue I’m interested in the nine monthly revenue exports has kind of been beat this nine months financial year ended and primarily we’ve seen growth from the domestic market. Correct me if I’m wrong.
Asad Daud
Yes, right. Yes sir. Yeah, it feels good.
Viraj Parikh
So in that if I look at Europe and America I feel Europe has been flat, I think it was 59 crore last year versus 60 crore this year in terms of nine months. America was 129 crore last year and 136 crore this year. Approximately a 5% kind of growth which is approximately 55, 60% of our business. So if you could just share some highlights in terms of, I mean last quarter we spoke that you know, not a single customer cancel the orders. Probably they are deferring them. So are we supposed to be a spillover in Q4? Is Q4 supposed to be very strong for us or is it more, is a lot of more pessimism in the American market in for the entire year.
So just wanted to understand your thoughts of what the ongoing situation there.
Asad Daud
Yeah, okay, so thank you so much for the question. So just wanted to you know, to.
Asad Daud
Update to you if you see our Q1 result.
Asad Daud
Right. We had a very, I would say a very bad Q1 number.
Asad Daud
So you know, because of that you.
Asad Daud
See that our nine month numbers are.
Asad Daud
Still don’t appear as good as what they are. It’s because of a very, I would say a very bad Q1. That’s why if you see the growth even after 30% of growth in, in these particular markets on a nine month basis, our growth is still in the.
Asad Daud
Single digit, you know, but obvious things, you know nowadays to change on every quarter to quarter. Right now we seeing that there’s strong.
Asad Daud
Demand that we’re seeing from, you know, from the export market.
Asad Daud
Obviously in the US market like I mentioned, we did not have any order.
Asad Daud
Cancellations and now we are starting to receive, you know, repeat orders coming on from our existing, you know, customers. The only issue that we are facing in terms of the tariffs is obviously, you know, getting new customers and new.
Asad Daud
OEMs on board, you know, which is.
Asad Daud
Taking a lot more time because of these tariffs.
Asad Daud
But our existing customers are continuing to place, you know, order to us because.
Asad Daud
Right now they don’t have any alternate.
Asad Daud
Supplier with regards to the eu. Like I mentioned also in the, in a couple of my previous earnings call, I, you know, you know, we felt.
Asad Daud
That the EU would be a strong market for us in the near future and that is what we are seeing in, in the EU market that over the next, I think a few quarters.
Asad Daud
We expect the business from EU to, to increase. Obviously this, this FTA once it is.
Asad Daud
Implemented, you know, would definitely be a booster for us in terms of our.
Asad Daud
Business to the, to the eu.
Asad Daud
Yes, domestic market in over nine months.
Asad Daud
Has, you know, has grown and the.
Asad Daud
International market has grown lesser than that. But I would say that the kind of disruptions that we had in the international market, but nowhere near as compared.
Asad Daud
To, to, you know, you know, as.
Asad Daud
In the kind of disruption that we had in international market was much more as compared to the domestic market where we did not have anything. So you also have to see the, the growth in terms of the challenges that we have been facing. But I would say despite that, I.
Asad Daud
Think the last quarter has been, you know, extremely good for us. And you know, we expect the same to happen in this, in the current.
Asad Daud
Quarter, which is ongoing and also in the next financial year as well.
Viraj Parikh
Just a follow up before I ask my second question. Domestic, as you rightly said, we’ve been doing well. Can you highlight certain areas where we’ve done well? Have we, you know, are we competing with whom? What are we doing? Are we gaining new customers? Are we gaining more wallet share with an existing customer? If you, and if you earlier used to give some kind of an end user industry mix, and I think for this quarter it’s not been given. So just wanted to request that if we could, you know, just stay a bit consistent with the disclosure so that it’s easier for us to track the performance as well.
And if you could just highlight in domestic, where are we doing well in the end user industry mix? Like where are we seeing more traction, more growth? Because that’s been a phenomenal nine months for us in the domestic market.
Asad Daud
Yeah. So in the domestic market we have seen the two major industries where we’ve seen a significant uptake.
Asad Daud
One is the steel industry that we have seen good demand coming in and.
Asad Daud
We have seen it from the ports and Terminal industry where we have seen.
Asad Daud
Significant uptake in orders from various ports and terminals for our various products. So these are the two industries in the domestic sector that are smaller than.
Asad Daud
Industries, you know with regards to construction and, and, and, and food and all.
Asad Daud
But the most, the most prominent ones are the ports and terminals and steel.
Asad Daud
And with, and specifically with you know, talking about ideas. So over there we are seeing a very, very good traction coming in from the railways industry. So these are the three major industries where we are seeing strong traction coming in.
Viraj Parikh
I asked if you have you know, gained new customers or increased wallets and existing customers in domestic market.
Asad Daud
Both like I mentioned.
Asad Daud
So we already had customers in the.
Asad Daud
Steel industry and ports and terminals.
Asad Daud
So we have, we have gained more business from them.
Asad Daud
And second we have also entered into.
Asad Daud
New ports where we did not have our presence earlier. In terms of the steel industry there’s.
Asad Daud
No major new customer but the major.
Asad Daud
New customers have come in in ports.
Asad Daud
And terminals and in the chemical industry.
Viraj Parikh
So my second question is just a bit on the planned pipeline of capex which we have if you could firstly just bifurcate the capex that we’ve done in this financial year up till date in hoses, in Bellows, in the liquid data cooling solutions and versus the cash we have on the books including the amount that we recently raised. Also if you could just help me understand the kind of capacity utilization we are on especially in the you know, hoses side and at what level are we seeing? Because I think we are very confident on that demand growing strongly.
So how are we you know, seeing that growth forward in the domestic and the export market at whatever capacity utilization we’re envisaging to be in the next two quarters for the next financial year. And just the last question would be on the liquid cooling solutions. If I understand correctly, we are using Bellows capacity as a feedstock to. It’s a mixture like a skill is a mixture of multiple components. As if I’m correct to understand it. What kind of margins are we going to see? Because I think Bellows was supposed to drive our margins upward being a niche product.
So you’ve given like kind of a 3 lakh rupee average, you know, revenue per piece. What kind of margins do we see? You know, given the exclusivity we have with the US partner.
Asad Daud
Okay, first of all.
Asad Daud
There were a lot of questions.
Viraj Parikh
Yeah, yeah.
Asad Daud
So I would like, I think I’ll.
Viraj Parikh
Just make up if you just do on the cash and the capacity front and the post that unit economic.
Asad Daud
Yeah, yeah.
Asad Daud
So just to update, we, we have not yet received the fund from the. Because we received the in principal approval from stock exchanges in this week itself.
Asad Daud
So most likely in the, in the upcoming week we would be you know, plotting you know as in receiving the money and allotting or getting the fund.
Asad Daud
From the preferential allotment. So that is to Clarify on, on.
Asad Daud
One point, second point, with regards to.
Asad Daud
The total CapEx that we have done.
Asad Daud
Across the entire spectrum in, in this.
Asad Daud
Nine months which is you know in this, in the current financial year is approximately 36 crore rupees.
Asad Daud
That is spread across various, you know, the, the whole business, the liquid, the.
Asad Daud
Cooling, obviously the, the investment in the liquid, the cooling or the major investment in the liquid, the cooling would start.
Asad Daud
Now because initially what we did like.
Asad Daud
You mentioned is we utilized some of.
Asad Daud
The machines from the bellows plant and then we, you know, we bought some.
Asad Daud
Some of the, the other machines to kickstart the project in the first phase. And now since we are expanding or planning a bigger expansion in capacity, they want to now invest significantly in the, in the liquid cooling space. So that was that in terms of obviously anything else that I missed out from your question.
Viraj Parikh
So what is a cash in hand.
Asad Daud
Right now as on date as of.
Asad Daud
31St of December it was approximately about 20 crore rupees.
Viraj Parikh
So in your presentation you’ve written assemblies, you’ve added some six assembly stations. So I said.
Asad Daud
You said I think nine months.
Viraj Parikh
You said you’re on 36 crore. Can you bifurcate into hoses, bellows assemblies and cooling solutions?
Asad Daud
Okay so in terms of you know, assembly this part of the hoses because that’s just one part of the, the project. So I’ll just give you the broad numbers.
Asad Daud
Approximately till 31st of December we have.
Asad Daud
Invested approximately 9 crores for the liquid, the cooling. These all data are as of 31st of December.
Asad Daud
For the, the bellows it is around 5 crores.
Asad Daud
This is for the nine months I’m talking about. And for the, the hoses and for assemblies and for assembly stations and the.
Asad Daud
Welding, all of that is about 22 crores.
Asad Daud
This is for the nine months.
Asad Daud
Right.
Viraj Parikh
And for the next months what was the plan capex amount?
Asad Daud
So first obviously the remaining protects to be done for the the hoses division.
Asad Daud
Then we as we have yet announced.
Asad Daud
In last month that we are going to increase capacity for skid assemblies. The capex would go into that. And the third one would be for the annealing plant along with the automated and robotic assemblies that is required, you know, along with the Annealing plant for a specific, you know, projects that we have, you know from a couple of our customers.
Viraj Parikh
So what would be the amounts?
Asad Daud
Those amounts have already been you know.
Asad Daud
Given in the last board meeting.
Asad Daud
So I would suggest you to, you.
Asad Daud
Could refer to that because the overall capex including working capital and all that.
Asad Daud
We had planned is around 90, 97 crores.
Asad Daud
That includes working capital and just wanted.
Viraj Parikh
To understand what was the peak debt with all the capex being done next year. Yeah, I, I’m assuming that we have taken part of.
Asad Daud
We have not taken.
Asad Daud
Any data as on date.
Asad Daud
I know I’m saying that right now.
Viraj Parikh
We have raised the money funder capex post that we will be taking a little bit of internal accruals and some part of debt to do the second line of CapEx for the liquid data cooling solutions. So you want to understand what would be our debt number?
Asad Daud
Now as of, as of now we, we don’t plan to raise on, we don’t plan to raise any debt as of now in case we require in the future for any short term. I think that would be decided you.
Asad Daud
Know at, at that time. But as of now we, we don’t.
Asad Daud
Plan to take on any debt.
Viraj Parikh
Got it. So this last question in terms of the unit economics for the liquid data cooling solutions what would be the margin profile for this?
Asad Daud
So you know I think I mentioned this probably in my last earnings call as well since right now we are.
Asad Daud
Dealing with or as in we have.
Asad Daud
A exclusive contract with this U.S. customer. It’s, it will not be possible for me to give you a specific number.
Asad Daud
Of margin on this business obviously due to you know, confidence, charity reasons. But along with this particular business I think we expect our, our overall margins to remain as expected or you know.
Asad Daud
As we had mentioned in the range.
Asad Daud
Of 23 to 25% over the next couple of years.
Asad Daud
Because right now it’s you know, it’s you know this particular.
Asad Daud
Business is you know dedicated for one customer.
Asad Daud
So you know, I hope you understand that it’s, it’s not possible for me.
Asad Daud
To openly share the margins on a play forum.
Viraj Parikh
Sure sir. Thank you so much. I’ll have a few more questions and get back into. Thank you so much.
operator
Thank you. The next question is from the line of Sringaraju Ram. The next question is from the line of Prates from Lucky Investment. Please proceed.
Pritesh Chheda
Yeah, hi. Just from a slightly longer horizon perspective. So now at what sales level is your metal bellow quarterly sales level or annual sales level in FY26 and utilization and for the capacity that you have put, when do you see, in which year do you see the peak utilization and the peak revenue on the current capacity? Same way on the, on the skid. The liquid skid assembly side is 15, 000 unit and this 300, 350 crore of revenue which is the year or the quarter when we start seeing the peak utilization of this piece.
Asad Daud
Okay, so the metal bellows right now is at an annual run rate of 12 crores.
Asad Daud
As of now, we expect this to, to increase to about 36 crores. The run rate in the next, in.
Asad Daud
The next few quarters. Obviously being very honest, it is a.
Asad Daud
Little behind our schedule.
Asad Daud
We expected it to be much faster. And I think I just mentioned before a couple of questions back in terms.
Asad Daud
Of the US market, we expected a.
Asad Daud
Big business to come of metal bellows from the US market. But because of this, the tariff that is being slightly, you know, the fanlands.
Asad Daud
Have slightly gone up, you know.
Asad Daud
But we also participated in an exhibition.
Asad Daud
Recently and we saw a very good.
Asad Daud
Lead generation from that. So we expect the bellows business to achieve a run rate of 36 crores.
Asad Daud
Over the next few quarters.
Asad Daud
With regards to the peak utilization, I think we expect the bellows plant to.
Asad Daud
Achieve the peak utilization in about two, two years time from now.
Asad Daud
Yep. 100 crores. Actually. 85. 85. 85.
Pritesh Chheda
So two years. Which means it will go in FY28 or FY29. Basically.
Asad Daud
F. F20.
Asad Daud
I think it will be by the end of FY28 and start of FY29.
Pritesh Chheda
Writing FY29 for safety purpose, metal value, then the liquid cooling.
Asad Daud
Liquid cooling.
Asad Daud
So with the capex that we have planned and we should expect the liquid cooling peak utilization should be achieved in.
Asad Daud
I would say two and a half years.
Asad Daud
Two to two and a half years.
Pritesh Chheda
So peak of about 350 crores.
Asad Daud
Yeah.
Pritesh Chheda
In FY29 again.
Asad Daud
Yeah, 29.
Pritesh Chheda
And what are the margins in liquid cooling and margins in Bello GP and the operating.
Asad Daud
I just, I just, I just spoke.
Asad Daud
Regarding the margins for liquid cooling.
Asad Daud
I mentioned that not possible for me.
Asad Daud
To share because we are right now dealing with this one customer. So on a public forum I cannot share the exact.
Pritesh Chheda
Okay, but directionally are they, directionally are they better or inferior to the, to the existing margins that you have in hoses?
Asad Daud
No. So in terms of the hoses, they are better than the, the margin in the hoses. They are almost in line with the margins that we have of assemblies.
Pritesh Chheda
The margins are better than hoses and in line with assemblies.
Asad Daud
Okay, yeah, okay, nonsense.
Pritesh Chheda
And lastly on the hoses side, now you have a capacity on ground, you know, and then you had these challenges. I don’t think that the international challenges have rectified in terms of the tariff and etc. So how do you see the growth in the assembly side, the hoses side?
Asad Daud
So when I talk about hoses, so I, you know, I, you know, we have to talk about both hoses and hose assemblies because.
Pritesh Chheda
Correct.
Asad Daud
Yeah. So you know, if you see this, the last quarter was, you know, we had very good sales in the international market, you know, and if you see over nine months, yes, over nine months the sale might be, and the growth might be in single digit, but obviously there were. The Q1, like I mentioned, was, you know, very modest for us and hence.
Asad Daud
The overall numbers look not as strong.
Asad Daud
As, you know, what they actually are.
Asad Daud
So in terms of the outlook.
Asad Daud
So I think with the, with this.
Asad Daud
Ft, I think you’ll see increased business coming in from the EU because over the last three, three years almost I think we had more or less, you know, flat sales or you know, barely.
Asad Daud
Minimum, you know, growth in sales from.
Asad Daud
The eu, you know, from the EU region.
Asad Daud
But I think over the next one year, I think, and hopefully with this.
Asad Daud
FTA being implemented very soon, we’ll see.
Asad Daud
Higher business coming in from the EU.
Asad Daud
Market, US market from the existing customer point is strong.
Asad Daud
Obviously like I mentioned, the new customers, there are still some challenges, especially with.
Asad Daud
Regards to these tariffs. Hoping that if the tariffs also get resolved soon, we’ll see a significant uptake.
Asad Daud
Also coming in from the US market, which continues to remain our biggest market still.
Pritesh Chheda
Okay, thank you very much.
Asad Daud
Thank you so much.
operator
Thank you. Participants, please limit your questions to two per participant. The next question is from the line of Sringaraju Ram from Home Holdings. Please proceed.
Unidentified Participant
Hello sir. Am I audible?
Asad Daud
Yes, you’re audible.
Unidentified Participant
Sir, I have two questions both regarding our liquid cooling secondary fluid network solutions. One, if our, if SFM systems are not available, would customers need to redesign their entire cooling system or can they substitute components without major changes? And the second question is, can the. SFM liquid cooling solutions and technologies be adapted beyond product centers, e.g. Electric vehicle engine cooling or semiconductor direct chip cooling, etc.
Asad Daud
Something like that, sir. So if, if I have understood your, your question correctly, first question is if is SFN components are not there, then will the liquid cooling work? Is is that correct at first? The first.
Raman Venkata Kerti
No sir.
Asad Daud
No, no sir.
Asad Daud
If our systems are not, not available, then the customer have to redefine Their entire co. Or simply can they substitute our components with property disk products? So as of now there is.
Asad Daud
So, you know, as of now, we.
Asad Daud
Are one of the first movers in.
Asad Daud
This space in India in terms of the components.
Asad Daud
So as of now, if we are not providing the system or there is.
Asad Daud
You know, delays from our end, the.
Asad Daud
Only option available to the customers would be to. To import it.
Asad Daud
So as of now there are, you.
Asad Daud
Know, the customer does not have much option. And what was the second question that you said? Can these technologies be adapted beyond data centers, for example, to electric vehicle engine.
Asad Daud
Cooling or semiconductor dive chip cooling, some other applications. So, so what we are providing is basically, you know, a cooling, you know.
Asad Daud
Or a flow solution. You know, ultimately it is used for, you know, cooling. Right now it is useful for, you know, cooling data centers. But actually it can be used for cooling any other, you know, kind of, you know, system or any other, you know, kind of application. Because ultimately it’s a flow control. So you can actually change the design of the flow control. And instead of say, you know, cooling data centers, you know, you can pull.
Asad Daud
Tomorrow, say a large machinery or say.
Asad Daud
A semiconductor plant or, you know, so the adaptability of. And specifically the machines that we have or, you know, that we have already installed and are also in the pipeline to install, they are not specifically meant to, you know, for know, just for data centers.
Asad Daud
So I’m just saying tomorrow, if just.
Asad Daud
For, you know, if just for any reason, the entire data center, you know, industry collapses, we can still, you use our machines to manufacture the flow controls for, you know, for, you know, for other H Vac industries. Okay, fine, sir, thank you so much. Thank you so much. Thank you.
operator
Thank you. The next question is from the line of Nikonj Manushali from Kosh. Well, please proceed.
Raman Venkata Kerti
Hi.
Asad Daud
Thank you for the opportunity. So just I wanted to go over through the peak revenues from each division.
Raman Venkata Kerti
We have the current four to five divisions.
Asad Daud
Right.
Raman Venkata Kerti
First is the hose and assembly business. Then there’s metal bellows, there’s miniature metal bellows, liquid cooling and then there’s hide air. So peak revenues from each of the division. If you could give me the numbers.
Asad Daud
Yeah. Okay. So with regards to the liquid, the cooling, I think already it was just a couple of.
Raman Venkata Kerti
Yeah, that question.
Asad Daud
300. Yeah.
Asad Daud
300 to 50 crores at utilization. At the peak utilization in terms of.
Asad Daud
The, the, the holes and the assemblies business.
Asad Daud
The hose.
Asad Daud
And the hose assemblies business. At the peak utilization of capacity of 20 million, we would reach. And, and you know, considering if 70% of the sales, you know, comes from the assemblies. You know, we’re expecting a turnover of between 650 to 675. And in terms of the bellows, as I said, already around 85 crores at peak utilization. And hider as of the capacity right.
Asad Daud
Now is about 45 crores based on the current capacity. Okay.
Raman Venkata Kerti
Metal panels is what, miniature as well, right?
Asad Daud
Yeah, miniature. So as I mentioned in my speech, we are redeploying some of the capital from miniature metal bellows to the other, you know, project.
Raman Venkata Kerti
Right.
Asad Daud
So metal bellows right now. Yeah. The peak utilization would be about 8, 9 crores. Okay. All right.
Asad Daud
Yeah.
Asad Daud
Overall, if you see it would be.
Asad Daud
Somewhere about close to, you know, I think more than thousand, you know, crores over the next, you know, three years.
Asad Daud
That we expect to generate. Right, yeah, that’s that. That was just the question. Yeah.
Asad Daud
Thank you.
Unidentified Participant
Thank you so much.
Asad Daud
Thank you.
operator
Thank you. The next question is from the line of Vanj from Envis Analytical Advisors. Please proceed.
Unidentified Participant
Thanks for the opportunity.
Asad Daud
Yes, you’re audible.
Unidentified Participant
So first question is on the liquid cooling adoption. Given that many other data centers still use air cooling, what makes you confident that liquid cooling will scale meaningfully despite being more expensive outfit specifically, what are the key triggers that will drive the system?
Asad Daud
So that’s my first question, sorry, if.
Asad Daud
I heard you correctly, you’re saying that what makes the shift from air cooling to liquid cooling? Am I right?
operator
Correct. Correct.
Asad Daud
Yeah.
Asad Daud
Okay, so a lot of the, the old data centers or the data centers which were up and running for many years, right. They were in the traditional air cooling system. Now the, the reason for them being on the air cooling is because the capacity of those data centers were, you.
Asad Daud
Know, were actually very small and liquid.
Asad Daud
The cooling as a technology was not.
Asad Daud
Developed, I would say, you know, four.
Asad Daud
Or five years back. Now with liquid cooling and also with the chip capacities, you know, increasing. So we have chips, we can compute much more power. So and if the chips are using much more power, they need much more, you know, cooling and at a faster pace. Hence, if you do through air cooling, the cost, the running and the recurring cost of air cooling is huge. And obviously for any data center, especially at a large scale, to be viable, the recurring cost has to be lesser. So hence, obviously the technology of liquid cooling has, you know, has evolved, you.
Asad Daud
Know, or was, you know, was invented. And now for all the new data.
Asad Daud
Centers that are, you know, coming up, 99% of them are coming up with.
Asad Daud
The liquid, the cooling only in some.
Asad Daud
Form or the other. And the reason is because the liquid, the cooling, the initial investment is, you know, is higher, but the recurring cost is significantly lower.
Asad Daud
Okay, so hope I was able to answer your question.
Unidentified Participant
Yeah. My next question is what is the life cycle of this typical solution when it is deployed in a data center and what drives the replacement demand?
Asad Daud
You know, obviously in terms of the.
Asad Daud
Life cycle, I think it can stay for at least minimum four to five.
Asad Daud
Years without much, you know, without much prepared.
Asad Daud
But obviously if there are, you know, some component or some part of the system, you know, which is, you know, which gets damaged or which needs, you know, you know, which needs to be changed, I think that can be changed, you know, you know, easily with the current liquid cooling systems that we’re developing. You know, say for example, if a part of the line there is some damage, you know, we have built the system in such a way that we can actually bypass that particular, you know.
Asad Daud
Line for a short period of time.
Asad Daud
Replace the part and then, you know, again bring it on the line.
Asad Daud
So the replacement is, is, you know.
Asad Daud
We have designed it in a way that the replacement becomes very quick.
Unidentified Participant
Okay, so the replacement demand.
operator
Maybe request you to join the question queue for your follow up questions as there are other participants waiting for their turn.
Unidentified Participant
Okay, just wait in the Polar Polly that whether it was revealed here or technology.
Asad Daud
I’m actually not able to hear you. I’m sorry, you said.
Asad Daud
I’m so sorry.
Asad Daud
I think there’s some, some noise is not. I’m, I’m very sorry. Not able to hear you.
Asad Daud
I’m sorry.
Unidentified Participant
Okay.
operator
Thank you. The next question, the next question is. From the line of Ashar Kapadia from Front Wave Research. Please proceed.
Unidentified Participant
Thank you for the opportunity and congrats on good set of numbers. I was just going through investor presentation. Of last quarter versus current quarter and. If I look at our capacity addition plan, there’s a delay across all of our categories like hoses assemblies as well as bellows. And specifically for bellows, if I look at metal bellows, the capacity addition plan was 1.20 to 3 lakh units. And for miniature billows it was like 2 40,000 units. Now that has been curtailed significantly to 60,000 units. And for metal bellows it’s 1 20,000 units. So just wanted to understand this significant curtainment it looks like. So just wanted to wrap my head around this. So what’s, what’s the particular reason behind it?
Asad Daud
Yeah, so it’s basically so to clarify on a few points, first is the. Expansion of metal bellows from 1 lakh.
Asad Daud
20 to 3 lakh was part of the phase 2. If you see in the last presentation.
Asad Daud
The phase 2 was as informed in.
Asad Daud
My, you know, previous, you know, calls also that we would only start work on phase two once.
Asad Daud
Phase one is, is you know, you.
Asad Daud
Know, up to an optimum capacity utilization. So that was in anyways planned for a later time. First of all that, second of all as I mentioned in my speech as.
Asad Daud
Well we, you know we have reduced.
Asad Daud
Our capital expenditure in minis and metal.
Asad Daud
Bellows from about 23 and a half crores to.
Asad Daud
Sorry about from 23 crores to about.
Asad Daud
10 and a half crores.
Asad Daud
Obviously with that reduction there will obviously be reduction in the capacity. And the reason is that we feel that right now we want to. So as per the demand that we are seeing from the international market for minis and metal bellows we feel that the first phase it’s better for us to deploy lesser, you know, capital, get the ball rolling and then over a period of time, you know, as we see demand picking up then you know.
Asad Daud
Putting in more capital.
Asad Daud
So the idea of the, the idea for us is that we, we want to deploy our capital, you know, we’ve seen over the past three to four months that we want to deploy now our capital to the area where we feel that we can, we are seeing a significant demand coming in and we.
Asad Daud
Want to redeploy our capital to those.
Asad Daud
Areas where we are seeing the demand.
Asad Daud
As of right now as compared to.
Asad Daud
Investing in capital where we see demand coming in maybe one or two years down the line. So that is the strategy that we have and it also helps us in a faster payback. It also helps us to, to you know, to make money faster.
Asad Daud
So, so that’s the business, you know.
Asad Daud
Call that, you know, we have taken. Understood that, that’s really helpful, thank you and all the. Very well, thank you. Thank you so much.
operator
Thank you. The next question is from the line of Vinayak from Exponent tribe. Please proceed.
Unidentified Participant
Thank you for the opportunity. So I just wanted to ask your liquid cooling spit solutions, in the previous call you mentioned that they are part of the domestic revenue and not the export revenue. Yeah. So just wanted to ask. Are you. Exporting these skid assemblies firstly to your customer and then they are bringing it back like a couple in all this stuff and then bring it back or like are you just providing them in the country itself?
Asad Daud
No, no.
Asad Daud
So we are not exporting any liquid.
Asad Daud
Assembly, sorry, you know, skid assemblies, you know, all the skid assemblies that we.
Asad Daud
Are manufacturing or the orders that we have received for the skid assemblies is for the, the India market only. Right now as of now there is no, there is no export and.
Asad Daud
You know, it is just for the, the India market. As I speak right now, maybe six.
Asad Daud
Months down the line we may start with exports. But as of now there is nothing as in, there is no export of status in this.
Raman Venkata Kerti
Okay, so you’re supplying your customer domestically and not domestically.
Asad Daud
Yeah, domestically. Yeah.
Raman Venkata Kerti
And so what is the visibility we have like current visibility in the liquid cooling sticks like for the next one year, two years if you could give an idea about that.
Asad Daud
Well, next one, two years is obviously.
Asad Daud
We had doing the capex for the, you know, for the skid assemblies based on what, you know, visibility that we.
Asad Daud
Have been given by our, our partner.
Asad Daud
You know, and, and accordingly we are deploying the, the CapEx for that. If you see, if you talk about the, the immediate, you know, the immediate business. So right now we have a pipeline.
Asad Daud
Of about 45 crores that we already have which is you know, planned for.
Asad Daud
Dispatches as per the schedule given by our partner. So that is the immediate plan that we have.
Asad Daud
But yes, our entire capex for the.
Asad Daud
Skid assemblies is based on the, the, the projections and the discussions that we.
Asad Daud
Have had with our partners. So it’s, it’s, you know, it’s, it’s.
Asad Daud
It’S based on or we are actually doing the capex based on the demand or you know, forecast that has been.
Asad Daud
Given by our partner.
Asad Daud
And so that.
Raman Venkata Kerti
Like the 352 number at the peak utilization. When do you expect that?
Asad Daud
29 FY 29 like I mentioned earlier.
Unidentified Participant
Sure.
Asad Daud
Thank you. Thank you.
operator
Thank you. The next question is from the line of Nidhi Tiwari from adroid Financial. Please proceed.
Asad Daud
Hello ma’, am, you are not audible.
Asad Daud
Can you just speak up a bit? Yeah, little bit. But you can go ahead with your question. I’ll let you know if I’m, if I’m not able to hear you.
Unidentified Participant
So for now I got my all answers which has been raised by the other companies. So for now my question is so are there any plans plan to target immobilizable market beyond the US and current exports resolution where we can diversify other. And also I had one question.
Asad Daud
So you were saying diversify beyond the.
Asad Daud
U.S. is that correct?
Unidentified Participant
Yeah, yeah. So that we could diversify our demand for the product.
Asad Daud
Okay. Okay.
Unidentified Participant
And also my second question is.
Asad Daud
Go ahead with your second question and then I’ll answer.
Unidentified Participant
Yeah, so my second question is like with stainless steel like as A key raw material. How are you managing raw material price volatility and its impact on margin? Because it’s quite high. Right.
Asad Daud
Okay.
Asad Daud
All right. So to answer your first question, so diversifying the risk beyond us. So if you see in this financial specifically we have focused a lot, a lot, I’m sorry on the domestic market and that we have also seen in.
Asad Daud
Terms of the numbers also if you.
Asad Daud
See the, the liquid, the cooling, the skid assembly.
Asad Daud
Right.
Asad Daud
So right now the, the entire plan is you know, for the, you know, you know, for the sales in the India market. So that also kind of de risks.
Asad Daud
Ourselves from the, you know, from the risk of usa. But you know, saying that despite I.
Asad Daud
Think USA is right now our biggest.
Asad Daud
Market, you know, as of today it continues to be. So we are focusing on Europe also.
Asad Daud
Because Europe especially now with this, you know, you know, with this FDA being.
Asad Daud
In, you know, being announced and you.
Asad Daud
Know, it would soon come into force as well.
Asad Daud
I think we’ll see a lot of business coming in from the EU as well. So that is one part of de risking ourselves from, you know, from USA.
Asad Daud
With regards to raw material.
Asad Daud
So specifically in case of our, you know, our orders, we do, you know, we do back to back raw material planning. We do long term contracts with our, with our suppliers specifically for our major raw materials. You know, which is the same in.
Asad Daud
Terms of the hoses, it’s the stainless.
Asad Daud
Steel wire and the stainless steel coil. So we do back to back. But obviously if there is significant volatility in the, in the raw metal prices.
Asad Daud
Then affects the margin slightly.
Asad Daud
But I think right now we’ve not.
Asad Daud
Seen it as yet. The volatility was there a couple of years back when there was significant uptake.
Asad Daud
And then obviously a significant downward trend.
Asad Daud
In the raw material prices.
Asad Daud
But over the last couple of years I think it’s more or less stable with minor fluctuations.
Asad Daud
So yeah.
Unidentified Participant
You have a good retention of orders, not getting new audit from them. So will that impact your margin?
Asad Daud
Sorry, sorry, I didn’t, I didn’t get your question. Can you just repeat your question again?
Unidentified Participant
So, But our attention is good. Right.
Asad Daud
So I mentioned that, Yes, I mentioned that we are, you know, getting the repeat business from our existing customers. The new customers. Yes, we are facing some delays in onboarding new customers. Obviously, you know, because of the, you know, the situation of the tariffs, because.
operator
Hello? Ms. Nidhi? Yeah, we are unable to hear your.
Asad Daud
I was not able to hear you the question.
Asad Daud
Yeah, yeah.
operator
Ma’, am, can you please join the line?
Asad Daud
Again there is some disturbance. You know. Yeah. At your back end. So, you know, because of that we’re not able to hear your question correctly.
Asad Daud
So that’s why.
operator
Thank you. The next question is from the line of Arjun from Longequity, please proceed.
Arjun Katechia
Hi. Thank you for this opportunity and amazing results given the fact that we have a tariff of 50% and we took a price hit of 8%. So how do you see in this backdrop our margins for the next one or two quarters, like Q4 and Q1 of next year?
Asad Daud
You know, I would still maintain that.
Asad Daud
We, we look at our margins from a long term perspective.
Asad Daud
Right.
Asad Daud
A couple of years back our margin.
Asad Daud
Was around 21, 20 to 21%.
Asad Daud
Our aim is over the next couple.
Asad Daud
Of years to, to have our margins.
Asad Daud
At up to 25%.
Asad Daud
Right. You know, obviously some quarters would be good, some quarters might not be good.
Asad Daud
As you would have seen from a.
Asad Daud
Q1 was, you know, not so good. And Q3 is, you know, I would.
Asad Daud
I would still say Q3 is good, I would not say very good. But I think, you know, Q3 is good.
Asad Daud
You know, we expect the margins to continue to grow in the next, you.
Asad Daud
Know, quarters and in the next year.
Asad Daud
So the target would be to achieve.
Asad Daud
A margin, an EBITDA margin of 25% over the next couple of years.
Asad Daud
So no, I’m just like a little.
Arjun Katechia
Curious here and I would appreciate if you elaborate this more. Even with the tariff impact, you’re saying that we would still maintain a margin of 20 to 23% and with the 8% price hit. Am I hearing it right?
Asad Daud
Yeah. So what happened is when we gave a discount to our customers, we also worked internally with our, with our engineering team, with our production team, with, you know, with our, you know, R D team and to, to also optimize or.
Asad Daud
You know, on our costs because, you.
Asad Daud
Know, the reason is that in terms of, you know, when we, you know, give out the discount to our customers, we also need to work internally how to ensure that this discount directly does.
Asad Daud
Not impact our bottom line, you know, you know, immediately.
Asad Daud
So we, you know, we worked internally with our teams to optimize our cost. We also worked with our vendors, right. To, you know, to, to ask them.
Asad Daud
To, to bear also some of the.
Asad Daud
Costs or some of the price that we had passed on.
Asad Daud
Right.
Asad Daud
So it was a joint effort from the end, the entire team and also.
Asad Daud
From our supply chain partners to help us that, to reduce the impact of.
Asad Daud
You know, to reduce the impact of.
Asad Daud
The discount that we had given and.
Asad Daud
You know, hopefully the tariff would go away soon and then our margins would be much better.
Asad Daud
But yeah, you know, the reduction in.
Asad Daud
The price, you know, sometimes actually makes you more agile.
Asad Daud
Right. Because then you work doubly hard to.
Asad Daud
Optimize your cost and to optimize your supply chain as well.
Arjun Katechia
This is fantastic because what I can infer from this is that if when things get normalized and we hope to get very soon, we could actually see a 400, 500 basis points increase of margins.
Asad Daud
Right.
Arjun Katechia
In that case because one, we have done internal engineering to make ourselves more efficient and two, we have an external environment support.
Asad Daud
Yeah.
Asad Daud
So I would not be able to.
Asad Daud
You know, give you the exact number.
Asad Daud
But yes, definitely, if, if the tariffs.
Asad Daud
Go, you know, go away, our margins would be much higher than what it is right now.
Asad Daud
Okay. Not able to give a specific number, obviously.
Arjun Katechia
No, no, I appreciate it. I and I totally get the sensitivity of it just from a different angle because we are an exclusive player to one of the biggest US multinational company. And, and I’m sure they, they’ve been, they have a huge Asia Asia PAC in which they’re functioning. How big would India would be for the, in the, in the whole APAC for them? I mean just to understand how big the size could be.
Asad Daud
Because liquid cooling or for their liquid cooling.
Arjun Katechia
For the liquid cooling. I’m assuming they would this, this, this, this kind of an effort by this multinational companies made across apac. So how big is India for them in the liquid cooling in the whole apac?
Asad Daud
Well, it’s difficult for me to answer on their behalf because I don’t know their APAC numbers, I don’t know their exact India numbers. So how big is liquid cooling as compared to their apac? Difficult to give you a number but what I can say is that their India team is, is working as like literally day and night with us, you.
Asad Daud
Know to, to obviously it was first.
Asad Daud
To you know, to start the first dispatches and, and now to increase the capacity.
Asad Daud
So I think they want to make.
Asad Daud
You know, India as the, you know, as the second hub, you know, for their, you know, worldwide supply. So right now the Indian team is obviously focused on the supplies to in India. But whatever discussion that we have had they are their ultimate long term goal is to make the, the India entity.
Asad Daud
As a global supplier for you know, skid assemblies over the next, you know, I would say three to four years time.
Asad Daud
So specifically on numbers I would not have because this company is a multi billion dollar company. I don’t know their APAC numbers and.
Asad Daud
Obviously they’re into they are into a.
Asad Daud
Huge number of businesses.
Asad Daud
So liquid cooling is a part of their overall business.
Asad Daud
They are into multiple, multiple different businesses.
Asad Daud
So exact numbers, I’m afraid I would not have it.
Arjun Katechia
No, true, I totally get that part. And one last question from my. And it could be very specific question. If you see the breakup, I see there’s a significant traction in your assembly segment for the nine months we have crossed close to 52%. How do you see this traction going forward?
Asad Daud
I think this session is. Is. Is only going to increase. I think the assemblies is part of.
Asad Daud
Our overall, you know, sales is, is.
Asad Daud
Only going to increase because the entire focus of the, of the company for us, for the entire team is to increase the sales of assemblies because that’s the, that’s the future, you know, that we see.
Asad Daud
So when I talk about assemblies, right, I’m not talking. So, you know, when I talk about.
Asad Daud
Assemblies, I’m just leaving the skid assemblies, you know, aside for the time being. In assemblies, the, the main raw material.
Asad Daud
Is basically frozen bread.
Asad Daud
So for us, if we increase the sales of assembly, we are actually increasing our production of, of whole bread also because ultimately whole bread is a part of the assembly. So the focus is for the entire team is to, to increase the sales of the assembly.
Arjun Katechia
If I can just squeeze. One last question. You said that it’s not a, it’s not a. The what you have done for the liquid coolants can be also used in other sectors, which I’m trying to say that it is the change in design in the hose and if I understand it very superficially, so what stops other players to come into it if it is just a change of a design or is there something which makes us.
Asad Daud
More stickier to the client?
Asad Daud
Oh, so, so first of all, whatever the design of the, the skid assemblies that we have developed jointly with our.
Asad Daud
Partner, so it’s, you know, a partner has worked with us and we have worked with them to jointly develop this entire system. Right.
Asad Daud
So the, the, the expertise, you know, you know, lie in the design in the RND and in the, you know, and in the engineering. And then obviously on the shop floor.
Asad Daud
Level, the expertise lies in conversion of the design into an actual, you know, finished product which will be, you know.
Asad Daud
Utilized, you know, at the, at the customer’s end.
Asad Daud
So see, you know, I would say it is, you know, anyone can, you.
Asad Daud
Know, can start any business at any time.
Asad Daud
Right.
Asad Daud
That never stops anybody. Right? The only. So, so the thing is, first of all, you need to have the expertise to do that. Second of all you need to have that kind of a customer, you know, also to, you know, say for example, if tomorrow say I’m just giving example randomly say if Amazon is, is having data center or some, some other companies is, is setting up a data center, right? So you need to have those kind of for customers also with you so that you can actually, you know, give them that solution. So your, your access to those, you know, you know, customers is also very important.
Asad Daud
And third is you need to have.
Asad Daud
So we have built this, this engineering and this, the, the skills of the entire flow control over a period of the last 15, 20 years.
Asad Daud
So we, we know what exactly are.
Asad Daud
The, you know, are the issues that you’ll face, you know, when you are controlling the flow of any kind of.
Asad Daud
A liquid in an entire cooling system. Because, you know, we have a few.
Asad Daud
Proprietary, you know, software that we have.
Asad Daud
You know, that we work with.
Asad Daud
Well, it shows you. The, the, you know, the simulation actually shows that in case of, in case of the flow being, you know, being increased at this particular level, you’ll actually have, you know, breakage or damage in this particular area. So these kind of expertise and skills, they are developed over a period of time. It is difficult for, you know, anyone to replicate in a very short period of time, you know, so that’s why you’ll see that there’s the moat that we have in this business right now.
operator
Thank you, ladies and gentlemen. Due to time constraint, we take that as the last question. I now hand the conference over to the management for the closing comments. Over to you, sir.
Asad Daud
Thank you so much everyone for your questions. If I think there were a couple.
Asad Daud
Of people who are not able to hear their questions, so I would request them to, you know, probably send their.
Asad Daud
Questions to the SGA team and we.
Asad Daud
You know, arrange to reply to you at the earliest.
Asad Daud
And if I’m not able to answer anyone else’s question as well, so just.
Asad Daud
Request you to get in touch with.
Asad Daud
SGA and you know, we could answer.
Asad Daud
Your queries or we could schedule a meeting as well. So thank you so much everyone.
operator
Thank you on behalf of Aeroflex Industries limited. That concludes this conference. Thank you for joining us and you may now disconnect your lines.
Asad Daud
Thank you.