Kalyani Forge Ltd (NSE: KALYANIFRG) Q3 2026 Earnings Call dated Feb. 12, 2026
Corporate Participants:
Mr. Viraj G. Kalyani — Executive Director
Analysts:
Unidentified Participant
Presentation:
operator
Good morning everyone. I welcome you all to the investor and analyst conference call of Kalani Force Limited for Q3. I am Rajkuma Diksangi. Before we begin, I would like to make few disclosures on behalf of the company. This call is being recorded. The video recording and the transcript of this conference call will be made available on company’s website and stock exchange portal within the prescribed time period. During this course of this call there may be certain forward looking statements based upon current expectations and assumptions. This statement involves risk and uncertainties for that could cause actual result to differ materially from those expressed or implied.
All the material information required to be disclosed under applicable CB regulation have been duly shared with stock exchanges. No unpublished price sensitive information that is UPSI will be shared during this call. All the participants are on mute by default. You may raise your hand or use the chat box to ask the questions. After the presentation. We have with us our Managing Director Mr. Viraji Kalyani. Now I hand over the platform to our MD Viraj Kalyani. Thank you, sir. Over to you, Viras.
Mr. Viraj G. Kalyani — Executive Director
Sir. You are on mute. Thank you, Rajkumar. Very good morning to all of you. I welcome all the shareholders, investors and all the general public that is interested in our stock and following us. And especially a warm welcome to all our regular participants as well. So today we have our investor quarterly Investor call for Q3FY26 company updates. So I will take you through the presentation. Rajkumar, can you confirm that the screen is presentation is visible?
operator
Yes, sir. It is visible.
Mr. Viraj G. Kalyani — Executive Director
Okay. All right. So this is our Investor presentation for Q3FY26. This is our safe harbor statement. I request you all to please go through it after the call as well. We do not have any forward looking statements. And there are. These are subject to risks. So please take all the information within this context. So Q3 FY26 highlights record margins and stronger discipline. Revenue was at 58.22 crores. It was resilient despite deliberate exit from low quality business. EBITDA margin was at 15.7% which is the highest in the company history. And I will talk more about the factors contributing to it.
PBT was at 3.95 crores. Also almost an all time high and highest in the last several quarters. Operating profitability has structurally improved. Export mix is strengthened. European transmission program is scaling up which I had updated last quarter. And CAPEX is aligned to growth areas. Funding options are also more structured and disciplined. For those of you who are new to our business. And just as a refresher. These are our product offerings. We make critical high performance components leveraging decades of experience and we have three major product groups, Engine, Driveline and Axle. The engine group especially has connecting rods which is our signature product.
We also make smaller crankshafts and a few other engine parts. But the connecting rod is our core capability and strength since inception, so it continues to grow and support the new growth areas. And the new growth areas are Driveline and Axle which are also critical components. And these are products which we have developed with new technologies, especially in Driveline. It requires warm forging and we are the only forging company that has hot, warm and cold forging technology all under one roof. So we’re able to offer all these three product groups, Engine, Driveline and Axle to all the OEM customers.
So our strategy is to increase customer share of Wallet as well as vehicle share of Wallet by offering all these three products. Our KFL growth formula is Strong Execution plus Business Development plus capex equals growth. And this is a formula that I have been highlighting since our first investor call last year and it is something we stick to and all our major business decisions are guided on this formula. As you all know, we are a company going through a major transformation and that is the reason that a very clear pathway for growth is important. So I’ll take you through each of those three areas starting with strong execution and which is reflected in our financial performance.
As I said earlier, revenue is at 58.22 crores. This is up 1.99 crores from last quarter. EBITDA margin is 15.7 crores, sorry, 15.7% highest in the company history. Profit before tax is 3.94 crores which is also strongest in the last four quarters. And profit after tax is negative 0.12 crores or 12 lakhs which is impacted by non cash deferred tax adjustment. This quarter demonstrates improved structural profitability even as the company continues to streamline its business mix and strengthen financial governance systems. So related to our More about our EBITDA margin expansion, Major factors have been exit from low margin business, improved material and power cost discipline and operational stabilization which has come from machinery conditioning and die run prioritization.
These are several actions that are part of the Vriddhi Council projects that I have shared with you in the earlier presentations. So a lot of the efforts of those strategic initiatives for cost savings, for productivity improvement, for output increasing and scaling up the business, they’re all bearing fruit in terms of and reflected in our EBITDA margin. Of course we do not give any forward looking guidance for the EBITDA margin, but our top priority and focus is to stabilize at this level. As you know that this has also been our medium term target to achieve at least 15% EBITDA margin.
Over a longer term our next target and next milestone would be around at a 20% EBITDA level. Now this is our sales by product group. As you can see that our core business in the engine segment has grown with a focus on OEM growing demand and the domestic PV business also experienced increased demand which is seen in our ramp up programs. This is both in the driveline and axle programs. So our core businesses have been stable or growing while we have done some selective pruning of non core businesses which I will also detail out in the later slides.
Coming to geography, our exports have grown this quarter to 10.6 crores. There was a more of a slump in the previous quarter because of the tariff uncertainty, but the major factor for this growth is our new exports business. It’s a new transmission business which is scaling up. We had started SOP that started production about two quarters before and now it is getting into a steady state or scaling up ramp up phase. So we are on track with getting the right exports business in and old legacy volume export businesses have been proved. Coming to business development, we have submitted samples for a new MNC customer in the axle business in Q3.
We’ve also achieved ramp up of XEV driveline new business programs, additional orders received from existing businesses and vehicle share of wallet is increasing with offerings of Engine plus Driveline plus axle components across multiple vehicle platforms. And as I said earlier, Kalyani forged the only forging company to offer engine, driveline and axle components to OEMs due to a combination of hot and warm forging technologies built over several decades. So this is our new business order book value. In the previous presentations or investor calls there were a lot of questions in terms of the mix of this new business order book what type of products there are.
So here is the more clear picture. Around 107 crores of new business is from Connecting Rods which is our core business. But the new growth areas contribute significantly to the new business order book. So 45 crores from driveline and 10 crores of new business in the axle segment. If we look at existing sales base for each of these segments you will notice that the driveline and axle new business as a percentage of existing business is in multiples. The engine business already has a pretty strong base. Now coming to the business mix optimization. This is a progress update and this also relates to business development.
So there were questions in earlier investor calls about, you know, how long this sort of business rationalization is going to continue. So we wanted to showcase a clear phased plan that we have been executing over the last say one and a half years or so. So phase one has been about product rationalization, phase two customer quality upgrade and phase three volume and price optimization. So in phase one in product rationalization we exited from unrelated non core product lines and we started a focus on engine, driveline and axle portfolios. So as we were doing this, the biggest filter we started applying was for all new RFQs that were coming in.
So we were rejecting a lot of RFQs that are from these unrelated and non core product lines so that we don’t repeat the same business that we are trying to get, trying to phase out. And therefore the RFQ quality that is request for quotes drastically improved and the focus has come in. So our new order book pipeline is of a much better quality. Phase two has been customer quality upgrade. We have reduced exposure to low margin and credit risk customers as well as non strategic customers, businesses with low growth potential. And while doing this we focused on increasing share of wallet with OEM focused accounts.
In phase three, volume and price optimization, we have been pruning low volume, low price export as well as legacy programs in domestic segments. Business quality now is the primary focus over random top line growth. So that’s the, that’s the sort of core foundation where we ensure good quality business coming in and that automatically improves earnings quality. And that’s the link we are executing in our strategy and our day to day decisions. Rationalization actions are deliberate, measured and aimed at improving scalability, better capacity allocation and long term margin stability. So as you can see in the graph on the right, OEM revenue has significantly improved in Q3 to 35 crores and that’s highest in last five quarters.
An important point related to growth is that doing these actions is what is going to help us to grow fast. If we do not remove the misfit or wrong fitting business from the existing business mix, it will have a dragging effect on our capacity utilization, on our number of setups and operational efficiencies and it will hamper our ability to deliver for new business programs. So the more we have similar strategically aligned businesses, the more economies of scale we are able to benefit from. And this is getting reflected in the numbers. And finally CAPEX is our third pillar of growth and it is fueling all the growth initiatives.
Here I’m Going to highlight a more business oriented CapEx strategy that we have updated since the last quarter. 60% of our CapEx allocation is to future growth areas I.e. driveline and axle products. So from I’m talking about our 25 crore FY26 capex budget. So 60% of that has been allocated to future growth areas and the remaining 40% is for the engine, mostly for the engine product group which is also experiencing significant growth through market share increase as well as demand increase. Capex purpose and strategy there is a bias for future growth areas. We are upgrading asset base for predictable growth and KFL’s fixed asset turnover I.e.
sales to Netflix assets is currently at around 3.5 while the industry benchmark is 1.5 to 2. So we are executing on a much smaller asset base and it’s very important to strengthen that asset base which will increase OEE and remove bottlenecks and make more predictable growth. Our funding plan is also aligned to this capex strategy and we have both debt and equity options in the works in parallel. The timing of course would be slightly different and therefore we are keeping both options open. So that’s all for the Q3 updates. In the following slides there are there is more information about the company.
I encourage any first time participants to go through all these slides. In terms of the Board of directors, there’s one update I want to highlight. Mr. Abhijit Sen has been an independent director at Kalyani Forge for 10 years. He had joined in 2016 and therefore as per regulation he’s had to retire in February 2026. So we on behalf of Kalyani Torj, I’d like to express my gratitude and appreciation for his very valuable presence on the board and strategic inputs and direction. So we are very thankful for having him with us now in his place we have Mr.
Swaminathan who has joined us as a as an independent director. And in our next call I will share more updates about him and we will also share his profile online. So that’s all from my side and thank you for listening. I’d like to hand over back to Rajkumar.
Questions and Answers:
operator
Thank you sir for your insightful presentation. Now we begin with a question and answer session. Participant who wish to ask a question may kindly raise their hand or use the chat box. Please note each participant would be allowed two to three questions at a time. For more questions please stand the queue. Thank you. We have saket kapoor.
Unidentified Participant
Yeah, thank you. Rajmar Bhai and Namaskar Viraji. Hope I modified. Sir. We have demonstrated operationally definitely A good quarter. In terms of the EBITDA margin which you have alluded to. The the mood point for investing community is to understand the aspects of the trajectory that you are trying to unravel going ahead there. There are aspects which sir, suppose when, when you people make investment in optimization of your resources in terms of product improvision, in terms of improving the efficiency, we as investors also need that kind of inputs on the basis of which we can model out where this organization may or may not reach over a period of time.
So in prospect of that are these only questions wherein we want to understand of what’s the thought process behind and it will be. It would be. It would depend on the market conditions and then how well you are into the business because we are only sideline. So the first point sir, which I wanted to understand from you is pertaining to the employee cost. I think so efficiency aspect as a percentage of sales. [Foreign Language]That has remained flat at 12 crore or percentage.[Foreign Language]
Mr. Viraj G. Kalyani
Yes, yes. So employee costs have increased in, in the last two years as we’ve had some wage agreements with our, you know, our unions in the, in the, in the operations, in the plants. We’ve also improved our salaries. We are paying at or above market rates and we’re improving the quality of people in our overall team. Now this is again part of fueling growth because you know, employees are also an asset or a form of asset that, that’s how we look at it. And in terms of financials, there will be a fixed cost element to it while also there’s some part of temporary workforce which we can scale up and scale down as per the business conditions.
So we are completely conscious of the high employee cost percentage right now. And our focus is on improving productivity, improving reducing manual work in all the operations, improving staff productivity as well through technology and better training. So we definitely want to bring this percentage down. We are aware of the benchmarks in our industry and that is so that the main approach is to be increasing sales and increase productivity to bring this cost down. While you have seen that many other costs have come down because those are easier to improve and typically employee cost structure is, you know that that impact and that improvement comes in a later stage.
Unidentified Participant
Yes, you are absolutely correct. We understand the limitations here. I’m audible, sir. So what I wanted to understand further. Only three more points and I’ll join the queue. Point number one is you have alluded to that this 15 to 16% EBITDA margin we can also improve upon and our trajectory may be 20% going ahead. So that is correct. About the EBITDA margin part but margin number important then even the EBITDA margin number above the line, [Foreign Language]below the line [Foreign Language]then it does not translates into the the P ratio. So my understanding, I wanted to hear from you is that.
[Foreign Language]Presentation may elaborate product may changes and all current that is all, all good but especially[Foreign Language].
Mr. Viraj G. Kalyani
Very important and insightful question and it gives us an opportunity opportunity to explain better. So the strategy for improving PAT is through multiple levels and it starts from sales, then we get to contribution, then gross margin, EBITDA margin and PBT and then optimizing for tax. So as you can see our PBT performance has been very good this quarter and we’ve had a deferred tax expense which is a non cash expense here. The sort of optimization if we’re strictly looking at from PBT to PAT is to optimize our asset capitalization, depreciation and the deferred tax planning.
So that’s something we will structure as we structure our CAPEX programs. But what’s going to improve the PAT margin the most? The biggest lever is EBITDA margin and that’s why that has been our topmost focus. Historically our EBITDA margin was pretty low and improving that was the top priority. The more you increase EBITDA margin it just lifts up PBT as well as pat as long as we keep depreciation and interest costs in control. So definitely that is our strategy. We, we are keeping a good control on depreciation and interest costs. I know that the interest cost has slightly increased in this these nine months compared to last year.
But that was a function of our working capital optimization and improving our banking. Sort of banking facilities. So we are getting new banking facilities with lower or better interest rates. We are getting new types of facilities which are more suited to our business where interest rate can be further optimized. And our treasury team is now fully focused on that as well. So another part of EBITDA margin expansion which flows into PAT is price improvement. So which improves our, improves the revenue itself. So we have been negotiating prices with customers and for many old products which did not have a price revision for many years.
And we have got positive confirmations from many of the customers who are very supportive and understand the business in our industry. So these are sort of the few, the major levers for improving pat. I wouldn’t declare a PAT margin target right away. I’d still urge all our investors to stay focused on the EBITDA margin growth because that’s where the biggest impact will take place.
Unidentified Participant
I joined the queue and we would also like to understand from you by when are we trying to get to this number of 20 since you have given the order book and the product profile also mix changing. So by when should we start exhibiting those numbers? That would have sufficed. And the follow up I will take post the second partition.
Mr. Viraj G. Kalyani
Yeah. Yeah. So I mean as I said, I won’t give a forward looking guidance on EBITDA margin. Our current priority is stabilize at this level. 20% is the next milestone. So it will take a little more time. But it is definitely within sight and you know we know the approaches for it. So I won’t give an exact. It’s too early to give a milestone date or expected time frame for that. Thank you.
operator
Okay, so. So moving. Moving ahead with the next question. We have question for from V.
Unidentified Participant
What is your deferred tax adjustment done this quarter? Will any of that come in next quarter also?
Mr. Viraj G. Kalyani
Yeah. So deferred tax is tax that. It’s. It’s a sort of tax accounting rule where you have to look at tax as per income tax act and tax calculated as per the book, the company’s books. And there is some difference in the rules of calculating it. And that difference is what has to be booked as a deferred tax. Sometimes it can be plus, sometimes it can also be minus. So the major factor was that in Q4, FY25. Sorry. In Q1 and Q2 there was some significant capitalization of assets this year. And therefore the deferred tax expense expenses come up.
So we expect in next quarter it may become negative as well. That means it will add to the bottom line. But please don’t hold me for that. It depends on several factors.
operator
Hope Mr. Once you got your answer, moving on to the next question. Sir,
Unidentified Participant
it is from Jagdish. What is FY26 revenue and the EBITDA guidance.
Mr. Viraj G. Kalyani
Our FY26 revenue, we are looking at a similar level as last year or slightly higher. I cannot give an exact guidance EBITDA margin. We should see some improvement for overall financial year basis.
operator
Okay, so we have next participant, Mr. Nia Saxena. Okay. Hello. Please unmute yourself.
Unidentified Participant
Yeah. Is it audible?
operator
Yeah, you’re audible.
Unidentified Participant
Yeah. So I just wanted to ask is the operating reset phase that you’re doing in the company, is it complete now? Because since this year was involved in operational cleanup and efficiency actions that were taking place at Kalani Forge, should we expect the FY performance to reflect the normalized operations?
Mr. Viraj G. Kalyani
Yes, definitely. In terms of impact, our operational resetting is bearing fruits as we can see in the margin expansion, in the operating margin expansion, which means EBITDA margin. This is a multi year transformation exercise and we, which we started about one and a half years ago or two years ago. Some major highlights of this resetting have been reconditioning of our forging presses, replacing you know, equipment which should have been replaced a little sometime back, improving die life, resetting production strategies, making sure capacity is allocated to high volume business first and high value. High volume and high value business first.
So bringing all these strategies aligned, getting all the departments in the company to align on the same in line with the company’s targets, that has been a major part of this operational resetting. What was happening earlier was external stakeholder competing demands were kind of taking more priority than a coherent internal strategy of the company. So that’s another big shift that we’re doing. So I wouldn’t say it’s done or complete because operational excellence and continuous improvement is a very core part of manufacturing philosophy. It comes from lean manufacturing philosophy which companies like Toyota had, you know, made into a very, into a fine science, so to speak.
So continuous improvement will be our next phase. As we come out of the, as we finish a lot of the resetting and reconditioning or restructuring activities, we will then graduate to continuous improvement, bringing out more efficiencies, upgrading technologies and so on. I hope that answers the question.
Unidentified Participant
Yeah, yeah, that’s clear now. So I just had one more question, is how much improvement do you expect because of this in cash convergence?
Mr. Viraj G. Kalyani
Oh yes, cash flow is a very important ingredient in our growth journey. We have targeted to reduce working capital. Currently it is higher than what we expect, but we are now bringing in a more coherent method of reducing working capital. So as we improve our capacity utilization, as we do more long dive runs, more high volume production, it automatically improves inventory management and shipment and cash flows. Along with that there is a lot of efforts on suppliers terms as well as getting the right kind of suppliers on board, rationalizing purchasing, getting rid of unnecessary purchase items that will reduce our payables burden.
And on the receivable side we have, I’m happy to announce that we have installed an automatic credit control system through our ERP and therefore we’re able to immediately control if there are any sales happening where there’s a credit risk from the customer side. So this brings in a lot of discipline, automatically puts in discipline in various internal departments as well as in our interactions with customers, therefore improving our receivables. So as I was talking about our CAPEX strategy and Looking at cash flow, one high level strategy that we identified is that we need to increase our fixed assets and reduce our current assets.
And therefore we also need to reduce our short term debt or working capital debt and increase our long term debt, which is the more healthy mix that will fuel growth. So that’s how we are going about it.
Unidentified Participant
Yeah. Thank you, thank you for the explanation.
Mr. Viraj G. Kalyani
Thank you.
operator
So, moving with our next question, it is from Swami.
Unidentified Participant
Revenue grew only to 2/4 quarter on quarter despite strong margin expansion. Is the company consciously sacrificing growth for margin? Another other question we have, is there any seasonality expected in Q4?
Mr. Viraj G. Kalyani
Yes. Thank you for your question, Mr. Swami. So short answer is no. The company is not consciously sacrificing revenue. I mean not consciously trying to control revenue to increase margins. We are consciously removing bad business and bringing in good business into the company. And this is what will improve future ability to increase sales as well as future sales and improve the margins. And that’s what we have highlighted in our business mix optimization roadmap. So it’s a very important thing to understand. You may look at say several years of our history where sales have been flat, but what’s happening in the recent years is that we are bringing in new business and we are doing this rationalization of old business simultaneously.
And that’s why it is still looking flat. But this kind of the current lower sales growth is more deliberate compared to earlier and it is aimed at enabling more growth in the coming quarters.
operator
Okay, so moving ahead with next question we have from Wench,
Unidentified Participant
Your view on FTA with Europe, do we get some advantage on exports? What is the current capacity utilizations? Any plans to dilute equity or add debt this year?
Mr. Viraj G. Kalyani
Okay, there’s multiple questions. First one is FTA Free Trade Agreement. Second was
Unidentified Participant
advantage on exports.
Mr. Viraj G. Kalyani
Yeah.
Unidentified Participant
What is your current capacity utilization?
Mr. Viraj G. Kalyani
Okay, I didn’t get the advantage on exports question. Can you repeat that.
operator
Mr. Bunch?
Mr. Viraj G. Kalyani
I mean, can you just repeat the question?
Unidentified Participant
Yes, sir. Your view on FTA with Europe, do we get some advantage on exports?
Mr. Viraj G. Kalyani
Okay, fine. So it was part of the same question. So there’s two questions. Got it. So as many of you may know, India has done a free trade agreement with Europe and then soon after that with the US as well. Both are very positive for the country as a whole and the manufacturing industry and the forging industry as well. Or auto component players like Kalyani Forge. So with the Free Trade Agreement agreement in Europe, of course there is some fine tuning and you know, finalization of the fine print. So to Speak. And the exact agreement will take effect from January 2027 if I’m not mistaken.
So that’s when the real benefits will start kicking in. But we do see good interest from European customers and we are also focused on prioritizing growing business in Europe. That’s how you can see some of our new business of transmission parts going to Europe for marquee oem. That’s one of our priority areas of growth. Similarly, the US Free Trade Agreement is also very advantageous for India as we have the lowest tariff compared to many other sort of medium or low cost countries. So that’s an advantage that we would take. And our first priority would be more business in Europe and then grow the business in us.
But it’s not very easy to predict as customer priorities can. You know, there’s a lot of variables involved, but we are bullish on both geographies. Second question was on utilization. So utilizations have definitely improved in Q3. However, the margin expansion has been driven more by business mix discipline and operational efficiency rather than pure volume absorption. And we are not yet operating at peak capacity. In fact, there’s a lot more headroom for increasing our overall equipment efficiency and therefore the productive capacities and utilization. So there’s a lot of operating leverage potential that we still have.
operator
Okay, so next question from Jagdish.
Unidentified Participant
When can we expect consistently positive PAT without adjustments?
Mr. Viraj G. Kalyani
Yes, that’s a good question. And of course this, this, this quarter was more of an aberration in terms of deferred tax expense. So our aim is always to have consistently positive path quarter on quarter at the same time. I mean in a, in a transformation phase there, there can be such instances. The core focus is to look at our fundamentals of profitability which are pretty strong. So our operating profitability is structurally improved and that’s what’s reflecting in our pbt.
operator
Okay, so next question from once.
Unidentified Participant
What is the max revenue potential rough figure with current capacity that we have on board?
Mr. Viraj G. Kalyani
I would answer that from more from a capacity point of view. So our installed capacity theoretically can produce revenues of close to 500 crores. However, the fixed asset value currently is only 74 crores, which is in CapEx. Slide. Yeah, here. So 70, 74 or 75 crores of fixed asset value. Industry benchmark for sales to net fixed assets is 1.5 to 2. So. We are currently having revenues of 3.5 times the net fixed assets. So our plan is to increase the capex to bring the asset base up to a good level. That is what will help us realize that 500 crore installed capacity. So right now available capacity is much less in the range of 200 crores. But that’s also been a stretched capacity. So what we are working on is making it more reliable capacity, more predictable so that our sales become more reliable and predictable as well. And this is. I’m talking on the forging side because that’s the major part of the cost structure, machining capacity.
We. Our utilization is much higher. And there we add more capacity as and when new business programs come in.
operator
Okay. Okay, sir. So moving with our next participant. Vena.
Mr. Viraj G. Kalyani
Yes, yes.
operator
Yes. Mrs. Vina, you can unmute yourself. Please unmute yourself. This has been. Okay.
Mr. Viraj G. Kalyani
Good morning sir. I am Veena Revachetty here. Am I audible now?
operator
Yes, ma’. Am.
Mr. Viraj G. Kalyani
Yes. Yes.
Unidentified Participant
Okay. I. Yeah. I would like to take this opportunity to thank Rajkumar and some of your team members, especially Rajkumar for helping us to, you know, get back our shares which were, you know, moved to iepf. Yeah. Almost six months to one year straddle. And then he helped us a lot. So I wish to thank Rajkumar for all the help and.
Mr. Viraj G. Kalyani
Okay. Very happy to hear that. And I’m glad you got your shares back.
Unidentified Participant
Yes, yes, yes. So the shares were in my father’s name. Mr. Basaraj, Reva Shetty and my brother. So I actually took help from Rajkumar and was really very helpful. And I wish you and the entire team and the organization for a great future.
Mr. Viraj G. Kalyani
Thank you so much. Your blessings mean a lot to us.
Unidentified Participant
Thank you, sir. Thank you.
operator
Yes. Yes. Thank you. Pleasure to you.
Unidentified Participant
Yeah.
operator
So moving with the next participant, Saket Kapoor.
Mr. Viraj G. Kalyani
Yes.
operator
Yes, sir.
Unidentified Participant
Yes, sir. Just to add on to what you just spoke about the potential of this 500 crore revenue at. At max given the current capacity. And sir, when you mentioned about this machining part and the forging part, if you could just briefly outline to us how are things aligned in terms of our forging and the machining capacity and the type of order book, order bins that we have got in the. In the connecting rods and all that forms part of which portfolio. And secondly, we are doing capex to improve and reach that figure of 500.
Is it about the finishing lines that we are working to currently to get installed or just give us some more prospect?
Mr. Viraj G. Kalyani
Yeah. So the forging versus machining, our forging asset base is much older and it tends to be that way because forging presses can run for anywhere from 20 years to 50 years or even 100 years if you really maintain them well and do regular reconditioning so that’s the whole ball game in the forging side. On the machining side you have typical VMC CNC machines which have a life of 10 to 15 years and then you have to replace it. You can do some reconditioning and extend the life a little bit but you can’t recondition it and make it working like new which is more possible in the forging presses.
So majority of the reconditioning work, refurbishment is done in forging, in the forging capacity. And as you can see in this slide, about 7.6 crores of our CapEx budget is towards reconditioning. Most of this is for forging. I’d say maybe 10% of this is for machining. So that’s, that’s the capacity in terms of the capacity and capex in terms of new business where we are looking at driveline, engine oil, all products as well as axle business. So especially in, in both the driveline business and some of the engine business a lot of the CAPEX is for refurbishing the forging presses which will increase the production output for the new business of driveline and engine.
And driveline is our lot of our future growth business. So we have already done two forging presses in the driveline division. We have done a complete reconditioning in the last two quarters. So we will take the third press now and we will replace some of the other ancillary equipment there. So all this will improve productivity, improve quality, reduce rejections and all of this automatically starts increasing volumes and top line enables the top line growth. On the machining side we, we do have machining investments in Driveline especially since we are doing, we are graduating from as for supplies to fully finished spline rolled parts, machined and spline rolled parts.
In the axle segment we’re also doing induction hardening. We’re one of the few companies in India that does induction hardening for forgings and we have very good process capability there. So there also we are putting in new investments. So these are driven, the new machining investments are all driven by new business programs and increase in value addition.
Unidentified Participant
Only if I may add. And then we will also conclude. I think so.
operator
Yes sir.
Unidentified Participant
Firstly for the nine months what how much have we spent on the CAPEX part and also what portion of the CAPEX has been capitalized and what should be the number for 31st March 26th and then sir, in your, in your presentation we have, I am correct me there, we have not mentioned about our clientele so if you could just give us a slide of who are our prominent client in terms of the domestic as well as the export party, they can be disclosed. And thirdly sir, on the. On the order wins for the. I think so the connecting rod and the driveline business.
What is the visibility on the. On the same sir in terms of execution, have we commenced the execution or what’s the thought process?
Mr. Viraj G. Kalyani
Yeah, okay, so coming first question was on capex how much is spent and how much is capital? So out of the 25 crore budget we have spent around 18 crores in up to Q3. This is a ballpark figure I’m telling you and amount and the rest we are going to complete in this quarter. In terms of capitalized value as you can see in this fixed asset graph it’s simply 74 minus 60 which is. This is Q4 fixed asset base of 60.4 and 74 is the latest. That’s a rough estimate. So around 14 crores is capitalized so far.
But this 14 crores may include some projects from last year as well. So you cannot automatically relate the 18 crores to the 14 crores. I hope that makes it clear. But what I want to highlight is that our Turnaround time for CapEx projects is pretty efficient and it is something we consciously monitor. So we are, our goal is to productionize assets as fast as possible, productionize the capex and bring the start getting the returns as fast as possible. There may be some very long gestation projects but those are more of an exception. Most of the projects in this year’s capex is more of a immediate turnaround and return return on investment coming to the client base.
We don’t give names, we don’t declare names but I can share that we work with all the top OEMs in the passenger car and in the truck segment in India as well as in the tractor space also in the construction segment. So all the industry leaders, you can take any of the top five names. Typically we would work with most of them or the top 10 names we would work with most of them. And third question was on the new business when it will, what’s the status and when it will kick in. So our aim is to productionize at least 30 crores of this new business in FY26.
So already a good amount has been, has been launched earlier this year as well as in last quarter so around 30 crores. We are looking at productionizing this year which will be a good jump compared to earlier years.
Unidentified Participant
30 crores already done or or total 30 crores for this financial year.
Mr. Viraj G. Kalyani
Yeah. By March end we should productionize. 30
Unidentified Participant
and how much have we done?
Mr. Viraj G. Kalyani
Projects which are in the last phase of launching.
Unidentified Participant
How much have we done for nine months?
Mr. Viraj G. Kalyani
Sir, I, I don’t have an exact number so I’m. It will be less than 30 crores. Maybe you can assume 20 crores done in nine months. But again very rough figures.
Unidentified Participant
Okay, so last point, one of the participants did ask about the seasonality aspect also and the nature of Q4 for the industry. So if you could have just.
Mr. Viraj G. Kalyani
Yes, sorry, I missed that question. Yes, seasonality is present in, in our end customer segments. So we work in passenger car, trucks, construction, sorry agro and industrial segments. We typically club all the non auto in one major segment. So Q4 is generally good for passenger car and trucks on the domestic side especially. But the biggest growth is typically in the festive season which is in around Diwali just before, just before Diwali time. So that’s the major festive season bump that takes place in automotive. In a segment like construction, the demand goes down in the monsoon months because there is less construction activity happening during the rains.
So around that time construction segment takes a dip and then it goes back up in Q3 and Q4. Agriculture also has a seasonality. So tractor sales or associated business with tractors is dependent on the agricultural seasonality which, which is also with respect to the crop seasons. And so I think that that’s. Those are the major, major trends. Now the good thing is these take place at different times of the year. So we are fairly diversified and have a good hedge across segments in terms of longer period cyclicality. There are multi, over multiple years there can be a peak and a slump in both in automotive as well as in the truck space, in the passenger car and the truck space.
And that is driven by any sort of inventory buildup in the, in the distributors and or retailers, sorry the dealerships. If there’s a lot of inventory build up then OEMs tend to cut down their production, bring their inventory levels down. So that, that depends a lot on market demand, general demand as well. But coming to a more of a macro story, India is a high growth market and automotive passenger car ownership is only increasing and there is also a very visible trend of premiumization so in all consumer segments. So these are all very strong long term sustainable trends for us.
Unidentified Participant
Thank you sir for all the elaborate answers. I have only one suggestion to make sir, before the call conclude. Number one, sir, the presentation has been very elaborate. Sir, it and it is and it has put forward the aspects very clear but the timing of uploading is. Is not giving us an opportunity to even appreciate the work. Good work done by the team sir. That is headed by you. Probably so sir, I would request that since we have made press release also this time a part of our numbers. That’s again a part of congratulations on on that part.
Kindly, kindly continue with the press release and the presentation simultaneously or within an hour of your reporting. So that would suffice questions that would make the interaction more elaborate, more exhausting.
Mr. Viraj G. Kalyani
Okay.
Unidentified Participant
Other than that said all investors are only looking to invest in organization where we can see the profitable growth ahead. And it. It appears that we, your team, the Vriddhi council, the board, everybody is working towards enriching the value for the shareholders in large. So that message should be very clear also on that point and hope to interact further with you going ahead and hope the suggestions are deliberated upon. Thank you sir and all the best.
Mr. Viraj G. Kalyani
Very happy to hear your words and and it’s very encouraging. So and and your questions also help us to clarify our thinking and our you know putting our thoughts across to the. To all the shareholders. So thanks for your valuation in these calls.
operator
All right sir. Thank you. Sake sir, I seek your permission sir. Should we conclude this call with the last questions if any participant is remaining over here.
Mr. Viraj G. Kalyani
Yeah, sure.
operator
We have Mr. Sunil Kumar.
Unidentified Participant
Sir, good afternoon. Yes sir,
Mr. Viraj G. Kalyani
good afternoon. Good afternoon
Unidentified Participant
sir. I’m much more happy the ride is on the right track.
Mr. Viraj G. Kalyani
Okay, good to hear.
Unidentified Participant
And definitely your efforts are visible in the balance sheet. So definitely we are hopeful for nicer days ahead. And our thanks to the team Kalyani. Forge for doing pretty nice job and. Also to you for giving us very nice figures every quarter. Thank you sir.
Mr. Viraj G. Kalyani
Lot thanks for appreciating and always good to have you on our call.
Unidentified Participant
Yes sir. Yes sir,
operator
thank you. Yeah. So with this note we should end we’ll conclude this call sir. So thank you all the participants for joining us today. Please note the recording and the transcript of this call will be made available shortly the stock exchanges portal as well as on the company’s website. With this we conclude today’s conference call. Thank you once again for your participation and continued support. Have a great day.
Mr. Viraj G. Kalyani
Thank you.