Craftsman Automation Ltd (NSE: CRAFTSMAN) Q3 2025 Earnings Call dated Jan. 30, 2025
Corporate Participants:
Srinivasan Ravi — Chairman and Managing Director
C.B Chandrasekar — Chief Financial Officer
Analysts:
Mumuksh Mandlesha — Analyst
Jinesh Gandhi — Analyst
Abhishek Jain — Analyst
Joseph George — Analyst
Mukesh Saraf — Analyst
Ganeshram Rajagopalan — Analyst
Ajox Frederick — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Earnings Conference Call of Craftsman Automation Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should we need assistance during the conference call, please signal an operator start and see you on touchstone phone.
I now hand the conference over to Mr. Srinivasan Ravi, Chairman and Managing Director from Craftsman Automation Limited.
Thank you, and over to you, Mr. Ravi.
Srinivasan Ravi — Chairman and Managing Director
Good afternoon, everybody, and thanks for joining the earnings call today.
This time around, I would like to run-through the changes which has happened in the last quarter, which is quite substantial. So I will take 10, 15 minutes to highlight the changes and what is the ongoing projects and the status of the questions. The strategic investment, what we have also announced at Ozo also I’d like to highlight at the end-of-the first introduction.
Investments made during the current year was INR1,015 crore, mainly for DR, 24% stake to be balanced, which is a INR20 crore, son Sunbean investment was INR606 crore. So OCD, some of it will come back when the land happens. Crops in Germany, INR154 crores, that is INR94 crores for acquisition and INR60 crores towards working capital requirement, which is very strategic.
Capex investments in greenfield projects, capex has been INR700 crores for the current-period, including greenfield at INR219 crores excluding land because land is also a little common because we plan to house Sunbeam also when we shipped the Gurgaon plant. All the wadi is INR91 crores. So the status of the project has become a wholly-owned subsidiary from 9th October and achieved a turnover of INR284 crores with a positive EBITDA of INR10 crore as planned shipping of Gurgaon plant has already started and hope to be completed by Q1 of FY ’26, after which we will start looking at the land sale of Gurgaon.
50% of the employees have opted for VRS and we relieved them in November ’24. So balance once the shifting is started, which is in April, May, we will be settling the balance for the VRFs. The order book status is comfortable and hope to achieve a reasonable turnover and positive EBITDA in Q4. Germany has a consolidated revenue of INR56 crore with a positive EBITDA and hope to continue positive results in Q4. The order book for Germany for the calendar year of ’25 is full.
Biwadi commenced its operation in 31 August and you may know very well this is the first foray into structural parts, especially the alloy wheel, which is for the BIS initiated change in the country. So, we had an timeline which for the festive season, so we had to put in altogether. So for a small turnover of INR38 crores, we had to spend a lot of money during the startup period. So we have brought the plant into production in a record time, that is from the land acquired in January of ’24. We started commercial production in August. So because of this, there has been additional costs which were involved there. But the plant is now operating at 28% efficiency and will be at 25% of the capacity and will be up to full-speed by July of this year. Has supplied several samples to customers waiting for approval and we may start production in Q4 of FY ’26 — sorry, FY ’25.
The new greenfield projects at has been planned to set-up the wheel plant in complementary with the Biwadi Wheel plant to supply to customers in the South. So both the plants have been fully booked for orders for the alloy wheel on Biwadi as well as. The consolidated EBITDA for the period has been INR609 crores against the previous year nine months EBITDA of INR684 crore for various reasons of many start-up projects and also massive expansion and the excellence related to the massive expansion, which we have created the extra overheads to look at the forward-looking here the EBITDA contribution is from the powertrain is INR298 crore, aluminium products is INR315 and engineering is INR36 crore, unallocated is INR40 crore. The shortfall is mainly due to the expenses like acquisition costs related due-diligence, legal and other initial operating losses that Diwadi and for.
Now, I’d like to run-through the changes in the structure of the organization a little and also the change of the — in each of the segments as we go on. In the powertrain, at the IPO time, we were heavily dependent on the commercial vehicle segment and we are looking-forward towards more-and-more clients, mainly the multinational companies setting up plants here for their starting up the diesel engine production in India with a view for the Indian market as well as for the global market, which is still ongoing and we have received the orders. At the same time, the ramp-up has not happen. These are orders which will certify in the coming couple of years translating into revenue and profitability.
Meanwhile, we have also embarked on a long-lead time project for the stationary engines, which we had declared to the shareholders and made them sensitive towards the long-term nature of this sort of investment because it’s an exclusive club for the stationary engines. Only 10 companies in the world are ruling the market for the station engines worldwide and there is a big inflection point, which has happened due to the data centers growth mainly driven by AI. So this was also highlighted in my Chairman speech during the annual report, which you might have read.
So I’m proud to say and happy to share with the shareholders that we have got at least five engagements of the top-10 of the companies in a big way. We have received orders. It is already ongoing. The missioning process for the trials have started at our Unit-3 facility and we have started tooling development to be product mass production — not mass production, production at plant. Since these nature of these projects are long gestation for development, that is a development period is 18 to 24 months and customer valuations almost a year. So we are almost halfway through the journey and next one year later, we will see the revenues flowing to the stream.
We got our into this business at the right time overall and we are looking at a revenue of $100 million in four years’ time, only in the power in division contributing in the contribution coming from the stationary engines, mainly from the power generation.
Now coming to the aluminum segment of the business. When we went for the IPO, we were only in the two-wheeler business, only in the ice portion of the two-wheeler business with a small margin presence on the four-wheeler business. Now what we have transformed in the last year was after DR, we have become predominantly on the four-wheeler segment of the business. So our dependence on two-wheeler came down and the latest initiative into the thing is, we have spread our geographically very well. And also the clientele of craftsmen and DR, the overlap has been negligible. And also there is practically no overlap between the clientele of man craftsmen and the process is also more or less not overlapping exactly.
So for the instance of each of the companies is helping the Craftsman to leverage on this trends. For example, the Biwadi plant for the alloy wheel has been set thanks to the DR action where it’s clear that without that, the plant will not have come up in a record time of eight months, which has never been done in this country so-far. So now with this sort of an execution strategy, we got the second chance at now for the customers in South.
The next is with this alloy wheel, which is also today a structural part in the two-wheeler, our dependence on ICE for the two-wheeler also has dramatically come down. Still on the consolidated — not the consolidated, I think the segment-wise end-use of the aluminum products. It is predominantly four-wheeler with marquee names in the — both in the domestic as well as the export customer range. And after this acquisition, we have reached a possible INR4,000 crore revenue on the aluminum business in the next financial year, which is still suboptimum and compared to the global majors which I had highlighted in the past that we are not able to serve the global customers because of the size of the aluminum segment of the business. But at INR0.5 billion or INR4,000 crore approximately, I think we are attracting a lot of attention globally for also export business.
Now coming to the Industrial Engineering segment of the business, we have done quite well on the automated storage business and today our automated storage business is contributing to a very-high percentage of the storage business. And the order book is for the next year-on the automated storage business is quite full. So we will reap the benefit of profitability going-forward on the storage business. We — never we have given any guidance, but now that there has been a massive shift in the company’s revenue growth and the acquisition, so we need to look at the consolidated numbers of going forward.
Just to give a thumbs-up on a guideline, which normally we never give. This is only a guideline. We are looking at an consol revenue going from mid INR5,500 crores in the region from to going to around INR7,000 crore in the next financial year. It’s not exactly apple-to-apple because some of the acquisitions has happened in the second half of this year. And the EBITDA consolidated number from, say, around INR850 crores range should go up to northwards of INR1,000 crores, which is almost a 29% growth in the EBITDA numbers, which will lead to a 40% growth in the EBIT numbers, say, from INR500 crore to INR700 crore in the coming year.
So this is the projected revenue of the company which is for this massive expansion. This is the reason when we also have informed the shareholders when we went for QIP, this is a one-time QIP which we have raised. In this year of the company, we had raised INR150 crore in 2010, ’12 from private-equity. And during the IPO, we had raised only INR150 crore. So has been the cumulative infusion of capital to the company. Otherwise the company has been organically growing with the massive QIP infusion of INR1,200 crore, we have executed the multipronged strategy to take the company to greater heights. So we have developed the escape velocity to reach to the next level of the organization growth.
So now there has been always — always when we are putting up the expenses slightly ahead of the project. None of the projects are risky projects in my opinion totally overall, but I think the 90%, 95% investment has gone into organic or within the country and hardly INR150 crore has left the shorts of India into outside subsidiary, which is very, very strategic and which is helping the growth in the stress arrangements. So the — we are very comfortable as Craftsman to be at a very low-level of debt. But as I had mentioned earlier, for a short period of time, we don’t mind exceeding the debt-to-EBITDA levels.
So we are looking at a consolidated debt-to-EBITDA for this financial year is 2.24, which would have looked at 1.88 if the land sale of, which will fetch around INR300 crore-plus had happened in this financial year, but is not going to happen, otherwise, it would have been 1.88 crore. So anyway, we are very hopeful and quite confident that we’ll be able to send the land in the next financial year. With that, we expect the consolidated debt-to-EBITDA to be around 1.4 in the next financial year. So going-forward, in spite of the capex which is being done. So this is the headline which I would like to reiterate before I open the floor for question-answers.
Operator
Shall we start with the Q&A?
Srinivasan Ravi — Chairman and Managing Director
Yes.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press R and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets and even restrict the question to two per participant. Ladies and gentlemen, we will wait for a moment while the question queue assembles.
The first question is from the line of Mumuksh Mandlesha from Anand Rathi Institutional Equities. Please go-ahead.
Mumuksh Mandlesha
Yeah. Thank you so much, sir, for the opportunity. Sir, firstly, just on the standalone margins, which has come down sequentially. Any reason for that segment margins to come down, sir? Any one-off there, sir?
Srinivasan Ravi
Yes. On the powertrain segment, we have built-up capacity. So-far we are making only truck engines. We have built-up missioning capacity and other capabilities for handling large engine blocks for V12, V16, V20 that is swaying in tons, that is the missioning technology is more or less same, but the equipments are totally different. So, we have added more infrastructure plus machinery, plant and machinery and started doing the trial production. So, all those expenses have been booked in the powertrain segment. The powertrain segment by itself has not increased on the value addition. And we also have invested for the term for the construction equipment for the engine emission norm change and the new projects, whatever is there, we have set-up some lines for export of — not direct export, our customers, customers are exporting. So it is under trial production again.
So we have made the — all the investments required and incurred the expenses as well as some overheads and people cost towards the growth. This is one of the reasons we are now looking at the growth going-forward in the coming years. Powertrain will be little delayed on the growth. Maybe one year later, it’s more on the FY ’27 number. FY ’26, we will see some portion of it. But I think the investments, as I mentioned, it’s a long gestation, that is the reason. And any increase in depreciation and the stationary number which is there on the value addition portion of it will directly hit the EBIT. So that is the reason. It’s not anything of the organic performance or the execution portion of the company. I hope I answered that in total.
Mumuksh Mandlesha
Got it, sir. I mean all this efforts, sir, I mean any quantification you want to give what kind of impact this quarter it would be? And I mean once all things normalizes, I mean say in FY ’27, any guidance you want to share on the margins for the powertrain segment.
Srinivasan Ravi
Yes, I have been guided as a company on FY ’26 overall, which I think the margins will swing back to the original margins in two years’ time on the powertrain in the two phases because of the market expansion.
Mumuksh Mandlesha
Got it, sir. Sir, on this on the employee cost-saving for this the new acquisition, and the plant closure and any number you want to share what kind of benefit it would bring on the EBIT margin, sir?
Srinivasan Ravi
You’re talking about standalone or a consolidated number?
Mumuksh Mandlesha
Number sir, where basically we have given the — reduced the employees and we have close the Gurba plan, right?
Srinivasan Ravi
So we’re not yet closed it to say we are on the cost of closing it, but I think we announced and we’ve taken the Board approval. It is — it has to go for approval soon for selling the land of Gurgam, which is valued around INR35 crores as a number approximately. So will — you are asking for the number of clients.
Mumuksh Mandlesha
So yeah, reduction in employee cost and because the plant being closed, any saving from that also.
Srinivasan Ravi
Yes, five plants will become four plants in one sense or another totally, but I think that the one plant will be the same-location as current Biwadi plant, which will be shifted to there. Yes, the employee cost is going to come down by at least 30% minimum. And further, we need to improve the operations and process to bring down the employee cost per headcount further. Employee cost will be — per head will be increasing as you move on, but I think the employee headcount will continuously reduce in the next two years.
Mumuksh Mandlesha
Got it, sir. Sir, can you share what the capex nine-month has been and what is the full-year guidance and also for next year, if you can share the capex guidance.
Srinivasan Ravi
So, this is looking at standalone craftsman if you take.
Mumuksh Mandlesha
If you can have consol number also.
Srinivasan Ravi
Consol number, I don’t have it ready-made available today for next year-on this matter, because we are contemplating for some deal whether we need to modernize quickly or modernize slowly to be taken. So we are looking at INR700 crore until now the capex done at and maybe another INR150 for the quarter, so around INR850 crores for this year. Next year, I think it should be less than half the number, including the maintenance capex.
Mumuksh Mandlesha
Got it, sir. And just lastly…
Operator
Sorry to interrupt you, sir. Certainly I request you to please rejoin the queue. We have participants ready for the turn.
Mumuksh Mandlesha
Sure.
Operator
Thank you. Ladies and gentlemen, we will request you to kindly limit your question to two per participant. The next question is from the line of Jinesh Gandhi from Ambit Capital. Please go-ahead.
Jinesh Gandhi
Yeah, hi. My question is on — in this quarter we had multiple of different impacts on the performance. So if you can highlight the exact impact of our acquisition on the aluminum consol margin, what was the impact of that? And even on the standalone powertrain business, you talked about several costs coming in and standalone aluminum also had Diwadi plant come back. So if you can talk about the impact of this transitory costs which are there in P&L that will make easier for us to understand.
Srinivasan Ravi
Suddenly most EBIT — EBITDA-positive will be Q3, but at the EBIT level and it is negative totally. And so that would have around INR9 crore, minus INR9 crore at the level. And for the Diwaldi plant, I think it is quite substantial because of the startup cost is around INR20 crore is the negative EBIT at Biwadi. So both put together, we can say around close to INR30 crore was impacted only in the Q3 on the aluminum side part of the business.
Jinesh Gandhi
Okay. And similarly for the powertrain, given there is a much investment on the stationary engine as it looks to on and what is.
Srinivasan Ravi
Overall, I think 50% has come from stationary engines, whatever the development we are doing and half of it has come from the new lines and capacities we have set-up for various customers, which the production has not either is a startup production or is not ramped-up. So overall, I think it’s a 50-50 for the cost because we have many plants for the powertrain now totally.
Jinesh Gandhi
Okay. But any sense on combined cost for that? What would be?
Srinivasan Ravi
You’re talking about cost. One is the inflation of people cost, the absolute value addition has not gone up or the revenue has not seen the growth. So there is an inflationary pressure. So I would say 25% or 30% is inflationary pressure because of no-growth. Balance, 60% 80% is because of the new projects both on the inflation agents as well as on the new lines.
Jinesh Gandhi
Okay. Okay, got it. Secondly, when we look at the derived DRN revenues, it’s showing about 20% decline on Y-o-Y basis for 3Q. Is that observation right on the PSP, what is the back?
Srinivasan Ravi
There is no revenue decline from action as you are talking about, now.
Jinesh Gandhi
Yeah, I’m taking the 38% revenue contribution from the consol as the other revenues and then comparing it with last year, so it’s 20%, maybe that direction is not the right thing.
Srinivasan Ravi
Not clear and the question is not audible and not able to understand the question.
Jinesh Gandhi
So DRA the DRE business, how was the growth in the DRA business?
Srinivasan Ravi
There’s no-growth in the DRA business in fact, I think it has been very stable because it is into only two-three customers and it is on public domain, the customers growth in the pass vehicle or degrowth.
Jinesh Gandhi
Right, right, right, right. Okay. I got that. And lastly, what would be our consol net-debt now? And what should be the full interest cost by 1Q as some of these projects gets commercialized?
Srinivasan Ravi
Yes. I had mentioned the consol net-debt for this projected for this financial year. No, I’m looking at the projected number for this financial year as a consolidated net-debt. We are looking at around INR850 crore. Sorry, sorry, the INR1,800 crores as a consolidated debt. So okay, that is — the debt-to-EBITDA will be 2.24, which I read-out. And if the happened, it would have been INR1,600 crore, but it’s not like it’s not happening this year. In financial year, it would have been 1.88% debt-to-EBITDA.
Jinesh Gandhi
Sure. And that would be a cost of debt? What will be a cost of debt for this INR1,800 crores?
Srinivasan Ravi
No, this is a normal debt we have got, I think is nothing different on the market trend. I would say it will appear on the numbers I think we can take offline.
Jinesh Gandhi
19%. Got it. Got it. Thanks. Thank you.
Srinivasan Ravi
Plus/minus.
Jinesh Gandhi
Okay. Thanks. I’ll go back-in queue for more questions. Thank you.
Srinivasan Ravi
Okay.
Operator
Thank you. The next question is from the line of Abhishek Jain from AlfAccurate Advisors Private Limited. Please go-ahead.
Abhishek Jain
Thanks for opportunity and congrats for the decent set of number despite a lot of the challenges. Sir, in this quarter, we have seen a significant growth on numbers like other expenditure and employe cost. So if you can throw some light, what is the extraordinary expenditure in this quarter or one-up in the console PL.
Srinivasan Ravi
There are three components to it. One component is we have looked at what is the requirement for next year and started taking people, employees and training it. That is one long-term objective. Short-term objective is how to manage the Sanve acquisition and the two greenfield facilities of owner and known at. So there has been expenses occurring and people cost incurred even before the start of the production. So these are the two major components. The third major component is the normal inflation, which is happening for the people cost, which we have been always talking about and we are more inclined towards semi automation and improvements of processes to not to increase the headcount, which is inflationary.
Abhishek Jain
So is there any legal and consultant charges in this quarter because of the acquisition of the three our company in other?
Srinivasan Ravi
Yes. So that is there because we have acquired — there is a Sanveen related expenditure at, there is also expenditure also for Germany, there is an expenditure, these are all one-time expenditures, yes.
Abhishek Jain
And how much is this, sir? Because there is a significant or a jump-in the number.
Srinivasan Ravi
So getting that into detail will not be — it will be time-consuming. We don’t mind you can come back at the end-of-the Q&A so that we will give a fair chance to everybody if you don’t mind.
Abhishek Jain
Okay, sir. And my last question on the powertrain business, basically business can be categorized in the three parts. So one is the standalone, another is the journey and third was the quota. So how do you see the scale-up in all three business and how will be the margin profile in FY ’26 sir?
Srinivasan Ravi
I didn’t understand the question and the voice clarity is a little poor. I think one question if you ask at a time, I think is better. I think, please can you repeat?
Abhishek Jain
Sir, just wanted to understand gain on the and?
Srinivasan Ravi
Germany business is not scalable to that level, maybe 5%, 10% we can grow because it is an a fixed plant and we are expecting to increase revenue by 10%, that’s what we are looking at. But we are getting a strategic advantage that the same team is working for us for development of products in India. Even now, as we speak, the teams of and are together at a customer place in Europe for discussions for a project to be brought to India. So this is the advantage. I want to see is this company has got the mark few customers. I think that three good engine customers for that and they have decades and decades of experience there, people knowledgeable. So this is giving a lot of trust to the customer and then they are giving business to either or to Kashmen as the case may be wherever it suitable. So we’ve been able to acquire a quite substantial business in the last few months after the question.
Abhishek Jain
Sure. Okay, sir. And sir, is there any debt prepayment plan for from FY ’26, ’27?
Srinivasan Ravi
Sorry?
Abhishek Jain
Any total borrowing is around INR1,800 crores. So what is the debt income?
Srinivasan Ravi
No, can you — I mean without the speaker, can you come because I think it is voice is problem?
Abhishek Jain
Hello. Are you able to hear me?
Srinivasan Ravi
Now able to hear you.
Abhishek Jain
Yeah. Sir, the total debt is now INR1,800 crores. And so just wanted to understand what is your debt repayment plan for the coming year?
Srinivasan Ravi
No, the debt has been taken recently. The debt has been spread over I think five to six years, right? It will be more or less linear, I would say. But the — as I mentioned, the debt will be coming down in the next year in one big chunk when the — sorry, the Gurugam plant is getting sold, which is quite substantial is INR300 crore. And next year with the capex being lower on the consolidated balance sheet itself, our debt is likely to come down. So, I had shared the debt numbers when I read-out the debt numbers. I can read it again now. So, we are expecting the debt to come down next year to INR1,400 crore on the consolidated loan.
Abhishek Jain
Okay, sir. Thank you, sir. That’s all from my side. Thank you.
Operator
Thank you. Participants are requested to kindly use handsets while asking a question. The next question is from the line of Joseph George from IIFL Securities. Please go-ahead.
Joseph George
Hi, sir. Thank you for the opportunity. I have two questions. One is, you mentioned that had negative EBIT and similarly, the Piwadi plant was also below EBIT breakeven. So when we think about, say, FY ’26, would it be fair to assume that on a full-year basis, would be at least EBIT neutral in FY ’26? And similarly, when do you expect Biwadi plant to become EBIT neutral?
Srinivasan Ravi
So the Biwadi plant will be EBIT neutral starting from Q1 of FY ’26. And the Sunbean will be — I mean, Diwadi plant will be EBIT positive high-single-digit by end of FY ’26 totally. And by itself will be EBIT positive by Q2 of FY ’24 FY ’26 and for the full-year, it will be EBIT positive.
Joseph George
Understood, sir. And the second question that I had was in relation to your aluminum segment. So when I look at the aluminum segment EBIT at the consolidated level is about INR72 crores of EBIT. And at the standalone level, it’s about INR20 crores of EBIT. So which means that the subsidiaries have a positive EBIT contribution of about INR52 crores. Now the EBIT for Sundeen is minus INR9, as you mentioned, which means that the residue is about INR61 crores of positive EBIT. Is that entirely DR Axeon or is there any other element there?
Srinivasan Ravi
See, the most of the own EBIT has been more or less been wiped out because of two reasons, because of the mainly because of the project, I would say in total all this.
Joseph George
Sir, actually, I’m sorry to interrupt. My question is more on what is the EBIT in each of the subsidiaries. So consol is 72 for the aluminum segment for stand — consolidated aluminum segment EBIT is 72%. Standalone aluminum segment EBIT is 20, the remaining is 52. I wanted to get the breakdown of that 52, right?
Srinivasan Ravi
So I think I will refer somebody from my side to answer this please.
C.B Chandrasekar
Actually, this is the balance is the intergroup adjustment which has happened because of the understandable it has been categorized as other segment because from trading what happens between the groups that is we think. And so these are — it’s only an intergroup participant, which we’ll explain later.
Joseph George
Understood, sir, no problem. Thank you.
Operator
The next question is from the line of Mukesh Saraf from Avendus Spark. Please go-ahead.
Mukesh Saraf
Yes, sir. Yes, sir. Thank you for the opportunity. My question is on the wheels to begin with, so what would be the capacity we’ll have once the plant is ready and by when that capacity come in here?
Srinivasan Ravi
So the plant will be operational by Q2 of next financial year and Q4 of next financial year, it will be fully at full capacity. So the capacity of each of these plants are around INR400 crore-plus. Biwadi Alloy Wheel and the Wheel plant both put together the peak capacity which we expect in FY ’27 will be between the two plants INR800 crores on the.
Mukesh Saraf
Sorry, how much is that capacity?
Operator
Mr. Saraf, we are unable to hear you clearly, sir.
Mukesh Saraf
Is it better now?
Operator
Yes, can you please switch on to the handset mode?
Mukesh Saraf
Yeah, I am on the handset mode. Sorry, sir, could you just repeat that capacity number?
Srinivasan Ravi
So we talked about in FY ’27 the each of the plants, Biwadi Alloy Wheel and Alloy Wheel, which each will contribute more than INR400 crore on the top-line.
Mukesh Saraf
Okay, got it, got it. And secondly on the plant, you did mention that these stationary engines will start next year, but we’ll start with some production in the next quarter itself. So is that the..
Srinivasan Ravi
Sorry, it is the tooling itself, as I mentioned, the plant is just constructed in the trial production, the toolings are getting ready in Germany. The toolings itself will be delivered only in the end of next year. So we will not see revenue from the industrial engine portion, but we are doing some engineering parts on that. That will — plant is also going to serve that. So there will be some revenue from the plant, but not from the powertrain perspective.
Mukesh Saraf
Right, right. So any kind of sense on how big could that business be, mix of the industrial engines from plant?
Srinivasan Ravi
Plant and the machining capacity which we have put up in — are in the process of putting up at Arsur plant in Unit-3 in. On the stationary engines, we are looking at around FY ’28, ’29 in that range. We are looking at around $100 million, around INR800 crore revenue, INR80 crore revenue, which I had mentioned in my opening remarks, which will add to the powertrain, which will be quite significant.
Mukesh Saraf
Right. No, so in this next one year, excluding the — the — before you start the stationary engine is what I was asking, this engineering that you were saying that you will start some kind of revenues will start from the Kotiwali plant. How would — how much would — how much could that be?
Srinivasan Ravi
That should be around INR150 crores for the full next financial year because most of the trial is trial run with the facility and so — and the first time we are getting the foundry, so it will be little slow start only.
Mukesh Saraf
Got that, sir. Got that. Got it. Thank you so much. I’ll get back-in the queue.
Srinivasan Ravi
Thank you.
Operator
Thank you. The next question is from the line of Ganeshram from Unifi Capital. Please go-ahead.
Ganeshram Rajagopalan
So thank you for taking my question. Now my questions are more on the long-term strategy that are adopting. So, I have two option, please. The first one is just on the acquisition and this move into stationary engines, right? So there’s obviously a long gestation, 18 to 24 periods, months of development, one year for approval, right? So what are sort of the risks that we have to be conscious of when you go through such a long development process? And overall, what gives you the confidence that there will be acceptability of the product at the end of this journey, right? How are we placed versus competitors and what’s the edge that we are bringing to these OEMs? That’s the first question, sir.
Srinivasan Ravi
Okay. Thank you for the question. I will answer the question first.
Ganeshram Rajagopalan
May I request the participant to please mute your line, sir. There is a disturbance coming from you end. Yeah. I’ll do that.
Srinivasan Ravi
On the powertrain, in the past history, I mean, all the stakeholders know that we do not have a foundry on the powertrain. We are the partner with one of the leading foundries for the smaller 20 years ago and as Tyre 2 when it is the inflation goes strong for exports to mainly commercial vehicle segment in North-America. It has been going on for more than two decades now. The second tie-up we made was a leading axle casting manufacturer, again, listed company, which, which is there — and this has been almost a decade now and their exports have grown and they are tied to them. For the other engine blocks, the leading foundry in India, where we have been partnering ever since we took the business in 2008, 2009 and we have been partnering with them for I think around 10 projects for the powertrain. So we are well-covered with this partnership going on very well.
So we have not inferenced any of these customers by backward integrating anywhere and our relationship remains strong and we have opened a new avenue on the station engines, which was not available for the Indian market or the global market because most of the multinationals are even today doing enough overall. And the outsourcing has been negligible because of the difficulty in technology, both on the casting and missioning and the number of casting players also in the whole world, including China, including the OEMs themselves, hardly 10 players are there and standalone machining companies who are doing to this criticality, maybe three, four in the whole world totally overall. So we as a machining company are — it is for us a normal migration. It is not — it is a challenge, but it has gone through already. We have submitted samples that’s got approved.
On the casting side, with further, we don’t see any risk there because the technology is already in-house there. So the only registration period is there to all of this. Otherwise, the customer themselves will not be placing orders. Now, you may say customer approval may not come, but customer scheme in the game is very-high. All the pattern tuning equipment, which is running one block, I think it is costing millions of dollars for the tooling cost which customer pays for. So the more customer is going to just like that select a supplier and lot of engineering costs they will incur while during the development-stage itself overall. So it is a very, very strategic relationship. It’s very, very sticky business so we will be through with that.
Ganeshram Rajagopalan
Thank you, sir. So that’s clear. Another question that I had is with all the consolidation and the activity that’s that you’ve undertaken, what would sort of be — how should we think about your exposure to ICE from a product portfolio point-of-view? And how will that evolve over the coming years, right? So for each of the segments, how would you be exposed to ICE? And how do we sort of derisk that over the coming years? And would it be possible to sort of maintain these margins or improve them as we go-forward through that process as well? I think you’ll be in a better position with the granularity and nuances of that, but the broad understanding I’m trying to develop is on those two-levels.
Srinivasan Ravi
On powertrain — sorry, please, mute it, please, sir?
Ganeshram Rajagopalan
Yeah.
Srinivasan Ravi
For the powertrain, 100% of it is ice related. I would say 90% is isolated, some are transmission parts which can be neutral, whether it’s ice or not. But these are not — I think the passenger vehicle segment on the powertrain is negligible totally overall, hardly 5% or 10%. Balance is all related to commercial vehicle, construction equipment and maybe farm segment. And now we are coming into station engines and all of the multinational companies on the station engines are putting up large capex for growth, which they see for the next 10 years on the station engines for backup generators. So I don’t see any risk-on the powertrain per se. And India is becoming a slowly and quite a big hub going-forward because now there is no more investment happening from internationals into China. So we will see growth happening on that front also for the global market. Yes, as we improve our revenue stream there, the operating leverage will better. Margins should improve going-forward. We hit the lowest level in this particular financial year. From next year onwards, it will look costly going forward.
On the aluminum business, we have a segment which is now more predominantly on the passenger vehicles and also significantly high on the two-wheeler segment, which we have derisked with the — also the structural parts of the alloy wheel. So overall, the capacities and capabilities are fungible. The casting process by itself, high-pressure die-casting, gravity die-casting, low-pressure die-casting, they do not — the emissions of the equipment or the people do not differentiate between what is the end application of these particular parts, whether ICE or non-ICE. We are more interested in gravity and low-pressure going-forward more-and-more because we see this like on the two-wheeler, the lightweighting has happened on the aluminum front. On the passenger vehicle, the aluminum content will go up, whether it’s ICE or EV, both it will go up. So we see the capability of the castings point-of-view remaining the same. So these capacities are fungible with EV on the aluminum segment. I hope I answered that.
Ganeshram Rajagopalan
Yes, sir. Thank you very much.
Operator
Thank you. The next question is from the line of Saket Kapoor from Kapoor & Company. Please go-ahead. Saket Kapoor, please go-ahead with your question. Your line is unmuted.
As there is no response, we will move to the next question, which is from the line of Jinesh Gandhi from Ambit Capital. Please go-ahead.
Jinesh Gandhi
Yeah, hi. Thanks for follow-up opportunity. First is on the stationary engines, you indicated we are working with five of the top-10…
Operator
Mr. Gandhi, maybe request you to switch to on your handset mode.
Jinesh Gandhi
Yeah, sorry, just give me a second. Yeah. Is it better?
Operator
Yes, please go-ahead.
Jinesh Gandhi
Yeah. Ravi, you talked about we are working with a five customers of the top-10 customers on the stationary engine side and you have got orders as well. So any sense on the quantity of the order — quantum of the order which you have got for the stationary engines on that side?
Srinivasan Ravi
I had mentioned that in FY ’29, we will be doing around 100 million on the casting and machining front. How it evolves in the inventing period depends on the time for the gestation for the accruals. So we are targeting 100 million by FY ’29, if not earlier.
Jinesh Gandhi
See that already $100 million or is that aspiration?
Srinivasan Ravi
So I cannot give strategic answers Mr, Jinesh Gandhi, because there are many people interested in this call and detail which customer where we are and what we are on this matter.
Jinesh Gandhi
I understand.
Srinivasan Ravi
And you see, we acquired a company in, which is I think anyway and probably the INR200 crores that is already there. I’m not counting that into the $100 million sort of business. So there you know very well when we are going to replicate as a higher capacity in India, the casting portion still should be higher. And today the growth in the market segment is 8%, 10%. I had made a public disclosure in the my Chairman speech itself that this is going to be a growth area overall. And the projections of these customers, whether some of it is going to get organic, they are again making capex within. Most of the companies that do not are looking at outsourcing is possible and not many outsourcing partners are there. So I don’t — I think the size of the business what you’re talking about with $100 million is very conservative totally considering the inquiries we have or the orders in-hand or the orders are just which are about to finalized. I think this is — and this will be very sticky business as I mentioned.
Jinesh Gandhi
Sure. And the second question on the stationary engine business plant. So we are expecting revenue potential of over INR800 crores and our CapEx, if I remember it correctly, INR91 crores.
Srinivasan Ravi
So fine, Mr. Gandhi, I think there is some big mistake what we are looking at. It is the combination of casting and listening together, which is $100 million, which I had mentioned. Commissioning capacity has been put up at our Rasur facility, which we started earlier. And to put the record straight, since you were asking a few more questions, we are getting castings all the way from North-America. We are getting castings from Germany as we speak. It is being shipped to craftsmen and we are missioning samples and next year we will be looking at export of castings, which we are importing from Europe and from North America because even then our facility will not be up to speed to deliver that. So this means the customers are going to ship the customers to us and we are going to finish it in India and send it back. So this is the nature of the business currently. It’s a very exclusive club, so it is not easy to break-through and we have taken a big step towards breaking through into this segment of the business. It is a very business.
Jinesh Gandhi
And last question is on the storage business side. So we indicated automotive storage order book is full. But any sense on what percentage of our order book would be from automated storage and what percentage of 3Q revenues came from automated storage?
Srinivasan Ravi
See, the Q3 revenues of the automated storage has come from orders which received more than one year back because this automated storage because it requires a new land building site for customer side and not land, at least the building site and also the execution time for the such long projects with this electrical electronics, mechanical software and integration with their ERP system, which is working. So we are having an storage revenue on the automated storage totally how much it was. It was for the year-to-date it has been INR142 crore for the automated storage.
Jinesh Gandhi
INR142 for the Nine-Months?
Srinivasan Ravi
For the nine month period.
Jinesh Gandhi
Sure. Got it. This is interesting.
Srinivasan Ravi
It has been around INR260 crores. So INR400 crore has been revenue and this year we’ll be closing at around INR500 odd crore, which is a big milestone overall because we started practically on the revenue side post-GST, even though we have been preparing from 2012 onwards in the five years of up and running, we will be touching INR500 crore revenue and we are already in the top three bracket on the strategic racking. And among the Indian players on the automated tracking, we are among the top two already totally.
Jinesh Gandhi
Great, sir. Thanks and all the best.
Srinivasan Ravi
Thank you.
Operator
Thank you. The next question is from the line of from Ajox Frederick from Sundaram Mutual Fund. Please go-ahead.
Ajox Frederick
Hi, sir. Thanks for the opportunity. Sir, I have one question. From your guidance, the incremental revenue and EBITDA, where do you think will be acted — will those be coming from? So if you can give some broad sketches on the INR7,000 crore and the INR1,100 crores, the incremental is going to come through for next year.
Srinivasan Ravi
So we look at the revenue for this quarter, which is an indication of where we are going. We are looking at a revenue of Q3 has been the number — the Q3 number, Q3 consolidated number.
C.B Chandrasekar
1,576.
Srinivasan Ravi
Yeah. INR1,576. So if you are looking at that into 4 itself, it is coming to around INR6,000 odd crores. So we’ll be much higher than this number in Q4 without the any contribution from other plant and negligible contribution from the Diwadi plant totally overall. And the — so I think it is quite a conservative number what we had given 1,576 into Q3 has been always a lower number because of the market situation. And if you multiply that into INR, it is INR6,300 crores. So I had given a top-line of INR7,000 crores, which is quite conservative.
Ajox Frederick
Okay. Okay. So you’re saying incrementally probably quarter ad, that INR10 crores you mentioned that will come through and then some and. So that’s what incremental.
Srinivasan Ravi
Maybe quarter may be INR100-odd crore or INR10 crore, but I think will be quite significant in the next financial year because we will be peaking at Q2 itself before the festive season and the capacity will be done because we have set-up the plant within 8 within months, normal plant takes 18 months-to set-up. So we will be up to speed on that level. So, we are looking at more than INR300 crore revenue from Diwadi plant itself and maybe INR150 crores from the plant. So with that itself, we’ll be home and dry on INR7,000 crore, but I’m little conservative in saying that hey has done that.
Ajox Frederick
Okay, sir. And on margins and EBITDA, 850 to INR1,100 that run?
Srinivasan Ravi
Yes, EBITDA, we are looking at for the consolidated number anywhere between INR1,000 crore to INR1,100 crore on the consol numbers.
Ajox Frederick
Okay. Which will be driven primarily again your Biivadi and, the same revenue line segment?
Srinivasan Ravi
I would say this year has been little — because of the loss of which way we already have shown because we have incurred one-time expenditure maybe for operations and also we had losses from Biwadi and some expenses in and and we have geared up entraftsman to manage Sandeem also and we are supporting Sanveen for tools and and other technical operations because not much of investment has gone into Sandeem overall or engineering users are working there for that matter. And it’s all a combination of many things.
Ajox Frederick
Great, sir and congrats on all the best once again for your strategic journey. Thank you.
Srinivasan Ravi
Thank you very much.
Operator
Thank you. The next question is from the line of Abhishek Jain from AlfAccurate Advisors Private Limited. Please go-ahead.
Abhishek Jain
Sir, in this quarter, we have seen a significant jump on the interest and depreciation costs. So if you can give some color on the quarterly run-rate of interest and depreciation in the — from quarter one FY ’26?
Srinivasan Ravi
I think it will be little not apple-to-apple because we had in-between raised equity and then we had spent it for acquisitions. So — and then we started also greenfield investments. So we will not be able to exactly tell. I think this is the the interest cost is around 9% — around 9%, I would say. So and the debt to be already mentioned the debt level. Depreciation currently is — just a minute.
Abhishek Jain
Depreciation is just INR103 crores.
Srinivasan Ravi
INR195 crores depreciation.
Abhishek Jain
Yes, sir. So depreciation is INR104 crores in-quarter 3rd. So what would be the run-rate in Q1 FY ’26?
Srinivasan Ravi
INR252 crore is the depreciation for the year-to-date right totally for is not an apple-to-apple because some of the subsidiaries have been only for this quarter so the this quarter depreciation all put together is so much, consol number?103? 103? 103 number? So we are looking at around INR400 crore depreciation for the next financial year.
Abhishek Jain
INR400 crores, sir?
Srinivasan Ravi
Yes, INR400 crores.
Abhishek Jain
And sir, in a tax because of the lot of the accretion and the losses happened in these companies, can we assume that our tax rate — effective tax-rate will come down significantly because of this?
Srinivasan Ravi
Only the, there is some tax cover, otherwise there is no tax cover anywhere else has always been profitable, I would say totally on this and the overseas subsidiary is some sale, it is not a company which you have taken over. So the tax benefits will maybe around INR100 crore will accrue or to more period of two, three years as the net profit.
Abhishek Jain
So most of the tax-rate will come down to that 20% to 22% in FY ’26 because of the INR100 crores kind of the benefit?
Srinivasan Ravi
No, that is solely the subsidiary, it will be on Sunday, will not reflect on craftsman’s tax structure, nor on action tax structure.
Abhishek Jain
Okay.
Srinivasan Ravi
We have to pay the full normal corporate tax 24%.
Abhishek Jain
Okay. Thank you, sir. That’s all from my side. Thank you.
Operator
Thank you. Ladies and gentlemen, this was the last question for today. I would now like to hand the conference over to Mr. Ravi for closing comments.
Srinivasan Ravi
Thank you very much for you, all of you to participate in this. And our — I want to make some important and concluding remarks. This is the time to scale-up when we are looking at import reduction, the government is also very serious about it to grow the Indian industry. We are also having a slowdown — a little slowdown in growth where our customers are not going as we would like to. There has been a geopolitical situation. There is an opportunity where we can export a lot or the multinationals are setting up shop in India.
On top of it, we are also reaching an inflection point as a customer that as a company where we need to break-through on new avenues for growth trajectory. So for that, the company has to take-up some amount of pain and a little amount of leverage for a short period of time. So only when we have capacity, only then the customers are interested to look at us, otherwise, China’s growth story has been always that capacity front and then orders follow. We have not been so aggressive there, but we have slightly been little out of capacity now for the first time and we will see the fruits of it in the coming years. Thank you very much for staying with us.
Operator
Thank you. On behalf of Craftsman Automation Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.