Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Menon Bearings Ltd (NSE: MENONBE) Q3 2026 Earnings Call dated Jan. 16, 2026
Corporate Participants:
Arun Aradhya — Whole Time Director and Chief Financial Officer
Aditya Menon — Promoter Group
Analysts:
Darshan Gala — Analyst
Sukrit Patil — Analyst
Bhargav Buddhadev — Analyst
Unidentified Participant
Unidentified Participant
Arnav Sakhuja — Analyst
Unidentified Participant
Unidentified Participant
Himanshu — Analyst
Unidentified Participant
Keshav Kumar — Analyst
Madhur Rathi — Analyst
Presentation:
Darshan Gala — Analyst
This meeting is being recorded. Ladies
Sukrit Patil — Analyst
And gentlemen, on behalf of Katify Consulting Investor Relations team I welcome you all to the Q3 and 9 months FY26 post earnings conference call of Menonberries Limited today on the call from the management we have with us Mr. Arun Aradhya whole time director and CFO Mr. Aditya Menon, part of the Promoter Group. As a disclaimer I would like to inform all of you that this call may contain forward looking statements which may involve risks and uncertainties also. This is a reminder that this call is being recorded.
I would now request the management to detail us about the business performance highlights for the period ended December 2025, the growth perspective and the vision for the coming years post which we will open the floor for Q and A over to the management team.
Arun Aradhya — Whole Time Director and Chief Financial Officer
Okay, thank you. So good afternoon everyone. Wish you all a very happy and prosperous New Year and also thank you for post earnings call to discuss our performance for the third quarter and nine months ended on December 3, 2025. I am pleased to share Q3 FY26 has been a strong quarter for the company reflecting healthy demand across key segments and continued improvement in profitability. On a consolidated basis, revenue for the quarter stood at rupees 76.9 crore representing a 32% year on year growth total income was 78.5 crore, also up by 32%.
Profitability saw a sharp improvement with profit before tax at rupees 12.4 crore up 69% and packed at 9.3 crore also up 69%. Earning per share for the quarter increased to 1.65 compared to 0.98 rupees 0.98 last year. For the nine months period, consolidated revenue reached 206.6 crore, an increase of 18% year on year. PAT grew by 34% to 24.5 crore reflecting sustained operating leverage and improved efficiency across our business. Looking at the business mix, OEM continues to be our largest segment contributing about 48% of Q3 revenues.
Expos accounted for over 36% underscoring the strength of our international customer base and diversification benefits. The replacement market contributed around 8% and we continue to see steady improvement in this segment as well. At the business unit level, menonberries benefited from healthy OEM demand, stable export orders and improved capacity utilization which supported margin expansion. Menon Archive delivered stable performance during the quarter with continued focus on higher volume alloy products and customer qualification initiatives.
Men and Brakes, while still at an early stage, is progressing as planned and we expect a gradual ramp up as customer approvals and volumes increase on the cost and raw material prices. Volatility remains an area of close monitoring. However a combination of partial price pass through better product mix and operational efficiencies helped us to protect and improve margins during the quarter. Apart from that we have completed installation of 3.8 megawatt solar rooftop solar installations covering all plants which will curtail electricity expenses by about 2.25 crore per year.
As we move forward we see a stable demand environment across OEM and export markets. With major capex behind us, our focus remains on sweating assets, improving return ratios and driving profitable growth. Our subsidiaries continue to add long term strategies and value and optionality to the business. With that we will now be happy to take your questions. Thank you.
Sukrit Patil — Analyst
Thank you sir. We’ll now start the question and answer session. Anybody who wishes to ask a question please use the option of raise hand. We’ll wait for a moment till the question queue assembles. We’ll take the first question from Mr. Bharga Upradev. Please go ahead.
Questions and Answers:
Bhargav Buddhadev
Yeah, good afternoon sir and congratulations on a good set of numbers.
Arun Aradhya
Yeah, thank you.
Bhargav Buddhadev
So my first question is that obviously we’ve seen a very strong growth in exports. So the share of exports has also now improved to about 36% versus 33%. So if you can spend some time in terms of despite this tariff scenario how are we managing such a strong growth in exports? If you can just explain that, that would be my first question.
Arun Aradhya
Okay. As I told you last time, also in the earnings spot we have already started additional business with one of the major customers from USA that is Alison Transmission. And that alone business has added value of around 2 point more than 2.5 crores a month. Apart from that Dru Petrol, Mughal Driv is also there and other customers also added in the fold of our company so far as exports are concerned. So we hardly have any impact due to the tariffs import by usa. On the contrary our exports are poised to grow further in future as well.
Bhargav Buddhadev
Sir, the second question is that obviously in the last one month we have seen significant increase in copper prices and also steel prices undergoing some inflation. So in this scenario how are we poised to basically pass on these to our customers? Because copper in particular has seen a significant rally. So is it fair to say that despite such an inflation we will continue to maintain our gross margins or EBITDA margins going forward as well?
Arun Aradhya
Yes, very right question. As you know there is a tremendous volatility so far as non non ferrous materials are concerned. The prices are increasing like anything and it Will definitely have adverse impact on the margins. But at the same time what we have done that our contract typically allow for partial pass through. We are in the process of passing the increased raw material cost to the customers. And that is a process maybe depending upon 3 months contract, 6 months contract for revision of rates.
So that is a continuous process that we are following. Apart from that, we focus on product mix improvement, yield, then yield optimization and then cost efficiency to mitigate impact. And we are constantly having a visit on the raw material prices and to ensure that through the process improvement and yield improvement, our margins will not be affected to the greater extent. Maybe some dent can be there, but it will not have major impact due to passing of the burden on the customers as well as reduction in the raw material consumption and process improvements.
Aditya Menon
And like you said, like you said, prices are volatile. Some. With some customers we have three months, like three months period of rate increases. As management, we are also sending them every month now because now it’s very volatile. Before it used to be like from 900 rupees, 950, but now it’s from 900 rupees to 100 rupees a kilo. So that cost which we are bearing, so as management, we are also talking to our customers and we have relation for 20 years. So customers also, you know, they are also dependent on us.
We are also their suppliers. So they are also friendly with us. They have good relation. So they are also what you say, they also try to help us pass the burden for like, you know, take the burden from us. As
Arun Aradhya
You said, we are in the process of contacting all the customers to see that instead of looking at the what, whatever contracts we have for three months or six months of revision. It cannot be, it cannot be like that in future. It can. Considering the volatility in the prices, we cannot abide by the contract that we have already entered with them. We are already talking with them that it will be on a monthly basis instead of three months or six months.
Aditya Menon
Because now even the Iran situation, Venezuela situation, it could be move all the time. So the customers also are understanding because you do high engineering, it’s big business, you know, they are also understanding we have a good relation with them. So so far the talks are positive. But we still have to finalize it. Maybe by next quarter we get a better picture on this. But customers are helpful. They are ready to, you know, help us on this, pass on the burden. Because for three to six months we can’t bear the burden of price increase.
So they are like we have Sent them the emails last month, had calls with them in December. Some of them are agreed for in January to pass like you know, pass on the burden. Some are still in chats but they are reasonable. It’s not like it’s not unreasonable thing that goes on here.
Bhargav Buddhadev
And lastly on the brakes business, is there any development because that business can actually become a large business maybe in the next two to three years. So if there are any updates over there and that would be my final question.
Aditya Menon
Yes, actually now we are almost reaching a crore every month in BRICS. We are continuously working on our marketing. There are two OEMs. I won’t take the names now but we have gone and had very positive discussions with them. Maybe by next, next meeting we can give you more, maybe business also might start or we’ll give you more positive news on that. And regarding railway, we’re still in the dynamometer process like already maybe three to four months for the dynometer. So maybe by next one year we’ll see a more huge growth in brakes business because brakes because we had some, what do you say, some challenges with the dynamometer.
We have already entered the two wheeler segment market where we are doing a big pie chart there already. And after product quality and everything’s going smoothly, we got a big open order which we currently are not even doing every month. So we’re getting a new line for two wheeler segment also. So we’re not just waiting for HCV LCV because there is a little bit break on the railway segment. We are going on looking at other avenues where we can, you know, in the friction material, where else we can go.
So two wheeler also has picked up well other customers in two wheeler also are now approaching us but our still main focus is railway and HCV lcv. So as management and team we are focusing on that also currently
Arun Aradhya
Apart from. That one, one of the auto giants have already contacted us. We had a detailed meeting with them and probably they will visit to our establishment in the next month by 15th of February wherein we expect, we are not very sure but we may expect that additional business of at least 1 crore will start with there.
Aditya Menon
And even for that per
Arun Aradhya
Month,
Aditya Menon
Even. For the export question you asked for bearings and bush. Now as management we have taken a poll, not policy like we’ve taken a decision. We don’t do ddp, you know where we do the delivery to us we’re trying to get everything X works India because tomorrow some other war happens or any other external factor should not affect our business. Maybe like you know we Might lose some top line here and there because it won’t be billing in dollar, it will be rupees. But as management we are trying to do everything X work.
So in the long term we are not you know MONO Trump puts 100% tariff or some other issues happen in the world which are not in our control should not affect our supply. So that also we are doing because you asked how export is increasing now we are like you know with some, some customers we don’t do X works India we do DDP or their delivery terms. So we are trying to get it changed to our convenience. Maybe a top line might come down a little bit but in the long run this is a much more sustainable way.
A safer way for us to carry on our business ahead.
Arun Aradhya
Your payment cycle will also improve, right? If you do. 180 days it will come down to 30 days. There will be a great amount of saving on account of interest as well as the total turnover of inventory.
Aditya Menon
So as management we are taking big decisions. But in our industry how it is our suppliers are bigger than us and our customers are bigger than us. So it’s a challenge to get it done. So Mr. Is on his best to get, get it, get this done and. Probably they are going to conclude in the next week only. Yeah.
Bhargav Buddhadev
Thank you very much and all the way. Yeah.
Aditya Menon
Thank you.
Sukrit Patil
Thank you Bhargo. We’ll take the next question from Raho Maheshwari. Please go ahead.
Unidentified Participant
Hello. Congratulations on the great set of numbers just sir my first question would be around the capacity utilization this quarter.
Aditya Menon
In marine bearings pushing and washers we had around 8 90% and in aluminium aluminum castings we had around 65% and brakes we are around at 60 65%. So there is still a lot of room for future expansion. Like we can like you know what numbers we are given for 2027 don’t have to go for a major new investment capacity.
Unidentified Participant
Okay. An building up question that the last participant had about the tariff on men bearing like on about on the tariff in India. So sir men and Bex product are are subjected to the 50% tariff weight.
Aditya Menon
Some products are most. Now the new law has come for HCV and LCV that is like trucks they are waved of the tariff. So lot of places we are not like where we the tariff doesn’t apply to us. Wherever the other areas of tariff apply to us. Majority of the tariff is burned by our customers. We also pay a small amount. A customer also helps us with that. So I
Arun Aradhya
Will little clarify about that. Little, little more so far as our new business, we have started additional business with Alison. Earlier the tariff was 50%. Now it has reduced to 25%
Aditya Menon
And. On that 25% also because of good relation and we have supported them during tough times. They share the burden with us.
Unidentified Participant
Margin expansion that we have seen. Now we are standing at around 20.5% for this quarter. Sir, I wanted to know what drove this margin expansion. This quarter.
Arun Aradhya
You see benefited from strong execution, healthy OM demand and stable export orders. While we may not see the same growth rate every quarter we believe the current run rate is sustainable. Over the medium term. We expect growth to be in line with industry trends supported by exports, new customer additions and gradual improvement in the replacement market. Why we could maintain, and we will be maintaining the growth the similar growth in future as well. In terms of volumes as well as in the margins.
We have taken proactive steps to see how we can counter volatility in the prices of raw material. Number of actions have been already taken by the management which will definitely result in reduction in the raw material caused by about 60 to 70 lakhs per month. Which will be actually the burden of raw material prices per month will be around 70 lakhs. But this month we will be able to reduce it due to process improvement by about 55 to 60 lakh of rupees. And from the next month it will be around 75 to 80 lakhs.
All actions have been already taken. And with this we are sure that we will maintain the same margins which are sustainable in future.
Aditya Menon
And Raghav, to add to this, like if you’re following our company or these calls. For the last 12 years we’ve been telling about a strong order book. And we always said like it will be coming in third and fourth quarter and next year also. So what? All parts we developed for the last two years we are benefiting those fruits. Now. Those new orders are coming in now and the SOBs are starting. So from the next quarter you see a similar group for the next one year, one one and a half years.
Unidentified Participant
Yeah. Do we have a number on order book?
Arun Aradhya
It is for this, for this year what we project that whatever order book position if we consider that we may reach up to 295 crores and next year maybe around 350 and next year 425.
Unidentified Participant
That is the order book size. Right?
Arun Aradhya
Right.
Unidentified Participant
And what is the execution time? Right. For this.
Aditya Menon
Like next two years. See this year, this. This year we only finish around 290. Next year we’re going to do around 340 350. Little bit conservative. So when the results come, you guys are a little bit more happy.
Unidentified Participant
Right? Okay, sir, thank you so much. That was all from my side and all the best. Thank you.
Arnav Sakhuja
Thank you. We’ll take the next question from Arnaud Sahoja. Please go ahead. Hi. Congrats on a strong set of results. So my first question is in the ppt we’ve mentioned that we’re planning to double the Alcorp capacity from around 1440 to 2880 in the next two years. So I just wanted to understand, you know, would we fulfill these orders in the future by potentially increasing wallet share from existing customers or would we try onboarding new customers, you know, to fulfill this demand?
Aditya Menon
Yeah, actually a lot of or we already developed around 60 parts. Currently wallet share from one customer. But it’s not like one customer, there are two customers actually. But we are not only doing India, we are doing the plants in Germany, the plants in usa, their plants in South America. So you can. It’s like a new customer, but the main brand is like John Deere. We are doing John Deere usa, John Deere Europe, John Deere South America. So that’s one place. At the same time we are doing continuous efforts to get new customers also.
So there are new customers that are coming in because quality of our product, the techno, the criticality which we are able to achieve. So we are doing both at the same time. But this current growth is from current, current customers. But when I say current customer means John Deere India is a complete different group which is certain turnover. John Deere Europe is a certain group with like 10,000 crore turnover. John Deere US is a huge company, again separate. So it’s like new customers for us.
Arun Aradhya
You can treat it as a new. Because
Aditya Menon
We get vendor code different for John Deere Europe, John Deere usa, John Deere in South America, in Brazil, it’s like a new customer, but the brand name is same. But we get a vendor code different for all location. So it’s a mix of both. I don’t know how to explain that,
Arnav Sakhuja
But yeah. Okay, thanks. I kind of got your point. So my next question is, you know, in the PPT you mentioned a couple of strategic investments that the company is undertaking for cost saving. One of which is you mentioned in the opening statement as well, which is a 2.55 crore cost saving because of the solar installation. So you know what would be the total cost saving? If you add all the various ventures. That you are undertaking,
Arun Aradhya
You see one thing is electricity charges or power charges for one year. We are 100% sure that we should be able to curl the expenditure on electricity by 2.25 cr per year. Apart from that due to the process improvements, improved yield in the raw material, we should be able to save at least 8 crores of rupees
Aditya Menon
Per year. And at the same time we doing lot of technical innovation and investments where we are not dependent on that much manpower. But as moving forward manpower is going to get scarce. Like you know also the pf, all the like the salaries are getting increased like month by month which is not passed, which is not given to us by the customer like the customers, we.
Arun Aradhya
Cannot pass on that. So
Aditya Menon
We are doing a lot of technical innovations. So to try to reduce manpower in the future. So which benefits will come by next day or next to next year, you know. So that’s other different things which we are doing like technological where we innovation when we are not dependent on manpower too much.
Arun Aradhya
Wherever automation is possible to avoid rejection as well as improve the productivity that is going definitely going to help us so far as productivity is concerned. And which in turn will result in the reduced cost per item hardware component. In the long run.
Arnav Sakhuja
Okay, thanks a lot for answering my questions. And congrats again on strength.
Arun Aradhya
Thank you Arab. Thank you.
Sukrit Patil
Thank you. We’ll take the next question from Disha. Please go ahead.
Unidentified Participant
Hello.
Arun Aradhya
Hello. Hello.
Unidentified Participant
Am I audible, sir?
Arun Aradhya
Yes. Yeah. Yes.
Unidentified Participant
Yeah. So just a couple of questions. Firstly, what is the total amount of capex we’ve incurred till now for this year and what are we planning for the Q4 and for FY27?
Arun Aradhya
You see for so far as this year is concerned we already completed capex of around 15 crores of rupees. And additionally for next period, so what we have initially around 20 crores
Unidentified Participant
Next two years. You’re saying 20 crores. Right.
Aditya Menon
And last two years we have done around 50. Said last year 15. Before that we did 15. So the major capex of bailing land acquisition, all that has been completed. This 20 crore is just more technology machine, you know, more value addition. We can work what we can do to our products. What
Arun Aradhya
We have to know why, what we have to do now is to switch the assets.
Aditya Menon
Yes. So the main investment has been like we have done it. Yeah. Submit.
Unidentified Participant
All right. And you mentioned like so like for the brake segment we’re seeing a lot of growth potential. So I think the current revenue mixes around Biometrics is around 74%, 22% from ALCOP and 3% from the braking system. Right. For this for this quarter. So how do you see this product mix or the revenue mix changing going ahead?
Arun Aradhya
You see across all the segments what we foresee that for this year it will remain more or less constant, but next year it will change. Maybe it can be about 65 to 68% in B metal, about 25 to 28 in Alpha and remaining in bricks.
Aditya Menon
See by many, BI Metal is a parent company. It’s been there from 1993 when alcohol is from 2008, 2010 and Brakes is a baby company two years old. So that’s why the PI also looks similar. So what we are doing efforts where men breaks and alcohol contribute more to. The total P.
Unidentified Participant
All right. And what’s the margin split between all these three sectors?
Arun Aradhya
See margin so far as EBITDA margins are similar in alop aluminum as well as in bearing. It is similar so far as break is concern it less because we have just started an overage EO that is in process. As soon as we increase the volumes. What we foresee, what we have given for the next year is comparatively conservative figure, but from about 12 to 13% it may go up to 18% next. Year
Unidentified Participant
For the break segment.
Arun Aradhya
Yes. Yeah.
Unidentified Participant
And what’s the overall margin guidance for the next year?
Arun Aradhya
Next year the margin is around 21 to 22%. Maybe next year it is 21% and next to next in 28 it should be 22%.
Unidentified Participant
And where do we see though for this year on a console basis
Arun Aradhya
It is 20%.
Unidentified Participant
20% margins for an overall console basis.
Arun Aradhya
Yes.
Unidentified Participant
Okay. All right. Okay, that’s it. From my side. Thank you.
Sukrit Patil
Thank you. Thank you. We’ll take the next question from Sukrit Patil. Please go ahead.
Unidentified Participant
Good afternoon to the team. My name is Sukrut Patel from ISIGHT Fintech Private Limited. Am I audible?
Arun Aradhya
Yeah.
Unidentified Participant
Yeah. So I have two questions. My first question is, as global auto and industrial demands shift towards electrification and lightweight components, how do you see Men and bearing evolving its product portfolio to stay ahead of the competition? Could you share your vision for how the company plans to integrate new technologies and expand into emerging markets over the next say one to two years? This is my first question. I’ll ask second question after this. Thank you.
Arun Aradhya
Okay. Basically, so far as biometric bearing is concerned, you know, sorry, BI metal division is concerned, EV will not have any impact on this industry, our industry, because we are not into car segment and whatever EV is coming, that is in the segment of passenger vehicles more, not in heavy vehicles or off road vehicles where we are very strong and we don’t have any stake here so far as passenger vehicles are concerned. So it will not have any impact on us so far as EV is concerned and emerging market.
So we are concentrating more on that through Menon Alcohol, our subsidiary company which will be explained better by Mr. Ajit. Yes.
Aditya Menon
So like Mr. Aradi said in engine bearing also we are not in passenger cars. We are in hcv, LCV tractors, transmission, earth moving equipment. These kind of our parts go to these kind of vehicles where electrification won’t come in the next 5, 10 years because high power, high HP required. So in that way we are very good also like we make bushes. So we are trying to get PTFE bushes not only for engine application but other applications also like air conditioning, fridges, other other areas. And like Mr.
Arabi said to even electrification is coming and electric vehicles are coming through a marine Alcob division. We are already developing parts for different electric companies at tier 2 supplier to Tesla through concentric pumps. We do some parts for post e mobility through E10 transmission. We even do electric parts for Taco Bell. It’s a Tata Motors company subsidiary company that goes to Tata Punch and Curve. We do electric motor covers for them. So we are also through alcove entering the electric joining the electrification.
That’s that’s our answer. Apart
Arun Aradhya
From that we are in the process of engaging one of the major customers for PTFE buses which are required for evs which are to the and the business volumes are to the tune of almost 1.25 crore a month. We are not yet finalized. The samples are under process and we’ll see what happens. That will be in the interest of the company as well and we are very sure that we should get that business which will come in from the next year.
Unidentified Participant
Thank you. My second question in regards to finance and margins with rising raw material cost and currency fluctuations impacting exports, what forward looking steps are you taking to sustain margin expansion while continuing to invest in capacity and R and D? Specifically how do you see operating leverage and cost efficiency playing out in the next coming quarters?
Arun Aradhya
You see as I already told you that so far as electricity charges are concerned we should be able to bring it down by 2.25 crores per year. Apart from that, whatever initiatives that we have taken proactive measure that we have taken so far as process improvement and raw material yield is concerned which again will save us around rupees 8 to 9 crores per year. Apart from that, whatever automation that we are going to do that will definitely help us in reducing rejection further so that More and more quantities available for sale that will again help in reduction in the total cost of the company.
With this and with the increased volume so far, the exports are likely to grow further. As I already told you that we are in the. We are in the meeting with one of the major customers for business of which the volumes are likely to grow, which will definitely help in recovering the overhead. So more and more overheads will be absorbed by taking the measure to curtail the expenditure on raw material, electricity and to curb the expenditures which are wasteful. The steps have have been already taken and with this we are very sure that we should be able to not only sustain the margins, but we are looking forward to see how we can improve the margins further.
Unidentified Participant
I think that’s good guidance from your part and I wish the team best of luck for the next quarter. Thank you.
Arun Aradhya
Thank you.
Sukrit Patil
Thank you. We’ll take the next question from Himanshu. Please go ahead.
Himanshu
Yeah, hi. Good afternoon. Congrats on good numbers. I. I had two questions. In the previous quarter we had spoken about potential business from a competitor for U S Aftermarket where they had sent some 800 parts, if I am not mistaken.
Arun Aradhya
Yeah, yeah. Said that
Himanshu
Management will take some time to decide on that business should whether we’ll go forward or not. Any thoughts have we made on that business and what are your thoughts now means post this quarter?
Arun Aradhya
Okay. We are in the process of verifying the feasibility of all these parts. We cannot go ahead with 800 parts at the same time. But at the same time we are verifying which are having the more volumes with better, better pricing and which will add better, better numbers to our total numbers.
Aditya Menon
We are
Arun Aradhya
Selecting those items only. But at the same time we have to understand that we can develop not more than four to five items or parts per month. So considering that we are concentrating on the parts which are having more value addition with more volumes and one by one we are going to have this productionized over a period of time.
Aditya Menon
And there is a constant like when they have given 800 parts. Some parts are lucrative with high volumes and good margins. At the same. At the same time some parts are more critical, less volume. So there’s a back and forth discussion with the customer. Also they want us to take some bad parts also at the same time we only want the good parts, you know, which are high profitable. So it’s still going in. What do you say? We are still in discussion. So it’s not gone forward ahead like you know, we are waiting for a right.
What you say? Partly
Arun Aradhya
We have Gone forward and probably after having report from them. So far as the testing is concerned, we may start a business so far as out of 800 parts, some of the parts have been already developed and samples have been approved and we are likely to get another business of rupees one crore per month from April or May onwards.
Himanshu
Okay. And second was if we look LCOP’s numbers for the quarter and nine month it seems domestic business has fallen. Okay. So for last nine months it was domestic means from 69 has come down to 62% of the revenue for Alcorp. Any specific reason for that? Why would it have? Because we are seeing automotive which has done pretty well. Even engineering is doing well. So what would be the reason for domestic business coming down in Elkop?
Arun Aradhya
You see in some of the components where we were not having a good amount of value addition, we have taken a conscious decision to part away with those components. And at the same time we are in the process of developing almost eight parts for domestic companies and that business is likely to grow further and the mix up of the business of exports and domestic will remain same. The pie will remain same over a period of time.
Himanshu
And any new customers we would have added means on the domestic LCOP side.
Arun Aradhya
As Aditya already told you know that. So the gender is a one customer as such maybe domestic but they are having different, different divisions maybe in USA like Germany, usa then South America, North America, some of the establishments in India as well. So we are developing that for John Deere as well as we are having increasing the valid share so far as concentric pumps and ETERN is also concerned.
Aditya Menon
We are exploring new customers also. But it takes a. I like I told you it takes three months, six months in a new customer. They have to have belief in our technology. There are audits that are happening so in continuous process of that. And also Mr. Like Aarat said, we are looking more at export like develop our export stuff because we are getting better margins and better rates for export. That’s why a little bit focus is on that side. Like. Like what he meant by saying why domestic has fallen a little bit.
Some parts where you know, while doing the casting, fettling, doing so much value addition, the margin is not that high. So as management we are taking decision should we do this? It’s not donkey work. Should we do this for such low margin just because we are having a relation for 10, 15 years or should we go for a more lucrative or more attractive business? So we are taking some of those calls also now. So that would be over by this, this quarter, by next quarter, next two quarters, you’ll see a better pie chart between export and domestic.
Arun Aradhya
Further, we are in discussion with other four customers, a very big customers. So that is in pipeline and it will be successful. What I feel that it will take another five to six months.
Himanshu
We have not lost any customer on lcop. It is just we are restructuring the. Business or let’s say
Aditya Menon
Absolutely just making. The product mix better so we get better value. You know, making the product mix more efficient so our margins are better.
Himanshu
Okay, thank you. I’ll join back in the queue.
Sukrit Patil
Thank you. We’ll take the next question from. Please go ahead.
Unidentified Participant
Am I audible? Yes, pretty much all of my questions are answered. But I have some specific questions from the railway front. What’s exactly the issue with dynamometer, why it’s getting delayed and such.
Arun Aradhya
You see, we are already given the order for dynamometers and another took when we ordered last time to one of the manufacturer of dynamometers. But unfortunately since he had to leave the country and go to usa, he could not complete that. Because of that it is delayed. We are now given to another manufacturer and he has given the assurance that it will be completed within a period of four months from now. Since the rotation with railways is always already completed and we are likely to get that along with quality checking for not only railway for OEMS as well.
So fingers crossed that is the key for railway business as well as OEMs.
Aditya Menon
Yeah, and it’s like its dynamics are very clear. Like it just sounds simple but it’s a very critical equipment. So we have gone and like, you know, done our audits and seen who’s capable of doing it and all, finally found this party in Pune who’s ready to do it. And you know, according to aspects, we want to do it in a higher capacity and also next five, 10 years you don’t have to invest in another dynamic. So the old guy couldn’t do it and there were other XYZ reasons which we had to pull out also didn’t want to get stuck there.
So this is a new person we have, after a lot of inspection and final audits, we finalized him. So after this dynamometer comes in the next four, five months, we should be good to go for railway. We finished all the other paperwork, other registration for railway. But the main thing is that you should have a dynamometer in house. So we were, we had few discussions with them if we could do third party for the first few months and all. But they were, they were very persistent on having an in house dynamometer.
So as management we finally found a right candidate to get a dynamometer done according to our special specifications. So for the next five years we don’t have to go for another dynamometer or you know, another changes in that.
Unidentified Participant
Right. And on the capex side we have 20 crores of capex left to be incurred, right?
Aditya Menon
Yeah. So yeah that
Arun Aradhya
Is over a period of two
Aditya Menon
Years,
Unidentified Participant
Right. So 10 each I guess.
Aditya Menon
Yeah. Next two
Unidentified Participant
Years. Okay. Roughly
Aditya Menon
Depending how order book comes maybe.
Arun Aradhya
In years remaining period in the this quarter we may be incurring expenditure to the tune of around 3 crores of rupees and raise 17 crores consolidated basis we have to incur during next two years.
Aditya Menon
And it is like how we have already submitted all samples and all as soon as the samples are approved, production have started. We just have to order the required cells, required machinery. We don’t want to do it too early or too late, you know, to have a good cash flow or not use our funds in a wrong way.
Arun Aradhya
So I can give you the tentative details so far. Alcob is concerned we will have to incur capex of around 7 crores of rupee in next two years in bearing about 7 crores and in breaks around 6 crores.
Aditya Menon
This
Arun Aradhya
Is a
Aditya Menon
Roughly breakup. Yeah.
Unidentified Participant
And on the alcove side as you have mentioned John Deere, right?
Aditya Menon
Yeah.
Unidentified Participant
It should be based, I mean analyze as if it’s five different companies as such.
Aditya Menon
So
Unidentified Participant
Where is the major growth coming in? From a geographical point of view
Aditya Menon
I. Would say more on exports.
Unidentified Participant
No, I mean from which geography of the world?
Aditya Menon
Germany Export, Europe and usa. Those are the two driving more big exports,
Unidentified Participant
Right?
Aditya Menon
Yes, that’s
Unidentified Participant
It. At the same time John
Aditya Menon
Deere also is there at the same time talking to Brakes, India, GPP Precision. Then there’s
Arun Aradhya
Alison
Aditya Menon
Mayakaba. So there are different. But I wanted I in this video I’ll tell you 100 concrete. The other ones are 70, 80 done. They will be converted. So when they get converted I’ll take those names also. I don’t want to give you a false hope or you know, wrong names. So maybe next meeting I can when their order is confirmed, you know when I have PO in my hand I can give you those names.
Darshan Gala
So those are in the pipeline.
Aditya Menon
Yeah.
Darshan Gala
Thank you.
Sukrit Patil
Thank you. We take the next question from Raghav Maheshwari. Please go ahead.
Unidentified Participant
Yes, thank you for the opportunity. Just a follow up question that we that you are talking about. So if you can just give a detail what portion of your revenue will Be booked as like, you know, X works and then what impact?
Sukrit Patil
Sorry, your voice is not clear.
Unidentified Participant
Yeah. Is it better now? Yeah.
Sukrit Patil
Yes.
Unidentified Participant
Yeah. So I just wanted to understand more on the X work revenue booking that you were talking about with the previous participant. So what impact will it get us on our cash conversion cycle On a consolidated basis?
Arun Aradhya
On a consolidated basis, the cash conversion, whatever you are telling you know, it will drop down from 180 days to almost 30 days. That is amazing. We can save much so far as interest is concerned on working capital. At the same time, while we will be saving huge, huge costs on account of interest because of X works, we will have to shell with some of the margins so far as transit, shipment to cost are concerned, tariff is concerned, then interest is concerned. So. So maybe around some of the business will be impacted by 15% probably.
But at the same time margins will remain same because we will be reducing the cost by about 20%. On the contrary, 5% margin will be increased.
Aditya Menon
As management, we have safety, you know, like we’re doing X works. There’s no pressure of third. Third, external factors affecting us. So maybe margin here and there might be affected marginally. But at the same time we have peace of mind and you know, everything’s in our hand. We have less external factors affecting our business.
Unidentified Participant
Okay. And sir, are we planning to do this for our entire business or just the export or like what?
Aditya Menon
This only happens for exports. So we are trying to get that
Unidentified Participant
Too. Like
Aditya Menon
We are trying to get it done for all our U.S. Exports.
Unidentified Participant
Okay. All our U. S. Exports. But
Aditya Menon
I can’t promise you it will happen for all it’s, you know, it’s in customers. And also it’s a. It’s a negotiation, it’s a dialogue to have with the customers. So where all it can happen, it’s good for us. Where are not where or not. We’ll try to minimize our risk as much as possible.
Arun Aradhya
But we are sure that about 90% of the exports will be covered under export.
Aditya Menon
Yeah. So that gives a peace of mind in a long, long run.
Unidentified Participant
So this one, 30 days to 30 days. This will happen once the 90% of exports are converted into exports, right?
Aditya Menon
Already actually 60 to 70% exports are experts not even currently.
Unidentified Participant
Oh, okay. Thank you.
Sukrit Patil
Yeah, thank you. We’ll take the next question from Keshav Kumar. Please go ahead.
Keshav Kumar
Hi sir, on the biometal front, would. You be able to tell how much of our exports come from EU and US if you could give a split between the two?
Arun Aradhya
See, majority of the exports are to the USA almost 60 to 65% export is to USA.
Keshav Kumar
Okay. And sir, if this EUFTA happens then how difficult or easy would it be to scale the business? The EU business, considering the business is sticky and therefore it’s difficult dislodge the comp competitors.
Arun Aradhya
We don’t see any issues so far. As you see recently in the last week only one of the major customers, John Deere, they have visited our factory B Global Global sourcing for their all the plants across the globe and
Aditya Menon
Especially for Europe.
Arun Aradhya
Especially for the Europe and they specifically for Germany. I
Aditya Menon
Think if quality and technology, if your deliveries on time, other factors are workable, you know, they. There are not loopholes. There are. You can work around if your product is strong, if your communication with them is strong technologically or achieving the quality deliveries on time. The other factors are 10, 20% in the challenge of the 100% business. You know,
Arun Aradhya
And what we learned from the discussion we had with them, that China plus one policy is getting further momentum now.
Aditya Menon
Yeah, they’re implementing that even more
Arun Aradhya
Looking. At India as a major source. Yes.
Keshav Kumar
So sir, say this FTA happens, is the EU opportunity size equally big or would the US be the bigger focus for us say for the next five to seven years.
Aditya Menon
Will
Arun Aradhya
Be the major focus.
Aditya Menon
Yeah, yeah. USA still are. We’ve been exporting there for the last 30 years. So we have a good base there. Good customer relation also. And if EU gets better, there’s no harm in exploring EU also. We can’t say which is focused, whichever is more lucrative. And if EU also grows at that rate, both will have equal priorities. Not like one has less priority or. Another has less priority
Arun Aradhya
Not impacted
Aditya Menon
Our business.
Keshav Kumar
I was asking about the opportunity size. Not the. I mean priority but just like arithmetically if we, if I can get some. Sense,
Aditya Menon
Currently US is like bigger size wise for us. Yeah. But if EU comes we are making good like good size of business there. Why not? You know like I don’t know what like what to give you answer here. But like currently US is our big export goes there. We have a warehouse there, team there.
Arun Aradhya
Then again we have tapped the South African market as well that a business of around 6 to 7 crores per year that we already backed. Then we can export and we are already catering to the African market through distributor in Dubai.
Keshav Kumar
Understood sir, thank you. That’s all from my side. All the best.
Sukrit Patil
Thank you. Kesha. We’ll take the next question from Darshan Gala. Please go ahead.
Darshan Gala
Hi sir, good afternoon. I would just like to know, you know when you say that now we. Have to sweat our assets. So what is the asset turns, you know, in peak level we can achieve. From the capacity which we have currently and the capex which we might.
Arun Aradhya
It will be almost two and a half. Yeah. Two to 2.5.
Darshan Gala
All right. All right, that’s it.
Sukrit Patil
Thank you Darshan. We’ll take the last question from Madhur Rathi. Please go ahead.
Madhur Rathi
So thank you for the opportunity. Sir. I wanted to understand. You mentioned that in the break segment our margins are currently in the 12, 13% range and that could go to 17, 18%. So what would lead to this such huge margin increase? Is it that the dynamometer when it caters to railway our margin profile will increase significantly or is something else other than this?
Aditya Menon
Actually like you said, that also is one point. Currently we are only 60% utilization. So 40% utilization. Currently we are not doing so automatically. When you go out 80, 90% utilization, the margins get better. So currently we are only at 60% utilization at the whole plant. So second shift is half running, third shift is not, not running.
Arun Aradhya
So you are in the finance. You also know how we can recover and absorb the overheads. Yeah. So volumes grow, you know.
Madhur Rathi
So. So I. I’m just looking at our competitors Rani Break and Sundaram Brake Lining. So these guys do very little margins versus what we are targeting. So is our product profile different from them or. I’m not trying to understand how can a big large OEM give us margins when our competitors are making so little margins.
Arun Aradhya
You see they are concentrating more on aftermarket where the value addition is definitely very less. Because we have to have a total network throughout the India and the cost of establishment and selling and distribution is always higher. But at the same time when a big giant automotive giant is coming and visiting our factory in the next month and we are absolutely sure that we may get additional business of 1 to 1.5 crores a month where the cost involved is definitely almost zero. So far as marketing is concerned.
That is definitely going to add to the margins.
Aditya Menon
And I don’t want to compare with competitors. Then for BI Metal also you check all of all our competitors, BI Metal Bearing, Federal, Mugler, KSPG. You check their margin 6, 7% and then you’ll ask why, how can I do 80, 20%. Capabilities. And that’s why we’re doing well for the last 20 years.
Madhur Rathi
Right. So that’s very good to hear. Sir. Just a final question from mine sir. If I look at our aluminum casting business, so we just based on the 60, 60, 65% utilization that we are doing currently. I am getting that we do close to 2 lakh to two 20,000 rupees per metric turn realization. Whereas some of the larger peers do 4, 4.5 lakhs. So how do we plan to bridge this gap? By either doing more complex products or doing the 38 products that you mentioned that are in the pipeline. So how do we plan to bridge this gap?
Arun Aradhya
When we look at the total part we have developed for exports and for domestic. So the total is 51 parts and the total volume that looking at is almost 30 crores over a period of one and half years. The items which are already developed which have been approved since for one or the other reason in European countries some of the projects have been postponed by that customer. And that’s why we were looking at this business to start our production eyes by the end of this quarter. By end of this year, last quarter it is postponed to some extent.
And maybe that will be productionized during the entire next year. So all those items will be productionized one by one, one by one. So that per year impact maybe if we consider half of the year for the next year 15 more cross up new business will be added during the next year. And another 15 crores of business in the next year. This is confirmed. Numbers confirmed.
Madhur Rathi
Answer this. In your investor presentation you have given that we expect to generate 50 to 60 crore or incremental revenue within two years. So where will this rest 45 crores come in from?
Arun Aradhya
You see we have already increased our valid share with the existing customers as well. Then addition of new customers, what we discussed just now that is in the pipeline. And we are sure that we will be able to grab that business as well as so that there will be addition of 5060 crores during next year.
Madhur Rathi
Got it. Sir, that was from mentor. Thank you so much and all the best.
Arun Aradhya
Thank you. Thank
Sukrit Patil
You. Thank you. Madhuru. Sir, since that was the last question, would you like to give any closing comments?
Arun Aradhya
So we are very much thankful for the investor community as well as to our all stakeholders and our customers, bankers, everybody including Menon. Captify you see. Captify Our P and ir they are excellently doing well. They are having very well coordination with all the investor community. And I look forward for more and more investors to come here and see the facilities so that they can appreciate and spread a word of appreciation amongst all the community across the country. So I will be very thankful if they come and visit the factories.
I request captify to arrange so it visits in future as well as during this quarter as well. So that will be very happy to welcome all of you. Thank you very much again and wish you again a very happy and prosperous new year.
Sukrit Patil
Thank you, sir. Thank you to the management team and thank you to all the participants for joining on this call. This brings us to the end of this conference call. Thank you.
Arun Aradhya
Thank