Kirloskar Pneumatic Company Ltd (BSE: 505283) Q4 2025 Earnings Call dated Apr. 24, 2025
Corporate Participants:
K. Srinivasan — Managing Director
Jitendra R. Shah — Company Secretary & Head Legal
Ramesh Birajdar — Chief Financial Officer
Analysts:
Amit Shah — Analyst
Amit Anwani — Analyst
Shubham Sehgal — Analyst
Mahesh Bendre — Analyst
Unidentified Participant
Sahil Rohit Sanghvi — Analyst
Kunal Sheth — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Pneumatics Company Limited Q4 and FY ’25 Earnings Conference Call hosted by Antique Stock Broking. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing 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 Antique Stock Broking. Thank you, and over to you, sir.
Amit Shah — Analyst
Yeah. Thank you, Mano. Good afternoon, everyone. On behalf of Antique Stock Broking Limited, I welcome you all to 4Q FY ’25 post result earnings call of Pneumatic Company Limited. To discuss the results, we have the senior management team of the company represented by Mr Kesh Niwasan, Managing Director of the company; Mr Ramesh, CFO of the company. I would hand over the call to Mr Kesh Vina for his opening remarks, post which we can open the floor for Q&A. Over to you, sir.
K. Srinivasan — Managing Director
Thank you. Yeah. So good evening to all of you. Let me start by wishing you all well on the occasion of the various New Years we celebrated last week, Bengali, Punjabi, Assami, the, Maliali and Samuel New Year. I also take a moment to pause on a — to mark of respect in-memory of the 26th innocent who lost their lives yesterday. Now let’s continue with the call. Before proceeding with business update, I will ask Mr Shah, our Company Secretary to read-out the disclaimer statement. Are please?
Jitendra R. Shah — Company Secretary & Head Legal
Thank you, sir. The presentation uploaded on the website of the company and discussion on the financial results during the earnings call may contain statements relating to future business developments and economic performance that could constitute forward-looking statements. While these forward-looking statements represent the company’s judgments and future expectations, a number of factors could cause actual developments and results to differ materially from expectations.
The company undertakes no obligation to publicly revise any forward-looking statements to reflect future events or circumstances. Further, investors are requested to exercise their own judgments in assessing various risks associated with the company and also the effectiveness of the measures which taken by the company in tackling them as indicated during the discussions.
Thank you.
K. Srinivasan — Managing Director
Thank you,. Now I’ll proceed with the business updates. The financial year F ’21 was as near to plan as one could get. We achieved both the top-line and bottom-line plan in-spite of the various uncertainties, thanks to the robust business model that allows for the various sectors and markets to compensate for each other. Domestic market was strong in food, diety, pharma, fertilizer and chemicals and in some sectors of general engineering. Growth in oil and gas sector as well as all the new energy sectors was patchy.
Our targeted and modest export aspiration was more than met with export at INR124 crores, which is roughly about 7% of sales. New product sales of, centrifuge compressors, Q&A compressors, Karana Boosters, biogas compressors and ARIA low-cost air compressors all pick traction. With record filing of and award of 41 IPs during the year, the company is accelerating in creating a more winning solution for its customers.
Order booking remains strong, providing players visibility for continued growth in F ’26. I do understand that there are some concerns expressed about order booking and I will address them later. Sales for the year was INR1,629 crores as against INR1,320 crores of the previous year, a growth of 23%. Growth came predominantly from the domestic market, exports too grew and grew by 80% from the very modest INR69 crores of the previous year.
We produced over 3,500 comprisors during the year and this was a new record. Order booking was strong and this leaves us with our order book as we start the year of INR1,624 crores as compared to INR1,425 crores — INR1,435 crores of the last year. This increase of 12% may be appearing less than our projected sales growth of at least 20%. But considering the fact that our average execution cycle as a whole has come down primarily because our switch between equipment sales and packaged sales has changed 60-40 in a positive direction.
Consequently, this order book does represent adequate order backlog for meeting our growth aspirations. Also, the inquiry pipeline and the orders in-hand would allow us to meet the planned growth not only of F ’26, but also going-forward. We are continuing our effort to build in-house manufacturing capabilities, both at and at Chasper towards the facilities to manufacture the range of semi-hermatic compressors and the lost casting LFC range of cast iron, SG ion and steel casting for our compressor park have been commissioned.
Capex execution for the year was near INR100 crores. The acquisition of the 55.26% stake in Systems and Company India Product Limited during the year allows the company to scale-up its business in the pharma, chemical and battery sectors. These are early days, we did have only a quarter and a few days for this — this company to be brought into our port. There is strong work-in progress to ensure that we have a significant jump-in the top and bottom-line during the next year.
The net working capital at INR272 crores as against INR300 crores, a decrease of about INR28 crores over the beginning of the year. This is about 15% of the sale and is in-line with our planned objective. Free-cash generation from operations was strong at INR280 crores, supporting an enhanced dividend to commemorate the 58th AGM of the company.
There is a bit of a explanation that would be required to say why 15th AGM is quite different from our 74th year of operation that I think most of you know. And let’s look this is about our various product lines. Air compressors, the Air Compressor business ended the year-on a strong moat with record of the tech compressors. The sales of large reciprocating compressor packages to the fertilizer and chemical plants added to the sales growth. Overall order intake was strong, indicating a clear growth in-market share. The air compressor business continues to be 20% of our overall sales.
Refrigeration compressor system and compressor systems, this clearly was the start of the year as the refrigeration compression segment grew strongly on the back of cold chains and ice plants, diary industry, food processing, pharma, chemicals and suppliza industries. This more than compensated for the marginal decline in the growth of the gas business. Bringing our systems and components into our core further enhanced our offering to the growing markets.
Process gas compression systems, the process gas space continues to throw up new opportunities and challenges. While the sale of gas packages was slow and steady, the sale of CMD packages and Kalana booster for gas distribution was in fits and. We had periods of good order inflow, bad execution and vice-versa. We continue to see a decline in commissioning of stations and to put upper stations. This is clearly to comply with the coverage commitments such as a gas company that made and this is not a good sign for us. This is the moonster Compressor is a marginal business and we are reluctant to pick-up more orders beyond the.
However, the new energy business, both in hydrogen and biogas are growing, but it is yet to pick-up significantly in terms of execution. Sale of CNG packages to the MENA region is scaling up and this seems to be a new area of growth as countries in this area find it the quickest way to get energy to meet their growing economies. We continue to operate and maintain near 1,000 odd filling stations across 15 states And the O&M business remains strong and growing. Outlook for F ’26, the economic outlook continues to be uncertain, less so in India. The general slowdown across geographies does have a sobering impact on all new projects and investments. Yet in all this, we seem to be in a sweet-spot with several things going-in our favor. We have a slew of launches, mostly replacing imports. We have good products addressing the growing market segments like diary, pharma, chemicals and more in-house manufacturing that has been continuously being set-up, reducing both our cost and sharpening deliveries. The strong engineering capabilities to build customer solutions for very many applications and industries helps us to meet the growing customized requirements of various customers. A large-value of active codes and proposal out there as well as the highest-ever order book at the beginning of the year bode well to meet our growing aspiration we are quite confident of reaching our first milestone of being above INR2,000 crores during this year. Now I request Ramesh, our CFO to take you through the financial aspects. Ramesh?
Ramesh Birajdar — Chief Financial Officer
Yes. Thank you. And good evening. The presentation highlighting the trends observed in the Q4 as well as FY ’25. The results is now available on the company’s website. You can find it in the Investor Relations section. Additionally, we have released the financial results on the BFC and MSC website following the conclusion of the Board meetings held today.
These filings contain detailed information about the company’s performance. Before discussing the specifics of our financial performance. Let me first highlight some of the year’s significant achievement. The company recorded new order booking exceeding INR1,860 crores during FY ’25. This is highest order gaining in the history of the company. The sales of INR1,629 crores witnessing the growth by 23% over the last year. Export sales gone up from INR69 crores in FY ’24 to INR124 crore in FY ’25. PBT, that is profitable before-tax showed a growth by 58% to the tune of INR281 crores, crores reaffirmed AA minus credit rating by with positive outlook, dividend at rate of 500% for FY ’25, which is the highest in any financial year, completed one acquisition successfully in FY ’25 and as our commitment to ESG, all our three sectors have started using the solar energy to the extent of 30% of the total consumption.
Now I will run-through to the business segment for Q4 and the year ended on 31st March 2025. Sales for Q4 FY ’25 were at INR583 crores against INR490 crores of Q4 FY ’24. The sales for Q4 also showed a growth by 19% over the previous year Q4 FY ’24. Other income for Q4 is almost same for the fourth years, INR557 crore in FY ’25 against INR5.95 crore in FY ’24. The total income for Q4 FY ’25 was at INR588 crores compared to INR496 crores in the previous year.
There is a minor change in the percentage of raw-material to sales for Q4 FY ’25 compared to Q4 FY ’24, 56.36% in Q4 FY ’25 against 56.21% in Q4 FY ’24. However, the YTD percentage of raw-material to sales has improved by 1.1% in FY ’25 due to better product mix, better selection of orders, execution of large packages and export sales.
The staff cost stands at INR45.52 crores in Q4 FY ’25, that is 7.75% of the total income against INR37.88 crores in Q4 FY ’24, again the same percentage, 7.72% of the total income. YTD employee-related costs stand at INR177 crore, that is 10.72% of total income against INR164 crores, that is 12.21% of the total income in FY ’24. Lower depreciation is in FY ’25 compared to FY ’24 is due to the impairment of road leather assets in FY ’24, reduction in depreciation of the lease assets, which are fully depreciated now.
Other expenses are mix of fixed and variable costs and are at INR302 crores in FY ’25 against INR244 crore in previous year, increase in these expenses are mainly surge in of packages, higher export sales, enhanced level of service business and expanding activities in our plant. The year-to-date performance for the year shows an improvement in the EBITDA margin, reaching 19% of total income to INR313 crores compared to 16.5% of total income to INR22 crores in the previous year.
In the ongoing fiscal year, the year-to-date profit before-tax, that is PBT has reached INR281 crore, constituting 17% of total income against 13.2% to INR178 crore in FY ’24. Net profit-after-tax for the current fiscal year is INR211 crores, that is 12.8% of total income. In comparison to previous year, INR133 crores, that is 9.9% of the total income. The company has maintained status as a debt-free company and I would like to state that company still has net cash position of INR330 crores plus as on 1st April 2025.
The company issued 1,24,300 equity shares during year FY ’25. Last year, 1,38,400 equity shares under the stock option — employee stock option program. As a result, the product share capital increased to INR12.98 crores compared to INR12.95 at the beginning of the year. YTT earnings per share in the current year has shown growth by 58%, reaching to INR32.50% per share, while INR20.60 per share was at the previous year FY ’24. In-line with our dividend policy, the Board of Directors has approved a final dividend at rate of 321% on fair-value of INR2, that is INR650 per share.
This is in addition to interim dividend at rate of 170 odd percent, that is INR350 per share. So the total dividend for FY ’24 is 500%, that is 10, which is the highest in the history of the company. With about 95% — 94% of the total revenue coming from the Compression segment it remains the only reportable segment.
The segment earned profit of about 21.71% in the current year, higher than the previous year when it was 19.8%, the Compresent segment is consistently sustaining the profitability within the range of 18% to 20% and which is directionally will maintain in that range. As of April 2025, the order book amounted to INR1,624 crores.
Assets or includes the assets and assets of transmission business and plants to the tune of INR753 crores. As you may know, the company recently-acquired the system and Component India Private Limited situated in the village Padgon near Murbad, Maharashtra. Following this acquisition, company has published its consolidated income statement along with the balance sheet from the date of acquisition that is 4th December 24 to 31st March ’25, reflecting the financials of both entities. Comparable details of consolidated business will be provided after completion of a full reporting cycle of one year.
Now this forum is open for questions from our investors.
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 withdraw yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles. We have our first question from the line of Amit Anwani from PL Capital. Please go-ahead.
Amit Anwani
Hi, am I audible?
K. Srinivasan
Yes, please go-ahead.
Amit Anwani
Yes, yes. Congratulations teams for the strong set of numbers. My first question is, sir, you highlighted about the air compression, very strong growth in test received a phenomenal response. Wanted to understand what was the absolute contribution or value from and how it has grown versus last year? And second thing is, any top two, three industries where you highlight — definitely you highlighted few sectors. Any top two, three sectors where the poker is receiving a strong response and you highlighted about the market-share gain. So any sense whether we gained a — but to what extent we have gained the market-share versus the competition?
K. Srinivasan
Yeah. The ACD business itself is a pretty small-business. It’s only 20% of the company’s total sales. Test cataly, now account almost about 15% to 18% of the ACD business. So that’s a big growth that we are seeing. This was not a product-line three years back. So that’s a big jump. So in terms of multiples, it’s growing many times every year.
So we’ll have to see how big it can be. Like we said in the beginning, it can be anywhere between a INR300 crores to INR500 crore opportunity in three to five years. We are the only people who make the entire compressor in India and that gives us a huge advantage. In terms of industries where this is being accepted, metal, all kinds of metal, carbon black, cement, so these are so many big industries that are buying, material conveying industries like power plant, et-cetera, for conveying coal and all.
So these are broadly, wherever large-volume of air is being used at moderate pressure, which has picked-up and this is a very popular product now. We hope to see much bigger traction going-forward.
Amit Anwani
Sure. Now coming to the gas segment, you highlighted that the oil and gas remains patchy. So any ballpark you want — are we expecting that the package orders will moderate any color you want to give, what was the contribution from package and CNV this year and how it will shape next year?
K. Srinivasan
So we have — the package business is about half of our process gas business, other half comes from the gas distribution, which is the CNG packages at the stations and the boosters as well as in the O&M maintenance and operations of all these stations. It’s about half-and-half very roughly. And the package business is okay. It’s not as patchy as the C&D station and the installation of the booster packages. Their orders are coming in. The installation is muted on and off. There’s some urgency sometimes and then they say, no, the sites are not ready. So it’s going a little up-and-down.
The approval of 18,000 stations out of that they are supposed to about 2,000 ob stations every year. I think if you look at most of their numbers that are putting out, they are still calling out somewhere between 1,500 to 1,800 stations is what they’re looking to put out. Unfortunately, significant number of them end-up being booster stations. That is where the whole — the whole story changes completely.
Amit Anwani
So lastly, on the order intake, if I can see roughly about INR1,860 crores versus INR1,70 crores, so just 3%, 4% growth this year in order inflow. So is it a right read-through that this includes now the package orders might have increased and as you highlighted that the duration has gone up, or can we understand that there was some slowdown in receiving the inflows the?
K. Srinivasan
No, I think there is some error there. The order — full-year order pickup was up by 23%. So we were some 1,460 odd numbers. I’m now giving you a number of could be 1,400, 65, 62, whatever it is and this year it’s about 1,800 something. So it was up by almost 23% for the full-year order booking. Now the opening order bank as we start the year is 12% higher than the opening order bank that we started the previous year with. So booking for the year was 23% up.
Our execution obviously was much faster, quicker during the year and I gave an explanation for that we are having now a significant change in the breakup between equipment as a part of the total sale versus packages as a part of the total sale. As we go more towards the equipment as a part of the total sale, the execution cycle sharpens. So we have now actually moved down on an average the execution cycle from about seven months-to about five months. So that means the order bank will automatically be lower.
Amit Anwani
Yeah. Thank you so much, sir. Thanks.
Operator
Thank you. We have our next question from the line of Shubham Segal from Simple. Please go-ahead.
Shubham Sehgal
Hello, sir, am I audible?
K. Srinivasan
Yes, please.
Shubham Sehgal
Yeah. So my question — first question was on the process segment. I mean, you mentioned that the slowdown is still very apparent and are not coming up and we’re supplying the package or the boosters. But do we see any improvement coming up in this year, like will we be — will we start to supply the mother packages or how do you foresee? And another one thing on our process segment, I think like Reliance had planned 500 compressed wirewase plants like to. And I think one of the plant showed some progress like earlier last month. So did we supply our compressor there? And like do we have any do we have any outlook on this?
K. Srinivasan
Yeah. So first, let me answer the gas distribution business, which is really the mother station and the station. This business is not something that’s going away. There is a slowdown, but this goes up-and-down with the availability of gas and the pricing of gas that is available. So if we plan to have overall in the country more than 96% of the geography covered by city gas and as the corollary, you need to have also there along with that the gas distribution for the industries and automobile.
So it doesn’t both go together, otherwise they won’t be able to make money. 18,000 stations have to come up and I think we still have to do something like about 12,000 to 14,000 stations. The exact numbers will be difficult to tell us at the moment. So this keeps coming up. So it’s not going away and we are still a very, very strong player in it. We continue to manage and run over 1,000 stations across the country. So that’s on the PVS gas system.
Now coming to the biogas business, yes, line had announced 500 biogas plants. There is an overall government of India’s team saying that there will be 5,000 biogas plants across the country in five years. We have several products for this. We have the Lay of compressors, which can take biogas as it is generated from 0.5 bar and take it up to 250 bars to fill cascades or to fill into vehicles directly or we can even compress it and put it into pipeline so conveying to various cases. Now Reliance projects, we are an approved supplier of compressors.
So there is a move by reliance earlier they were offering the complete packages and order out to a person who set-up the plant for generating biogas, for compressing it and to bottle it. Today, they seem to be convinced that the equipment can be directly ordered on recruited manufacturers like Loster.
So we expect more orders to come directly from Reliance and we are an approved supplier to Reliance for both the low-pressure and the high-pressure gas. We expect the biogas business would scale-up, but it is not scaling up as fast as everybody would expect it to happen. And we had explained this reason earlier also.
This slowdown is not because of intent, it is because of the signs of generating continuous biogas from a variable biosource and still delivering the kind of requirement of gas that is stipulated. That is where the challenge is and I think they will this.
Shubham Sehgal
Okay, all right. And on margin expansion, so I mean, like the initiatives we have been taking like our fabrication plant and other backward integration you’re doing. So can we expect margins to — like can we do over 20% in FY ’26 or it will take time to gradually reach there or we can maybe Out to 20% like how is your outlook on margins?
K. Srinivasan
See, on the EBITDA margin, I think you have said directionally the company will move towards 20%. We will already be already something like about 19%. The compression segment margin will be about 20%, we are already at 21 points — 21.7%. So we have moved directionally.
Now, Ramesh had explained several times that there is a trade-off between margin and volume. So we have to keep that in mind that we would like to get a 20% top-line growth continuously and we would use margins prudently to trade-off to see that the volume of top-line does not diminish. Most of the businesses we work with are government, government-related and they’re all tender-based and we would like to stay very competitive.
So the in-house manufacturing gives us the capability to be cost-competitive and allow us to work for customers who still buy on LVOM, but still also make reasonable margins as we go-forward.
Shubham Sehgal
Okay, that seems fair. Just my last question. So I think last quarter we had mentioned that the recorded like around INR130 crore revenue for for the whole nine months. So I mean if you can provide the number for it for the full-year and do we have other compressors which are kind of like crossing the INR100 crore mark and any other compressor other than boca that we are betting on like we have very-high scope so that it could reach good scale.
K. Srinivasan
Booka has not crossed INR100 crores this year. We are still working to cross INR100 crore during the current year. We are booking orders and we expect to cross INR100 crores during the current year. At the moment, it is not INR100 crores. It’s significantly lower than that, but we are booking orders and scaling up.
As far as the question of which are the compressor packages where we do more than INR100 crores, the KC series of compressors, which is really ammonia reciprocating compressor has been well-above INR100 crores for many years now and it continues to be the largest selling reciprocating compressor for — with ammonia, which is a natural refrigerant used in cold chained ice plant across the country with a dominant position.
And all the bios — all the compress — CNG compressors also the KGCs of compressors also have been over INR100 crores for many years now.
Shubham Sehgal
Okay, got it. That’s all from my side. Thank you.
Operator
Thank you. Before we move on, ladies and gentlemen, please restrict yourself to two questions per participants as there are several participants. The next question is from the line of Mahesh from LIC Mutual Fund. Please go-ahead.
Mahesh Bendre
Hi sir. Thank you so much for the opportunity. Sir, I just wanted to know your input on the order inflow for the full-year. So we’ll be able to see a 20% kind of growth in order inflow as well?
K. Srinivasan
If you see the order receipt in the year FY ’25, we got almost INR1,860 crores plus and this is the highest order booking in any financial year. And in terms of the sales also, this is the highest sales ever in the company. Going-forward, where which is switch from the packages to equipment where the cycle time for the production and sales goes and that is again benefit to achieve our aspirational sales.
Mahesh Bendre
Okay. So we have not witnessed any order inflow slackness in the current quarter at least.
K. Srinivasan
No, there are many orders, there are inquiries also. We are working on that. And on that basis, we are saying that we will achieve the aspiration sales of INR2,000 crore-plus. So I think there are quite a few questions on order book and order backlog, let me explain this. We have said in the beginning that our business modeling of working on different segments and markets allows us the comfort of managing order inflow obviously trading off some margin between various segments.
If the gas distribution segment sees a slowdown, we can pick-up traction in the segment, which is the refrigeration segment, which also offers us opportunities both in commercial and industrial. We do more on the commercial side as an optional thing where we can pick-up more orders.
So overall, our position has been relatively the same. We’ve been saying that we will meet the 20% growth. Our order intake supports this aspiration and there is slowdown and good things also happening. The refrigeration part, which really runs into food, food processing, diary, these are all doing exceptionally well for pharma fertilizers, chemicals, all of them are doing exceptionally well.
So on the whole, our order intake is adequate to meet our growth aspiration. That’s the sum and substance that we would like to leave with you.
Mahesh Bendre
Sure, sir. Thank you so much.
K. Srinivasan
Thanks. Thanks, Ash.
Operator
Thank you. A reminder to all participants, please restrict yourself to two questions only. If you have a follow-up question, we request you to rejoin the queue. The next question is from the line of Manoj from Carolin Asset Management. Please go-ahead. Yes, sir, sorry. A reminder to all participants to restrict yourself to only two questions per participant. Should you have a follow-up question, we request you to rejoin. We have our next question from the line of Manoj from Carelang Asset Management. Please go-ahead hello, hello, Manoj, are you there?
Unidentified Participant
Hello, am I audible yeah, please, yeah, sure. So congratulations on good set of numbers. I mean, specifically, when I see I mean INR83 crores of PAT this quarter, I mean the numbers when we started this journey in 2022, this was a full-year PAT. So close to the team for that and more three years, the full-year PAT has come in a single quarter, definitely there has been a progression which has happened.
Largely, sir, I wanted to understand on the order booking side. I mean, when I see the order book for this particular quarter now stands at crores and you are also mentioning that INR2,000 crores kind of a visibility you are still looking. So just wanted to get a sense on execution cycle when you say the execution cycle has come down, but how can there be a change just in a single quarter that last quarter we were still looking at the order book to be sufficient enough for us to have the INR2,000 crores and now there is a change in that.
So if you can provide some clarity and get some color as to what is the equipment order intake for this particular year, your equipment order intake and order intake out-of-the INR18 crore INR360 crores of order inflow and also on the last year basis the year I think we have
K. Srinivasan
Gone through this and I’ll repeat again, our order booking for the year was 23% higher than the previous year. Our order backlog as we start the year, as we Call-IT order bank for execution during the year is 12% higher than the last year. So these are the two benchmarks that you have to look at.
Will a 12% higher order bank allow us to deliver 20% growth in the top-line is a question that is to be answered. We believe we can for two reasons. One is, compared to the last year, this year, we will have a even higher execution of equipment compared to packages. So we expect to execute more of the orders that we booked this year quite quickly.
Consequently, we still are confident that we will deliver the 20% plus growth that we are planning for the year. Now we will have to deliver quarter-on-quarter and as we go-forward, we will be able to convince everybody that this is possible. Our modeling shows that we are booking enough orders as of now and busy for the first-quarter, I’m quite busy for the package orders for the full-year.
We still have to see that the order traction is good and we believe it is good to complete the numbers that we have put out. We will talk about it every quarter.
Unidentified Participant
Sure, understood. How much will be the increment order booking for this particular financial year
K. Srinivasan
Of the recruitment orders get booked and executed during the same year. Out-of-the INR14 and our INR1,465 crores of order banks that we start with, only about INR400 odd crores would be equipment, more than INR1,000 crores would be the packages. So we quite about INR1,000 crores, I won’t say exactly.
Packages and maybe the AMPs are there. So we should be okay. That is our — our estimation is that we have enough orders to do the numbers.
Unidentified Participant
Okay. Sure. And second question was just on the local compressor. I mean, over here, the business has done well for us over the last three years. Now close to 4% to 5% of our business is coming from this particular category. Just wanted to understand as we are also gaining market-share.
Just wanted to understand the differentiation here and what is the product differentiation from a competition perspective or from an offering perspective, if you could throw some color over that, that would be really helpful. And how should one see this particular number building in over the last few
K. Srinivasan
Few years? The compressor business in India is roughly about INR300 crores. We expect it to be about INR500 crores in the next two to three years. Current customers — manufacturers will deliver these compressors are almost all imported. Some of them would be 100% imported, some of them will have the errands and significant parts imported and gets put together in India.
In any case, they are significantly import dependent, they’re expensive and they are all based on supply chains which are anywhere between 7,000 kilometers and above. Parts could come from China, parts would come from Europe, parts would come from the US. So the compressor that we make is designed by us, manufactured entirely in a supply-chain within 200 kilometers.
I have three factories within which we do this. And whatever we have delivered has been delivering the lowest-cost of utilization or lowest lifetime cost of usage as we believe. Initially, it is just a demonstration as customers buy and use it, the repeat orders demonstrate that they find that it is far superior to anything that they’ve experienced so-far. It’s economical, it’s efficient.
Unidentified Participant
Sure. Yeah, that’s it from us.
Operator
Thank you. We have our next question from the line of Ashish Kumar from Ampersand Capital. Please go-ahead.
Unidentified Participant
Hello, am I audible? Yes. Yes. Yeah. Thanks for the opportunity. So my first question is, you have already given guidance of INR2,000 crores for next year. My question is more of a medium-term, like beyond FY ’26, do we see this 20% kind of revenue growth sustaining? And my second question is this change in this order book mix, do you think it is structural?
And what does it mean for our margins from a medium-term perspective?
K. Srinivasan
Okay. Thank you. Now coming to the medium-term perspective, we have been saying that we are in an industry where delivering a 20% sustained growth over a long-ish period of time is possible. We are at a very early-stage of this growth club. We can deliver it. So what are the enablers that give us the confidence that we can do it.
One is our current market-share, if you look at air compressors, we are now somewhere in-between 5% to 7%. If you look at our market-share as a country in the refrigeration business, what compressors are made in India and the product addressed through the Indian manufacturer is very, very small.
India is still the largest import of compressors. If you look at the gas business, we are probably the only one who does most of the packaging and the work within India and also we have the distribution that we build ourselves 100%. So there are lot of things going-in our favor.
Our modeling is done in such a way that we increasingly do more-and-more manufacture within the country, which allows us two things. One is it allows us a steel of execution. Second is it allows us customization to meet specific requirements of customers. Third is it allows us to be cost-competitive.
With all this, we have a huge opportunity out there. We are a small, small player in a huge developing market predominantly served with imported inputs. The market itself is India and I see this 20% growth for a significant period of time is a definite possibility. Now what are the things we are doing to give us the right to play there?
One, our R&D investment of trying to put in enough number of IPs is one big investment to build the capability. Two, we are setting up manufacturing and these are not traditional old manufacturing. And we do have a casting plant that has been running for 60 years. But the new casting plant that we set-up would be a lost form casting, which is probably there is maybe two or three plants in India of such type.
And even that what we do is even more special. It’s hydrocarbon-free, it’s got so many other features that make it even more competitive and even more environmentally-friendly. So all we’re trying to do is build capabilities that will allow us to deliver this 20% growth in an opportunity that is already there, creating that opportunity.
That’s why we are not so worried about markets slowing down, going up, et-cetera, because our share of the total market even today is so small that even if the market doesn’t grow and stays where it is for one a year or two years. I still can continue to grow.
Unidentified Participant
Okay, understood. Comment on the margins.
K. Srinivasan
Yeah. So margins we keep saying and Ranesh explained it best, capability to deliver superior margins exist. But depending on-market conditions, we are willing to trade-off margins for growth. So all we keep saying is directionally company’s margin be above 20% EBITDA and the compression segment already 21 plus, we’ll keep it around, 21 ’22, but we will focus on getting scale and volumes.
Unidentified Participant
Okay, that’s all from my side. Thanks thank you.
Operator
Thank you. We have our next question from the line of Mohit Jain from SPIMS PMS. Please go-ahead.
Unidentified Participant
Hi, sir, thank you. My questions have been answered. We can move on to the next question.
Operator
Thank you very much. Thanks. Thank you. We have our next question from the line of Sahil Sanghvi from Munaj Network Capital. Please go-ahead.
Sahil Rohit Sanghvi
Yeah, hello. Am I audible?
K. Srinivasan
Yes.
Sahil Rohit Sanghvi
Yes, sir. Yeah. First of all, congratulations that’s extremely amazing execution from your team. So very well done. My first question is, which are these new products that we expect to roll-out in the next one year or so and where we expect some good response and good order bookings? Thank you.
Jitendra R. Shah
Okay. So thanks for this question because it’s a nice subject to me to explain. See, if you look at the capital goods product that we bring to the market, generally our — first is a product acceptance. Second is product scale-up. So there are two-parts to it. We need to get about 10% market before it starts scaling up. People cut took two years for us to get accepted by the market and then the rapid scale-up starts.
And then you really get to a cascading effect as customers buy and experience this. We have the similar experience in Kione with a variant that we thought we can sell a bare shaft compressor and eventually we realized for two years the sales was just so lukewarm that we shifted to packaging and suddenly now it is picked-up very well.
So I’ll come on and tell you what are the products that will scale-up. Our definition of a new product is product launched within the last three years. So the risk capable of our scale-up remarkably, the packages will scale-up and here we have an outlet further added to our chain by having systems and complement as one more potential customer internity.
Then we have the products like the which is announced. So that is another thing. The new product that we are hitting the market with this year is a. Now Tai Chi is a semi-hermatic compressor, probably the only semi-hermatic compressor made in India. Today, over 1,000 semiermatic compressors are being imported, primarily from Germany, Italy and a little bit from China as well.
These are technically a superior product. The would be comparable or better than what they get from imports and obviously significantly competitive — better price than the imported German or the Italian machines. Over 1,000 compressors come into this country. Now it depends on how we position. Do we want to sell them as bad compressors or do we want to package them and offer it as a customer solution?
This is something that we will learn as we go-forward. Initially, our interest would be there sell the compressor, then it is a meet you product against an import. But if you package it and offer, then you end-up partly competing with your own OEs. So there will be a mix. Our learning from the Q&A has been that you have to go through this in a mixed way.
We will do that. There are several other products, but a couple of them are not even announced. So I would wait till they are launched before I make the announcement. Like I said, 41 IPs, both granted and filed is an indication that there is a lot many good things in the pipeline coming out.
Sahil Rohit Sanghvi
Right, sir, in this, just a follow-up question will go into which End-User industries. Is it refrigeration? I just understand refrigeration.
K. Srinivasan
So all commercial refrigerations starting from cold chains, the cold boxes, cold rooms and in restaurants and other storage areas, it could be very, very small ones as well. So quite a few small things. We are not — this cannot go or this — we have not made the smaller ones yet, which can go into a reef, containers, milk beauty vans, et-cetera.
But they are all-in the pipeline. There are quite a few things happy things will come.
Sahil Rohit Sanghvi
Right, sir. And secondly, sir, you said the refrigeration side of the business is very largely dominated by imports. So can you give a number to it as in how much percent of this market is currently catered by imports?
K. Srinivasan
So almost all 100% all the compressors are imported. So that’s the first thing. Now what is the market? Is it only the compressor or the compression system? Because there is a condenser, there is a fan, The whole packaging that has to be done before it becomes a working tool. Now eventually that part of the work is partly being done in India with imported parts. At which part we play is the question. So we generally tend to give packages, which is not just a bag compressor, but the condenser, the air-handling system, the driver, the whole thing. So if you cut it at different places, the market could be anywhere between INR3,000 crores plus.
Sahil Rohit Sanghvi
Got it, sir. Got it. Got it. And sir, lastly, is it fair to assume that the equipment versus package ratio in our order book will be now something like 60-40, which was vice-versa before?
K. Srinivasan
Yes, that’s the way we are some months plus/minus, but directionally we are equipment favor. And equipment is a five-month processing sort of time improvement is about 15 on an average
Sahil Rohit Sanghvi
Okay sir. Thank you. Thank you so much and all the best.
K. Srinivasan
Thank you
Operator
Thank you. We have our next question from the line of Bharat Shah from Ask Investment Managers. Please go-ahead.
Unidentified Participant
Hey, Harish.
K. Srinivasan
Good evening.
Unidentified Participant
Good evening to you. Good evening to you. Just one question. We have a 65-year-old company now, almost. And if you look at it, say, even five years back, we were just about half the turnover that we have just achieved in the year gone by. Therefore for longish period of time we have kind of leaved modestly. But clearly in last five years, things seem to have improved and accelerated, even if it is on a very low-base. But things have definitely improved and moved at a faster clip and there is a greater ambition to grow.
There is a greater desire to engage with the outside world and achieve exports and explore more areas where we can find our feet and clearly our profitability also has improved. So what I wanted to understand is how much of this improvement both in the top-line growth margin improvement, the overall trajectory of the business in terms of capital efficiency, how much of these improvement in last five years is because of internal resolve and energizing and engagement and how much it has improved due to the external opportunity becoming more favorable? Thank you..
K. Srinivasan
Thank you for a very good analysis and I must explain this in two-parts. First part is the environment in which we are currently operating is hugely supporting growth compared to what we had earlier. I think that’s the first thing. So credit should go to the external environment and opportunities that is now available for the company to grow, which is significantly more — significantly bigger than what it was earlier.
That’s the first thing. The second-half of the growth is the ability as a team to address those opportunities and accept those new challenges that have come up. There, it has been a question of building capability, be it in the design, engineering, R&D sector, be it in a conscious decision to be, let’s say, not in-line with the traditional process of saying that everything should be outsourced, we do only minimum in-house, etc., we have done exactly the opposite of what most common manufacturing companies have done.
We have in-house a lot of things. We have consciously decided to go more deeper into manufacturing, which means we have looked back and said which are those things that we and many companies did do in-house but gave away over a period of time, get back to very basic things like forging, fabrication, casting and say with the sign, with the technology that is currently available, is this still the right solution to get it done by small scalers who are outside there doing it with very old techniques and methods, et-cetera.
So here is something I would say, learning from the Chinese model, scale, competence, building the new signs around old processes and seeing how we can build products more efficiently. So that’s a capability building exercise. The strategic call that all of us collectively take and do is to ensure that the business modeling is done with three tiles of aspiration.
One is growth is paramount. We need to grow because the market is there, opportunity is there. Second is, it has to be profitable growth. The third one is it should be cash accretive. We should generate enough free-cash and that should fund all our aspiration. So everything has been structured in ways choice of markets, choice of mix between opportunities — take opportunities to take a call to say whether we should get into exports early enough or choose the markets we export.
So all that has come out-of-the business modeling exercise that we have done. To say that we are relatively agnostic to-market. That’s what I’ve been explaining. Look, two worders when there is a big tariff war out there, two words when there is a bit of a slowdown out there because in most cases, we have chosen segments and markets in a way that there is enough headroom for us to meet our current growth aspirations for quite some time.
So that’s the way we have modeled it. And we are quite confident that we will be able to live up to the expectations of investors and not disappoint them for quite some period of time.
Unidentified Participant
I know that you are the humble man and you do not want to draw life to yourself, but how much really speaking, the noticeable improvement in last few years a, would you attribute to the energy within and how much to the opportunity outside? I mean, is it 50-50, 70-30, 80/20 to internal and external? What would be your — I know it’s a — it’s a bit of a random question, but I’ll be very keen to understand your mind because your internal energy of organization is something which is more durable. External opportunity, of course, has to be there in order to gain an in, but it is still so small in terms of the size of the business that clearly that opportunity I think existed earlier as well,
K. Srinivasan
Let me answer like this. I think quite a few investors visited our plant sometime in March last six months. I don’t know-how many had been there what I would say is it is a little bit of a judgmental question for me to answer. I think there is a invest — the energy in-house is measured by, let’s say, the IP creations measured by the employee engagement scores, which is an industry-standard today, measured by my attrition rate being single-digit among the lowest in at this time.
So the engagement and the capability building that has happened is huge. So I would really leave it for time and judgment to see how we are able to deliver on a sustained basis because that’s a very subjective question and difficult to answer. All I would say is there is opportunity out there, there is capability in-house and I think both of them work beautifully together. I will add one more sentence because he is sitting in front of me and I’m also here part of this growth story of the company.
Unidentified Participant
One leadership factor is also driving the company from INR800 crores to INR1,600 crores because bringing the new product, bringing the manufacturing capability, driving for the new growth opportunities, sustaining all these things, of course it is a direction of intelligence and direction of intelligence is coming from the leadership, both at MD level and both at the Chairman level. Also.
Sure. Now, as I said, I know Srinivasan is a humble man, so he does not like to attribute much light to himself, but you have answered. Thank you. One last thing,. From INR1,600 odd crores that we are today and given the large-size of opportunity and our desire to seize that opportunity and give a good account of our sales, in five years’ time, will we be INR4,000 crores, INR4,5000 crores or INR5,000 crore kind of a business?
If we grow at 20%, we will be INR4,000 crore. If we grow at 23 odd percent will be INR5,000 crore. So where do you think we are likely to grow again,
K. Srinivasan
Let me answer this question in two-parts. I think this 20% year-on-year is directionally doable with the capability and the market opportunity. Obviously, we don’t factor-in Inorganics too much because it happens as it happens and we are a value buyer. So I think while growth is a — is an aspiration that we continuously work on as one of our prime objective, we will not buy growth. So that is one important thing that we are all-in in ourselves say that we would not buy growth because there is a lot of opportunities, which are tempting, but it is not the price or it doesn’t bring the capability that the company is looking for. So let’s take it, modest 4,000 is a good number to look at. We can go much bigger is the inorganic opportunity. We don’t talk about it, but we keep looking, which is appropriate for us.
Unidentified Participant
Fantastic. Alternative.
K. Srinivasan
Thank you.
Jitendra R. Shah
Thank you.
Operator
Thank you much. Thank you. We have our next question from the line of Sarda from Nimal Bang Equities. Please go-ahead.
Unidentified Participant
Thanks. Am I audible? Yes, sir, please go-ahead. Can you give me the components of other expenses which is at 244 crore for FY ’24 and 301 crore at FY ’25
K. Srinivasan
Number because the other ones are also semi-variable. It varies with the volume of our business. Ramesh will give you the exact items that go into it. You can take it as almost semi-variable because there is a lot of things that is related to the volume of business, let’s say, outsourcing, our labor for all our O&M maintenance outside, all that comes under this, but we’ll give you the largely it is IP addition plus the maintenance cost-plus addition of the plus power and fuel, and outsourcing.
Outsourcing is another part where mainly the contract cost is and of course, it is a maintenance of the O&M business through the is all of this.
Unidentified Participant
Okay. So it will be driving according to the volumes
K. Srinivasan
Number of stations walk. You will see this going on a business is growing and at the same time our cost is also because it is completely also,
Unidentified Participant
Sir, thank you
Operator
We have our next question from the line of Dhavan Shah from Advisors. Please go-ahead.
Unidentified Participant
Yeah. Thanks for the opportunity, sir. Sir, my question is on the order inflow. I think in the last con-call, you mentioned that there is some green shoots only from the refrigeration side, while the air and gas business are witnessing slowdown. So I think that is visible in the current quarter order inflow as well, which is around INR300 odd crores and down by 25-odd percent on Y-o-Y basis.
So I just wanted to understand what gives you the confidence that for FY ’26, we can grow in terms of the order inflow by-20 odd percent.
K. Srinivasan
I think the answer is, but I’ll repeat again. So the order inflow, we should look at it not just only on the quarter because one project order booking in a quarter will change the number — absolute number. But the composition of the order inflow gives us the confidence of water.
Almost INR300, if you look at the total order book during the year of, 1,8160. Significant part actually got executed, which is unusual, which got executed also during the year, the equipment order, etc. So what we do expect going-forward is there will be booking and execution during the same year, which has been much less during the previous year. So that’s one first thing.
We do have as an overall order for the year, 23% higher booking compared to the previous year. There is a change in the mix between equipment and packages. That’s the second step. Third is even as we speak, the start of the year, we are starting with a 12% higher order bank compared to the previous year.
So I think to get to about 20%, I would take it as, let’s say, 12% plus 15%, 18% is a given. We’re not expecting anything big when we say we’ll do achieve 20% growth.
Unidentified Participant
Understood, sir. Yeah, that’s it from my side. Thank you.
Operator
Thank you. We have our next question from the line of Kuna from B&K Securities. Please go-ahead.
Kunal Sheth
Thank you for the opportunity, sir. I’m sorry this question has already been answered. Just wanted to check, sir, we have seen a seen meaningful improvement in margin over the last few years. Would it be possible to list out key reasons that has been driving this margin and what part of these reasons are sustainable?
K. Srinivasan
Thank you. So the margin growth have multiple steps. The company’s margin growth we kept saying from day-one that we take-out decretive activities. We had transmission as some of the reason we had the Road railer business is one of the reasons these have all been economic.
So on the company side, the margin moving us is driven largely by taking out the decretive activities that has happened. On the positive side, we have a better product mix, we have a cost-control coming out of in-house manufacturing, better design, better engineering, et-cetera, all this combined has helped us. Is the market giving us better margin on the product?
No. It is a competitive market. But what is also happening is our ability to come up with the newer products which are less material intensive, more engineering intensive allows us to improve. Ramesh explained that our material cost-of-sales is down this year-by about 1.1%, 1.2%. That’s an indication of a better product mix that allows us to make better margin.
So all this combined thing adds up to take our margins up towards. That’s why I said in the beginning, we’ll take it directionally there, but we are not in a way saying that we will work only on margin and not to look at taking the well-one orders we need to take to keep the growth going.
Kunal Sheth
Got it, sir. That was very useful. Thank you so much.
Operator
Thank you. We have our next question from the line of Rohan Gora from Envision Capital. Please go-ahead.
Unidentified Participant
Hello, sir. Thank you for the opportunity and congratulations on the number. So sir, you already gave out the reason. I just missed that point. So you said that the CBG as a whole is getting implemented at a slower pace. So just wanted to understand the reason for that. And also wanted to understand the kind of competition that is there in that segment and what is the per CBG plant, what is the amount — amount of higher supply that can be there at a potential level? Thank you.
K. Srinivasan
Okay. It’s a good question. We have dealt with this an earlier call, but I’ll deal with it once again as a subject. Compressed biogas, India’s stated objective is to have this generated and one consumed locally where it is filled into cascades. The second one is to mix it along with natural gas and consume it in the regular way, along with vehicle usage and other things, gas.
And they want to say that the compressed biogas would be mixed with natural gas to the extent of about 6% going up to 15% max. So that is our stated objective. We are less than 2% or 1% at the moment. So there is a big plan out there for compress biogas and it sort of substitutes a significant amount of gas that is currently being imported.
So there are multiple reasons to support this. The challenges today remain that as you set-up these biogas plants, generation of biogas is still a challenge because the biosource is still not a very stable source, except the red mark, which is from the sugar milk, all other biosource, urban waste, the spent wash, et-cetera, are all sporadic, agri-based, all kinds of things are being tried and used.
The generation of biogas in any, many of these projects have been significantly below their expected plan. Consequently, the challenges now on the gas generation. Once gas is generated, we can help with compressors for cleaning it either through wax scrubbing, with membrane, whatever it is, low-pressure gas compressors, high-pressure compressors, compressor technology is available proven and available.
It is also there with a few other customer imported compressor suppliers. But that is not the challenge today. The big challenge is the generation of stable significant biogas. So that is why this is not scaling up. If you ask me, will it scale-up very quickly, it will go through again the initial 10% story.
If they crack the technology of getting stable biogas, compressing and distribution consumption is all go on price processes. Are we positive about it? We are hugely positive. We have all the range of products for us. We are happy working with all the big companies which are working on this and we’re only hoping and playing that as they scale-up, we will grow along with them.
That’s the short story
Unidentified Participant
Sir, just the ticket size per plant ballpark number if possible
K. Srinivasan
Possible. Okay. Sorry. So the plant size depending on the kind of cleaning and capacity, whether it’s a 5, 10 DPR, 25, whatever they have, the packages could vary somewhere between INR13 lakh crores to INR2.5 crores.
Unidentified Participant
Sure, sir. This is very helpful. Thank you so much.
Operator
Thank you. Ladies and gentlemen, that would be the last question for today. And I would now like to hand the conference over to the management for closing comments. Over to you, sir.
K. Srinivasan
Okay. So thank you all very much for accepting to be in this call. I think on an overall basis, my understanding is there is a bit of apprehension on the order intake. Let me assure you that is not the key worry for us at the moment. We are quite well-placed to deliver what we have promised.
What we look-ahead is to see that our execution cycles get even better with all the in-house manufacturing, new products hitting the market. We look-forward to talking to all of you with a continuing good performance going-forward. Thank you all very much. Thank you.
Operator
Thank you. On behalf of Antique Stock Broking, that concludes this conference. Thank you for joining us and you may now disconnect your lines.