Elecon Engineering Company Ltd (NSE: ELECON) Q4 2025 Earnings Call dated Apr. 25, 2025
Corporate Participants:
Prayasvin B. Patel — Chairman and Managing Director
Narasimhan Raghunathan — Chief Financial Officer
Kamlesh Shah — Group Chief Financial Officer
Analysts:
Harshit Kapadia — Analyst
Bharat Shah — Analyst
Akash Vora — Analyst
Pritesh Chheda — Lucky Investment Managers
Raj Shah — Analyst
Mayank Bhandari — Analyst
Unidentified Participant
Anish Jobalia — Analyst
Deepak Purswani — Analyst
Rishi Kothari — Analyst
Manish Goyal — Analyst
Nidhi Shah — Analyst
Pratik Kothari — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Q4 and FY ’25 Earnings Conference Call of Elecon Engineering Company 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 you need assistance during the conference call, please signal an operator by pressing a star then zero on your touchtone phone. Please note, this conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectation of the company as on-date of this call. These statements are not a guarantees of future performance and involve risks and uncertainties that are difficult to predict. With that, I now hand the conference over to Mr Harshit Kapadia from Elara Capital. Thank you, and over to you, sir.
Harshit Kapadia — Analyst
Thank you. Good evening, everyone. On behalf of Elara Securities, we welcome you all for the Q4 FY ’25 and FY ’25 conference call of Elecon Engineering Limited. I take this opportunity to welcome the management of Elecon Engineering represented by Mr Patel, Chairman and Managing Director; Mr Kamlesh Shah, Group Chief Financial Officer; Mr Ragunathan, Chief Financial Officer along with that team. We will begin the call with a brief overview by management, followed by a Q&A session. I will now hand over the call to Mr Prayasin Patel for his opening remarks. Over to you, sir.
Prayasvin B. Patel — Chairman and Managing Director
Thank you, Harshit. Good evening and a very warm welcome to everyone on our Q4 and FY ’25 earnings conference call. I am delighted to be joined today by my colleagues, Mr Ayush Shah, Non-Executive Director; Mr, Head of the Gear division; Mr Kamlesh Shah, Group, CFO; and Mr Ragunathan, CFO. The press release and investor presentation have been uploaded to the stock exchanges as well as on our company website. I trust you have had the opportunity to go through the same. To begin with, I will provide a brief macro-level overview of the industry and the prevailing business environment followed by a detailed review of our financial performance, which Mr, our CFO, will walk you through. As one of the largest suppliers of industrial gear solutions in Asia. Helecom continues to be a leader in the organized industrial gear market in India. Internationally, our expansive distribution network spans approximately 95 countries, reinforcing significant presence of our global reach. Aligned with our long-term strategy vision, we are focused on increasing the contribution of international markets to 50% of our consolidated revenues by FY ’30. This global expansion is underpinned by our strong R&D capabilities and ongoing investment in-product innovation. I’m pleased to report that Elecon has successfully met with revenue guidance set at the beginning of the year, delivering a record-breaking revenue and EBITDA in both Q4 and full financial year. This milestone reinforces our disciplined execution and deep alignment with our strategic roadmap. Our business is anchored by two primary divisions, industrial gears and material handling equipment, each playing a distinct role into shaping our overall performance. The gear division, which contributes approximately 75% to Q4 FY ’25 consolidated revenue has shown a stellar growth of 28.9% on a year-on-year basis, despite some sectorial headwinds in the earlier part of the year, largely due to softness in domestic demand due to elections and global macroeconomic uncertainties, the division recorded its highest quarterly revenue of INR597 crores, marking a significant reach. This resurgence has been driven by robust demand in both domestic and international markets, particularly from the steel, power and cement sectors. While growth was moderate in the first-nine months, the strong finish of the year reflects the division’s resilience and our ability to capitalize on improving market conditions. We are also encouraged by sustained strength in inquiry levels and market sentiment improvement. We see a strong pipeline shaping up for FY ’26. Our MHE division continues to exceed expectations with FY ’25 revenue up 72.8% year-on-year and Q4 FY ’25 revenues surging 98.2%. This division is emerging as a prominent growing division for due to our focused strategy on developing this as a scalable business. This impressive performance is underpinned by a strong order book, primarily led by the demand from the steel and power sectors followed by cement. MHE division’s strong growth trajectory reflects the successful execution of our strategic initiatives, growing market demand and our ability to deliver tailored solutions across industries. We remain confident that the division will continue its upward momentum in FY ’26 and beyond, backed by a healthy order book and a robust outlook across core centers. Together, the solid recovery in the gear division and the accelerating growth of energy division provide a strong foundation for Elecom’s continued performance and long-term value-creation. Elecom remains firmly focused on executing its long-term growth strategy. We are actively diversifying our business portfolio and expanding our presence across new sectors and geography. Our wide range product portfolio backed-up by strong in-house R&D and engineering capabilities — capabilities continues to differentiate us in the industry. Looking ahead, we are seeing consistent demand from both domestic and international markets. Internationally, as part of the business strategy, we are actively pursuing opportunities to establish rapid build centers in Canada and Latin-America, complementing our presence in the US and Europe. Domestically core sectors continue to drive sustained capital investments and we are strategically positioned to capitalize on this trend. Our strong order book, proactive client engagement and the focus on customized high-quality engineering solutions provide a solid platform for Group. FY ’25 has validated the resilience of our business model. And as we move into FY ’26, we do so with the renewed confidence supported by a clear strategy and robust execution framework. Sustainability is VP into DNA. This year, we achieved a major milestone with the approval of our near-term targets based from the Science Based Target Initiative SBTI, reaffirming our alignment with global climate goals. We are also proud to have recognized by one of our global clients in innovative and sustainable building solutions for our ESG practices, a testament to our transparent governance and operational excellence. These goals reflect our deep-rooted commitment to sustainability and our proactive steps to transition to renewable energy sources and reduce our carbon footprint across the value chain. Our ESG strategy extends beyond compliance. It is integral to our values and our approach to responsible business. We remain focused on driving positive environmental and social impact, fostering employee well-being, supporting community development and maintaining highest standards of corporate governance. With this, I would like to hand over the call to Mr Narsiman, our CFO, for financial highlights for Q4 and FY ’25. Over to you, Mr. Narasimhan Raghunathan.
Narasimhan Raghunathan — Chief Financial Officer
Thank you, sir. Good evening, everyone. A warm — a very warm welcome to our Q4 and FY ’23 earnings call. I will now take you through the highlights of our financial performance for the quarter and the full-year ended March 2025. We are pleased to report that we have successfully achieved our annual guidance for FY ’25 alongside delivering the highest-ever quarterly and annual revenue, EBITDA and PAT. We have exceeded our annual guidance by achieving 40 basis-points higher EBITDA margins, reflecting strong operational efficiency and disciplined cost management. Financial performance Q4 FY ’25. For the 4th-quarter ended March 2025, our consolidated revenue from operations stood at INR798 crores, reflecting a robust growth of 41.3 percentage on year-on-year basis compared to INR565 crores in Q4 FY ’24. This resurgence has been driven by robust demand in both domestic and international markets. Overseas business remains healthy and domestic demand has picked-up meaningfully, particularly from the steel power and followed by cement sectors. The domestic market contributed 83 percentage to the consolidated revenue, while the remaining 17% came from overseas markets. Domestic revenue in Q4 FY ’25 stood at INR662 crores, registering a growth of strong 14.8 percentage on a year-on-year basis as compared to INR445 crores in Q4 FY ’24. Overseas revenue in Q4 FY ’25 stood at INR136 crores, registering a growth of 13.4 percentage on a year-on-year basis as compared to INR120 crores in Q4 FY ’24. The order book visibility and heightened inquiries keeps us optimistic for higher-growth in future. Consolidated EBITDA for the quarter was INR195 crores, up from INR135 crores in Q4 FY ’24, representing a solid growth of 44.3 percentage. Consequently, our EBITDA margin improved to 24.5 percentage compared to 24.0 percentage in Q4 FY ’24, a 50 basis-points improvement. This EBITDA margin improvement was mainly driven by a favorable product mix, improvements in after-sales services and operational efficiencies. Profit-after-tax for the quarter stood at INR146 crores, representing an 18.4 percentage margin, up from INR104 crores or 18.4 percentage in the same quarter last year. Financial performance FY ’25. For the year ended March ’25, our financial performance remained solid. The consolidated revenue from operations stood at INR2,227 crores compared to INR1,937 crores in the same-period last year, reflecting a 14.9 percentage year-on-year growth. Our EBITDA for the year was INR543 crores compared to INR474 crores in FY ’24. EBITDA margin for the period stood at 24.4 percentage, which is stable despite the challenges faced in certain sectors and markets in the first-half of FY ’25. The PAT for the year was INR415 crores compared to INR356 crores in FY ’24, reflecting a 16.7% year-on-year growth. The PAT margin for this period stood at 18.6 percentage. Segment-wise performance, the gear division contributed a significant portion of our overall revenue accounting for 75 percentage of the total revenue in Q4 FY ’25. For the quarter ended March ’25, the Gear division’s revenue stood at INR597 crores, up by 28.9 percentage year-on-year compared to INR464 crores in Q4 FY ’24. The EBIT for the division in Q4 FY ’25 was INR146 crores, up from INR126 crores in Q4 FY ’24, reflecting a significant turnaround as compared to previous quarters. The EBIT margins declined to 24.5 percentage in Q4 FY ’25 as compared to 27.2% in the same-period last year, mainly due to the change in the product mix. The order intake for the quarter was INR497 crores, reflecting a healthy 20.6 percentage year-on-year increase. As at 31st March ’25, our order book stood at INR583 crores, positioning us for sustainable growth in the upcoming quarters. The Material Handling Equipment division delivered outstanding performance, contributed — contributing to 25 percentage to total revenue in Q4 FY ’25. The division’s revenue for the quarter was INR200 crores, up by 98.2 percentage year-on-year compared to INR101 crores in Q4 FY ’24. This growth was driven by a strong demand in both the product supply and aftermarket segments. The EBIT for MHE stood at INR59 crores compared to INR22 crores in Q4 FY ’24, reflecting a significant growth due to higher demand of our offerings in the market. The EBIT margin sugged to 29.6 percentage in Q4 FY ’25, up from 21.4 percentage in Q4 FY ’24, an increase of 820 basis-points. This was primarily due to a favorable product mix and a higher contribution from the aftermarket business. The order inflow for the quarter stood at INR148 crores, up by 22.8 percentage year-on-year compared to INR144 crores in Q4 FY ’24. As at 31st March ’25, the open order book for MHE stood at INR365 crores, reflecting strong demand and growth prospects. On the balance sheet front, we are pleased to report a strong cash position. Our consolidated net free-cash surplus stood at approximately INR550 crores as of 31st March ’25, providing us with significant financial flexibility to pursue growth opportunities and maintain operational resilience. The Board has recommended a final dividend of INR150 percentage that is INR1.50 per equity share having face value of INR1 each subject to shareholders approval. As we look-ahead to FY ’26, we are providing a guidance of INR2,650 crores in consolidated revenue with an EBITDA margin of 24 percentage. This reflects our confidence in the continued strength of our business model, the resilience of our core markets and the strategic initiatives we have put in-place to drive growth. However, we are closely monitoring the global economic and geopolitical situation, which remains fluid. We remain committed to delivering value for our shareholders and we are confident that our strategic investments, coupled with our focus on sustainable growth will position us to achieve these targets and continue to strengthen our — strengthen our financial position. On that note, I would like to open the floor for questions you may have. Thank you.
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 your touchstone telephone. If you wish to withdraw yourself from the question queue, you may press star N2. Participants are requested to use while asking a question. Thank you ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Harad Shah from ASK Investment Managers. Please go-ahead. Yeah. Congratulations to the team. Finally, the 4th-quarter kind of made the worth the rate. And just one question. Given the fact that our overall asset turnover is shy of one-time, actually has fallen compared to last year, which was one-time and is now at 0.9 that means our return on capital employed remains about less ambitious number than what otherwise one would look-forward to in a quality engineering solution-driven from. So, would like to hear your comments on that. How do we raise the bar on capital efficiency.
Kamlesh Shah
We started in putting in the capex, which has completed in March 2025. So the capitalization has in the 4th-quarter. So that is the reason it is reflected in the way what we are looking. But going-forward, that will cover-up what we are just doing in the earlier period also.
Bharat Shah
So what kind of asset turnover — total asset turnover we can expect.
Kamlesh Shah
We can expect more than one asset turnover is expected going-forward.
Bharat Shah
More than one-time.
Kamlesh Shah
Yes.
Bharat Shah
So that means return on capital employed will be in the bend of 21% to 24% if it is just one-time or thereabouts, which I thought given the strength of our business, won’t you think that, that number could have been higher?
Kamlesh Shah
Yeah, but what we reflect our number will always be conservative. As you have seen, we have always crossed what we have given the guidance also in terms of our EBITDA margin and otherwise. Our endeavor is always to improve than what we are estimating also.
Bharat Shah
But essentially in the of the business, what is the optimal asset turn we can expect overall?
Kamlesh Shah
And what we just — the new machine has been started installing. So may take its own to shuttle down on the machines and based on — based upon that what we can see the good asset turnover as well as the improvement on our return on capital and for maybe from next to next year that is from FY ’27, that will get reflected for that. All our are fully automatic and robotic. So you want to — and with the new technologies, we are what we are investing in. So it may have some teasing issues, it. It may require some more training and development for the operators who are operating the markets.
Bharat Shah
At that stage, do you think 1.2, 1.3 time asset total asset turnover is possible.
Kamlesh Shah
Yeah, it is achievable, honestly. So that we get reflected from FY ’27 onwards.
Bharat Shah
All right. Thank you.
Operator
Thank you. The next question is from the line of Akash from Galal and Rochha Stock Broking. Please go-ahead.
Akash Vora
Yeah. Thanks for the opportunity and a very strong set of performance, sir. So my first question would be to understand you know what would be the impact of the US tariffs on our US business and also our other export business, like hello?
Prayasvin B. Patel
Hello yes, sir. Yes, we can hear you yes, sir, we can go on with a question sure. Regarding the tariffs, we are looking at this as an opportunity right now, though our order inflow is healthy from the United States. They are also a hub for Canada and South America, which from now onwards we are planning that we will establish entities separately in Canada, in Mexico and if required even in South America so that they will be able to do the business directly without going through the United States. This, I would look upon it as an opportunity to further grow and expand our reach within the Americans. So I would look upon it as a great opportunity to do this.
Operator
Sir The current participant has been disconnected. We will move on to the next question. It’s from the line of Pritesh from Lucky Investments. Please go-ahead.
Pritesh Chheda
Yes, sir. My question is on the gears division. So there is a deceleration in growth for the full-year of between this year and the last year. So this year we grew at about 5% in the gears business. So I just want to understand from a sector perspective, which of the sectors in FY ’25 would have done well and which of the sectors would have been weaker for the growth to come down versus FY ’24. So — and I have a corresponding question linked to this, so if you could answer this first.
Prayasvin B. Patel
See what had actually happened last year is the first-quarter was slow because of the elections and that is the reason the customers were not willing to take the deliveries of the gears and the products that we had manufactured. There was a bit of slowdown and then there was an acceleration that happened later on because we were keen to reach our targets or get as close to our targets as possible. So which was the reason why we accelerated. The same thing happened in the order inflow also. The first-quarter in the beginning, the order inflow was slow, okay, the pending orders were less and then the acceleration happened in the second and 3rd-quarter, enabling us to further strengthen our requirements for execution of the orders. I can proudly say that today, as we talk about, our outstanding or pending orders in the gear are INR365 crores. And in Material Handling, it stands at INR58 crores. Sorry, I’m sorry, 583 in years and 365 in MHE totaling up to INR948 crores.
Pritesh Chheda
So sectorally, let’s say, power, cement, steel, marine, off-the-shelf, which part would have seen the lower-growth momentum or any negative surprises in a certain sector versus others, if you could just comment there. We understood how it transpired during the year and reasons why it transpired that way. My question was the sectoral comments.
Prayasvin B. Patel
See, see as I told you, if I tell you steel it is a funny situation because it had slowed down and now it is again accelerating. So you can blame it on steel for the time-being but it is showing a robust inflow of orders.
Pritesh Chheda
So is it that the steel, so let’s say your larger sectors are steel, cement, power, metal, marine and off-the-shelf, your last six or seven months. Is this — is it that the steel grew less than the metal and the gear growth rate, so the growth — gear growth rate was 5%, steel grew lesser than this or maybe declined. If you could give that way the comment will be helpful.
Kamlesh Shah
Yes, the steel factor compared to last year, there was a 6% dip in that, which was one of the major impact on the revenue contributors.
Prayasvin B. Patel
Correct.
Pritesh Chheda
Any other sector which had a lower performance or a lower-growth rates?
Kamlesh Shah
No, rest of them are in the same line in terms of the of people, but only the steel factor which was one of the contributor which has impacted the customers. Now when you are giving a growth guidance of 19% next year, which is higher than the growth of this year, what is the inherent assumption in this 19% growth number? In that reason of my order book portion as of 31st March, which is quite stock and all these are exhibitable in the coming year — only in the next year itself. So and above power is also going to contribute in a good way in the — no revenue driver for us.
Pritesh Chheda
Okay. So basically power is a sector which is a driver for growth next year.
Kamlesh Shah
Yeah, one of the major driver.
Pritesh Chheda
Major drivers. Okay. Any sector which you think is weaker in the coming year based on whatever you’re seeing today?
Prayasvin B. Patel
What our sugar seems to be as of now, sugar. However, let us hope that we are wrong and it picks up momentum during the year and during later part of the year.
Pritesh Chheda
Okay. And just confirming, power means what? Basically power means power generation side?
Kamlesh Shah
Thermal power.
Pritesh Chheda
Thermal power side. Okay.
Kamlesh Shah
Yes, power plants.
Pritesh Chheda
Okay. The steel cement — so the six sectors which we mentioned, steel cement, metal, power of the shelf, if you could give a broader mix here, what was it in ’25?
Kamlesh Shah
So in FY ’25, steel was in my total revenue, gear yeah, I’m talking about gear only. Yeah. So my steel sector contributed 11% of our total revenue. Sugar contributed 4%. Cement contributed 9% power contributed 12%.
Pritesh Chheda
Okay. And balance is off the show. I’m sorry to interrupt.
Kamlesh Shah
There are lots of like MHE then my marine is there and engineering sectors are there. Plastic and rubber and tire are there and mining sector is also there.
Pritesh Chheda
Okay. Thank you very much, sir. All the best. Thank you.
Kamlesh Shah
Thank you.
Operator
Thank you. The next question is from the line of Akash from Rochha Stock Broking. Please go-ahead.
Akash Vora
Yeah. So sir, I would like to understand if you could give a detailed breakup of the next year guidance. So of that 2,650, how much we can — are we planning to do in gears and how much in MHE? I mean any ballpark percentage that you can give?
Prayasvin B. Patel
So we are expecting near INR2,000 crore from gear division and INR650 crore from MHE division. Both put together will contribute INR2,000 — put together will have a revenue of INR2,650 crores.
Akash Vora
Understood. And within gears, if you could give us it for domestic and export, I mean how much is a tiny day?
Kamlesh Shah
So presently we are not competitive, we are expected this my overseas revenue would touch nearly 27% to 30%.
Akash Vora
ONC will include both, right? The things that are exports from India and plus water during the subsidiary.
Kamlesh Shah
Yeah, correct, absolutely.
Akash Vora
You said 27%, right?
Kamlesh Shah
27%. Yeah. 27% to 30%.
Akash Vora
Understood, sir. And one more question I wanted to ask was on MHE segment. So basically we on a quarter-on-quarter basis, we see the MHE orders dropping and still I mean I think you — so you mentioned the INR650 crore kind of a guidance for FY ’26 in MHE. So from how many further will you expect such tailwinds in MHE to sustain.
Prayasvin B. Patel
Normally the material handling business is on the rise because a lot of new power plants are likely to be tendered or ordered for. And therefore, there is going to be a larger demand for material handling equipment. The orders are normally finalized in facets. So you may find that in a particular quarter, there might be a surge or there might be a flat-line during the other quarters. So that keeps on varying from quarter-to-quarter, but I’m sure that overall MHE would be doing fairly well. As of now the way the wins are the tailwinds are helping us looking at things that they will be very, very positive.
Akash Vora
Understood. Sir, last question before I come back-in the queue. How much is replacement business as a percentage of the total gears business we did this year?
Kamlesh Shah
34% is after service.
Akash Vora
Thank you so much, sir. I’ll come back-in the queue. Thank you.
Operator
Thank you. I would request all the investors to please limit the questions to two per participants as there are several people waiting for their turn. The next question is from the line of Raj Shah from Enam Asset Managers. Please go-ahead.
Raj Shah
Am I audible?
Prayasvin B. Patel
Yes, sir, you are.
Raj Shah
Okay. Thank you so much. My question is, based on if you can provide any update on the progress with the OEM partnership, what kind of number have we achieved in this FY ’25?
Prayasvin B. Patel
Hello, yes, the major one we got one OEM order this year?
Raj Shah
In the quarter?
Kamlesh Shah
Yeah.
Raj Shah
And in the last call, you mentioned, sir, that we will be able to clock around INR50 crore revenue from this OEM partnerships in Europe. If you can throw some idea what would be the approximate number that we assume.
Kamlesh Shah
So we — we crossed INR58 crore for this year against our target of nearly INR50 crores.
Raj Shah
Okay. Okay. And how do we see for the year?
Kamlesh Shah
Yeah. At the beginning of the year, we had given a projection of INR25 crore, but later part in the Q2 earnings call, we said it is expected to touch the nearly INR5 million-plus euro. And we touched INR60 crores, I think which would be nearly — which will be nearly INR6 million, 6.36 million.
Raj Shah
And how do we see this number going ahead in FY ’26?
Kamlesh Shah
Yeah, that we see a good improvement in this OEM business. And our target is also to take more-and-more OEM business, so that one, we will have sustainable growth in revenue as well as going-forward considering the warranty period of the year of six to 12 months that will further generate after-sales service business.
Raj Shah
If I’m not from this is entirely Europe business right or from US as well.
Kamlesh Shah
Mainly it is from Europe only Mali one is only one is from Middle.
Raj Shah
Got it. One last question. Sir, there is sir.
Operator
I would request you to please come back-in the queue for further questions. The next question is from the line of Mayank Bhandari from Asian Market Securities. Please go-ahead.
Prayasvin B. Patel
Yeah, may I request you please little bit loud, please? Can you hear me? Still your voice is low, but better than the. Can you just feel louder please?
Mayank Bhandari
Yeah. So my first question is on the margin side. As you have been guiding that next year your margin will be 24%. Yeah. So on this, what kind of segmental margin guidance you will give like for transmission and material handling? So maybe you can just highlight a sustainable margin in the material handling segment?
Kamlesh Shah
Yeah. Material handling will have a sustainable margin of 23% and division will have a sustainable margin of 25.5% each. So overall, it will be 24% sustainable margin at a company at a consol revenue level.
Mayank Bhandari
Okay. And secondly, on this total revenue of almost INR1762 crore in the transmission, what would be the composition in terms of standard industrial.
Kamlesh Shah
Yeah. We had the 60% is from the engineered product and product 40% for this Q4. And if I say on our total level, the year — for the full-year, 52% is from the engineered product and 42% is from a catlock product.
Operator
I think I would request you to please come back-in the queue for further questions. The next question is from the line of from Maran. Please go-ahead.
Unidentified Participant
Hi, sir. Thank you for the. I might have missed this in the start, but can you brief a little bit more about the OEM business and strategy? Like what sector clients are doing? And last year you had mentioned that eventually we want the international business to be 50%. But right now, the guidance says around 27% to 30%, which is what we had even this year. So just want to understand how we’re thinking to achieve the 50% mark.
Prayasvin B. Patel
We are reach in various parts of the world is continuously increasing. Our marketing aggressiveness is showing results. The orders may have come in ones and twos, but it is just the beginning in various territories, new territories that we are looking for. And therefore, we believe that over a period of time, it will help us reach the 50% that we are looking for yes, the increase this year has not been substantial, but you have to also understand that there was a tremendous turmoil in the geopolitical situation all over the world including in Europe as well as in the Middle-East so which is also having a severe impact in various countries. Together with that, now we have Americas which is again getting destabilized due to tariff wars which are going on. So all these are situations which are beyond the control of the business economy and therefore you would see variations in what we have said. But overall, our strategy has been perfect or I would say strong in what we believe and it will give results over a long period of time.
Unidentified Participant
Thank you, sir. If I may just ask about the strategy. So which geographies would be your main focus? And among that which what sector clients are we seeing interest from?
Prayasvin B. Patel
See, we — our trust has been in the Middle-East then also in the Americas, especially Canada and South America and we are also seeing a good traction coming in now from the far east
Unidentified Participant
From the far east.
Prayasvin B. Patel
Yeah but the revenue that we have right now it’s from Europe right?
Kamlesh Shah
Europe is always the primary, which is there the OEM business and the sustainable business over the house.
Operator
Okay. And Hitri, ma’am, please join back the queue for further questions. Also, I would request all the investors to please limit your questions to one per participant as there are several people waiting for their turn. Thank you. The next question is from the line of Anish Jiwalia from Capital. Please go-ahead.
Anish Jobalia
Yeah, hi, sir. Good evening. Congratulations for a very good performance in Q4 and a strong finish to the full-year. Sir, just wanted to have one question. One is your depreciation amount is now INR19 odd crores and finance cost is INR5 crores. So I believe there is some impact of the leased assets on this number. So if you could just help to understand in FY ’26, what will this number be between the depreciation and the finance cost? We don’t have any debt. So if you could help — maybe there are other borrowing costs, etc., but if you could just help to understand these two-line items for FY ’23.
Kamlesh Shah
So this year my full-year is INR50 crore. And we are the same is considering the operating lease matter what we are generally talking to everyone. So this year in FY ’26, we are expecting this to be nearly INR70 crore to INR75 crores for the full-year.
Anish Jobalia
So this will be the total depreciation of INR70 to IN 75, I mean, sorry, I didn’t get that.
Kamlesh Shah
Yes. Yeah, INR70 crore to INR75 crore for the full-year FY ’26. Okay.
Anish Jobalia
And finance cost, like anything coming in the finance cost from this line items, ROE assets?
Kamlesh Shah
Yeah. Finance cost will be nearly INR15 crores for the full-year, INR15 crore to INR15 crores.
Anish Jobalia
Okay, sir, between the two of them, it will be around INR90 crores, right?
Kamlesh Shah
Correct. Correct, correct.
Anish Jobalia
Okay, sir. Thank you and wish you a very good FY ’23.
Kamlesh Shah
Thank you.
Operator
Thank you. The next question is from the line of Deepak from Swan Investments. Please go-ahead.
Deepak Purswani
Hello. Yeah, congratulations for the very good set of numbers, sir. Sir, my question is regarding the international market. I mean, if I were to look into the last year number, we’ve grown at a 13% and next year, we are looking at a 27% kind of growth in this segment. So if you can just give some sense which are the key segments which we are looking into it. And also the — I mean in some of the OEM, earlier we used to say, I mean we are exploring six, seven deals from the different OEM. And at what stage we are at in terms of the current discussion and what is the revenue contribution we are expecting from these?
Kamlesh Shah
So the still there some — some of them are in the pipeline and I think we are quite hopeful it will be converted into the concrete order for us. And what is this year we have achieved that from this OEM, we achieved INR60 crores which are from the different starting steel, rubber, plastic, metal and engineering sector, which are there. And going-forward, the same kind of mix will be there from the other OEMs we are going to in this financial year also. And our endeavor is also the same, we have to attack more-and-more OEM businesses from Europe and maybe from other part of the Western world. This should help us to make a sustainable growth going-forward. And after that maybe a couple of years after that we may start generating more revenue as an after-sale service from that.
Deepak Purswani
Oh, yes, sir.
Kamlesh Shah
Hello?
Operator
Yes. The current participant has been disconnected. We will move on to the next question. It’s from the line of Rishi Kothari from Square Investments. Please go-ahead.
Rishi Kothari
Hello. Yeah. Thank you so much for the opportunity and congratulations on good set of numbers. Can you again let me know what exactly impact will have for the tariff on us. I mean, is it beneficial? And you said it will be a good opportunity for us to tapen the business. But can you just be brief us what exactly would be the benefit, how will it will incur that benefit?
Kamlesh Shah
Okay. So what are the considering the tariff in USA which is applicable across-the-board, across the territories and countries. So-far India is concerned, we consider India the sweet-spot, but still we are not away from that impact on that also. So considering our business growing more on Canada, Mexico and Latin-America, we are exploring to have our own chatter over there, that is in Canada, Mexico and Latin-America, which will help us to directly supplier from India over there and let them grow by itself so that I will not get impacted on the tariff side. And we are already at a very advanced-stage to explore the same. And maybe in the Q2, we will have that this setup from one or more territories what we are just exploring now.
Rishi Kothari
So in a way we are going more for geographical diversification that is apart from US, we are exploring more from areas like Canada, Mexico, LatAm and all that.
Prayasvin B. Patel
Q2 and as far as USA is concerned, while we would be subject to additional taxes, so would our competitors, so it would kind of nullify the situation. So the difference in tariffs between various countries would not be more than 2% or 3%. So which is easily bridgeable so we are not yeah, we are not expecting a severe difference in pricing because of this.
Kamlesh Shah
So presently what we are — presently what we are doing the business from USA to this territoric that is Canada, Mexico and Latin-America that now will do directly instead of instead of routing through our manufacturing chatter.
Rishi Kothari
Okay, got it. And in terms of US tariffs, we say the initial cost increase will be hardly 2% to 3%.
Prayasvin B. Patel
On other products that we supply to them, right? The difference in tariffs between us and our competitors from other nations would be two to three questions.
Rishi Kothari
Okay, so 2% to 3% advantages compared to other countries to the US.
Kamlesh Shah
Advantages or disadvantages.
Rishi Kothari
Okay, so sorry to add-up…
Operator
Mr. Rishi, I would request you to come back-in the queue for further questions. The next question is from the line of Manish Koyal from Wealth Managers. Please go-ahead.
Manish Goyal
Thank, thank you so much. Just to clarify, on the depreciation number, you mentioned INR70 crores INR75 crores versus INR50 crores visit on the standalone basis, right?
Kamlesh Shah
Yeah, correct and because my major — I know our capex is in India, that is at the standalone level also.
Manish Goyal
So — and also, so if you can just provide clarity like what is the absolute capex in FY ’25 and what will be in FY ’26? And secondly, what are you see in your balance sheet is that lease liability has increased significantly from INR44 crores to INR147 crores in standalone and similar jump is seen in the balance sheet. So now what is this lease liability pertaining to? Because is it particular to asset addition or what-if you can clarify? And if we take this combined effect of the capex outflow and lease liability, what is the kind of capacity we are creating on revenue generation front? Just want to get a sense on these numbers. Thank you so much. And also one more question. What was the export revenue from India and how has it grown and how do you see it? Because you give the international number, but how much is exports from India? Thank you.
Kamlesh Shah
Okay. So this additional leak liability is nothing but addition to the capex. So what we are adding the — what we have projected the last three years, the capex addition of INR300 crores, which is going to generate additional revenue of INR500 crore for us.
Manish Goyal
So why is it — so what is that? So when you say lease liability, it is probably — we have probably taken some assets on the lease and then what is the actual capex which we are doing because that number in the balance — in the cash-flow statement is roughly INR65 crores. So what is the absolute capex you will be doing when you are saying INR300 crores, does it include lease liability also or it is excluding that?
Kamlesh Shah
No, it includes the lease liability also. But when the cash-flow is — because cash-flow is prepared as per the India’s guidance. So in that India’s guidance and all these assets are not covered over there also.
Manish Goyal
Okay. I will take this out. Yeah. And sorry.
Operator
Yeah. We will move on to the next question. It’s from the line of Shah from ICICI Securities. Please go-ahead.
Nidhi Shah
Thank you so much for the opportunity. I just wanted to ask on the employee expenses. We are seeing a huge uptick this quarter, especially in the standalone. I believe that sustainable level, is there a one-off in this quarter?
Kamlesh Shah
No, these are our sustainable revenue growth only. Whatever the numbers are very sustainable for us.
Nidhi Shah
I meant employee expenses actually. Pardon? Employee expenses. So the employee expenses are much higher this quarter.
Kamlesh Shah
Yeah. Generally, employees we observe to increase some employees, particularly more on the business development side as well on the R&D side also, which is what is reflected. So whatever the new additions to the employees are there, it is mainly on the productivity side only, that is in R&D and on the marketing side, which is now required considering our growth trajectory what we are looking for over the period of time. And it is increased because there are always the fixed pay as well as the variable PR there. So variable pay is always considered through our certain parameters of our financial parameters to give to the employees and that is how it is reflected.
Nidhi Shah
Okay. Thank you so much.
Kamlesh Shah
Thank you very much.
Operator
Thank you. The next question is from the line of Prateek Kothari from Unique PMS. Please go-ahead.
Pratik Kothari
Yes, hi, good evening and thank you. Sir, one comment on Enco elect on the press release that you have been what is happening with eventually it won’t be an associate anymore. So I understand that the tri-parted agreement is being broken, but are we also selling our stake there?
Kamlesh Shah
No, considering the guidance when we terminated our agreements with the Sanvi Group or UK, so we are now nowhere — earlier we were the part of the orders agreement. And that is the reason the Alicon — Amco was considered as an associate company because of that agreement on. So now that agreement doesn’t exist effective from 23rd of April. So much take will continue because for — to be an associate company, we must-have the holding of more than 25% of that. So as my holding is remained less than 25%, this will not be considered as an associate company. That is only changed, nothing else. It is just a classification of my investment. There is no other impact so-far as my holding is concerned. We have no plan to add anything so-far as the holdings in the as well as we do not have any plan to offload our existing holding of 16% or 66% in the market or otherwise?
Pratik Kothari
Okay, great. And sir, in light of the opening remarks, the Chairman or the guidance that we have the order book that we are seeing. I mean when we look at CapEx, it’s only INR65 crores, which I believe we are also going — adding capacity to this lease route. So one qualitatively, I mean, be it on the employee side, on the capacity, machines, plant, et-cetera, I mean, are we investing enough given the opportunity that we see, I mean, we also see that we will be benefit out of this tariff issue which is going on. One, I mean, one, are we preparing enough for it and have we invested enough just if you can share your thought process to capture what is coming.
Kamlesh Shah
We have invested nearly INR160 crore in this year, nearly generally lease assets, which are considered as a right of used assets in the fixed asset, which are not reflected in the cash-flow. You might — you can see the note which is given in the cash-flow statement. As per the India accounting guidance or guidelines, that these assets are not reflected as addition or the decision to the assets. And we have a plan ourselves very well so-far as the capex plan is concerned, considering the lead-time of the muffin for the delivery as well as the revenue projections from the marketing department. And we don’t foresee any challenge so by the capacity — capacity is concerned or any capacity constraint to manufacture and provide timely delivery of our books to the customers.
Pratik Kothari
Right. And sir, lastly on dividends, I mean, 10%, 15% of profits we generated being paid out as. Our capex plan also is not very-high. I mean, INR100 crore INR200 crores a year. We have now enough cash on books. So if you can share just differently ramped-up what else are we thinking, how do you plan to spend the cash that we are generating.
Kamlesh Shah
Yeah. We have already calculated and as per our dividend policy, we have declared the dividend. And consider while presenting the dividend proposed dividend to the Board, we are considering the different parameters to declare the dividend. I think this time you might have seen we have increased our dividend by nearly 50 per so that also is a good start. As we already started from the last year to improve my dividend outflow and this year that the same is reflected by increasing my dividend this time, that is 200% including the interim dividend of 50%.
Pratik Kothari
Correct. Excess cash that we have excess capex within — which is currently sitting on our balance sheet. What potentially can amount of that?
Kamlesh Shah
So that lab because we also have to keep some considering my global business, so we have to keep some amount which maybe a material amount for my contingency also like this geopolitical changes and different kind of what we are expecting. And at the same time, we have to keep certain cash available for us for the capex also. Though we may explore the alternate opportunity — alternate options to do the capex, but in order to keep that money reserve the house.
Prayasvin B. Patel
Let’s put it this way that this is a which has been created for any opportunities which come our way in the near-future.
Operator
Thank you, sir. Ladies and gentlemen, due to time constraint, that was the last question for today’s conference call. I would now like to hand the conference over to the management for closing comments. Thank you.
Prayasvin B. Patel
In closing, I would like to thank you all for joining this call and for your continued support to Elekon Engineering FY ’24 has been a landmark year for the company. We are encouraged by the strong growth momentum across both our Gear and MHC divisions. The Gear division has demonstrated a solid recovery with robust demand across key geographics as well as other sectors, while the MHE division continues to outperform driven by healthy and diversified order book. Our consistent execution focus on high-growth segments, disciplined approach positions us well for sustained performance. As we move into FY ’26, we remain fully committed to scaling new hikes, strengthening our leadership across markets and delivering long-term value for our stakeholders. We don’t nearly provide solutions. We shape the future of industrial gear technology. Thank you once again for your participation and trust in Engineering. If you have any further questions or inquiries, please do not hesitate to reach-out to our Investor Relations Advisor, SGA or our CFO, Mr. Thank you.
Operator
[Operator Closing Remarks]