Jash Engineering Limited (NSE: JASH) Q4 2025 Earnings Call dated May. 06, 2025
Corporate Participants:
Pratik Patel — Chairman and Managing Director
Unidentified Speaker
Analysts:
Siddesh Chawan — Investor Relations
Navin — Analyst
Akshay Deshpande — Analyst
Sahil Doshi — Analyst
Tej Patel — Analyst
Unidentified Participant
Presentation:
Siddesh Chawan — Investor Relations
Good afternoon everyone. I’m Shawan from Einstein Young Investor Relations, and I would like to welcome you to the Engineering Q4 FY ’25 Earnings Conference Call. I would like to indicate that all participant lines will be in the listen-only mode and there will be an opportunity to ask questions after the opening remarks conclude.
Should you need to ask the question, please select the and option under the reaction tab of the zoom application. We will call-out your name and then request you to unmute yourself to ask a question. While asking, please begin with your name and your organization. Please note that this conference is being recorded. The recording will be made available on the website within a day and the transcript of the call shall be made available subsequently.
To take us through the results and-answer your questions today, we have the top management of Engineering Limited represented by Mr Pratik Patel, Chairman and Managing Director; and Mr Jain, Chief Financial Officer. Before we begin, I want to remind everyone about the Safe-Harbor related to the today’s earnings call. Comments made during the call may contain forward-looking statements that may involve known or unknown risks, uncertainties and other factors.
It must be viewed in conjunction with our business risks that will be caused future results, performance or achievements to differ significantly from what it is expressed or implied by such forward-looking statements. After the end of this call, if you need any further information or clarification, please do get-in touch with me. With that said, I will now hand over the call to Mr Pratik Patel. Over to you, sir.
Sir, you are on-mute.
Pratik Patel — Chairman and Managing Director
And thank you for sparing a valuable time and attending this call. We would go-ahead with the format which is new. However, I would just like to give a caution. We have a lot of stormy weather just now here with huge rains and so in-between if there is an interruption please excuse us for the same. I’m pleased to inform that we had a very good financial year from most parameters, visible parameters, I would say, except on the EBITDA part and except on the PET portion.
However, we are working on strengthening on those parameters in this financial year. We are quite confident of improving on those parameters in this year as we go-forward. And we are also quite committed to ensure that in the long-term all these parameters which influence the investors are taken care of. In the beginning I would like to just on some growth journey of the company.
Over the last many years, we have been strengthening company at various level. We made a strong foundation for the company. Thereafter we emphasized on growing, growing by ensuring investments in-plant and machinery and things like that. Further on the Phase-3, we scaled-up our operation globally by going for strategic acquisitions, which today are bringing us revenues of close to 60% of our total turnover.
And finally, I would say we are at Phase 4 where built — having built everything, we are now looking to expedite and increase our order book, our revenue and also our various parameters in time to come. I would just like to show about our growth in the beginning so that you get a clear idea of what we were in ’19 — sorry, 2017 versus what we had today in ’25, we have had been growing revenue-wise at a CAGR of 21% over these seven, eight years and as far as profitability is concerned, we have been growing stronger profitability-wise.
However, this year, when we say this year is on the financial year 2025. We have a drop-in our EBITDA as well as in our PAT. Drop-in EBITDA is by 2% and drop-in PAT is by 1%. As we go-forward, we explain why this has happened. But overall, I would say that we have been improving over the years and this year from that point-of-view has also been an excellent year for us.
If you see all the ratios, whether it is return-on-equity or return on capital employed or debt-equity or debt-to-EBITDA, we have been improving at all levels. Year-on-year, there has been improvements in-between there has been some lifts in some years due to maybe COVID or some other purpose, like in financial year ’18, it was acquisition.
But other than that, the company has been slowly and steadily improving at all parameters. This is what we show when we show these trends in last eight years. At the same time, we started — when we started on this journey, we started with a market cap of INR170 crore in March 2017 And today at the end of eight year, we have reached a market cap of close to INR3,500 crores or INR3,600 crore. Giving a CAGR of close to 47% and we are committed to maintain such growth and create such value in the future as well. The company is also quite profitable and the company is also having a very positive trend as far as dividend payout is concerned. The dividend payout this year once we get the approval at AGM would be 15%, which is equivalent to 100% dividend declared on par value of the share. Coming to financial snapnotes for year ’25, our revenue has grown year-on-year by 43%. Our gross profit also has grown by 24%. Our EBITDA is up by 31%, profit before-tax is up by 29%, profit-after-tax is up by 30% annual earning per share has been up. The revenue composition is quite diversified but water control gains is still our predominant product and followed by skinning equipment, followed by valves, hydropower and process equipment and others. When we talk about our market spread, I would say we are also quite uniformly spread. We have 37% in India, 40% in America and balance in rest of the world. Next. Coming to standalone performance, the revenue of Josh Engineering as standalone revenue has improved by 27%. The PAT also has improved by 38%. As a percentage, PAT last year and this year has remained the same. When we talk about Shipad, the revenue has grown by 118%. The PAT has grown by 251%, percentage of PAT also has grown positively for Shipad this year. However, when we come to in-spite of having a year-on-year growth of 29%, the growth in PAT of 9% is not comparable to last year, 9% PET margin. This year the PET margin has gone down. The result for the PET margin having gone down is our execution of Kansas City project, which is a very big project which you have taken. However, due to people problem, we do not have enough manpower manufacturing manpower in our plant and we are not able to ramp-up the production capacity fast enough. As a result of that, we have not been able to execute this project smoothly with lot of cost overruns and so the PAT margins in and has come down this year. Waterfront which is the company which we acquired last year, we are now building that company up. So earlier we had 11 people in the company. Now we have touched around 18 people. We will be adding a few more people now in that company. However, when we added people, the revenue has not grown in proportionate to the growth in number of people and that is very normal because when we get people, they take six, seven, eight months’ time to understand the company, understand the product and then approach the market to improve the revenue. So we are quite hopeful that we would be able to turn-around waterfront also. And in this year, we expect to break-even at waterfront. Coming to our consolidated order book position, we have a very healthy order book position in most of our companies and we have a combined order book as of today of INR838 crore in which INR546 crore orders is for projects outside India and for projects within India, we have INR292 crores. We — the operations is getting merged with just engineering in this year and we have recommenced Maher operations in Austria. So this year, we expect Mar also to start contributing to our revenues for the year our consolidated order pipeline for the month of May also is quite good. We have already negotiated orders for INR59 crores, which we expect to receive within next four to six-weeks, of which INR44 crores are outside India and INR15 crores are within India. Orders under negotiation in this month are around INR78 crore. We have a quite — we have quite a good track-record of converting orders and so we expect a significant quantity of these orders 78 of INR78 crore to come into our food. For the year ’26, we are projecting combined revenue of INR860 crore, out of which INR540 crores would be outside India and INR320 crore would be within India. We expect growth in all the companies Engineering, Jesh USA as well as Waterfront. Though in Waterfront, we have mentioned INR50 crores, but our internal targets is for INR55 crore to INR60 crore. The reason we have shown less in Waterfront is because of the uncertainty in growing a company in which we have just entered recently. But we are quite hopeful to easily cross INR40 crores and take the turnover in excess of INR50 crores in Waterfront. Coming to strategic updates, I’m pleased to inform you that when we do the mapping of business especially in-the-water industry, we see a potential today of close to INR1,500 crores worth of business from drinking water, irrigation water, wastewater, used water, desalinated water, storm water, rising seawater and industrial water. Now what does that mean next that means that on the basis of this INR1,500 crores market potential we can for which today we are only doing INR275 crore. So if this INR1,500 crore-plus market potential comes into being we can expect a growth in excess of 18% on the domestic market. This INR1,500 crore, we expect this to come in few years’ time as the government focus on infrastructure-related to roads, railways, airports, etc., slow-down because a lot of capacity has been built-up. We expect government to start focusing on wastewater, which is going to be at a crisis mode in years to come. And when that happens, we expect a huge growth in the wastewater business, in the drinking water business in India, resulting into a tremendous growth for us, much more in excess of 18% in time to come. Similarly due to the focus of renewable energy and the investments to power infrastructure that is cement, power, oil, etc, we expect overall domestic growth in the next five years to be in excess of 15%. At the same time when we talk about exports our subsidiary in USA, UK and Austria are expected to do good. Year for us after all that we have put together is not a very hard task and should be easily achievable. Yes. One of the key question traveling most of the people is the US tariff. We had given a circular to not MSC in which we have clarified our position. However, I would like to take this occasion to reinforce what we have stated in our letter on NSE. Out of and 34 million revenue, the purchases from India were only 31%. So of that purchases also only INR30 crore to INR40 crore is subject to new US tariff. Now if the tariff of 25% stands, that will cost us INR8 crore to INR10 crore rupees. So we are in talks with our client on how we can pass-on. In some cases, we’ll be able to pass-on. In many cases, we will not be able to pass-on. However, we expect that in time to come, this would stabilize. Also, we expect the government of India to arrive at some figure with US government on the scope of tariff. And once that happens, we expect the tariff levels to come down for us also. However, irrespective of what is happening in future, what we are doing, we are already increasing our capacity in orange. We have more than 400,000 square feet, of which we are using only 90,000 square feet. We will innovate 60,000 square feet more and add it to our manufacturing capacity. However, Orange them of getting people. And so we have already planned for a new plant in Houston. This may happen in ’27. However, I’m going there this year, next this month and it is possible based on the US business potential, we may expedite this and execute this plant in ’26 as well. Coming to the tail, I would like to clarify that tariff is not as big a risk as the US BABA Act. US BABA Act requires for federal projects 55% local content and this will rise to 75% by 2029. Keeping this in mind, we had already drawn expansion plan so that by ’28, we have enough infrastructure in America to cater to projects needing Baba at compliance compliance. so we were already doing this but tariff would force us to expedite and that is why when I am going this month we will be taking a decision on how to go-ahead further coming to company overview, as many know we are an equipment manufacturer, we have more than 45 countries where we are supplying our equipment and we have six manufacturing facility. We have a very comprehensive product portfolio. The growth is coming mostly from exports. However, we are growing also in domestic market by quite a high percentage. We are approved by most of the authorities and we seek more-and-more approvals worldwide. Our strategic acquisitions done over the period of time internationally has come well and these are helping us push our growth. The acquisitions which we have done nationally as well as internationally are this and all the acquisition I would say are now bearing results except Waterfront, which is a very recent acquisition and I’m quite hopeful that even in case of waterfront we would give good results in time to come. We have a global footprint manufacturing in six different facilities in India, US and UK. Okay. So we have infrastructure to produce more than INR800 crores per year and in this year, we’ll be adding two more plants. So by the end of this year, we would be well-positioned to produce more than INR1,000 crores worth of equipment in our plants. All the balanced slides, I will not like to go through because these are for information purpose that would spare us time to start taking questions. So I would like to start with taking questions so that we can have more constructive discussion.
Questions and Answers:
Siddesh Chawan
Thank you, sir. We will now begin a question-and-answer session. We’ll take the first question from Mr Raman. Please unmute yourself and go-ahead.
Navin
Hi, sir, can you hear me? Yes. So I just have few questions with respect to the — mainly with respect to the tariff situation in US business. So you said about INR30 crores to INR40 crores is subjected to out-of-the INR293 crores business, which was done from the US unit in FY ’25, only INR30 crores to INR40 crores is subjected under tariff, which means — which makes it around 10% to 15% of the total revenue of US business.
So my — I want to know, is this like limited only to like can we expect on an entirety basis the US revenue impact will be around 10% to 15% now understand the revenue from India to US is only 31% of US revenue.
Pratik Patel
-Yeah. So we have this year like given around INR90 crore worth of material to US. Out of INR90 crores worth of material, only INR30 crores to INR40 crores worth of material will be subjected to tariff. Okay. Because from US, we also do business outside US. Okay. Yeah, yeah. That would not be subjected to tariff to we also do lot of services through our project management, design engineering. And those services also would be out of tariff.
Navin
Okay, understood.
Pratik Patel
So the actual tariff would be on, 30% 40% there too, because this has come out of view, we may be not able to take care of absorbing everything. We will talk to people. If we cannot, then we may have to absorb. So that is why we said the hit would be 8% to 10%.
Navin
Yeah sorry. Yeah, yeah, understood, sir. Sir, my second unit — second question was respect to the Rodney unit. So currently, it’s 90,000 square feet is operational out-of-the operational facility. And within that 90,000 square feet, we did around INR230 crores plus of revenue. So now you are expanding it to 60 — you are expanding it by 60,000 square feet more.
So can we expect the maximum potential like of — from unit to be around INR350 crores. This is already projected for this year, 50 million $40 million, which is like into 85 would be something similar to what figures you are telling.
Pratik Patel
So the stress at Rodney Hunt Orange is not revenue, the stress at and Orange is people.
Navin
Okay.
Pratik Patel
We have not been able to get manufacturing people there, right? Otherwise, why should I have 400 square feet of shade available and still look for Houston? We are looking for Houston because in-spite of our doing all the efforts, we have not been able to get enough people to work-in the plants in orange.
Navin
Okay, okay. Yeah. And out of INR34 million, we do 60% from India, so not 100% from overhead.
Pratik Patel
60% is including overhead. So at this level 30% of the otherwise people will not understand it.
Navin
Can you hear me? So my fine, I mean only follow-up with respect to this. So you’re basically saying the only reason why you’re not able to scale the US business is because of the less availability of employee, manufacturing employee. Unit can we expect?
Pratik Patel
See, as I said after years you come to know what is possible, what is not possible. In orange in-spite of wearing 400,000 square feet shade we will not be able to utilize all 400,000 square feet shape. Because we are not getting people. Now I don’t see the situation changing so drastically that overnight or in next one year, people would be available. It’s not going to happen.And that is why if we have to go for growth in US, we will have to set-up a plant in Houston where more manufacturing industry is there. In orange and surrounding areas, most of the manufacturing industries have disappeared for last 20, 30 years now. So people are just not available.
Even if you see the type of people I have today maximum people are 55 to 70 years of age yeah. So it is not possible that this scenario will change overnight. And that is why we are planning for Houston. So as the company is growing, this year revenue we will be able to meet from and its expansion, but down the years, we will have to bank on new to bring additional revenue.
Navin
Okay, sir. Sir, and I would because you get back-in the queue. There are other pulse who are waiting you. Yeah. Thank you.
Siddesh Chawan
Thank you. We’ll take the next question from Akshay Deshpande. Please unmute yourself and go-ahead.
Akshay Deshpande
Good afternoon, sir. Akshay Deshpande aside from Ashika Institutional Equity. I just had a couple of questions. So in this quarter, our gross margin have taken a hit. So is this a one-time thing or is this trend going to continue for financial year ’26?
Pratik Patel
See, from beginning, we have been telling that we have certain orders which are stressful. Now what are those orders? In case of Josh Engineering, we had a INR50 crore order from Tata projects for Nuclear Power Corporation of India. This project has been executed now, except for the services portion that is installation, etc, the manufacturing portion has been completed.
However, this order was taken from day-one at a loss and this I have been telling from beginning. The reason we had taken this order at a loss was to prove to companies like Tata projects, Lassan etc that we are the best company to do such projects. This order was canceled on our computer and then given to us.
Once we agreed to do it at the lower-price, not lower-price than competitor, same price as competitor because they were not able to do it. Now one and a half year in row, we have been selected as the best vendor by Tata projects. We have also been requested by NPCIL that we should seriously pursue their future projects and lot of projects are coming with NPCIL due to government focus on renewable energy.
So in the end we knew that this is going to be a loss-making job and still we have taken it. In-spite of that the path of just engineering has little bit improved, like 14.1 versus 14.16 or something like that. So there has been no hit on the PAT in-spite of doing a INR50 crore job out of INR225 crore local revenue at a loss.
Coming to America, we had a project, which we had taken from which we learned our lessons and that is why the next project, which project we are expecting of more than $20 million for Manhattan. When we were asked to do the production in America, we declined to take that project because we had realized that it is easy to take a project, but very difficult to get a get people who execute such jobs big jobs and so we decline that job but project will come to an end in next few months and once that happens then we will no more have such projects in America.
Coming to Waterfront, we acquired Waterfront, we are leading team. So from 11 people, we have gone to 18 people now. So we are adding people with a view to increase revenues in future. We are also taking part in executions. We have started advertising. We are quite confident that this year our revenue will go from INR30 crores-odd to INR50 crores-odd or even up to INR60 crores.
But today we have to invest on people today, we have to invest on everything to make it happen and that investment has resulted into INR5 crores loss. So if that INR5 crore loss, INR4.5 crore loss was not there, then the profitability of the company would have gone to INR90 crore INR92 crore level, which is what at least some people expected.
So this is not consistent policy of the company to do at a loss. This was done because the company is in a strong position. And when the company is in a strong position, it does not take some risk to expand for future business, then it’s not worth doing business. And that is why we took this calculated risk and this is a one-time thing only.
Akshay Deshpande
Understood, sir. Sir, my second question, how do you see the Chennai factory performing in financial year ’26? Are we going to fully ramp-up or it is going to be in stages?
Pratik Patel
It has to be in stages. We will start in first week of June. Production will start in June. By the time we built-up team because we had no production facility. So by the time we built-up team and set-up and get everything smooth and running, it will be November, December. So this year, the improvement in revenue will not be staggering.
But we expect two to three years down the line this plant to fully come online and deliver more.
Akshay Deshpande
Understood, sir. And just a follow-up, what is the maximum revenue potential coming from the Chennai factory?
Pratik Patel
I would say if we are able to run on three shift basis on an average, four to five times of our investment can be the revenue. So if you are investing INR30 crores and if we are able to run three shift, which generally we are able to do on the third or fourth year, then we should be able to get revenue of close to INR120 crores to INR150 crores.
Akshay Deshpande
Understood, sir. And ask I would request you to get back-in the queue.
Pratik Patel
Okay, sure. Thank you.
Siddesh Chawan
Thank you. We’ll take the next question from Sahil Doshi. Please go-ahead.
Sahil Doshi
Hi, sir. Sir, congratulations on exceeding your full-year revenue guidance. Just on the margin front, sir, we are expectations was that as the Rodney Hunt scale-up happens, overall at a company-level, we could go to 14% PAT margins at some stage. And however, this year-on a Y-o-Y basis, if I see, though you explained it in your previous answer as well, we’ve seen some decline. So on a gross margin basis and a margin basis, how should we think about the company over the last next two to three years?
Pratik Patel
So we are still committed to take the EBITDA margins in 21% to 24% range and PAT margins in 12% to 14% range. In-spite of all the risks we have taken this year, the PAT margin is at 12% on consolidated level, right, not on the standalone level, standalone level is 14%, 16% and 7% in case of Rodney hunt.
And in case of Rodney hunt, to reach 14% is not going to be easy. However, the reason we are quite confident of reaching 12% to 14% PAT level on consolid consolidated level, the reason for our confidence comes from that we would be able to improve our operations in Indore, there is just engineering standalone along with and also improve on Waterfront, which is so negative.
So even if Rodney hunt gradually goes back to 8%, 9%, 10%, waterfront becomes 7%, 8%, 9% and Josh and operations are performing well, then we expect EBITDA as well as PET to improve. Our general guidance, our target is for PET is 12% to 14%. It may not be possible every year to do 14%, but we can do between 12% to 14% based on the type of orders we take, the type of export jobs we get, the type of complexity and the type of margin which we get from order to order.
At the same time, EBITDA also would be between INR21 to INR24 crores. Understood, sir. And sir, the reason which we see a massive decline
Sahil Doshi
Almost 800 basis-points in this quarter in gross margins is purely on account of this execution of Tata projects. Could you quantify that? And going-forward,
Pratik Patel
Two projects, one of Tata project, another was a project was Suez, but the reason is that only. Okay. So normal steady-state gross margin should be, around 58% 60% is how we should envisage on a — between 5% to 60%.
Sahil Doshi
Yeah. Okay, okay. Understood, sir.
Pratik Patel
In some years we — some projects or some years, we get all projects with very-high margins. Or in some quarter we executed a project with very-high margin. And when that happens, it will jump out of queue. But on an average in the yearly basis, as I said, 12% to 14% PAT and 21% to 24% EBITDA is what our target is.
Sahil Doshi
Understood, sir. And second on Waterfront, sir, last year, you had commented the target was to take it to INR200 odd crores in four years. 120 million. Okay. Basically 180 million 18 million GBP is what you had targeted 1 million.
Pratik Patel
Okay. Okay, okay. 18 million or 15 million was revenue of when it closed down. The biggest company in UK had a revenue of pounds 15 million and we believe that four years down the line it is possible for us to reach 12 million in revenue but that is our projections and we are working on it.
So in the current year, though we have said 4 million, we have gone conservative based on various parameters, we are expecting to do close to 5.5 and then take this 5.5 to 7%, 7.5 next year. And then the explosion will happen because then you have spread yourself in the market, the team is there, all has been set-up to grow.
So we expect that the first two years would be tough, but thereafter we’ll be able to grow fast? Sure, sir. And on this — I request you to get back-in the queue. Just one small follow-up on that. Okay. In terms of profitability related to that, are we seeing any setbacks from our acquisition or everything is as on plan in terms of the waterfront, if you can.
See, first, second year, we always look very positive. I would like to break-even in first year. But after having acquired, when we go for recruitment of people, we expect to get people within the month, we don’t get it. It takes five, six months sometimes. So our expectation is one thing, what actually happens is different.
But as I said from this year, we expect to be breaking even and making profit. So first year is always touchy. Second year could be, but this year we are feeling that we’ll be able to do each.
Sahil Doshi
Sure, sir. Best question, sir. Thank you so much. Thank you.
Siddesh Chawan
Thank you, Sahi. I would request everyone to stick to two questions for the request. So we’ll take our next question from Mr Tesh Patein. Please go-ahead.
Tej Patel
Yeah. Thank you so much for the opportunity and first of all, congratulations to the entire team for a very consistent growth. So, sir, my question is again on similar to the previous participant, I know you explained the reason for fall in gross margin was due to two to three projects, that is the Tata nuclear project and but is it possible for you to quantify it?
The reason I’m asking is because as far as I remember two calls back, you mentioned that about INR50 crores from NPCI was already executed in Q2, Q3, right? And about INR1,20 crores of more order which we received was.
Pratik Patel
That order is still not started, okay. So INR20 crores is still not started and the last of the supplies were done in Q4.
Tej Patel
Got it. So is it possible for you to quantify that is low-margin order? I mean, what portion of the revenue was probably the low-margin business which led to this decline in gross margin?
Pratik Patel
INR50 crores. INR50 crore Tata projects, INR15 crores so as around INR65 crore.
Tej Patel
Got it. Got it. And sir, how much was the waterfront contribution in this quarter revenue.
Pratik Patel
The order front, the whole year contribution was less than INR10 crore. In this quarter was how much?
In this crore — so whole year is INR10 crores or this year would be around INR3 crores. This quarter, INR3 crores, I don’t think more than that. Got it. INR811 crores just around the total waterfront. He is asking our two waterfront, just to waterfront. No, no sir, I’m talking about total. Out of total INR30 crore revenue, INR11 crores we have said this is like waterfront and out of 11 in this quarter, so that is what I’m saying out of would be INR3 crore, INR2 crores, INR3 crores for crores.
Tej Patel
Got it. Got it, got it. Sir, my other question was on — I just wanted to know, so the tariff impact, you already explained the reasons, but I was looking at this — so correct me if I’m wrong, sir, major orders in US are driven through the bipartisan law that was passed, let’s say, two years back, right, about a $55 billion improvement in water infra.
But after the Trump coming in — coming in, do you anticipate you know, there could be cuts in this bill because I was looking online and there was profitable cuts to this water infra spend. Do you do envisage it? And from the demand perspective in the US, what’s your outlook on the same?
Pratik Patel
It’s going to increase, it’s not going to reduce okay what is trying to do is increase and improve the infrastructure in America.
Tej Patel
Got it.
Pratik Patel
And if you have increased and improve the infrastructure in America, you’ll have to invest a lot of money on highways, roads, projects like airports and military bases and things like that. So all these will call for investment where water is an essential part.
Tej Patel
Got it. Got it. And sir, if you could just quantify, you should — Kansas was also one order which led to deterioration of margins at Hunt. So what was the quantum of that and what value is still left to be recognized?
Pratik Patel
I think we have done around 65% of the project, 35% is still pending is around the project was around $7 million, $8 million.
Tej Patel
Okay, got it.
Siddesh Chawan
I request you to get back-in the que.
Tej Patel
Sorry, one last question, I’m really sorry, just one last question. Sir, what was the EBITDA margins that we closed for Rodney Hunt in this financial year?
Pratik Patel
10%,
Tej Patel
10%. Okay. Got it.
Pratik Patel
It was 7% and EBITDA was plus.
Tej Patel
Got it, got it. No problem, sir. I will join back-in the queue. Thank you.
Pratik Patel
Thank you. We’ll take our next question from. Please unmute yourself and go-ahead.
Unidentified Participant
Hi, sir. Just wanted to check, if the expected revenue that you’re likely to book in FY ’26, which you talked about and which orders you have in-hand, what will be — are there any orders that you would like to flag out right now in terms of where margins may not meet your expectations like have you had orders in like in the — in Kansas and as far as the in this way is concerned, are there any other orders in the existing order book that there are any red flags?
Pratik Patel
So in Jash, there is no more there, maybe few crores, but not any major. In case of, it is balance execution of around 20% 35% which is pending, so maybe $2 million, $3 million, $2 million, $2.5 million. And in case of Waterfront, it’s a new ball game. So waterfront, we don’t do business at a loss, but we are trying to grow. And when you’re trying to grow, sometimes you have to take orders at low margins also.
Unidentified Participant
Okay.
Pratik Patel
So these are the only three things. We don’t see other than that any major change in strategy just now.
Unidentified Participant
Right. And my second question is, sir, on the capex that you were likely to do in FY ’26 coming year and the next year, particularly because we are looking at a new plant you said in Houston. So I’m just trying to understand what could be the capex for each of these two years.
Pratik Patel
So in Houston, we are setting up first an office is around $4 million to $4.5 million. We will be investing $1.5 million in orange. That is to renovate an existing plant of 60,000 square feet.
Unidentified Participant
Okay.
Pratik Patel
So around $6 million, you can say we are going to invest in America this year.
Unidentified Participant
Okay.
Pratik Patel
We are going to invest around $2 million in the Pitampur plant, $2 million to $2.5 million in-plant, which will be commissioned in December or January and maybe few crores in the Chennai plant which is To be commissioned at end of this month. We are also planning very tentatively. We are also planning to set-up a plant in Saudi Arabia, but that may not call for investment more than INR5 crore because we’ll go for a rental facility.
Unidentified Participant
Okay. And in Houston, you said the office is going to cost about INR4 million, 4.5 million.
Pratik Patel
It’s our own building, we are building an office which will cater to future growth and cater to a company which is $75 million in revenue. Right. And the plants are coming like office and plant bore. First we are building the office and then behind the office, we are building — going to build the plant.
Unidentified Participant
Got it. Got it, sir. And last question, sir, given — given the likely burst in a big push of inflation coming through in the US and since not only do we have US-based operations and plants, but we also have exports to the US from India, in aggregate, have you factored in that increase — likely increase in inflation when you’ve given your EBITDA guidance of 21% to 24%.
Pratik Patel
The inflation, local domestic inflation will not affect costing too much. It will affect maybe the salary and the wages, yes, and that is what is always considered while we are doing our estimates.
Unidentified Participant
So ’21 to ’24 seems fairly confident as far as this particular year is concerned.
Pratik Patel
I said is our guidance, not for America.
Unidentified Participant
No, no.
Pratik Patel
Consolidated guidance.
Unidentified Participant
Yeah, consolidated, I’m saying given the fact that in the existing order book, we have very little which is low orders where there is red flags and the fact that in the cost, you’ve already factored in a little bit of increase in costs as far as US is concerned. Keeping both these things in mind, 21% to 24% aggregate EBITDA margin seems to be reasonable, right?
Pratik Patel
Yes, it seems to be possible. Mind well that INR8 crore to INR10 crore of tariff implication also is going to come this year.
Unidentified Participant
Yeah, assuming, of course that the tariff goes through the way it’s expected to go through.
Pratik Patel
I have no prior information on that.
Unidentified Participant
Sure. Thank you, sir. Nothing else to appreciate.
Siddesh Chawan
We’ll take our next question from Dixan Bulchandani.,
Pratik Patel
I would like to add here that time is not a constraint for me because we started early 3 o’clock instead of 4 o’clock generally. If there are more questions, I will be able to answer if we can go beyond four if it is possible.
Siddesh Chawan
Yes, sir.
We’ll take the next question from Dixan Bulchandani. Please unmute yourself and go-ahead.
Unidentified Participant
Hi, good evening, sir. So the first question is basically, we have seen a big number increase in our change in inventories for this quarter, while you have alluded to some of the points here, can you please elaborate on why we are seeing this in our consolidated results for this particular quarter?
Pratik Patel
Can you please repeat once again? I did not get.
Unidentified Participant
So in this particular quarter, on the consolidated revenues, we are seeing an increase in our change in inventories. It’s around INR28.7 crores. Now you have alluded to some of the — some of the things regarding the Tata plant and. But can you just give us a little bit more color on what is the reason for this change in inventories?
Pratik Patel
INR35 crores smooth? Yeah. Basically it’s a good quarter because they have a INR35 crore reversal in that quarter. That’s why it’s increasing inventory.
Unidentified Participant
Sir, can you just give us some reason that why this has happened because the same quarter last year, this was only around INR4.86 crores and this quarter it is around INR28 crores.
Pratik Patel
Yeah.
Unidentified Participant
On consolidated results, I’m looking at
Pratik Patel
What march like this INR20 crores increase in inventory in no decrease in inventory. But this is a decrease in inventory actually. Last year our inventory is very-high. That’s why it’s not reflecting that well. So that’s why it’s reflecting this part. But definitely we will give in detail your answer if you give us the mail on our mail here.So we’ll give you the strong.
Unidentified Participant
I’ll send an email, no issues on that. But the essence of asking the question is the change in inventories, what is happening fundamentally in the business that is reflecting in our sort of numbers here. Is there something fundamentally happening in our business?
Pratik Patel
Improvement or deterior improvement? It is improved improvement. Because the change in inventory if it is positive, there definitely we use the stock is in a consumption gene. So it is a positive side, no problem. But definitely we will be clear in detail that why the difference is figured in both for G
Unidentified Participant
Thank you, sir. I know sir, the company has been doing well is just that these numbers are point note to accounts, that’s the only reason I ask nothing else there.
Second question is, while we are being conservative on our guidance and we have always outperformed our guidance. That is the very good thing about our management.
My question is really that while we are saying 860 as revenue target, can this be close to around INR950 realistically
Pratik Patel
I would say you are putting me in a soup. 838 crores of order book 860 to easily a of 950 few owners it depends on so many parameters. The world is in crisis today. I do not know what is going to happen. So it is better to be conservative and then not try to justify why did I say something like that
Unidentified Participant
Yes sir.
Pratik Patel
So I would say 860 is really possible it can increase to 900 but I cannot guarantee I am not prompt, I am not Modi, I don’t have any controls.
Unidentified Participant
So you have been too kind. We have always outperformed and
Pratik Patel
The situation is not in our end. I agree.
Unidentified Participant
No questions about it sir, but sir up Middle-East you are working a lot on the desalination part. And in the last quarter also when you were in the exhibition, we were being told that Middle-East is becoming a focus for us. And maybe we are looking at a capex there. Can you just give us a couple of just your over-the-head thoughts on how is the strategy because desalination seems to be a very big opportunity for Josh. Is that right?
Pratik Patel
It would be. But have to see is the seven water businesses, desalination is one of that. So the biggest opportunity always would be in wastewater, then desalination and then others. So yes, it is an opportunity. However, it is not an easy market. It is very tough to enter and we are trying out best to enter.
So as we become more-and-more successful in desalination, we should improve. In fact, in this week, we have a visit from ITE, which is a very strong company in Israel in desalination technologies. So we are working hard, but it takes time.
Unidentified Participant
Yeah, of course, of course.
Siddesh Chawan
So, I would like to get — request you take-in the queue.
Unidentified Participant
No problem. Thank you.
Siddesh Chawan
Thank you. Thank you. We’ll take the next question from Parishith. Please go-ahead.
Unidentified Participant
Am I audible?
Siddesh Chawan
Yeah.
Unidentified Participant
Okay. Sir, thank you for the opportunity and congratulations on hitting your such wonderful revenue numbers. From a margin perspective, you have explained everything, so I don’t want you to repeat all of that. Just understanding that the left over the pending quarter that is going to create the poorer gross margin, should we assume that we end get completed in Q1 or will it go through the entire year?
Pratik Patel
As I said, it will not go through entire year. It has to be completed in Q1, Q2. We are already under lot of stress to execute it. These orders are delayed now by the project order is delayed by more than seven, eight months now.
So we are already under lot of stress. This has to be executed in first two quarters.,
Unidentified Participant
Perfect. So in that case, what I would like to understand is that this year you even with all of these stress orders, you have given a 12% PAT and for the subsequent year also you’re guiding revenue from 12 to 14 years and that’s why you want to create some buffer, that’s all right. I’m just trying to understand that we are
Unidentified Participant
Not — going-forward, we are not going for these stressed orders. So fundamentally, our order mix and our overall gross margin should be better than what we have been surpass because of these orders. Is that a fair assumption?
Pratik Patel
No, it is not a fair assumption according to me. See, every company has to balance growth along with-profit. Now when we are trying to grow, the growth comes on the basis of big jobs. And sometimes when you are bidding for big jobs, you have to be a little bit more aggressive than normal jobs, right?
And as a result of that, you may have to compensate on the profit somewhere. So you cannot have growth at higher profit. It is not always possible. Sometime it may happen if you are very lunt. So if we intend to grow 20% or 25% year-on-year, then we may also have to take some jobs with lower margins.
We will not like to take any jobs at loss as we had done last year. But with lower margins always is possible. So that is why we have to give a guidance of range, 12 to 14 is a range. If everything goes right, we may be at 14%, it doesn’t go right, we may be at 12%.
Unidentified Participant
Understood, sir. So the other thing you mentioned, which I didn’t quite catch fully was that something about China and how that might impact your expose to Southeast Asia and Far East. Can you elaborate on that?
Pratik Patel
We have a very big business number. We have our order book in Hong-Kong is more than I would say INR60 crores as of now. What would if something happens between Taiwan and China?
There would be lot of stress everywhere so that is why there are 3, 4 pressure points in the world just now one is India, Pakistan, another is China Taiwan, another is in Middle-East. We don’t know-how this pans out and that is why I said we have to be a little bit conservative because if something happens, the projects will come to us and still deliveries can stop. I don’t know it.
Unidentified Participant
Sorry, thank you.
Siddesh Chawan
Thank you. Thank you. We’ll take the next question from Savi. Please go-ahead.
Unidentified Participant
Hello. Hope I’m audible. Hello.
Pratik Patel
Yes.
Unidentified Participant
Yeah. Hi. Firstly, sir, congratulations on a great set of results, sir. I just wanted to ask a bit about our increased depreciation. So is this due to the Chennai plant coming in or so, I think it’s around INR7 crores this quarter. So this would be a new normal for us in terms of depreciation.
Pratik Patel
It’s a two, three reasons. One is the waterfront adding of waterfront and approach because of that INR2 crore depreciation is added. Same way, USL, we have put some asset in-hand for-sale. So we have now converted that asset into business asset. So four years accumulated deprecision we have a write-off this year, so it will affect us around INR1.5 crores to INR1.75 crores and sell some new capitalization in India, which affect around INR0.8 crore business.
So overall, 6.25 year if you see the yearly increase in the depreciation is 6.2 by crores. So measurely I have told you the INR5 crore addition in the depreciation.
Unidentified Participant
Okay, okay. So what would be. So one-off was around INR3 crores INR4 crores, but so are
Pratik Patel
We have quarter particular quarter is INR34 crores, okay. But I am asking about the full-year.
Unidentified Participant
Okay, okay. Fair, fair enough, sir. And sir, I just wanted to — sorry, sir, there was a disturbance in my line, sir. So just wanted to maybe ask about like when we are saying about our growth, so with INR830 crores order, like I think you mentioned it before, so it’s just a very — very this scenario, okay,
Pratik Patel
So everything goes right in the world I can do more than 900. If it doesn’t go right I will still do more than it.
Unidentified Participant
Yeah. That’s what I just wanted to ask. Okay. Fair enough. Yeah, that’s it from my side. All the best. Thank you.
Siddesh Chawan
Thank you. We’ll take the next question from Sumarth Nappal. Please go-ahead.
Unidentified Participant
Am I audible? Yeah. Hi, Pratik, sir. Congratulations on a really good set of numbers. Sir, I think most of the questions have been answered. Just a couple of questions, sir, quick ones. Middle-East, sir, like I mean, a couple of years back you gave an idea about how big the Southeast Asian market could be for Jash and the kind of orders we were getting.
And this time we have, I mean, very small bit of business from Middle-East, but you have also alluded to that we are making certain investments over there. So how do you see the market in Middle-East for the coming year?
Pratik Patel
Saudi Arabia is investing $100 billion in new cities $100 billion okay every country in Middle-East is trying to diversify out of oil.
Unidentified Participant
Yeah.
Pratik Patel
So huge investment in Middle-East, I would say investment — total investment in Middle-East will cross $200 billion in infrastructure is going to happen. And for that lot of water, wastewater desalination, all type of facilities would have to be created. And so we are trying to enter the — either in Rasal or in Saudi in Saudi with a plant because everyone wants to make in their own country otherwise you don’t get the orders so we would be assembling it in Saudi Arabia or something like that and we are working on it.
The decision would be taken, we are visiting in next two months and then we’ll take the decision now to go-forward.
Unidentified Participant
Sir, just a follow-up on that. I think you mentioned that when you enter these new countries, approval is a big step. I mean, to enter is a difficult thing. So I think that we have crossed that first hurdle of being approved over there in that same year. So for us to do well over there, the next step would be expansion or whatever thing we feel is good for the operations, right, sir is that?
Pratik Patel
Exactly.
Unidentified Participant
Yeah. Sir, one quick question. I mean, on the Indian side of the business, I think in the past, you have also stated that the government push in terms of wastewater has still not come and it is yet to come. So are we seeing any traction in terms of government orders in terms of mission also? There’s been a lot of emphasis. So are we seeing that thing on the domestic front, any uptake on government orders as well?
Pratik Patel
So if you see our results and you must-have seen the domestic business has grown tremendously. And just to give you some examples, I had said before also, we were doing a nearly INR5 crores in MCGM. As against that, we have now already orders worth more than INR100 crores in Bombay.
So this year we think the domestic will surpass exports. It is the amount of orders last year, the whole of last year we did INR55 crores worth of gates in the domestic gates in the domestic market. We today have INR135 crores already in-hand.
Unidentified Participant
Sure, sir. Yeah.
Pratik Patel
So domestic market is already booming. In fact, we are now facing resource constraint — capacity constraint in the domestic business.
Unidentified Participant
Okay, sir. I think that’s good to hear also. I mean, on the domestic part as well. I think, sir, these were the two questions which I had. And any, sir, any new products in pipeline that we are developing, particularly for the domestic market, any new products in pipeline or we would be operating with the existing products only.
Pratik Patel
So since we don’t have two new products, we will be reinforcing the existing products. However, we are looking at two acquisition, one in UK, one in India and we are — we will come to know about it in next two months’ time. So if products would come from that acquisition, additional products will come from the. It would go through.
Unidentified Participant
Sure, sir. Thank you, and hope that we have a great year ahead. Thank you for your time, sir.
Pratik Patel
Thank you. Thank you.
Siddesh Chawan
Thank you. Thank you. We’ll take our next question from Saho. Please go-ahead.
Unidentified Participant
Hello? Yeah, can you hear me?
Siddesh Chawan
Yes.
Pratik Patel
Yeah. Sir, my question was regarding the manpower constraint in US, now whether it’s tariff or whether it’s Baba at 29, one thing is very clear that our manufacturing in US will only grow exponentially by 2029, 70% to 80% and with the natural growth of 15% 20% of market there
Unidentified Participant
, it’s going to be multiples of what we are doing currently. So, and manpower is not something that gets addressed by itself within one or two years. So whether it’s Houston or whether it’s orange, we will have that problem and it will become only bigger. So how do we ensure growth in — and US is going to be 30% 40% or more of our total revenue.
How do we address this problem for over the next two to five years perspective?
Pratik Patel
I have no quick solution. Trump wants everything to be made in America, but when I have $40 million order book in America, I don’t know where to find people to make it, right? So the problem is for us, problem is more location-specific rather than US specific. It is still possible to get people in Texas because there is a lot of Mexican people and other mixed communities there.
It is not possible to get people in orange because manufacturing industry has sort of disappeared from that area. Okay. In last 20, 30 years, not today. So when there is no manufacturing sort of backup and plan in fact, we have — we are aware that some like Canai Metal, which is located nearby is going to close-down in Massachusetts.
So manufacturing industries are closing down instead of growing. So manpower is going to be a problem in Massachusetts, but I don’t think it should be a problem in Houston. As of now, we don’t see, but it is only when we set-up a plant and start to go seeking people to operate it, then we’ll come to know better sure.
Siddesh Chawan
But 10 years, two years down the line, what will happen I cannot say now. But yes, we expect to have it. That is why we are investing.
Unidentified Participant
Yeah. Sir, I remember having — in the first few years 2017, ’18, ’19, the problems that we had with Rodney Hunt in scaling up. So if we are going to start-up a new plant in Houston, do you expect into ’26 or ’27 or ’28, whatever it is, do you expect the initial two, three years to be problematic margins?
Pratik Patel
I don’t think so. The reason is we are already based in Houston. We have a team of 25 people in Houston so it’s not as if we are going blind. Okay. And now it is about setting up a plant because we cannot do it in orange. If we can do in orange, I will not let you do in them. Understood, understood. Why spend $3 million $4 million more in a new plant when you already were plant in orange?
Unidentified Participant
Sure, sure, sure. Yeah, my last question, sir, is regarding the Kansas size and complexity of projects. And I heard you saying that we have denied one order of a similar-size and complexity.
Pratik Patel
That was four times, four times bigger than Kansas.
Unidentified Participant
Yeah, yeah. So I mean, is that — is that a concern that we are refusing orders? I mean, I understand that somebody is taking it, right? I mean somebody is executing it in —
Pratik Patel
If I had taken that order, I would be answering more tougher questions. The problem. But the problem is it is easy to take an order, very difficult to execute if resources are not there. Most of the companies in the world have gone in problems when they had no resources and overbook themselves. We try to avoid it.
Kansas brought us a lesson. After, I will not take such risk in US until I have a good organization set-up to execute.
Unidentified Participant
Sure. Thank you, sir. All the best.
Siddesh Chawan
Thank you. We’ll take the next question from Nitin Dharmawat. Please go-ahead.
Unidentified Participant
Thank you for the opportunity. Am I audible?
Pratik Patel
Yes.
Unidentified Participant
Yeah. Sir, I have only one question. So what is the dollar and GBP conversion rate that you assumed in our calculation considering that we have now significant revenue coming in from the overseas market and there is a currency risk also involved considering the changes which are happening globally.
So just wanted to take a view, what is the rate that we have taken today?
Pratik Patel
Yeah. So generally when we are bidding for a project, we allow for 4% variation in rate when we are bidding for a project. However, when we are negotiating a project, depending upon how tough the negotiation is and how much the margin stress is there, we may reduce it to 2% or 3%.
Unidentified Participant
Got it, sir. Got it. Okay. Thank you so much. Wishing you best.
Pratik Patel
Thank you.
Siddesh Chawan
Thank you. We’ll take the next question from Harishit Solanki. Please go-ahead.
Unidentified Participant
Hi, team. Good afternoon. Sir, I had a question. We had supplied a pilot of 20 conveyors for solid waste management. So how is it doing and do we see any future potential in the medium-term for us?
Pratik Patel
We do definitely see future potential. However, the projects awarding by the cities for solid waste handling is quite slow presently. As a result of which the next line of jobs are expected to come slowly. But we have already diversified from solid waste to solid handling and we are starting getting orders in that. So the business is growing, though not as fast as, but it is good.
Unidentified Participant
Okay. And if you can throw some light on our progress with the judge Sinvent JV and specifically the disk filter.
Pratik Patel
So this filter, we are doing good. We have eight machines order now on Judge Sinvent, we are still negotiating and discussing how to go-ahead because of the Germans.
Unidentified Participant
Okay. Got it. And last question would be, we have done an expansion at, which is largely into process equipment manufacturing. So can we expect our revenue-share from process equipment increasing going-forward, so we can target a larger pie in the whole wastewater plant going-forward.
Pratik Patel
Yeah, we already are doing that business. So improve — increasing capacity would result into higher revenue and higher profitability in time to come. The pie remains the same. There are projects we will go with process equipment as well as our equipment and try to have no maximum. So it all depends upon new projects coming. If new projects are coming, this, we will be able to do more-and-more.
Unidentified Participant
Got it. This was — thank you for answering my question.
Siddesh Chawan
Thank you. We will take the next question from Envision Capital. Please go-ahead.
Unidentified Participant
Hello, am I audible?
Pratik Patel
Yeah.
Unidentified Participant
Yes, sir. Thank you for the opportunity. So the first question was, sir, what is the reason for increasing provision for warranty and liquidated damages in this year, specifically in the second-half
Pratik Patel
Warranty and basically this is a. Actually, this is a provision for the US bankward charges because looking to the current year expenses of the revert charges, auditor has planned for some particular provision for that and that’s why we have increased that provision this year. And it’s grew in the 4th-quarter. So at the year-end actually, but it is year-end provision.
Unidentified Participant
Sorry, sir, some of it was not clearly audible. You said we are talking about.
Pratik Patel
So the auditor has requested that we should provision for this contingency in case it becomes due. And the reason for that is based on past history, they have said that if there is any provision due to back charges coming from America, those provisions should be made at the end-of-the year, so that if anything happens, we are secured.
Unidentified Participant
Sure, sir. But sir, historically, this amount has been in INR2 crore range. In last two, three years, it has been annually around INR2 crore and this year it’s gone up to IN 10 crore INR10.5 crore. Hence the question so historically, the provision that we’ve carried was around INR2 crores.
Pratik Patel
The provision is always high. This time we are incurring expenses also. This time. We started incurring.
Unidentified Speaker
The real expenses of bed charges is increased increase. That’s why it’s showing bigger amount.
Unidentified Participant
Sorry, what has
Unidentified Participant
Has increased, sir?
Pratik Patel
USA bake charges, charges. But in a simple term, charges, reward charges.
Unidentified Participant
Okay, reward charges have increased and hence auditor has to provide any credit provision for that. And sir, is this a one-time thing or such amounts will come every year now going-forward?
Pratik Patel
So it is a one-time thing, but some will always come every year. Okay, the US is a very tough market. If you don’t deliver instead of one lot you deliver in two lots, they will put a back charge because they have to handle the material price.
Same is — so all these back charges are coming on account of that. As your revenue increases from US, some back charge will always come. But it will be always some percentage provided in the books, but this year there is some additional charges in USA. So that’s why they have increased the percentage for the provision, whatever sale last year.
Unidentified Participant
Okay, okay. Understood. And sir, the next question was, historically if we see we’ve never done 21% to 24% kind of EBITDA margin. So what gives us the confidence and what do we see currently that will enable us to do those kind of margins?
And just in continuation to this, does our guidance include other income in terms of EBITDA margin?
Pratik Patel
Yes. See, what is other income? Other income is generally price variation coming due to dollar or euro for foreign currency. So that is not that is business income basically so okay. And then that is factored in when we are doing a job. So yes, the margins include other income also, number-one.
Number two, you said that whether ’21 to ’24 is possible. I would say 21% to ’24 was possible this year also if I was happy to do only 15% 20% growth.
Unidentified Participant
Understood.
Pratik Patel
So the margin is also in our type of business, I would say is not mass production, it’s discrete manufacturing. The margin is also a factor of total revenue why? Now if you want to grow 10% to 15% you don’t have to take risk, you don’t have to go aggressive and take orders at lower margins but when you grow at 10% to 15% the other problem is you see the marketplace, you allow your competitors to go in, one, two, what you do is that your extent of procurement goes down.
So if I was buying steel 1,000 tonnes, I will buy only 100 tons but if I grow 43% I was buying 1,000 ton, I will be buying 1,400 tons. So that will reduce the price of procurement for steel. This is just an the example, okay. So as your revenue increase, your strength increases, you get better discounts, we are able to save more.
So sometimes this is a catch ’22 situation, we think we will get more discount, we go aggressive, but we don’t get the discount. So — but the fact remains that if a company revenue is growing, sometimes it will also put you a hit on the EBITDA or on the PAT? Sometimes depending upon the type of project which you have taken at higher revenue
Unidentified Participant
Got it. Got it. And sir, if I may just one more question.
So what is the reason for depreciation to have substantially gone up? And is this a steady-state number now going-forward?
Pratik Patel
The has already explained depreciation has gone up because of waterfront because of some USA asset for-sale is now transferred to the production assets. So we have a write-off of three, four year depreciation for this year. So that’s why deprecision amount has been increased.
Unidentified Participant
And this is steady-state number now going-forward.
Pratik Patel
This is not — this is not — now it will not come again and again.
Unidentified Participant
Okay.
Unidentified Speaker
We are proportionately will come fortunately come, but not always will come in the results.
Unidentified Participant
Got it. Thank you.
Siddesh Chawan
Thank you. We’ll take our next question from Pritesh from Invespec. Please go-ahead.
Unidentified Participant
Thank you for the opportunity, sir. My question is more related towards orders in the pipeline. Last con-call, we had mentioned that we are looking to secure orders from countries like Malaysia and Singapore.
So is there any visibility from that side?
Pratik Patel
Yeah. We are already in talks, but those tenders are all delayed and now tenders are going to come two years down the line.
Unidentified Participant
Okay. And sir, one more question on the domestic side. As you said, this year our domestic revenue will overcome the global revenue or the international revenue. So is there any particular segment we are seeing the traction. Is it a particular, I would say a scheme or a segment kind of?
Pratik Patel
So major revenue comes from severe treatment plants. So and severe treatment plant, Bombay itself is executing orders for close to INR30,000 crores. We have got many orders and many orders are still in pipeline. So all this will result into a very-high increase in domestic business,
Unidentified Participant
Okay. And what will be the margin profile for all this business coming from domestic?
Pratik Patel
Because these are big projects, our margin profile would be on the positive side.
Unidentified Participant
Okay, got it.
Pratik Patel
Please understand, I’d like to as you are aware, we are not in mass production, we are in discrete manufacturing but when you are in discrete manufacturing our USP is we can make a gate of 1 feet by one feet or 300 by 300 mm and we can also make a gate of 5 meter by-5 meter okay which is close to 16 17 feet by 17 feet.
So presently we are doing a job in Bombay where they need a gate of 5 by-5 meters which is going to cost like 2.5 crore. Now there are only one or two companies in the world who can do it so when some type of job we are doing obviously your margin profile is going to be much better than our margin profile on a three feet by three feet gate, one feet by one feet gate which maybe 15 companies can do it.
So bigger the projects more complex the project more difficult the project the competition is less and our margins is better and that is worldwide. That doesn’t mean to say that we can — in India, it will not happen. It will happen in India also, it will happen outside India.
Unidentified Participant
Got it, sir. Thanks, sir.
Siddesh Chawan
Thank you. We’ll take the next question from Kunal Mehta. Please go-ahead.
Unidentified Participant
Hi, sir. Sorry, I joined in little late. Am I audible?
Pratik Patel
Yeah.
Unidentified Participant
So apologies for any questions repeated. My first question is regarding the Screams product. How are we going to enter in impenetrate the US market. So I think there was a mention about rebranding, you know screens or for the US market.
Pratik Patel
Well, Mars screen only would be solely in US market. It has nothing to do with rebranding. The initial streams were also sold as screens. The presently in US is what to do first. The screens would have been made in America. And we are already having stress in manufacturing in America.
So when I go this time, we’ll take a call-out to go-ahead.
Unidentified Participant
Okay. Sir, one question is on the working capital cycle. This year it has improved from the previous year. So do we — it’s about 100 days if on 120 days.
Pratik Patel
120 days is what we are targeting, but it’s not around 150 plus, but because of America.
Because of stock of inventory increasing delivered in also America, water run. So definitely for overseas we have to have a separate — if you see we should be giving separate working capital requirement for domestic business and separate working capital for export business.
In America, because we are selling maximum to our own subsidiary and that subsidiary gets the payment after 60 days of material reaching the site, so the cycle increases for us.
Unidentified Participant
Okay, sir. And sir, this is excluding the INR35 crores order that you mentioned that it was delayed this year.
Pratik Patel
It was not delayed. It was delivered before 31st before it was dispatched from our plant before 31st March. Okay. But not received at the client’s End. So anything is not received on 31st, that is not coming into our revenue.
Unidentified Participant
It’s still in the inventory, right? That’s still in the — that’s still in the inventory, right, in the — so that’s why I can adjust the inventory for that just for this year.
Okay, so going ahead, the guidance would be approaching a 120 day working capital cycle that would be the target.
Pratik Patel
So domestic [Foreign Speech] [Foreign Speech]
Unidentified Speaker
10 is our data and same around 100 days is inventory day. So 220, this one and approach 70, 80 hour creditor days. So 220 less 80. So approx 14 140 days in India is the working capital cycle
Unidentified Participant
Okay. And sir, every year there is some other borrowing costs, which is a portion of the total finance cost that is about INR2.5 crores to INR2.8 crores in FY ’23 and INR2.6 crores in FY ’24.
Can you please explain what is the other borrowing costs?
Pratik Patel
It is a LC discounting bank charges for renewal of the bank charges and for pay guarantees, bank guarantee charges and this year we onboard the new bank, the cost and processing fees and delivery fees is also included is the delivering loss.
Other than interest whatever charged by the bank is the other borrowing charges.
Unidentified Participant
Okay. Okay. Yeah. Thank you, sir. Yeah.
Siddesh Chawan
Thank you, Punal. We’ll take a follow-up question from Navan. Please go-ahead.
Navin
Hello, sir. Can you hear me?
Pratik Patel
Yeah.
Navin
I just have only two questions. One was with respect to the guided capex. You said $6.5 million in America, $2.5 million in India and $1 million for setting up operations in Saudi Arabia, right? Is my figures, right?
Pratik Patel
Yeah, approximately. Yes. Sir. And I just wanted to know that in this quarter, we experienced heavy depreciation rate. So going-forward, what will be the — in FY ’26, what will be the depreciation rate? Will it be 25 cro for the entire year? No, no. This year it is INR17 crore. So it may be around INR15 crores average,
Navin
INR15 crore.
Pratik Patel
Yeah INR16 depending upon Konza commissioning they were up.
Navin
Okay. And interest expense will be around odd of INR15, right?
Pratik Patel
How much is interest expense.
Interest expenses is around INR13 crores this year. So it’s slightly higher than INR14.
Navin
Thank you, sir.
Siddesh Chawan
Thank you. We will take the next question from Pesh Patel. Please go-ahead.
Tej Patel
Thank you so much for the opportunity again. I’m really sorry sir, I’m bringing this question again. I just wanted to get more understanding. So as per my understanding, we said about 60% to 70% of US volumes from India, right?
And then now we have plans for that 60% to 70%.
Pratik Patel
Understand suppose US has got an order, yeah. Whose order can the manufacturing major material India? [Foreign Speech]
Tej Patel
Thermal, yes. The costing side, say, [Foreign Speech] To question that say going further down two years down the line, planning, we increase our manufacturing in, right? But have you mentioned that the overhead cost US has always been higher and which has troubled us in past.
I’m just trying to understand when we shift our portion of production more towards USA, does margins take a hit because of higher there?
Pratik Patel
Like Indian costing.
Tej Patel
Got it. So my question was only will be able to easily pass-on that cost and produce.
Pratik Patel
Exactly. Everyone would have to make in America. Everyone making in America would be making at same price levels.
Tej Patel
But then right now our competition is US, is it all US-based companies or there is import competition also?
Pratik Patel
All US-based companies, but they are also importing.
Tej Patel
Okay. Okay. So please understand India says. Okay, got it.
Pratik Patel
Other than Baba it is only which is not under Paba act is going from India.
Tej Patel
Got it. And sir, INR20 crores of nuclear order is still left to be executed, right? And also loss maybe right?
Pratik Patel
No, this is not a loss.
Tej Patel
Okay. Okay. Got you. Got it. Got it, got it.
Pratik Patel
INR50 crore first was at a loss.
Tej Patel
Got it, got it. That’s all from my side. Thank you so much, sir.
Pratik Patel
Thank you. We’ll have a complex in five, seven minutes. I have another zoom meeting at INR45
Siddesh Chawan
Yes, sir. We will take our last question for a day from Dixan Bulchandani. Please go-ahead.
Unidentified Participant
Thank you, Mr. Sir, the domestic market that we are seeing, largely the type of product cycle that we are seeing, is this deliverable between like six months, nine months or is it shorter timeframe?
Pratik Patel
It all depends upon the value of order and the complexity of the job, geep.
So most of the orders we can deliver within three to four months, the very big orders, we can take-up to one year. So the one that we are seeing in Mumbai, is that considered as a big order or a small order for us?
Mumbai, everyone, everyone wants everything overnight gee.
If they don’t want to install it, this is only required for billing purpose.
Unidentified Participant
Yeah. Yeah. So that would be a faster cycle for us.
Pratik Patel
Yeah, most of the deliveries, if you consider INR838 odd crores which are in-hand,
Unidentified Participant
Yeah.
Pratik Patel
I would say other than INR20 crore INR30 crores, mostly everything has to be delivered within this year.
Unidentified Participant
So from Q1 onwards, Q1 is significantly has been a weaker quarter for us. So now we can see PAT profitability from Q1 as well.
Pratik Patel
I think last year also we saw profitability in beyond. Did you not
Unidentified Participant
Largely breakeven, not that great. Yeah, but we have not been major losses. So we can expect this year also the same thing, breakeven or some profit.0 Sir, largely in India, apart from Mumbai, what is the next market that we are seeing?
Pratik Patel
No, everywhere, Delhi is going to invest a lot because no investment was done. Hyderabad has started, Puna has started, Bengalore has started, Chennai also is starting. So all cities are doing it.
Unidentified Participant
Sir, my last question is on human resources. I’m sure our government always looks at our management always looks at all the possible scenarios here. But India say for Lakage Ana, is that becoming a problem for the local government there, US specifically from and UK and Middle-East, so that shouldn’t be a problem, right?
Pratik Patel
That’s not a problem.
Unidentified Participant
Okay. So if we were — is there any scope that look India, say US may look at so that we can ramp-up our production.
Siddesh Chawan
Manufacturing the impossible end, these are S1B, we already have eight or nine H1B in America now in every department, we have literally 1% from India, but manufacturing it is impossible.
Unidentified Participant
The costing does not support us.
Pratik Patel
We will not get.
Unidentified Participant
Not sure. Okay. Okay. Okay. Sir, congratulations for delivering consistent results and wish you the best for our company. Thank you, sir.
Pratik Patel
Thank you.
Siddesh Chawan
Thank you. That was the last question. I will request Prateek sir for the closing comments.
Pratik Patel
So thank you everyone for attending this meeting. I am little bit surprised by the concern people have shown on the PAT and the EBITDA margins. But I do understand the reason for saying and that is why in — we will ensure in this year that we — even while we grow, we don’t grow that the margins get affected. With that, I would like to come to an end. Thank you.
Siddesh Chawan
Thank you. Thank you, everyone, for joining us today. If you have any additional questions, you can reach-out to us anytime. They wish you a good health and look-forward to seeing you again in the next quarter.
Pratik Patel
So there are some questions which are on the board, I can ask if you still have some time.
Unidentified Speaker
Yes. So already concluding
Navin
My name is they want to ask question, but they don’t want to raise hands.
Pratik Patel
So everyone can send their questions to us and we’ll reply to everyone.
Unidentified Speaker
Yeah. Please mail us.
Pratik Patel
On the chat there are many questions in this if you can ask those questions and get it sent to us, we’ll reply to everyone.
Siddesh Chawan
Sure, we’ll do that.
Pratik Patel
Okay thank you.