Kirloskar Oil Engines Ltd (NSE: KIRLOSENG) Q1 2026 Earnings Call dated Aug. 07, 2025
Corporate Participants:
Unidentified Speaker
Gauri A. Kirloskar — Managing Director
Sachin Kejriwal — Chief Financial Officer
Rahul Sahai — Chief Executive Officer
Ridhi Gangar — Chief Financial Officer, Arka Fincap Limited
Analysts:
Unidentified Participant
Amit Shah — Analyst
Balasubramanian A — Analyst
Jason Soans — Analyst
Suraj Malu — Analyst
Umesh Raut — Analyst
Teena Virmani — Analyst
Jeetu Panjabi — Analyst
Umakant Sharma — Analyst
Bharat Shah — Analyst
Sourabh Arya — Analyst
Pratik Dharmshi — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the Kirloskar Oil Engines Limited Q1FY26 earnings conference call hosted by Antique Stock Broking Limited. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Amit Shah from Ntech Stockbroking Limited. Thank you. And over to you sir.
Amit Shah — Analyst
Yeah. Thank you Shruti. On behalf of NT Stockbroking Limited, I welcome you all to Kirloskar Oil Engines Limited 1QFY26 Earnings Conference Call to discuss the results. We have the senior management team of the company represented by Ms. Gauri Kirloskar, Managing Director of the Company, Mr. Rahul Sahai, CEO of the Company and Mr. Sachin Kejriwal, CFO of the Company. I would now hand over the call to Ms. Gauri Kirloskar for her opening remarks post which we can open the floor for Q and A over to him.
Gauri A. Kirloskar — Managing Director
Thank you very much, Amit. Good evening everyone and thank you for joining us today. In addition to Rahul Sahai and Sachin, we also have with us Kiran Kapriyar, Chief Human Resources Officer and Farah Irani, the Company Secretary. And from ARCA we have Riddhi Gangar, CFO of arca. I will begin with business and operational updates and then Sachin will provide a brief overview of the financial financial performance following which we will answer any questions you may have. We’ve had a strong start to fiscal year 26. I’m happy to share that the first quarter has been a record breaking one for us.
We closed Q1 with the highest ever net sales in Coel’s history at 1434 crores for the standalone business and 1751 crores for the consolidated business. What makes this particularly noteworthy is that Q4 has traditionally been a best performing quarter. To surpass that in Q1 reflects strong demand, sharper execution and a clear alignment to our long term aspirations under the 2B 2 billion strategy. Also to put the numbers in context, in the same quarter of the last financial year on the Palm Gen side, we were at the peak of the pre buy phase right before the CPCB4 transition.
Despite the pre buy impact, we still grew at 6% plus. And if we normalize the pre buy effect, the growth is 22% in comparison with the same quarter of last year. We see that despite all the challenges in global markets, tariffs, geopolitical uncertainties, the Indian economy remains resilient and strong. We see strong tailwinds domestically and we see the demand staying strong for us as a business. During the quarter we made a regrouping within segments. The farm mechanization business, which was earlier classified under the B2C segment, is now grouped under the industrial business within the B2B segment.
Accordingly, you will see the numbers regrouped for the current and prior quarters in the presentation. Looking at the standalone sales breakup, the B2B business witnessed 8% year on year growth with all subsegments except industrial recording double digit growth. The B2C business grew 4% with WMF sales remaining flat at 154 crores, while international B2C business grew at a strong 76%. In terms of geographic mix, across both B2B and B2C segments, domestic sales stood at 1298 crores, registering a growth of approximately 6% year on year. Export sales stood at 136 crores reflecting a 21% growth year on year.
EBITDA for the quarter stood at 190 crores reflecting a margin of 13.2% versus 13% last year. Numbers for the previous period are excluding reversal of provision for overdue receivables made for a customer towards sales made in earlier years. EBITDA margin at standalone levels for the previous period, including reversal for overdue receivable provision was 14.8%. In the current period, there is no such reversal. Let me now take you through what drove this performance. The power generation business saw a strong revival in demand. We recorded our highest ever Q1 sales in the segment at 609 crores. This renewed demand coupled with a good traction in high horsepower products helped us build solid momentum.
The new products that we launched, including the Sentinel range and the Optiprime range, is seeing good traction. There is customer acceptance and the products are performing well in the market as per specification. We also hosted our Power Gen Conclave this quarter which was very well received. It gave us a valuable platform to reinforce trust amongst our partners and showcase the next leg of our innovation roadmap. As I had mentioned in some of our earlier calls, our product range on the Power gen side is one of the most exhaustive globally and we have products that cover the entire range of the genset industry.
We also are making significant inroads into markets where we have not traditionally been strong and we are closely monitoring the progress and this will be a journey. Moving to the industrial business, we progressed on two strategic projects, one for NPCIL and another for the Indian Navy. These are deeply aligned with our long term ambitions. We are very keen to participate in the indigenisation program that our defence agencies are focusing on. We believe that this is not just a great opportunity from a business standpoint, but also an opportunity to participate in nation building. In our Fluid dynamics business or the B2C arm, we had a stable quarter.
We believe that operationally we are on good fitting now. We see the business now delivering consistent results with double digit EBITDA margins and positive cash generation which is good news for us. There has been a lot of work done post the plant consolidation on operational efficiencies and this is showing rewards. We have to make sure that this consistency in results is maintained as we take the next steps of increasing market shares. On the international front, our performance continues to be very encouraging. The Middle east and North Africa region saw strong demand. Our run rate has been consistent in this region which is good news for us.
International business remains a key focus area for us and we will continue our journey of building out this business. Now a few updates on the consolidated business. Also within B2C business, we had successfully closed the divestiture of our cables and pipes business which is called Optiqua. As I had mentioned in my earlier calls as well, we have set out on a strategy that is clear on what is our core and what are the businesses that we will get into and we will focus on those. There is a product roadmap in place and over time we will build out the product portfolio in line with this roadmap.
This action of divestiture of Optiqua is in line with that strategy. At arca, we had outlined a strategy to build out a granular retail book to complement the stable wholesale book that we currently have. In line with the strategy, we are making progress. You will see more presence of arca in many tier 2 and tier 3 cities across the country. As I mentioned earlier, it is in our ethos to build businesses that sustain generations and it is also our expectation that each of our businesses remain successful in their own right. This principle will apply for ARCA as well as we grow this business.
Looking at the consolidated performance, net sales for the quarter was at 1,751 crores registering 8% year on year growth. Net profit from continuing operations for the quarter was at 134 crores. That’s approximately a 1% increase year on year. Please note that the numbers for the previous period are excluding exceptional items and including reversible provision for overdue receivables made for a customer to a sales made in earlier years. Net profit for the previous period excluding exceptional items and excluding reversals for overdue receivable provision was 133 crores. In the current period there are no such exceptional Items and reversals.
Three years before I thought of Coel as a 75 year old startup and that was how we had to operate to build out the organization that we have today and the product portfolio. Now I call Coel a 75 year old incubator of many startups. We have many areas that we are working on, many products that we are introducing that are new, many new markets that we are trying to enter, non internal combustion engine technologies that we are trying out to fast track our progress. Whatever we do is in line with our strategy and we will not lose focus on the path that we have set out for ourselves and I am very confident in Team Coel to deliver on what we have set out to do with that.
I’ll hand it over to Sachin who will walk you through the financial performance in detail. Thank you.
Sachin Kejriwal — Chief Financial Officer
Good evening everyone. Thanks Corey for the update. I will now give a quick walkthrough of the financial performance for the standalone and consolidated business. The result and the presentation for today’s call has already been uploaded on the exchanges. Our website Q1 top line registered growth of 8% year on year and 2% quarter on quarter. As Gauri mentioned, we believe this is a good start for the year. Even though we had a really good quarter in Q4 last year, we have surpassed it and grown marginal this quarter. Coming to the financial performance, I will start with the standalone performance first.
Net sales at 1434 crores for Q1FY 26 versus 1334 crores for Q1FY 25. That is 8% increase year on year. EBITDA at 190 crores for Q1FY 26 vs 175 crore for Q1FY 25. That Is 9% increase year on year. Ebitda margin at 13.2% for Q1FY 26 vs 13% for Q1FY 25. Net profit at 123 crores for Q1FY 26 Versus 117 crores for Q1FY 25. That is 5% increase year on year. Cash and cash equivalents of 639 crores by end of this quarter. Please note that cash position is net of debt and includes treasury investments numbers for previous period I.e.
q1 FY25 are excluding reversal of provisions for overdue receivables made for a customer towards sales made in earlier years. EBITDA margin at standalone level for the previous period I.e. q1FY25 including reversal for overdue receivables provision was 14.8% in the current period I.e. q1 FY26. There is no such reversal with payable at 76 days and receivables around 41 days. We are maintaining healthy working capital levels. Inventory is now at comfortable level of 53 days marking an improvement over quarter two and quarter three of last year when we were navigating the transition to new emission norms in both the power generated industrial segments.
Now here is the further breakdown of the standalone sales for the quarter. The B2B sales were at 1262 crores, that is 8% growth year on year. Power Gen was at 609 crores which was 15% increase year on year. PowerGen sales for the quarter first time have crossed 600 crores, Industrial at 310 crores, that is 8% decrease year on year. Please note we have reclassified our FMS business into B2B industrial business unit from this quarter which was earlier part of B2C business. Distribution in aftermarket was at 223 crores, that is 12% increase year on year and international business of B2B was at 120 crores, that is 13% increase year on year.
The B2C sales were at 172 crores registering a 4% increase year on year. WMS was at 154 crores at almost same level as previous year. Quarter International business of B2C was at 18 crores, that is 76% increase year on year. Now looking at the consolidated performance for the quarter, revenue from operation at 1764 crores for Q1FY26 versus 1632 crores for Q1FY25 that is 8% increase year on year. Net profit at 134 crores for Q1FY26 vs 133 crores for Q1FY25 I.e. 1% increase year on year. Please note, numbers discussed here represent continuing operations only. Numbers for the previous period I.e.
q1 FY25 are excluding exceptional items and reversal of provisions for overdue receivables made for a customer towards sales made in earlier years. Net profit for the previous period I.e. q1 FY25 excluding exceptional items and including reversal for over receivables provision was 151 crores in the current period. There are no such exceptional items in reversal now. Let us have a look at consolidated segment performance now. B2B segment revenue for the quarter was at 1,276 crores which is 9% growth year on year. The segment PBIT was at 139 crores reflecting approximately 7% decline year on year. The decline was due to one time factors such as reversal of provision for overdue receivables.
PBIT for the previous period excluding reversal for overdue receivable provision was 126 crores, that is 11% year on year growth. In the current year there are no such exceptional items in reversal. Operationally we remain confident in the underlying strength of the business. B2C segment revenue for the quarter was at 292 crores flat year on year the segment PBIT was 28 crores that is 18% decline year on year. Also within B2C business, the disinvestment of our cables and pipe business Optica was effectively completed. This moves free up capital for redeployment into higher growth areas aligned with our core strategy Financial services.
Segment revenue for the quarter is at 196 crores reflecting 18% year on year growth. The segment TPT was at 14 crores that is 28% decrease year on year. The asset under management was of 06-30-2025 stood at 7231 crores. Please note numbers discussed here represent containing operations only and the reclassification of our FMS business into B2B and B2C business. The PBIT and PBIT numbers are before exceptional items. With this overview I would like to restate that we have made a steady start to the year. As we move forward, our efforts are increasingly aligned with our long term 2B 2B vision.
We are progressing with measured steps and shaping a strategic roadmap that not only accelerates growth but also ensures it is sustainable securing long term value for the business. With these key updates now we will open the forum for the Q and A session.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use hands while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Bala Subramaniam from arihant capital market Ltd.
Balasubramanian A
Good evening sir. Thank you so much for the opportunity. So my first question regarding defense and navy vents and we got some 6 megawatt marine engine orders. I just want to understand what the pipeline for similar orders and how we. Will manage execution risk in terms of IP development delays or any other risk we have. My first question.
Gauri A. Kirloskar
Thanks Bharat Subramaniam. Thanks for your question. So this order is for the development of a 6 megawatt marine main propulsion medium speed engine. And it’s a order for a prototype development. So at this stage the order is just for prototype development. We have a certain amount of time to be able to execute that and build that engine. And if we do that successfully, then we are in line for the orders of that same type of engine.
Balasubramanian A
Okay, madam. And secondly, Sanil client consolidation drove B2C margin to double digit. I just want to understand whether it’s early double digits or are high double digits. And how will agro demand cyclicality impact water management solutions?
Gauri A. Kirloskar
Yeah, it’s a good question. So the margins are at low double digits and we see that sustaining. We do think that it’s a margin that we can sustain over the long term and even improve. And in terms of agri cyclicality, it certainly does exist. But I think at the kind of market shares that we are at, we are aiming to improve those market shares. So we will aim for the cyclicality not affecting us too much also as we build out the product portfolio to look for products that could work when the agri cyclicality is not in our favor.
Balasubramanian A
In PS5 transitions, we did some 20%. Kind of price hike. So whether we are gaining volumes or customers absorbing these price hikes or we are losing some marginal accounts.
Gauri A. Kirloskar
Okay, I’ll request Rahul to answer that question.
Rahul Sahai
So if you look at the CVBS5 transition that has happened, we have actually very successfully emissionized our full portfolio on the construction equipment side. And we are not only gaining volumes with our customers, customers that we currently have, but we’re also slowly gaining traction with customers that were not there with us earlier. And we’re also entering new applications from a revenue impact standpoint. You will see those impacts eventually coming in. But we are seeing a lot of positive response.
Balasubramanian A
Got it, sir. Thank you.
operator
Thank you. Our next question is from the line of Jason Sones from IDBI Capitals. Please go ahead.
Jason Soans
Yeah, thank you so much for taking my question. And congratulations on a good set of numbers. First question just pertains to, I mean PG segment, the power Generation segment has done really well with the 15% growth. Just wanted to know you know in terms of verticals, in terms of the infra verticals where is the demand emanating from? Like for example real estate or is it broad based, just some color on that?
Gauri A. Kirloskar
Yes, thank you for your question. So yeah, I mean the same segments which is infrastructure is essentially real estate and whether it’s commercial or residential developments, these are the normal sectors that we look at in terms of demand and it’s actually broad basis across the, across the board that we’ve seen better demand.
Jason Soans
Yeah, okay, thanks for that. And my next question is pertains to, I mean we’re seeing some after some good growth in the industrial segment we saw de growth in the 1Q some weakness here. And similarly on the same lines we saw good growth in the international where I can see if you club the thing it’s basically 19% yoy growth. So just wanted to know what an international was seeing some weakness in the past quarters. So just wanted to know the reason why the pickup in the international one and why the weakness in the industrial side of things.
Gauri A. Kirloskar
Yeah, so the industrials what we’re seeing actually is if you compare it to last year there was a pre buy that we saw in railways in the last year for industrial for Q1. So that’s what’s impacting the increase that you see. And on the international side, if you recall on some of the earlier calls we had talked about the business model change that we had done in the Middle east region which was essentially to appoint a genset OEM called MySPAN in that region and we would be operating through them. And we had aligned all of the dealers and distributors in the Middle east and North Africa region to my span.
So there was some, you know, like I mean essentially as that business settled down because we had introduced one more party in the mix. So what we’re seeing now is the pickup happening. That whole thing has settled down. We’re seeing that the strategy that we had for the Middle east market in terms of appointing a GOEM and that being the right strategy for power gen and growing up, the power gen market in the Middle east is playing out. So settle down. We’re seeing that traction and I think we will continue to see that traction as we go forward.
Jason Soans
Yeah, thank you so much. And just also just wanted to know, I mean last, the last quarter you had given the HHP sales so would it be possible to give it for this quarter as well the hhp sales for 1Q.
Rahul Sahai
Generally we don’t share the volume, share the value for each segment within the power gen and we have given overall value for the power gen business. So stick to that at the moment.
Gauri A. Kirloskar
Yeah, but we’re tracking HHP node by node very closely as it’s obviously a new market for us. And I can say that we are seeing our market shares increase node by node with our presence in those segments with the product portfolio that we have now.
Jason Soans
Yeah, sure. Last year you had given that it’s a. You done 110 crore of sales in the whole year. So I just thought, you know, anyways, sure. And just lastly for this first set, I just would want to know when I go to the annual report, you know, the loss for the Kirloskar Americas Corporation KAC has widened, you know, compared to 24 and it has widened by quite a large amount. So just wanted to know what is the reason for the same. I understand you have Wildcat etc as well in that subsidiary. So yeah, just wanted to know what is the reason for that.
Gauri A. Kirloskar
Yes, yeah, happy to answer that question. So yeah, you know, so the business and other US market is the largest genset market in the world and it is a market where. Which is new for us and we have to continue to invest in building out what we want to build up there to have a significant presence. So today our presence is pretty negligible and what we will see is we will continue to make investments and that’s why you’re seeing the gap in the numbers. But it’s a strategic call where, you know, I think that we have to continue to do that so that at some point we are present in that market in, you know, in a meaningful way.
So that’s what you’re seeing.
Jason Soans
Sure. Thanks for that. Thanks. I’ll come back in the queue for further questions. Thank you.
Gauri A. Kirloskar
Sure. Thank you.
operator
Thank you. Our next question is from the line of Suraj Malu from Catamaran. Please go ahead.
Suraj Malu
Hello. So when, when we, when we gather that multinational companies spend over a billion dollars in developing a new engine platform. My question was what is our plan in developing new engine platforms for let’s say 1500 KBA and 2000 KBA kind of high node single engines. Obviously we have this throughout Opticim offering right now. But if you could talk about some timelines and budget for developing these platforms, these large engine platforms.
Gauri A. Kirloskar
So the platforms you’ve talked about, we already have single engine nodes for 1500 as well as for 2000 KVA shortly. So we, you know, of course we’re not spending the same amount of money as you mentioned for the global companies, but we continue to invest in our R and D programs across the product portfolio that we want to build. And we already have some of the nodes that you mentioned.
Suraj Malu
Could you share some sort of client wins or any success stories with these nodes or let’s say large engine nodes in the recent quarter?
Rahul Sahai
Yeah. So for example, if you look at 1500 KVA, we routinely do several of these on a month to month basis and we are selling it to government clients as well as to private companies. It may not be appropriate for me to give out names of customers, but it’s almost routine for us at this point.
Suraj Malu
Could you share some industries applications like which industry is going into.
Rahul Sahai
Yeah, so it goes right across. It goes into manufacturing, it goes into airports, it goes into construction. So real estate developments all across.
Suraj Malu
Great, thank you.
operator
Thank you. Our next question is from the line of Umesh Raut from Nomura. Please go ahead.
Umesh Raut
Hi team, good evening. My first question is pertaining to power generation segment.
operator
Sorry to interrupt. Umesh. Sir, your voice is sounding very low, not clearly audible.
Umesh Raut
So is it audible now?
operator
Yes, now it’s better. Sir, please go ahead.
Umesh Raut
Yeah, okay, thank you. My first question is pertaining to power generation segment. So if I look at current demand for power generation, especially from reality segment. So in your view, how we are seeing that demand currently looking like whether we are more closer to big kind of a demand, how we are setting it in terms of cyclicality and also if you can talk about other emerging sectors as well, data center, qsr, retail, hospitality, how do you see demand over the period of say next one year or so.
Gauri A. Kirloskar
So as I mentioned in my opening notes, we see sustained demand in the domestic market and it’s, it’s actually across all of these segments and specifically, and you know, you mentioned some, some of these segments like real estate, etc. There’s no, we’re not seeing any cyclicality, we’re seeing sustained demand.
Umesh Raut
Got it. And the reality demand, is it broad based in terms of geographies or are you seeing differential demand with respect to any one particular region or any one particular kind of a breakup between urban, rural and similarly? I mean if there is any action on the pricing side during the quarter, have you seen any discounts given to the distributors? Because we have seen correction in the Kira material price, that is Pig iron and other things.
Rahul Sahai
Yeah, so I mean if you look at, in terms of pricing actions, we have also the market closely and we are correcting in case the minor corrections required. But there’s Nothing significant that we’ve done and there are no significant changes that have happened. The market is stabilizing.
Gauri A. Kirloskar
And your first part of your question which is on demand, we’re seeing it across certainly in terms of the higher KVA nodes, it would be more prevalent in urban center rather than rural because of the kind of developments and the size of developments we’re talking about. But yeah, no particular location or pockets. It’s across, it’s across the board.
Umesh Raut
Got it, got it. My second question is pertaining to distribution or aftermarket. So do you see a consolidation happening in terms of branded players now more and more since last few quarters and especially with the launch of CPCP4+ where electronic content could be relatively higher so demand prospects could be relatively better for distribution business going forward.
Gauri A. Kirloskar
Yeah, so I think, you know, with the, on the aftermarket and distribution side, what’s happened with the CPCV4 plus emissions change and which you mentioned in your question is that all of the elect, all of the platforms, all of the engine platforms have moved to electronic engines and that means the service has become proprietary. So certainly wherever there would have been freelancers or people who are out of say service dealer system who are servicing the engine, that’s not really possible anymore. So to that extent, yes, consolidation has happened on the aftermarket and distribution side where the service for our engines has become proprietary for the CPCB4 plus range.
Umesh Raut
Got it. One clarification here. If you can share whether you are servicing aftermarket for new engines through your in house team or you are doing it more of on the outsourcing basis.
Rahul Sahai
Yeah. So when it comes to our service operating model, we do both. So we have our own service dealers and we have service engineers that are part of the dealership organizations but then are certified and trained by us. So we do service via them and then we have service contracts and service manpower that we also have directly on kiloscoil engines. So it’s a composite model depending on what kind of contract or what kind of service operations need to be done.
Umesh Raut
Got it. My last question is pertaining to power generation. Again on the bookkeeping side, if you could share number of percentage contribution from CPCV4 plus products in terms of overall turnover for power generation.
Rahul Sahai
See we have transitioned completely to the CPCB4 era. So up to 800 kilowatt all our products that get shipped out are CPCB4 plus compliant. Anything over and above that qualifies under the pollution state pollution control norms and our products comply with that. We’re not really giving out segmental, you know, cuts at this point. But just to answer your question, every product that is CPCB4 compliant is being shipped out. So only CPCB4 compliant products up to 800 kilowatt are being shipped.
Umesh Raut
Exactly. So my question was your revenue contribution from KVA rating below 800 within power generation?
Gauri A. Kirloskar
Yeah, we’re not going to go into the segmental split.
Umesh Raut
Okay, thank you. Thank you so much. All the very best.
operator
Thank you. A reminder to all participants, anyone who wishes to ask a question may press star and one on their touchtone telephone. Our next question is from the line of Tina from Motilal OSWAL Financial Services Ltd. Please go ahead.
Teena Virmani
Hi, thanks for taking my question and congrats. A good set of numbers. My questions are related to the industrial and the distribution segment. So on the industrial segment, what would be the levers for long term growth in this particular segment? Like what kind of traction can you expect from the existing projects? Projects which are like NPCIL and even the marine order and even from the newer areas. So if you can elaborate a little bit more on how different segments are looking in this particular industrial side.
Gauri A. Kirloskar
Hi Tina, hope you’re doing well.
Teena Virmani
So yeah, thanks Joan.
Rahul Sahai
So if you look at the industrial business and as you’re aware each of the segments have their core business as well as projects that we are working on now the industrial segments comprise of our construction segment. Now within the construction we also we’re working on adding mining equipment into the equipment, mine engines for mining equipment into that. So it’s construction, mining, there is defense, marine and nuclear. That’s another segment that we focus on and even there. So if you look at whether it is the NPCI order or make one, which is the main propulsion engine proto order that we’ve got with the Indian Navy, there are strategic opportunities that could open up for us upon our successful completion of these projects.
So defense, marine and nuclear present interesting project type opportunities for large engines. Now we also have railways and in railways we largely do power cars. But we’re also looking at other applications at this point. So if you look at each of the segments and I won’t go into every segment segment at this point there is a core business that we routinely do and we continue to focus on that as well as there are strategic programs that we’ve launched and we hope to see some positive impact coming up in the subsequent quarters or years.
Teena Virmani
So within these segments you continue to see a fairly decent traction particularly for your construction, mining and even for the marine side and railway side?
Rahul Sahai
Yeah, absolutely.
Teena Virmani
And how would the revenue execution from these M.C.
operator
Sorry to interrupt. Tina. Ma’, Am, your voice break when you asking the question. Can you please repeat the question?
Teena Virmani
Yeah. So is it better now?
operator
Yes, yes ma’, am, now it’s better. Please go ahead.
Teena Virmani
How would the revenue recognition from this NPCIL and make and this marine project pan out over next one to two years? Because it’s only after that you’re saying that the bigger opportunities also will open up from these two areas?
Rahul Sahai
Actually Tina, it’d be difficult for me to answer that question at this point in time.
Gauri A. Kirloskar
Yeah, I mean essentially it’s milestone based, the revenue milestone based. And you know, apart from that I think it depends on successful completion. So for to give you more detail on that would be very speculative.
Teena Virmani
Okay, but the work would have already started on these projects in the existing projects which are already awarded to you.
Rahul Sahai
Yeah, of course, absolutely.
Teena Virmani
Okay. Okay. And one more thing on the presentation side, you have mentioned that you are doing some kind of restructuring in the distribution and after market. So can you please elaborate on the same, on the kind of restructuring on these, on this particular segment.
Rahul Sahai
So that was to do with the channel restructuring that we have been doing. That journey is more or less complete now. So that was more to do the channel.
Teena Virmani
Okay, Maybe addition and addition of new people, addition of new partners in this channel. Right.
Rahul Sahai
So we restructured the service channel and so there’s a lot of work that we’ve done there to enhance our service capabilities and our coverage.
Teena Virmani
Understood, thank you. That’s it from my side. I’ll come back in a few.
operator
Thank you. Our next question is from the line of Jeetu Punjabi from EM Investco Capital Advisors Private Limited. Please go ahead.
Jeetu Panjabi
Hi Gauri, Good going. Two questions here. One, your international numbers, growth rates seem pretty good. So question is can you give some color on what was driving that and whether it’s sustainable and how do you see the rest of the year? And the second question is on arca, can you again just throw some numbers on how the balance sheet is building up, how’s the new business shaping up and just a few more details on how that entire thing is expected to go.
Gauri A. Kirloskar
Yeah, great. Thanks Ritu. So on the international business, the main traction that we’re seeing and the pickup that we’re seeing over last year is from the Middle east region. And that’s because the GOEM that we have appointed Myspan, which we appointed about two years ago, is now settled down and we’re seeing them sort of grow in a good way. And I think that is something that we can expect to sustain over the course of the year and going forward on Arka. Riddy, are you there?
Ridhi Gangar
Yes.
Gauri A. Kirloskar
Would you be able to take the question on Arka and the numbers in terms of the balance sheet etc?
Ridhi Gangar
Yeah, so. Hi Jitu, this is Vinzi here. So with respect to the balance sheet, you know the on balance sheet AUM remained at 6006000 crores. Okay. And the on plus of AUM remained at 7200 crores. With respect to building of the secured granular retail quarter one, we focused on on, you know, building the distribution and the infrastructure and hiring the people. So as we speak we have got 32 or branches open for secured retail and in quarter two you will see more progress around it.
Jeetu Panjabi
Okay, and tell me something, do you have numbers on what are roas looking like and a little bit on quality, if anything, any trends that are emerging that are different from where they were?
Ridhi Gangar
Yeah, yeah. So we are more or less as far as the asset quality is concerned, we are more or less in line with the numbers that we reported for March. So the GPOs NPAs are in the range of 0.9% and NNPAs are in the range of 0Point3% as of the 30th of June. And the ROAS quarter one generally is a, you know, softer quarter for the NBSE. So our ROAS came at 0Point7% for what is one.
Jeetu Panjabi
Okay, lovely. Thank you. Thank you Gauri. Thank you.
Ridhi Gangar
Thank you.
operator
Thank you. Our next question is from the line of Umakan Sharma from Vanch Ventures. Please go ahead.
Umakant Sharma
Hi. Thanks for the opportunity. You know, most of my questions have been answered. I’ve just got two set of questions. Firstly, you know, is there any timeline that we are looking on ARCA in terms of any strategic action over there?
Gauri A. Kirloskar
So you know, I think it’s a step by step journey at this point looking at building out the retail part of the book. And we will continue to update you on the progress as we do that and we will then look at, you know, the next steps to making the organization stand independently. But it will be premature for me to say anything unless we have plans firmly in place.
Umakant Sharma
Okay, sure. And the second question, you know, we’ve started or we’ve gotten into the higher horsepower segment. You know, it’s been like two, two and a half years now. So could you just throw some category in terms of numbers or some quantitative metrics how we are tracking that and what kind of market share are we looking at currently and how are we seeing that business scaling up?
Gauri A. Kirloskar
Yeah, so umahant, what we generally do is historically as a company we have been on the low and medium side and over the years we’ve added node by node on the higher side. And we do see as soon as we have a product available that we are able to capture say a low double digit market share just by being present. Now what we have seen is as we move into the high horsepower segment, service becomes really, really critical. So it’s not just, for example, in the low and medium horsepower segment, price is a big deciding factor, but as we move up, service becomes really, really critical.
And because we have a good service network across the country, we don’t do believe we have the right to win, of course, assuming that the product quality and reliability is there. So what I can say is that we have built out the high horsepower portfolio very quickly in the last three years. Normally these developments take many years to complete, but I think because of some of the innovations around optiprime, et cetera, we were able to introduce products in the high horsepower range because obviously that’s where we’re seeing the largest growth rates. So it’s important for us to be present there.
We are seeing traction across all segments. We are seeing that because we have the service capability, we have a right to win. And what we do as a management team is that node by node we do track that. We are making that progress quarter on quarter in terms of market share improvement on a node by node basis. And I’d say I am satisfied with the progress that we have been making. But there’s a lot of headroom for us, right? We’re a company that has just started to introduce products. So there is a lot of headroom available for us to grow and we just see that as an opportunity.
But that’s how we track it. We track it on a node by node basis and we look at quarterly making progress and upskilling sales teams and service organization to be able to meet customer expectations in those segments.
Umakant Sharma
Got it, got it. And Gaur, just from an aspirational standpoint, would you be having any numbers? Let’s say if you’re not able to share currently, that’s absolutely fine, but let’s say three years or four years down the line, if you’re looking at 27, 28, what kind of number should this business be contributing to us? Any thoughts if you guys disclose that?
Gauri A. Kirloskar
So you know, I think when we’re talking about our broad goals, which is over the next five years and it’s a longer term goal that we’ve Taken this time. Right. Like, I mean last time we took a three year goal and I think if I look at how we landed compared to what we said we were going to do and last time we gave quite a clear breakdown of where we thought the growth would come from. It landed really differently. It’s very difficult for me to predict or answer questions like these because we are in a super volatile environment geopolitically.
Of course, the domestic economy seems to be resilient and strong, but it’s hard for me to give you a three year view on, you know what, what this should be.
Umakant Sharma
Okay, no worries. Thanks.
Gauri A. Kirloskar
Sure. Thank you so much.
operator
Thank you. Our next question is from the line of Bharat Shah from ask Investment Managers Ltd. Please go ahead.
Bharat Shah
Yeah. Hi Gaudi, you mentioned about the strategic focus earlier and in view of that the business of pipes and cables was divested. So that’s good news. On arca, I wanted to understand your long term thoughts. How does it strategically fit with our core business? And. Kind of given the size of the balance sheet, they the level of performance leaves quite underwhelming in terms of actual numbers and it actually clouds the picture on a consolidated basis of the real business performance. I wanted to understand what are the long term thoughts on ARCA and how does it strategically add value and fit in there?
Gauri A. Kirloskar
Yeah, thank you very much for your question. I think as we look forward on, on arca, building out the retail strategy that we have spoken about in the last couple of quarters since, you know, the leadership at ARCA has changed the idea also to leverage, say the coel distribution system that we have in place and look at where we have overlapping office areas, et cetera that we can build out over the medium term, that’s one in terms of the results and the expectations in terms of return, I think that we have clearly a certain return happening on the core business and that is what we will aim for in terms of return on capital over a certain period of time from the ARCA business as well in terms of the capital that we have invested.
But when we look at it, we would want the business to stand on its own two feet in a certain period of time. But we will support the business as it does that. We have a very clear plan with the new team in place, with a team that has done it before and has demonstrated very good results before. And I’m very confident that we will be able to earn the return that, you know, that we would expect even in our core business from this business as well.
Bharat Shah
But if we go by the first quarter numbers or even earlier numbers and given the amount of capital that we have already put in little less than 1100 crores into the business, the returns are very, very underwhelming and it’s not a particularly short period. You know, net profit of mere 10 crores in the first quarter on the injected capital by the group of less than somewhere around 1100 crores. It sounds barely 3,4% kind of an outcome written on equity that doesn’t sound to be good enough. Plus standalone on a size of a set book of some 7200 odd crore to make a piffling 10 crore net profit.
Leaves lot of questions. Actually.
Gauri A. Kirloskar
Yes, I understand your question and on a quarter to quarter basis I don’t think that you’re going to be satisfied with my response because I remember you asking me this last quarter as well. But in the medium term we do have a plan to look at how we grow this business and have it stand on its own two feet. So I would encourage you to just wait for that.
Bharat Shah
Sorry for persisting but I’m honestly unable to see that because if I see it over various quarters and including for this current quarter, if you see the financial services has contributed only about 13 odd crore to the bottom line to the segment results while last year first quarter it was 19 crores. This is not our line of real core strength in my opinion and therefore it may occupy much more time and give underwhelming results is my fear. And how does it strategically actually fit in with our business is not very clear to me.
Gauri A. Kirloskar
Yeah, so I think a couple of, you know, just points on what you said that you know, it’s not our core. I think even in terms of the kind of targets that we’re taking on, say the core business, there are many things that we haven’t done before. And I firmly believe that as long as we have and can attract and retain the right kind of talent and leadership to do things that are new, we will be able to build businesses. If you are looking at the results for ARCA just over the last couple of quarters, we are also in a period of time where we are pivoting from going from a largely stable wholesale book to a book that is, you know, more, has a more retail focus and that is going to take some time.
There are some clear goals that we have stated in terms of the ARCA medium term plan as well and that will take some time to see results. But I firmly believe, and I’m confident that the team that we have in place will be able to deliver that.
Bharat Shah
Gaudi, pardon me if I’m sounding annoying or persistent, but strategically, how does it fit in with our core businesses? Something that I am unable to comprehend. Even if you get good results over a period of time, which, judging by results in the last few quarters, doesn’t seem to indicate that, but even if, assuming that we derive good results over the period of time, how does this fit in with our code activity from a strategy point of view? It is not very clear to me.
Gauri A. Kirloskar
Yeah, I respect your opinion, but there’s not much further comment I can make besides what I’ve already said. Thank you.
Bharat Shah
Okay, and one last thing. The results need to be in a little more simplified fashion. If we go by these just the current quarter, there are so many footnotes and there are so many exclamation marks and so many references in order to really look at businesses and the performance in a very simple, elegant way on relatively small numbers, too many adjustments and too many numbers have to be looked at and correlated to get a picture. This is not comment on the how we have done on the business, which we have done fairly, but I think we can state our results in a more simplified way.
Anybody going through finds it a bit way much to correlate so many footnotes in exclamation marks. I think we can, we can simplify it a whole lot, I feel.
Gauri A. Kirloskar
No, I think that’s really great feedback and I think for us it’s a balance between simplifying and some of the mandatory disclosures that we have to make. But, you know, thank you. We’ve taken this point and I think we look at next time if there’s any way that we can simplify better. Thank you.
Bharat Shah
Sure. Thank you, Gauti. And on Ahrqa, I still leave the poses with you.
Gauri A. Kirloskar
Yes, thank you.
operator
Thank you. Our next question is from the line of Sourabh Arya from Auckland Capital. Please go ahead.
Sourabh Arya
Yeah, congrats on the members and the team. Just couple of questions. First is, can you comment on in power gen, are the volumes back? Like in last few calls we have referenced that, you know, industry volumes are running at lower numbers. So if one adjusts the CPCB for pricing of 20 to 25%, it seems volumes are still running low. So can you comment on that? And second, how has the market done and how has our market share has been in this particular quarter?
Rahul Sahai
Hi. So I would say that the volumes have in the market more or less returned to normalcy. So the cadence at which they used to be prior to the CPCP4 transition, we’ve slowly come back to those more or less those volume levels. I cannot comment specifically on the market share. I don’t think I would do that. We don’t have any formal reports or anything out yet. But I think we’ve performed fairly well, I would say.
Sourabh Arya
Okay. And related like obviously on HSP we have not given precise numbers but any qualitative comment there? Let’s say power gen has grown 15%. Has HHP grown much faster than that or anything there would be helpful.
Rahul Sahai
Yes, it has.
Sourabh Arya
Okay. And lastly, a little bit curious that, you know, why did we move this farm organization to B2B and specifically at a time when it had already bottomed. So a little bit curious here. What’s the reason for this moving it to B2B?
Rahul Sahai
Yeah, so overall we look at as one company now in the B2B, basically the industrial business. We already had an agri segment and we saw a lot of operational synergy with the industrial business within B2B and hence we decided to consolidate. And so the farm business and the agri business are parts of the industrial business now.
Sourabh Arya
Okay. Okay. I think perfect. Thank you. Thank you very much. All the best.
operator
Thank you. Our next question is from the line of Pratik Dharmashi from Union Mutual Fund. Please go ahead.
Pratik Dharmshi
Yeah, thanks a lot for giving the opportunity. Many congratulations. Corey and team. Just one question. Specifically on data centers. In terms of product introduction, can you give more color on the work we are doing around data center business?
Rahul Sahai
Yeah. So we are working with a lot of data centers and we’re in process of executing a few orders as well. At this point in time, I wouldn’t give any more detail than that, but there is work that we are doing with data centers.
Pratik Dharmshi
Thanks. Thanks a lot.
operator
Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments. Over to you.
Gauri A. Kirloskar
Yeah. Thank you very much for your interest in the company and your questions. See you next time.
operator
Thank you. On behalf of Ntech Stockbroking Ltd. That concludes this conference. Thank you for joining us. And you may now disconnect your line point.