Kirloskar Oil Engines Ltd (NSE: KIRLOSENG) Q3 2026 Earnings Call dated Feb. 12, 2026
Corporate Participants:
Gauri A. Kirloskar — Managing Director
Sachin Kejriwal — Chief Financial Officer
Samrat Gupta — Managing Director
Kiran Bhagnure Khapre — Chief Human Resources Officer
Analysts:
Amit Shah — Analyst
Jason Soans — Analyst
Mihir Manohar — Analyst
Harsha Jhunjhunwala — Analyst
Suraj Malu — Analyst
Palak Muchhal — Analyst
Saif Sohrab Gujar — Analyst
Saurabh Arya — Analyst
Krish — Analyst
Umakant Sharma — Analyst
Aditya Mongia — Analyst
Prolin Nandu — Analyst
Jason Soans — Analyst
Rahul Kumar Mishra — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Kaloskar Oil Engines Limited Q3 and FY26 earnings conference call hosted by Antique Stock Broking Limited. As a reminder, all participant lines will win 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 pressing10.0 on your Touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Amit Shah from Antique Stock Broking Limited. Thank you. And over to you, sir.
Amit Shah — Analyst
Yeah. Thank you, Palak. Good afternoon everyone. On behalf of Antique Stock Broking Limited, I welcome you all to 3Q FY26 post earnings call of Kirloskar Oil Engines Limited 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 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 you, ma’. Am.
Gauri A. Kirloskar — Managing Director
Yeah. Thank you. Good afternoon everyone. Thank you for joining us today. I’ll reintroduce my team on today’s call. Ram Sahai is here. He’s CEO at coel. Sachin, who’s the cfo. Kiran is the Chro. Farah, the company secretary. From Arka we have Samrat who is the Managing Director at arca. I will begin with business and operational updates. Sachin will then provide a brief overview of the financial performance following which we will take questions. I’m thrilled to report that Q3 fiscal year 26 has been a standout quarter for Coel. We delivered our highest ever third quarter sales capping off the highest year to date sales in our history.
This was powered by strong performance across all segments with 35% year on year sales growth the quarter and 25% year to date sales growth. That’s double digit growth in every single business. On top of that, robust operational efficiency drove meaningful improvement in our EBITDA margins. While our cash conversion cycle improved compared to the prior year. For the quarterly numbers, the domestic power gen business was a standout performer delivering sales of 603 crores which is a 44% growth over the previous year. Growth was primarily driven by our retail business and power generation. The high horsepower segment recorded substantial growth of 235% over the previous year.
The domestic industrial business witnessed A significant momentum shift recording its best quarter at 41% growth over last year with sales of 390 crores. This growth was fueled by strong performance of defence in nuclear and marine segment. Construction and mining segment was a bit slow this quarter, but we see it as a temporary phenomenon. The distribution business Q3 sales stood at 238 crores, registering 14% growth over the previous year. This was the highest ever quarter for the distribution and aftermarket business unit. The international business also reported 26% year on year growth in Q3. Now coming to the geographic mix, Domestic sales stood at 1243 crores which is a 38% growth year on year and export sales were at 128 crores.
That’s a 14% growth year on year. As I had mentioned, last quarter, this quarter saw coel standalone B2C integration into LGM Strategically. This integration of Fluid Dynamics business marks a milestone enabling focused growth in the segment while unlocking synergies across LGM operations. With B2B’s trends persisting and tailwinds in industrial, we’re well positioned for the balance of fiscal year 26. Now if we go to the consolidated business performance, B2B consolidated reported 1,396 crores revenue for the quarter, registering 36% growth year on year. Fluid Dynamics, that’s the B2C business reported Q3 revenue of 249 crores which is an 18% growth year on year.
Financial Services, that is Arca reported revenue of 227 crores, 7% growth year on year. Net interest margin at ARKA grew by 28% year on year to 107 crores in Q3. In closing, Q3 underscores our momentum record sales margin gains and operational discipline across the board in Baozhen. It has been a strong quarter for Coel and what is also heartening to see is the progress that we are making against industry numbers. Our numbers clearly indicate market share improvements across the board. This is in line with our plans that we set out for ourselves. All the other business segments have shown growth at arca.
We are successfully granularizing the book as planned by building a retail portfolio focused on used wheels and small ticket loans against the property. Our ground presence is ramping up to match this ambition. With 110 branches and approximately 1600 employees now active, we see a great future for this business and aspire to build an institution in the financial services space. And I’m confident that the management team at ARCA will deliver on the plans that have been laid out operationally. We continue to make steady progress and are advancing our expansion plans in line with our strategic roadmap and for all our business segments.
With a robust product pipeline and sustained focus on strengthening our existing segments, we remain confident about the opportunities ahead. We remain firmly aligned with our long term strategy and our commitment to sustainable growth. I’d now like to request Sachin to give a quick update on the financial performance.
Sachin Kejriwal — Chief Financial Officer
Good afternoon everyone and thanks Corey for the update. I will give a quick overview of the financial performance for stand alone and consolidated business. The result and the presentation for today’s call has already been uploaded on the Exchange and our website. Coel delivered a strong financial performance in Q3 FY26 with the company registering its highest ever third quarter sales and achieving record year to date revenues. Year to date margin performance improved on the back of operational efficiencies while prudent working capital management supported an improvement in cash conversion cycle compared to last year. Coming to the financial performance overview, I will start with standalone performance first.
For the quarter, net sales at 1371 crores for Q3FY26 versus 1015 crores for Q3FY25 35% increase year on year. EBITDA at 169 crores for Q3FY26 vs 106 crores for Q3FY25 59% increase year on year. Ebitda margin at 12.2% for Q3FY26 vs 10.3% for Q3FY25. Net profit excluding exceptional items at 102 crores for Q3FY26 Versus 57 crores for Q3FY25 that is 80% increase year on year. Cash position, net of debt and including treasury investment stood at 348crores. Our working capital position continues to remain healthy with payables at approximately 59 days and receivables at around 44 days.
Inventory levels stood at approximately 66 days reflecting an improvement over the same quarter last year supported by disciplined working capital management. Led by improved inventory and receivables efficiency, the overall cash conversion cycle has strengthened year on year. Here is further breakdown of the standalone sales for the quarter. The B2B sales that is coal standalone sales post the restructuring were at 1371 crores, that is 35% growth year on year. We registered a double digit growth across all the business units, so within B2B Powergen was at 603 crores 44% increase year on year. Industrial was at 390 crores 41% increase year on year.
Distribution in aftermarket was at 238 crores 14% increase year on year and international business of B2B was at 140 crores 26% increase year on year. Please note that on October 10th we completed the transfer of our B2C business to LGM through the slum sale route. Accordingly, the financial performance for this quarter reflects the impact of this restructuring. For ease of comparison, top line without the restructuring effect on like for like basis would be at 1503 crores for Q3FY26 versus 1154 crores for Q3FY25 that is 30% increase year on year. Now looking at consolidated performance for the quarter, the revenue from operation at 1873 crores for Q3FY26 versus 1449 crores for Q3FY25 29% increase year on year.
Net profit at 126 crore for Q3FY26 versus 67 crore for Q3FY25 90% increase year on year. Please note, numbers reported are for continuing operations only and excluding exceptional items. Now let us have a look at consolidated segment performance for the quarter now. B2B segment revenue for the quarter was at 1396 crore which is 36% growth year on year. The segment PBIT was at 137 crores reflecting approx. 90% increase year on year. B2C segment revenue for the quarter was at 249 crore which is 18% growth year on year. The Segment PBIT was at 18 crores against PBIT loss of around 4 crore for the same quarter last year.
Financial service segment revenue for the quarter is at 227 crores reflecting 7% year on year growth. The segment PBT was at 17 crore. Please note, number discussed here represent continuing operations only. The PBIT and PBT numbers are before exceptional items. To conclude, Company has delivered a strong quarterly performance complemented by solid year to date growth supported by sustained market demand and positive momentum across our core product segment. Our recent product launches have been encouraging market acceptance and we remain on track with the strategic initiative under our 2B 2B vision. With that I will open the floor for questions.
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may please 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 handsets 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 Jason from IDVI Capital. Please go ahead.
Jason Soans — Analyst
Sure. Sir, thank you so much for taking my question. So my first question just pertains to. Just wanted to know the volume growth both for YUI and qoq. If you could highlight for this quarter.
Sachin Kejriwal — Chief Financial Officer
Yeah, just one second.
Jason Soans — Analyst
Yeah.
Sachin Kejriwal — Chief Financial Officer
So for power, our volume growth has been 25% compared to the last year.
Jason Soans — Analyst
Okay. And QRQ, sir, there must be a decline. So if you could give that number as well. Sequentially, sir.
Sachin Kejriwal — Chief Financial Officer
Yeah, it’s a 15. Yeah, 15% decline.
Jason Soans — Analyst
15% decline. Okay, sure. And so next, just wanted some color on the the response for the HHP segment, some details about it. How. How are you creating market in roads? And just some color on the response for the HHP segment.
Sachin Kejriwal — Chief Financial Officer
So we’ve spoken in the past about our product portfolio and the initiatives that we are running on the HHP side today we have products that for the HSP that start right at 1000 KVA and go right up. What we are now seeing is demand for our 2,500 and 3,000 KBA products also. So I would say the market has always been there, but we are focusing on driving initiatives in line with the product readiness that we have now. And hence we are essentially gaining momentum there.
operator
Okay, sure, sir. And sir, if you could give the numbers for the, if possible just for a lightning like comparison for the FMS and the WMS segment as well, would that be possible for Q3?
Sachin Kejriwal — Chief Financial Officer
We’re not breaking that out.
operator
Okay, not breaking. Okay, okay, sure, I’ll join back with you. Thank you so much for answering my question.
Sachin Kejriwal — Chief Financial Officer
Thank you.
operator
Thank you sir. The next question is on the line of Mihir Manohar from Trust Mutual Fund. Please go ahead.
Mihir Manohar — Analyst
Yeah, hi. Thanks for giving the opportunity. Congratulations on great set of numbers. You mentioned about the growth for HHP for this quarter at 230%. What’s the growth on a nine month basis for the HHP segment And what’s the absolute number that we are now clocking on broadly and yearly basis for hhp?
Gauri A. Kirloskar — Managing Director
So the number that we’re sharing is the 235%. We’re not breaking it out by segment. For HHP value, what would be the.
Mihir Manohar — Analyst
Growth on a nine month basis?
Sachin Kejriwal — Chief Financial Officer
It’s 132%.
Mihir Manohar — Analyst
Sure. Understood. Correct. So basically which end use applications are driving this growth for hhp?
Sachin Kejriwal — Chief Financial Officer
So it’s pretty broad based but essentially the main end application is infrastructure. What we mean by infrastructure is any of these large developments that you see being built whether it’s commercial or residential and of course it includes some data center customers as well.
Mihir Manohar — Analyst
Sure. Second question was on the gross margin side. I mean when I say gross margins for 3Q versus 3Q and even on nine months basis the general understanding is that HHP should have a higher gross margins and if HHP proportion is increasing then I mean how could it should one extract gross margins improving as the HHP proportion goes up in the revenue going ahead?
Sachin Kejriwal — Chief Financial Officer
Yeah, that’s right. But right now our gross margin is flat at 35% margin. But in future as you see more sales from hhp definitely the gross margin should improve.
Mihir Manohar — Analyst
Sure. My last question was just on the data center side. I mean we are getting business on the data centers. I mean various interactions and all but however when we do a channel check it becomes difficult to get a sense as to if kiloscore oil products are used generally MNC names which are coming out. So some if you know how to understand the difference which is coming in channel checks versus the business that we are building in.
Sachin Kejriwal — Chief Financial Officer
Yeah, I think essentially your channel checks are an informal dipstick to get information. The whole information will only be ready once we disclose our results. So it’s hard for us to actually bridge because we’re not really sure what your the information you’re getting on the channel check.
Mihir Manohar — Analyst
That’s it for much of time.
operator
Thank you sir. The next question is from the line of Harsha from Access Capital. Please go ahead.
Harsha Jhunjhunwala — Analyst
Yeah, thank you for the opportunity and congratulations on strong set of numbers. So my first question was on the industrial side. So you. So this quarter we have what is the encouraging growth led by defense, nuclear and marine segment. So what is the outlook here and when do we expect the pickup in construction as well as mining segment?
Sachin Kejriwal — Chief Financial Officer
Yeah, so we saw a quarter where a lot of our OEMs were correcting their inventory. So the construction and mining segment was a little subdued because of that. In spite of that however we’ve grown. So the segment overall has performed reasonably well and we expect that going forward things will correct for themselves because the correction, the inventory corrections seem to have happened.
Harsha Jhunjhunwala — Analyst
Okay. And second question was on the distribution network. So distribution revenue has also grown during this quarter. So what is driving this growth? Is it the asset base or the shift to. From organized shift to organized organized power. Gentle.
Sachin Kejriwal — Chief Financial Officer
Yeah. So we’ve always said that our focus areas for driving profitable growth will remain to be more complex products aftermarket and international. Now more complex products in case of e.g. powergen are in the form of our optiply range of products, our HSP products. And that has eventual impact on the aftermarket business also. So we are seeing more and more of that impact coming in. Of course, the aftermarket team is driving a lot of initiative around growing the service penetration as well. Both through increasing the number of AMCs as well as ensuring adequate capability for breakdown SRN service requests.
Harsha Jhunjhunwala — Analyst
Okay. And there’s one last question on the standalone EBITDA margin. So now that we have shifted the B2C business to a subsidiary, so should we see margin improvement here or is it expected to remain at similar levels?
Sachin Kejriwal — Chief Financial Officer
So you will see slight improvement in the EBITDA margin with this move from B2C business to. To LGM. Yeah.
Harsha Jhunjhunwala — Analyst
Okay. Yeah, that’s all from my side. Thanks.
Gauri A. Kirloskar — Managing Director
Thank you. Question.
operator
Thank you, sir. The next question is from the line of Suraj from Catamaran. Please go ahead.
Suraj Malu — Analyst
Thank you very much. I have two questions. The first question is from a global landscape. Are there opportunities to do contract manufacturing for any of the global power genset companies with Caterpillar, Genrac or Kohler for. Okay, let’s.
Sachin Kejriwal — Chief Financial Officer
There. I mean there may be opportunities, but we will figure out the opportunities that work for us as per our strategy. So there is nothing further to disclose at this point.
Suraj Malu — Analyst
Got it. But would we be willing to take up those or would we be more of willing to sell these under Kerloskar oil engine brand name only?
Sachin Kejriwal — Chief Financial Officer
So our strategy varies region to region. We won’t be able to disclose that because that’s proprietary information. But we would be open for what makes sense for the company.
Suraj Malu — Analyst
Got it. And the next question is, you mentioned now you have a product for data center, right? So what KV or MVA would this product be and would it be Opti prime or a single engine product?
Sachin Kejriwal — Chief Financial Officer
So starts. I mean so we have variety of different products. Data centers actually start buying gensets right at 400 and 500 KVA also. And we’ve been supplying to data centers right through today. Some of the units that we are looking at are 2,500 KVA and 3,000 KVAs also.
Suraj Malu — Analyst
And it’s a single engine.
Sachin Kejriwal — Chief Financial Officer
Our single units right now go up to 1500 KVA. Actually let me just correct that. Our high speed single engine units go up to 1500 KVA. We have engines that go to 10 megawatt.
Suraj Malu — Analyst
Yeah, I get it. Yes, got it. All right. Thank you very much.
operator
Thank you, sir. Ladies and gentlemen, to ask a question please press star and one. Now, participants who wish to ask questions May please press star and one at this time. The next question is from the line of Palak from miv. Please go ahead.
Palak Muchhal — Analyst
Hi sir. So just in addition to the previous participant question, I understand that with the growing contribution of HSP we will see margin improvement, gross margin and operating margins. But what are specific reasons that this quarter both the gross margin and the operating margins saw some pressure on QOQ business? Are we seeing commodity price pressure due to a product mix?
Sachin Kejriwal — Chief Financial Officer
So on quarter, on quarter basis it was a product fix and operating leverage loss impacted by EBITDA compared to previous quarter.
Palak Muchhal — Analyst
When we say product Mitch is because of the. In the. I mean in industry also we have a certain segment. So within industrial there was a product. Because if I look at overall basis the contribution from power gen industry has been constant to our. I mean it’s been at a standalone level. So can you get in get a bit specific of when you say product mix?
Sachin Kejriwal — Chief Financial Officer
Yeah, so we don’t give those detail but definitely the product mix in all the business unit has impacted for this quarter.
Palak Muchhal — Analyst
Okay. And are we seeing any pressure due to commodity prices and which are the major commodity that we use to manufacture the product?
Sachin Kejriwal — Chief Financial Officer
We are keeping a close watch on that. And if you look at our gross margin that has remained flat. So we are taking the appropriate action on those commodity price increase.
Palak Muchhal — Analyst
But when I’m looking at on a Q OQ basis, cross margins have declined.
Sachin Kejriwal — Chief Financial Officer
I don’t think so.
Palak Muchhal — Analyst
Okay.
Sachin Kejriwal — Chief Financial Officer
It’s just a 50 basis point dip compared to the previous quarter. And that is because of product mix.
Palak Muchhal — Analyst
Okay, got it. Thank you.
operator
Thank you ma’. Am. The next question is from the line of Saif Saharab Guzar from ICICI Prudential amc. Please go ahead.
Saif Sohrab Gujar — Analyst
Yeah, thank you for the opportunity. So there’s the same file in Kong about incorporation of Kildoskar Advanced System. Can you highlight what specific is the plans with respect to this entity? How do you look at it next two to three years?
Sachin Kejriwal — Chief Financial Officer
Yeah. So there is a lot of specialized work that we are doing with our government customers such as defense and railways. Now that work is slightly different from our core engines business. It has a lot to do with system integration and you know, in case of defense, there’s defense contracting kind of work. We felt it best to carve that work into a separate business entity. And that entity is called Kirloskar Advanced Systems Ltd.
Saif Sohrab Gujar — Analyst
Pilik also mentioned about unmanned systems. So any existence. How do you look at that? Are you going to expand to UAVs or it’s some again powertrain related to unmanned systems you’re looking at.
Sachin Kejriwal — Chief Financial Officer
So we are not at a point where we can disclose that because that information is still proprietary at an adequate time we can speak more about it.
Saif Sohrab Gujar — Analyst
Sure. And just one quick one on the employee cost and standalone that this quarter is at 25%. So any specific reason does this represent more of headcount addition or there is some one off say maybe relating to gratuity or something like that.
Sachin Kejriwal — Chief Financial Officer
So it was a mix of both headcount and graduate.
Saif Sohrab Gujar — Analyst
Okay. Thank you.
operator
Thank you sir. The next question is from the line of Saurabh Arya from Oakland Capital Management llp. Please go ahead.
Saurabh Arya — Analyst
Yeah. Hi. Hi. Congrats team for the good numbers. The first question is let’s say till now our focus from export side has been Middle East Africa. But now that we have this EU deal and we have clearly avoided focus in Europe till now. So will there be any change in strategy in light of this EU ft?
Sachin Kejriwal — Chief Financial Officer
So I wouldn’t say we have a change in strategy because geopolitical movements keep happening From a company standpoint obviously these changes are inputs into strategy. But our strategy by and large remains similar. We continue and remain committed to the Middle east and the African markets. We are studying each region and trying to develop an appropriate strategy that covers our capability, capacity and coverage for each region.
Saurabh Arya — Analyst
Okay, this is fine. And so we won some large orders of NPCIL and this Marine I think. So is there some execution expected from that in next few quarters or. It’s already part of execution in industry.
Sachin Kejriwal — Chief Financial Officer
So it hasn’t been part of the execution until now. These are for large gen sets of 6.3 megawatt each and we will be executing them going forward. So none of them were executed in Q3.
Saurabh Arya — Analyst
Okay. And that would be part of industrial segment.
Sachin Kejriwal — Chief Financial Officer
Yes, that’s part of our nuclear segment under the industrial business.
Saurabh Arya — Analyst
Okay. And can you give some color how that execution would be? Like what is the size of it? Will it be done in one year itself or it’s spread over 23 years.
Sachin Kejriwal — Chief Financial Officer
For the overall order value that we have spoken about earlier is 798 crores in basic value. We have timelines of two years from now. I can’t give more details around that in terms of execution at this point.
Saurabh Arya — Analyst
Perfect. Thank you. I will go back to the queue. Thank you. Thank you very much.
operator
Thank you sir. The next question is from the line of Krish from Crosses Capital Market Private Limited. Please go ahead.
Krish — Analyst
Hi sir, I just had one more question regarding Kilosa Group. So sorry to interrupt you there’s a.
operator
Lot of background noise. We can’t hear you. Yes. Can you please use your hand, sir?
Krish — Analyst
Yeah. Am I audible now?
Sachin Kejriwal — Chief Financial Officer
Yeah.
operator
Yes sir.
Krish — Analyst
Yeah. So my question is regarding Kiloska Group in general. So Okayloska Chillers is a private limited company which is as per my knowledge is not a part of any of the listed companies. So is there any plan to take it as a subsidiary into any of the listed companies or to separately in the summer future? If you could answer me that.
Gauri A. Kirloskar — Managing Director
So thanks for your interest but because this is a Kirlosco Oil Engines earnings call, I won’t be able to answer or address that question here.
Krish — Analyst
Okay, got it. No problem. Thank you.
operator
Thank you sir. The next question is from the line of Preet Jain from Motilal Oswal. Please go ahead.
Krish — Analyst
Yes, hello. Am I audible?
operator
Yes sir.
Krish — Analyst
Yes. So I have two questions. My first question is despite the B2C segment going out of financials in the current quarter, the other expense still seem to be at a higher side. So any specific reason for that?
Sachin Kejriwal — Chief Financial Officer
No, it is related to B2B business so there’s no specific reason that why it is going up.
Krish — Analyst
Okay, got it. And my second question was on the domestic power gen business. So in the PPT it was mentioned that it was driven by LHP supported by the incentive schemes. So can you please highlight which incentive schemes are these and whether these numbers are sustainable?
Gauri A. Kirloskar — Managing Director
So that’s our retail business, the channel and the retail business incentive schemes are part and parcel of the business. So it’s just, you know, those incentive schemes that are running nothing in particular.
Krish — Analyst
Okay, that is all from my side. Thank you.
operator
Thank you sir. The next question is from the line of Palak from miv. Please go ahead.
Palak Muchhal — Analyst
Also just follow question. Is it possible for you that you can give some sense of contribution from lhp hhp, MHP in our power gen segment?
Sachin Kejriwal — Chief Financial Officer
So what I would say is that most of our business continues to be in the retail business. A lot of the retail business is LHP at this point in time. The rest of the information is proprietary so we won’t be able to give out specific split.
Palak Muchhal — Analyst
Okay, so are we changing some significant shift towards HSP in terms of revenue contribution?
Sachin Kejriwal — Chief Financial Officer
The answer to that would be yes because you can see that from the growth numbers the HHP is growing at a faster rate.
Palak Muchhal — Analyst
Okay. And in case of industrial segment, last two quarters have been very good for us. I mean is it because of the big orders that have received in Defense Marine? I mean how such a this growth number for us.
Sachin Kejriwal — Chief Financial Officer
We will Continue to. Focus and do our best. And this is an outcome of that. It’s not execution of one or two single orders.
Gauri A. Kirloskar — Managing Director
So what I would add is that from the large orders that we have mentioned that we’ve got, this is not to do with the execution of that. But if you remember a couple of years ago, our strategy was to look at key account management in a very focused way. And also we had identified certain white spaces. So that’s why you’re seeing this kind of, you know, this kind of growth. And we hope that we can, you know, continue to aspire to these kind.
Palak Muchhal — Analyst
Of growth rates and just. Do you have any guidance for a growth number for next one or two years or any comments on margins that we are targeting?
Gauri A. Kirloskar — Managing Director
We stated a five year strategy which is to be a two billion dollar company by fiscal year 30. And we’ve also said that we hope to continue to improve margins over that time because our focus areas continue to be advanced products, aftermarket and exports where these typically are the margin levers in our industry. So that’s the, you know, that’s the direction that we’re giving in terms of where we want to grow on the revenue and margins front.
Palak Muchhal — Analyst
So is there guidance for a consolidated entity or for the standalone business?
Gauri A. Kirloskar — Managing Director
Consolidated without arca?
Palak Muchhal — Analyst
No, I’m saying the guidance that you have given is it for a consolidated entity or is it for just B2B.
Gauri A. Kirloskar — Managing Director
For the B2B and B2C business?
Palak Muchhal — Analyst
Okay. Anything specifically for B2B business?
Gauri A. Kirloskar — Managing Director
No, we’ve not broken it out that way.
Krish — Analyst
Okay, thank you.
Palak Muchhal — Analyst
Thank you.
operator
Thank you. Ma’. Am. The next question is from the line of Omakan Sharma from Vyansh Ventures. Please go ahead.
Umakant Sharma — Analyst
Yeah, hi. Thank you for the opportunity and congratulations on a good set of numbers. I’ve just got two set of questions. Firstly on the arca, could you just talk a little bit about the current book split between the retail and wholesale. And also if you could throw some color around the asset quality that you’re observing.
Gauri A. Kirloskar — Managing Director
Samrat, will you take that question?
Samrat Gupta — Managing Director
Yeah. Hi, good afternoon to you. Currently our wholesale book is 2,600 crores assets under management and our total assets under management will be in the range of 7,600 crores. So the rest of the book will be retail or SME lending in nature and pure retail which is basically ticket size of about 15 lakhs in small ticket loan against property and used vehicle financing is about 4. Sorry as on 31st December is about 328 crores. And asset quality, our GNPA is about 1.2% and NNPA is about 0.3%.
Umakant Sharma — Analyst
And could you just talk about this asset quality for the last quarter.
What was that number
Samrat Gupta — Managing Director
last quarter? Asset quality was about 1% and NNPA was 0.2%.
Umakant Sharma — Analyst
Got it, got it. And just coming back to the main coal business, we’ve been talking about that HHP segment for a while now. You know Gauri, if you could just spell out, you know, when can we start talking numbers around the hsp? When are we aspiring from. From, you know, from articulating those numbers out? When are we looking at that?
Gauri A. Kirloskar — Managing Director
Sorry, you mean like segment wise numbers? When will we articulate?
Umakant Sharma — Analyst
Yeah, I’m just so the reason I’m looking at it, since we have, you know, launched this product, we have entered into HSP for about now, almost about two years. I just wanted a sense as to when are we thinking of communicating in terms of numbers? What are we doing on the overall genco business from the HHP side?
Gauri A. Kirloskar — Managing Director
Yeah, we haven’t thought about sharing those numbers yet because we are sharing growth numbers across this segment, which is obviously a very new segment for us. A couple of years ago we had zero market share and the market shares will be incremental quarter on quarter and it’s not always linear. So I think the growth rates right now is sufficient as long as we are showing good growth in that segment and traction in that segment. And at least as a management team, we track node by node incrementally if we’re making the progress that we should be making.
Umakant Sharma — Analyst
Got it. And Gauri, could you also just touch down if we are looking at eu, I know you broadly touched upon it in one of the previous participants, but are we seeing incremental like I think we have your previous call you highlighted, right? We have cracked the Middle east bit, at least in terms of the international side. Now are we looking at exploring other international markets or would we want to be looking at scaling up some of the places where we have got the market placement? Right?
Gauri A. Kirloskar — Managing Director
So we are looking at places other than the Middle east and we have been present in places other than the Middle east historically as well. The focus markets for us, you know, I mean there are many focus markets across the world and in each of them, you know, each of them is different. We have to look at what the competitive landscape, what the local power gen or industrial market is like. Who are the players in that space. Do we want to go in alone? Do we want to go in with a jv? Do we want to have an appointed genset oem.
What you’re seeing in the Middle east is the result of us appointing a genset OEM for specifically power gen sales. And you’ve seen the traction from that work in the last year or so. We had a pretty significant industrial presence there, but we didn’t have, you know, we weren’t doing so well on the power gen side. So I think that’s what, you know, that’s what you’re seeing in terms of growth. But whether it’s Africa, whether it’s the us whether it’s Southeast Asia, we’ll have, you know, different ways of going to the market depending on what makes sense.
Umakant Sharma — Analyst
Okay, got it. Perfect. Thanks. And all the best.
Gauri A. Kirloskar — Managing Director
Thank you.
operator
Thank you sir. The next question is from the line of Aditya Mongia from Kotak Securities. Please go ahead.
Aditya Mongia — Analyst
Yeah, thank you for the opportunity. The first question that I had was more to get a sense of some more insights on the HHP segment. As we understand in this segment there’s a requirement that customers have of consultants kind of approving the products that the company has. Could you give us a sense of how has that journey been for you and are you being able to make inroads on that count?
Gauri A. Kirloskar — Managing Director
I’ll just have Kiran, who’s our chro, talk a little bit about what we’re doing because there is capability building we had to do because the way the product is sold is quite different. So Kiran, please give an update.
Kiran Bhagnure Khapre — Chief Human Resources Officer
Sure. Thank you, Gauri. So I think you already heard Gauri and Rahul talking about, you know, the progress what we are making on the HHP side. So while the focus has been on building out the great products, we also in parallel started working on improving our capabilities. And for that we’ve worked for on an development program for our frontline sales teams which purely focuses on how the products are being sold. These products are way too more technical in nature compared to what our earlier product ranges were. And so we have worked through detailed development program including the technology of the products, the commercial aspects of the products, as well as focusing on the negotiation skills and the software skills of how to sell these products.
So some of these programs have been going through the organization at this point in time helping to build that capability inside the organization.
Gauri A. Kirloskar — Managing Director
Yeah. And we’ve done this not only for our sales teams but also for our genset OEMs who are partners as well for their sales team as well. So that’s part of it because as you said and as you mentioned, the consultants have to be on board. They have to be aware of what our product portfolio is. Especially because we have different solutions like an optiprime which is not a single engine solution that has to be explained, it has to be witnessed. So it’s been a lot of groundwork that we’ve had to do but we are seeing traction now come out of that.
Aditya Mongia — Analyst
Understood. The second question that’s.
operator
Ladies and gentlemen, the line for the management has been disconnected. Please wait while we reconnect them. Ladies and gentlemen, the line for the management has been reconnected. Thank you. And over to you ma’. Am.
Gauri A. Kirloskar — Managing Director
Yes, sorry, I think the person we were speaking to had a second question and we couldn’t hear it.
Aditya Mongia — Analyst
Am I audible to you? This is Aditya.
operator
Yeah. Yes sir.
Aditya Mongia — Analyst
Thanks. Thanks. The second question that I had was more to better understand market share shifts that may be happening in the LSP front. As in as we see through the relative changes happening. It seems still seems that on a two year basis or since CPC before happened, the market leader has gained share versus Kloska. Some pullbacks are happening right now but it still seems that a lot has been lost last two years on the LHP side. If do you think that there are. There are scopes of further climb back market share or how do you think about that aspect?
Gauri A. Kirloskar — Managing Director
So what makes you think that?
Aditya Mongia — Analyst
So one is just kind of comparing the relevant segments and the relative growth that’s happened okay. Over the last two years and it. It seems to suggest that while on a YY basis some bit of faster growth is happening for Kyloska, the market figures still kind of higher up on a two year basis on aggregate growth. Which makes me believe that there is more to kind of recoup as a market share for Kiloskar. And that’s why the question.
Gauri A. Kirloskar — Managing Director
Yeah, I mean I think it’s hard for me to comment because I don’t know the source of your information. So you know, I will not be able to answer that question.
Aditya Mongia — Analyst
Got it. I’ll take that separately. The third part was you give me.
Gauri A. Kirloskar — Managing Director
Specific growth rates and you know, look at those numbers. It’s very hard for me to answer that.
Aditya Mongia — Analyst
I’m happy to take it in a separate call numbers but let me just move on. On the distribution side of things, could you give us a rough split of what are the key elements over here? I understand that spares would be a large proportion and then there’ll be other parts such as solutions that you may be doing. Some sense of how the breakup is for you.
Samrat Gupta — Managing Director
I think so by and large you’re Right. There’s a lot of it’s mostly spare parts and service today. We also do overhauls and we under our brand called New Life. So but that component is very less so bulk of it would be you know, spare parts along with service contracts.
Aditya Mongia — Analyst
Sure. Those are my questions. Thank you for responses.
operator
Thank you sir. The next question is from the line of Prolin Nadu from Endless Wise. Please go ahead.
Prolin Nandu — Analyst
Hi, this is Prolin from Edelweiss. My question is on margin. While you answered the question just you know this quarter on quarter drop in margins on the EBITDA level. Is it mostly all of it is explained by the mix change. Is that a fair understanding?
Sachin Kejriwal — Chief Financial Officer
So I have already answered that. So it’s a combination of mixed product mix change and the operating leverage loss.
Prolin Nandu — Analyst
And by product mix you mean the, you know the distribution growing lower than the product growth. Right.
Sachin Kejriwal — Chief Financial Officer
Is that it’s a combination of two, three factors but we are not giving those details right now.
Prolin Nandu — Analyst
Okay. And on your the marine and naval execution on that part. Right. In a way will the margins on this orders marine orders be at par with company average or would it be lower? Or can you just understand, help us understand what could be the margin trajectory for this order.
Sachin Kejriwal — Chief Financial Officer
We don’t give those margin details for each customer segment. So sorry we will not be able to share any details further on that.
Prolin Nandu — Analyst
Okay, thank you so much. That’s it from my side.
operator
Thank you sir. The next question is from the line of Jason from IDBI Capital. Please go ahead.
Jason Soans — Analyst
So thank you so much for taking my question again. I’m just wanted to ask, you know, of course Q3 tends to be, you know, even last year it was a little drop off from Q2 and then again this year also is kind of the same trend. I just wanted to know what kind of seasonality is it because of less cooling demand because it tends to be cooler, you know, during. Just if you could highlight some reasons for the seasonality for the sequential drop in volumes.
Sachin Kejriwal — Chief Financial Officer
Yeah, I think that’s generally how capex flows happen here mostly on the domestic side. So it’s a phenomenon that’s seen across the industry. There’s nothing very specific to coel.
Jason Soans — Analyst
Okay. Okay, sure. And just want to also know, I mean of course I understand that DG sets are going through a good phase of growth now. Just wanted to know any particular infrastructure verticals you want to highlight which are driving this growth.
Gauri A. Kirloskar — Managing Director
No, it’s pretty broad based.
Jason Soans — Analyst
Yeah, sure. And also you know, you spoke in detail about how you are leveling up your, you know, this Your sales capabilities in terms of programs and you know, stuff all that. That’s, that’s good. Just wanted to know also just a pertinent question relating to that. Now I also understand for HHP you require a better quality, better qualified service engineers, you know, servicing that segment because service becomes a critical aspect of, for that solution. So what are the steps we are taking to basically to up our game there in that, that, that segment to service basically improve the quality of service engineers, hire their better hiring and those, those practices.
Just wanted to know some color from your side on that aspect.
Gauri A. Kirloskar — Managing Director
Sure. Kiran here to answer.
Kiran Bhagnure Khapre — Chief Human Resources Officer
Yeah, again the capability building initiatives are not only focused towards one segment, we are driving that as a common upskilling theme across the organization. So a lot of training programs to make sure that our workforce is able to address the customer issues right on time.
Gauri A. Kirloskar — Managing Director
So that’s what I would say and what I would add is this training program especially across service is a continuous process because you obviously have also people coming and leaving and you have to address that. You have to have trained service engineers on a continuous basis. And the product portfolio also keeps changing not only because of product expansion, but driven by emission norms as well. So the training on the service engineer side is a continuous process.
Jason Soans — Analyst
Sure. And lastly ma’, am, just wanted to ask about this notification on the BAC where you have invested close to 8 crores in the Middle east entity, which in turn is going, you know, for basically acquisition of the South African entity. Again, just if you could just give some color on what exactly. I understand you’ve given a lot of details there, but just your take on.
Gauri A. Kirloskar — Managing Director
That, I mean it’s the same thing, you know, when we look at our international market, we do an assessment on a market by market basis of how we want to be structured and how we want to operate there. So this is just in line with that strategy and in line with how we want to operate in South Africa. And it’s, you know, and, and it just follows that strategic rationale.
Jason Soans — Analyst
Right. So you’re basically saying that you don’t want to basically keep it to an external party, but you want to basically do the industrial piece in house. Is that correct for the South African market?
Gauri A. Kirloskar — Managing Director
No, that’s not necessarily correct. It’s just that we have now our own entity and office where like Rahul mentioned about capability, capacity and coverage, which is what we need to build in all international markets. We now have our own entity and office there. So we can at least start building that people capability in house in the future. And the reason I can’t answer your question specifically is in the future if we see opportunities to tie up with people or any similar such thing then we would do that. So you know I can’t say that we will not do it today because it remains to be seen as time goes on and how we do in that market and what we learn in that market.
Jason Soans — Analyst
Sure. Thanks a lot for answering my questions. Thank you so much.
Gauri A. Kirloskar — Managing Director
Thank you.
operator
The next question is from the line of Suraj from Catamaran. Please go ahead.
Suraj Malu — Analyst
Yeah, thank you very much again. So to reach the stated goal which is 2 billion dollar vision rate which is approximately a 3x growth from here. So how should one understand about the capex required to grow from the current levels? Like will you need to scale the gross block from current 19002000 crores to like 50006000 crores?
Sachin Kejriwal — Chief Financial Officer
Yeah, so there is, we have a capex plan as we have mentioned earlier. There is 700 crores of capex that we are deploying into, ramping up our operations. A lot of that work is currently ongoing. There is a capital allocation philosophy that is underway. So from time to time as we take actions you will see the, you know, you’ll see it reported post board meeting, I mean in these calls. So at this point in time the rest of the information is internal to Coel and we won’t be able to give it out.
Suraj Malu — Analyst
Got it. Thank you very much.
operator
Thank you sir. The next question is from the line of Rahul Kumar Mishra from Antiques Stockbroking. Please go ahead.
Rahul Kumar Mishra — Analyst
Hi. Thanks for the opportunity and congrats team for delivering a healthy set of numbers. During the quarter most of my questions have been answered. I have just two questions. So first if you could help me give some color on the water management system. So what is the demand outlook going ahead for the business?
Sachin Kejriwal — Chief Financial Officer
So the water management systems and the LGM business has now been consolidated into a single entity called Fluid Dynamics. We call it Coal Fluid Dynamics. It is going to be a subsidiary of Kiloscar Oil Engines focused on pumping solutions. Pumping solutions will vary across different kind of end use and applications. Water is one of them. As we proceed further there are big opportunities that we see on the domestic pumps and agri pumps side. So we continue to remain focused and look at the appropriate products that need to be launched.
Rahul Kumar Mishra — Analyst
Thanks for answering this. And my second question is on the export side. So we have seen that exports have grown healthy about 20% during this quarter as well as on a YTD basis. So wanted to just get a sense of what has driven this healthy growth during the quarter. And lastly, on the US Market last quarter we discussed that it is going to be one of the largest market with some good opportunities. And with the recent announcement of relaxation and tariff by the US Government. How do we look at this market? And given that almost 60% of sales we derive from Mena region, do we see this proportion shifting going ahead for the next couple of years once we build our capability for US Market and start securing orders? So just.
Just a color on this.
Sachin Kejriwal — Chief Financial Officer
Yeah, sure. See, each region that we look at, there is a very careful evaluation around the three Cs that I spoke about earlier. That’s capability, capacity and coverage. And then we take a look at how exactly do we want to go to market, whether it is through independence or joint ventures or an acquisition. So that’s a. And it’s a. It’s a lot of effort and work that goes into it. Some of the traction that you are seeing on the international side is an outcome of the outcome of the work that we’ve been doing. So there is work that we are doing, we’ve been doing on the Middle east and Africa side.
There are other work of other regions also now coming specifically to us. We have been investing in the US Market for a while. We have a subsidiary called Kiloskar Americas. And there is work that’s going on, but it is not at a mature stage that we can discuss about it right now.
Rahul Kumar Mishra — Analyst
Okay. Okay. Thanks. Thanks for answering all my questions. That’s it for my side. Thank you.
operator
Thank you, sir. As there are no further questions from the participants, I now hand the conference over to management for closing comments.
Gauri A. Kirloskar — Managing Director
Thank you very much for your interest on today’s call and for the questions. See you next time.
operator
Thank you, ma’. Am. On behalf of Antique Stock Broking Ltd. That concludes this conference call. Thank you for joining us and you may now disconnect your lines. Thank you.