Pennar Industries Limited (NSE: PENIND) Q1 2026 Earnings Call dated Aug. 14, 2025
Corporate Participants:
Unidentified Speaker
Shrikant Bhakkad — Chief Financial Officer
Aditya N Rao — Vice Chairman & Managing Director
Manoj Cherukuri — Head, Corporate Planning
K M Sunil — Vice President, Investor & Media Relations
Analysts:
Unidentified Participant
Shubhankar Gupta — Analyst
Yashovardhan Banka — Analyst
Deepak Poddar — Analyst
Rahul Kumar — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the Pinar Industries Limited Q1FY26 results conference call hosted by Philip Capital India Limited.
As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing start and zero on your touchstone phone. This conference call may contain forward looking statements about the company which are based on the beliefs, opinions and expectations of the company as on the date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. Please note that this conference is being recorded.
The management is represented by Mr. Aditya Rao, Vice Chairman and Managing Director Mr. Srikanth Bakkar, Chief Financial Officer Mr. Manoj, Vice President, Corporate Planning Mr. K.M. sunil, Vice President, Investor Relations and Media Relations. Before we get started with the Q and A session, we will have opening remarks from the management.
Now hand over the call to Mr. Aditya for opening comments. Over to you, sir.
Aditya N Rao — Vice Chairman & Managing Director
Okay, thanks. Good morning and thank you for joining. Us for Finland square one FY26 investor conference call covering the quarter ended 30 June 2026. We appreciate the opportunity to update you on our recent performance and provide insights onto our strategic priorities for the year ahead. As an agenda overview, today’s discussion will begin with a summary of our Q1 results highlighting key performance metrics which is revenue, profit before tax, working capital and major growth drivers. Following this overview, Mr. Srikant Bakar will. Present a detailed financial analysis and we. Will then open the floor for a. Q and A session to address your questions.
So, Performance snapshot For the first quarter FY 2026 our revenue for the quarter increased by 15.3% to 845.67 crores. While our profit after tax grew by. 21.06% to 31.96 crores. The key revenue growth drivers that we had was our PEB division which achieved. Double digit revenue growth. However, we had significant labour supply constraint which impacted our ability to meet our own internal targets, our internal plant targets. These challenges have now been resolved and. That positions the BU for a very. Strong Second quarter on the back of our improved capacity utilization.
Ripe Raili has now been commissioned and has quickly gained capacity utilization and our labor issues which we faced in the first quarter are behind us. In spite of that, the PV division. Has grown in revenue and profitability and with the new capacity now firing on all cylinders, we expect very good things from this business unit over the next few quarters. Ascent is the next business unit has delivered double digit growth in revenue and profitability. Our order backlog also has now expanded to 54 million and we expect this growth momentum will continue. So very strong growth in in the last quarter and quarter two as well. We expect good growth for the rest of the fiscal year. On the back of a strong order backlog. We’re quite confident that this business will continue to do well.
Body Invite has secured new clients. We had mentioned last time that we now have other than Stellantis, we have Hyundai, we have Sierra Automotive, we have Tivolt, Ashok Leyland and there are several others also that are coming in. So with our new ongoing capacity expansions coming in, the contribution to revenue for this business in the coming quarters will be quite strong. So Q1 was good and Q2 again. Will be exceptionally strong. We expect on a sequential basis our Q2 to be far stronger than Q1. Q1 itself was growth 15% but Q2 we expect will do a lot better engineering services. Structural engineering again grew quite well. BIM has been a little bit of. A laggard, but we have, as I mentioned on my previous call to you, we have expanded our new business development and our sales capabilities in the US and we expect that that will ensure that this business continues to grow.
As I previously guided, we project very healthy double digit growth in revenue and profitability for this business unit. In this fiscal Hydraulics has performed well in Q1 and is expected to maintain momentum in Q2. However, it’s important to talk about this. The new US tariff changes do present a challenge. The initial 25% tariff impact was manageable without any major impact on our operating margins.
But the upcoming 50% tariff, which is set to be effective August 27, well it makes the cost structure not really viable so it could affect our U.S. sales. Our mitigation plans are in place and. We have redirecting volumes to Europe, Canada, Australia and New Zealand. I do want to guide that. This revenue stream represents about 2.2% of Panhard’s entire revenue, so we do not. On an overall basis expect a significant impact. However, out of all of our revenue. Streams, this is the one revenue stream which is exported from India to the US and is exposed to the 50% export tariff.
And in the event the tariff turns out to be a long term, long term tax structure then we will have to mitigate this by moving our revenue streams to other job rupees which we are already working hard to build our order books in moving now to boilers and process equipment order backlog has grown strongly to 110 rows with further additions expected. The CEO of that business is very positive for scaling revenue by high double digit numbers in this quarter Q2 and for the remainder of the fiscal year as well we expect to do well.
Our PVT margin for the first quarter stands at 4.75%. Again, the impact of the labor issues. That we had in our revenue being. Not what we were expecting initially has resulted in some amount of margin contraction here, but a very very temporary issue pertaining to about a month or two months. We absolutely expect our margins to improve well once our portfolio mix shift to our higher margin businesses continues. So Q2 we expect that we go back onto our PBT growth path but this quarter we are at 4.75%.
Our capital efficiency standpoint rose is at 22.3%. Now in relation to Rose, we’ve always. Used the definition of EBIT divided by capital employed. We’ve been in touch with some of you, we’ve been talking to our investors and discussing this internally. Now the definition we have used as capital employed is total assets minus current liabilities. We are evaluating post some of our. Discussions moving our Rose definition to include short term borrowings at. Well we will have more on that. For you by the next we will take a firm call on this once. We understand what most of our investors are comfortable with what is typically done and we will then parallelly report the older rose numbers and the newer rose. Including. Short term capital as well. And we will take a call on this for the next investor conference call.
Our ROE of course will remain unchanged calculation wise and it’s at 12.12% for the quarter and we project improvements on this in the course of this financial year. Working Capital currently stands at 76. This is higher than planned. Again the same labor issue that I had mentioned. The amount of revenue that we had. To reduce is quite substantial, close to about 100 crores. So. While it is at 76, our. Confidence that we will be able to. Reduce this number and continue in our working capital reduction plan is extremely high. And with PEB and other segments already having rebounded strongly in Q2, we anticipate very meaningful improvements in the next when we when we come to you with our September numbers. So working capital efficiency trend continues. This concludes my Update on our Q1 performance.
I will now hand this over to our CFO Mr. Shrikant Bakat for his comments and a deeper dive into the financials. Thank you so much.
Shrikant Bhakkad — Chief Financial Officer
Thanks Aisha. Welcome to the shareholder and investor for the first quarter FY26 earnings call. Total revenue for the period is 845.67 crores from 733.45 crores up by 112.22 which is overall 15.3% increase in terms of total net revenue from the operations. In terms of EBITDA, it has increased from 79.01 crore to 94.12 crore up by 19.12%. In terms of percentage, it has increased from 10.77 to 11.13%. PBT has increased by 13.35% from 35.43 to 40.16. That has increased by 21.6% to 3. Now it is up at 3.78% up by 18 basis points and the overall number is at 31.96 crores.
Deep diving into the key metrics numbers that I have indicated above, revenue from our customers Custom Design Building Solutions has increased by 25%. It’s a strong revenue that has come from US as well as India. Both our India and the US PEB operations have significantly increased the revenue and both have contributed to the growth of the revenue in this quarter. Our rivalry is fully functional and we have started yielding the growth and we are poised to even higher growth as we speak. We had our US. Operations from PEP also growing well and the order book now it stands at USD 54 million and India PEB audible close to 855 crores.
The next line item, employee benefit expenses has increased by 6.52 crores on account of increments in wage divisions and the new additional plant and facilities that have come up in the current year standalone by 7.33 and increase in asset buildings by 9.19 crore. Moving on from that to the finance cost. Overall finance cost increased by 8.1 crores which comes predominantly from standalone financials. It is on account of increased additional revenue that we have planned and increase in the capex of rivalry lease.
The overall finance cost as A percentage is 4.16% while we have guided you to 4%. These are due to the delayed dispatches that we had at bribery leap plant and due to the lower revenue which are now behind us we have guided you to 4% as our net revenue cost 1% predominantly from long term and 3% from our working capital. While the long term is in control, the working capital is high and we are hard at work to reduce our inventory as we go by and the finance cost, you should expect this to come down in the next two quarters.
Working capital utilization is a metrics that we are trying to look and as we grow our revenue the working capital will automatically reduce. We are confident and we’ll get back in the next two quarters. Depreciation, amortization the overall increase is at 2.28 crores which includes standalone at 1.7 crores on account of rivalry and other capex that we have and 58 lakhs on account of subsidiaries capitalization. Other expenses increased by 37 crores. The variance is predominantly the account of in stand loan by 26 crores which comes through higher erection expenses, subcontract expense and spares consumers in subsidies.
The increase in other expenses by 11 crores which is predominantly due to legal and professional expenses and lot of one time related cost for our acquisition related expenses. We expect this to moderate in Q2 as well as Q3 and this would not repeat tax is lower due to the credit that we have received on the tax relating to earlier years. The provision of 1.75 crores is reversed as a result of the PAT is higher than the PBT we continue to guide be taxed at 25 between 25 to 26% keeping the US federal and corporate status into account.
Overall this has been good quarter from the revenue standpoint with PEB contributing significant growth in India as well as the. US. And we added better margins in terms of BAT in pat. With this I hand over the call for the investor community questions and answers.
Questions and Answers:
operator
Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchdown telephone. If you wish to remove yourself from the question queue, you may press chart 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. The first question is from the line of Nitin Jain from Fair Value. Please go ahead.
Unidentified Participant
Yeah, congratulations on the boot side. And sorry I joined the call little late so maybe you might have mentioned some of the information but what is the order book status for PEB, India and US as of 30 June?
Aditya N Rao
As of 30 June our order backlog. In PEB is about 800 crores and the US is about US$54 million. Now both of these are dynamic and in the last couple of weeks we’ve. Actually had reasonably large order booking in both business units. So we will get you those numbers as well. There’s a press note we’ll release and we’ll get you that. But we booked in excess of 200 crores some orders in the next few weeks so that there’s an upward trend to both numbers.
Unidentified Participant
That’s great. So. And there is a significant jump in other expenses this quarter. So if you could provide the breakup here and why it has jumped so much. I mean is it related to the labor issues that we face and how do we see it going forward? More importantly.
Shrikant Bhakkad
While I have explained in my conference in the initial press note, but I’m just expanding explaining it again, the total increase is 37% crores at consolidated levels and in standalone it is increased by 26.13. This is on account of higher direction expenses, subcontract expense and sold in spare consumables that we had detailed. The balance 11 crores increase is coming from our subsidies which is on account of legal and professional expenses which are related to acquisition and other consumer related expenses that we had during the year. We expect this to moderate in Q3 as significant one time costs are there related to acquisition and one time investments. That we are doing.
Unidentified Participant
Right. So just to clarify, the increase in contract expenses, was it related to the labor issues and should we assume that is one time or.
Aditya N Rao
There will be. No consistent or there’s no increase, permanent increase or even a sustained medium term increase in our labor costs? It was more a supply issue rather. Than a pricing issue. Yes, temporarily there’s been a little bit of an increase but I think it’s already moderated as of this quarter. The impact of our inability to get our labor in has been a loss of revenue and a loss of profit for that for that revenue stream. And it is a substantial number. But that’s all well was resolved in. The month of June itself. So come Q2 neither is there a. Cost increase which is medium term or permanent and also there’s no more revenue loss because of that regard.
Unidentified Participant
Sure. And just my last question, what is the total percentage of revenue we see being impacted by the US tariffs and what kind of workarounds do we have available with us?
Aditya N Rao
The vast majority of the impact is. Coming in a hydraulics business. As I mentioned, the initial 25% was something that was we had priced it in some sense and there wasn’t really an issue. Our hope is that there is some. Moderation in the 50%, perhaps with whatever is underway geopolitically above my pay grade. To comment on that. But if we can see that 50% drop from 25%, then there is zero impact. But even if the 50% sustains, significant steps have already been taken. This affects about 2.2% of our revenue.
So it’s not a massive number to begin with. But even that, I mean, the tariff. Situation is not going to impact our. Planning for this year, our targets for. This year, and frankly, not even for Q2. There’s more than enough revenue buffers underway. So we are quite well prepared for. An extremely strong Q2. And we do not see this affecting our revenue for hydraulics itself in the second quarter. Or they may be a moderate impact, but overall we do not see any impact on our revenue and profitability due to B status.
Unidentified Participant
Great. So just to clarify, the impact would be limited to hydraulics business and that is approximately 2% of our overall revenue. Right.
Aditya N Rao
That is the Hydraulics US business, which is over 2%. That is correct.
Unidentified Participant
Thank you. Thank you so much.
operator
Thank you. The next question is from the line of Shubankar Gupta from Equity Capital. Please go ahead.
Shubhankar Gupta
Two questions from my end. So first is that you said the CBDS CBD business has grown by 25% and overall growth of revenue is at 15%. And, and assuming a 50, 50% split between the two would mean that design engineering is at 5% growth for this quarter, Is that correct?
Aditya N Rao
Yeah, yeah, that.
Shubhankar Gupta
So what exactly is hindering that growth, barring the labor. The labor issues which you mentioned and how do we plan to revamp that?
Aditya N Rao
So the growth on that was just. Are you talking about engineering services. Right. So. Those revenue streams are not projected. To grow at a very fast clip. So they would continue to grow, of course, but at an organic rate. There’s no capex going into those business units. But the growth vectors that we have, which are pre engineered buildings, which are body in white, which includes our process engineering and boilers division and engineering services business. There is no bottleneck for them. To grow from an addressable market standpoint. They all have large addressable markets. But for the short term impacts which.
We had from a labor perspective, the growth wasn’t as high as we expected it to be. But in Q2 we have seen a. Lot of that getting addressed over Q3. And Q4 as our new BD kicks in. I Think in engineering services, also structural engineering, we are predicting quite strong growth, high double digit and BIM also should follow. So overall we expect, as I said, double digit growth in each of these business units. And as they go up, they will. Take our margins up and they’ll take our profitability up as well.
Shubhankar Gupta
Got it. That’s helpful. And the second question actually was on the labor issue. So I think somewhere I heard that you mentioned it was inability to get in the labor that has been the issue. So if that’s the case, will that not be a roadblock for further group as well and how do we plan to address that?
Aditya N Rao
So the specific issue was a timing issue typically. I mean just to give you a. Little bit of background because I think. It’S an important factor. I think we have lost close to 100 crores in revenue in Q1 because of that. So let me, let me explain it a little bit as best as I can. So typically we have at many of our factories, we have about 13 factories now we have a mix of in. House full labor and we have contract labor. So what happened in the first quarter is, which typically happens every year, there. Is a little bit of migration because. Of the wedding season. There’s seasonality to it where that labor. Moves back into up, Bihar and other states. Typically it only source from those two states.
We have not done Orissa, we have. Not done West Bengal and we’ve also. Not developed other avenues that we had in terms of, you know, sourcing other contract labor as well where we can engage with other agencies. We had not needed to because we. Just assumed that, you know, this is something that’s a cyclical and it goes away and it is accountable to neighbors. So typically April they moved and they come back by end of April, early May. What happened in this quarter is that. They did not come back in early. May because it coincided with some other wedding season. And it is something that other industries. Which are similarly structured, such as also. Faced and the labor came back only mid June.
So that in the industries where we. Have especially in assembly fabrication where there’s a, you know, it’s very difficult to automate those, those business units, PEB is one of them. We had a significant underperformance on revenue. So we had bought in the raw. Material, we had brought in the assets, current assets that we needed. And the surprise was that we could not get the labor in place to fix the situation by going and engaging with other agencies. Looking at other took us about a month. So it was a month of reduced performance which impacted us. We are now wiser to this. To your question, how do we know this won’t happen again?
How do we know this won’t impact our future growth? We have. It was. We’ll make no excuse. It was a miss. We should have known about this. We should have planned for this earlier. But we have now put in place. Process so that the accessible labor pool for us is much wider than it was by a factor of two or three, frankly. So we’ve seen it get corrected immediately. In Q2 and typically at the end of this quarter as well. There’s Ganesh Chaturdi, there’s other things and there tends to be slow down on that too. What we have found is that with. This additional we’re able to overcome those issues as well. So all in all, I am quite confident that labor will not be a bottleneck.
We’re not going to come back to you in Q2 or this time next year as well and tell you that. Again we had an issue on labor. Through a mixture of three, four different things. I won’t get into full detail on it but there’s multiple things we have. Undertaken and this issue is now in the rearview minute. And it was one bad month which impacted the quarter. We were able to grow, but we’ve done well. But we’ve done a lot better if we had. If we didn’t have that. And as of Q2, I think Q1. To Q2 sequentially also I think it’s. Important for us to guide to a substantially higher number sequentially also. We are looking at very, very healthy growth in revenue and profitability.
Shubhankar Gupta
That’s very fair. Thanks for sharing this. If you could just probably share one or two things which you have done like differently to sort this in very brief. It also helps.
Aditya N Rao
I’m sorry, could you say that again, sir?
Shubhankar Gupta
I’m saying that if you could just share in brief what strategic steps we have taken in brief, that will help. We don’t want details.
Aditya N Rao
It’s a combination of reducing our reliance. By increasing automation in our end plate and our detail lines. It has included expanding our labor base. To include Bengal and Orissa. We also tied up with. We will be typically used to use. Two or three contractors. We are now expanded that to a much larger number. These are some of the things that. We have done which has addressed this.
Shubhankar Gupta
Got it. That’s helpful. Thanks a lot, Aditya.
operator
Thank you. The next question is from the line of Mayank Agrawal from Scientific Investing. Please go ahead.
Unidentified Participant
Hello. Yeah, hi. Thank you for the opportunity. My Question is on debt on books. Since the business is like a working capital heavy, so some debt is expected on books. But if you look at the debt as a percent of enterprise value, it is around 23%. So how do you view this and like are there any plans to reduce it over the next few years?
Aditya N Rao
I’m sorry, the voice.
Shrikant Bhakkad
Question was basically on why your working capital is high and how do you plan to control our working capital to a broader number. If I understand this, if I understand your question, you’re.
Unidentified Participant
No, no. Actually my question was regarding like if we look at a debt as a percent of enterprise value, it is around 23%. So like how do you view this and are there any plans to reduce it over the few years? Like I know it’s a working capital heavy business but as a percent of enterprise value, I’m asking.
Aditya N Rao
I think, I think this. Good question. So in this quarter because of the anticipated higher revenue, so we expect current assets accordingly. When we did not have the revenue. That we expected, the percentage of our working capital as a proportion of our revenue went up. Already corrected. And I agree the number that you. Guided to is and as Srikanth also. Has mentioned, we are at 4.12%. By no means is that a number. That we’re comfortable with and we can commit to you that that is definitely not a number that you’re going to see next quarter. You will see it get below that. To 3point XX and we will maintain. However the use of our current assets. And specifically our working capital. We are right now at about 76 days.
We believe that the long term potential. We will steady state at is about 60 days. Now the nature of the business as you had mentioned and we also take. Far lower advances than some of our customers. It’s a lower level of risk for. Us as well because it is free cash flow. We don’t have to carry contingent liability on our balance sheet. It’s a model we’re comfortable with. And I think I would guide you to longer term 60 days. But in Q2 which is a balance sheet quarter, you are going to see. Substantial improvements on that 76 days of working capital. But we agree with you that it. Is high and that 4.12% is high. Yes.
Unidentified Participant
Just a follow up on this. So going forward as a percent of the enterprise value should decrease apart from the working capital requirements and everything. Right.
Shrikant Bhakkad
As a percentage of enterprise value.
Unidentified Participant
Yeah, debt as a percent of enterprise value, which is around 23% right now.
Aditya N Rao
So we, the metric we use which we had directed before is we look at our interest cost as a percentage. Our cost of capital is about 10%. We are A rated on our long term E1. In terms of our short term there’s actually adequate current asset cover and obviously other asset covers. So we are comfortable with this 3point XX number. We will be under 4 for sure. But that’s how we measure ourselves with these inventory ups and downs. So I think breaching the 4% number is something that we see as a Lakshman Rekha. We don’t want to do that. But as long as in that 3.5. 3.7% range we are okay. So that’s the metric that we use. And it’s something we have found to be quite sustainable. Slowly over time as a working capital number of days goes down then you. Will see that moderate further.
But you’re not going to see us. Be at 2%, 2.5%. I mean there is a long term. And a short term component to this. We have aggressive growth plans. Each of our five business verticals is something we expect to dramatically increase the size of the company. All of that will come with keeping our debt equity at the 0.7, 0.6 number. Keeping our overall interest cost as a. Percentage of revenue at the 3% 4 tech fix number is the way we intend to manage this company. And we found it to be to be good. And we talked to our rating agencies. As well and they said they’re fine with that as well. So we’re working hard on a rating. Upgrade to A and our understanding is our model works.
operator
Thank you. The next question is from the line of Yasha Vardhan Banka from Tiger Assets. Please go ahead.
Yashovardhan Banka
Hello sir. Am I audible?
Aditya N Rao
Yes please.
Yashovardhan Banka
So I just want to understand where on the PV part. Where exactly are we facing maximum demand from like what industries? If you could just specify.
Aditya N Rao
Most of it is manufacturing industries. There’s a little bit of pick and choose on this. Right now we are going heavy on manufacturing and capital. We were warehousing about two years ago. So it’s, it’s a very versatile, a kind of construction platform. So you can, you can pretty much make anything with it. But right now some of our orders appear. We have a press note out for you. But some of the orders we have received. We received a 200 crore from JSW. We’ve received from Tata Electronics. We performed in excess of 100 crores. 150 I think 157. So Reliance has been in excess of the 300 crores. So the, the Vast majority of our. Revenue is manufacturing and engineering companies.
Yashovardhan Banka
Understood, Understood.
Aditya N Rao
But just so you’re aware the versatility is quite high. We are also building warehouses. We just got, we have an order. From Rainbow Hospitals for their, for their two hospital towers which, which are coming. Which is coming up in Gurgaon which. We expect to finish very soon as well. So we’re not curtailed by any, any. Non residential construction can be. We can cater to but we are. Focusing right now on manufacturing.
Yashovardhan Banka
Understood. So what is, what is the mix of PV as a part of our revenue?
Aditya N Rao
If you include our India and US. Revenue about 40% of our overall revenue for the company is metal buildings and pre engineered buildings and high rise buildings.
Yashovardhan Banka
Understood. And any utilization levels for the Rivalry plant?
Aditya N Rao
Could you say that again?
Yashovardhan Banka
For the Rivalry plant? Any utilization levels for this year.
Aditya N Rao
We are at 65. I think in the next quarter we hit 70. Our goal is to hit 80% by the end of this year. We are quite comfortable that we’ll be able to do that. It’s. We have, we have. The order book isn’t a problem. Equipment commissioning capex isn’t a problem. I think we put a good team in there as well. We’re expanding that team further the next month or two. Output has strongly grown and it is a profitable factory now and we’re quite confident that it will be a strong driver for our PEBS revenue in this fiscal in fact from next quarter onwards. But I think you’ll be, you will see strong growth in this business in. Both rivalry and the PB India vertical. And frankly the entire PV vertical in the next in Q2.
Yashovardhan Banka
Understood. Just one last question. So any internal growth targets for short to midterm?
Aditya N Rao
Could you say that again sir?
Yashovardhan Banka
Growth targets for short term midterm.
Aditya N Rao
We typically don’t give guidance but what we can do is that all of. The five prioritized views that we have can sustain over the long term high double digit growth rates. So our job is simple. Increase our asset base. Increase our addressable market and our specific addressable market Sam and Tam, just increase that, increase our assets and our revenue. And profit will grow. And managing that growth in a capital. Efficient manner is our priority. So I would not be able to give you a number but we are committed to double digit growth in revenue. And profitability over the long term and we don’t see anything that can prevent us from doing that right now.
Yashovardhan Banka
Fair enough. Makes sense. Yeah, got my answer. Thank you.
operator
Next question is from the line of Deepak Badar from Sapphire Capital. Please go ahead.
Deepak Poddar
Yeah. Am I audible, sir?
Aditya N Rao
Yes, please go ahead.
Deepak Poddar
Okay. Yeah. Thank you very much sir for this opportunity. Opportunity. First up just wanted to understand what is our capacity in metric tons and, and what’s. What can be the optimum revenue potential from that plant.
Aditya N Rao
So we right now at about 20,000 with two beam lines at about 20,000 tons per year. From a revenue standpoint that comes to about 300 crores. Now that includes erection revenue. That’s enabled by it. Other roll forming revenues are enabled by it. Let me give you the quick short answer, Rai. Barely firing on all cylinders gives us.
Aditya N Rao
300 crores of revenue.
Deepak Poddar
And here we have assumed what, 80, 85% utilization?
Aditya N Rao
Yes, that’s correct.
Deepak Poddar
And annual capacity is about 20,000 metric tons.
Aditya N Rao
That is correct.
Deepak Poddar
Okay, great. And on the labor front, is it possible to quantify what was the revenue lost because. Because of the labor issue? Is that possible?
Aditya N Rao
It was about 100 crores.
Deepak Poddar
So 100 crores we lost because of labor issue?
Aditya N Rao
That is correct. For the quarter, yes. It’s a substantial number. So that entire operating margin of that. Is something we could have gotten. And it just. We saw the problem coming in May and. But what should typically happen fixed in May took us to June middle. It’s a lapse and it’s unique to. The way we have structured the business in terms of the labor short term versus long term labor contract labor versus on those labor. But we understood the problem and addressed it took us a few weeks more than we would ideally have liked. But I do want to state that the overall plan we have for the year, whatever we’ve guided to for this is revenue that can be recouped. We just have to run additional shifts.
We have also started outsourcing a little. Bit of manufacturing about 5, 10%. So revenue standpoint we will catch up. Profit standpoint. We will do what we need to to ensure that we hit our target. So this isn’t something that is going to cause us to moderate our financial year plans or quite frankly, longer term plans also.
Deepak Poddar
I got it. And you also mentioned that this has. Been completely fixed as we speak, right?
Aditya N Rao
100% fixed in my opinion. I think we can. On behalf of the management, it should not have happened, but we have fixed it.
Deepak Poddar
And you also mentioned that 2Q you expect a stronger quarter rate as compared to what we have seen in 1Q and generally second half is seasonally the better, better half. So is it fair to say, I mean sequentially for next 2, 3/4, quarter on quarter, we’ll see improvement in our performance, Would that be a fair statement to make.
Aditya N Rao
That is that. Yes. I mean short answer, yes, absolutely. Longer answer with the exception of the. December quarter in the US which tends to be a little muted. But again this is something I’m guiding. To about million two maybe, maybe I’m talking about 15, 20 crores. So with the exception of that sequential quarter growth is what we mapped out.
Deepak Poddar
Okay, okay, I, I got it. And that’s very helpful. Sir would like to wish you all the way best.
Aditya N Rao
Thank you so much Thank you. Thank you so much.
operator
Thank you. The next question is from the line of Rahul Kumar from Vikarya. Please go ahead.
Rahul Kumar
Yeah, hi. On uspb, what is the sense you are getting from your discussion with the customers regarding the orders and execution?
Aditya N Rao
Order backlog is good. So we maintain something called an active order backlog which is a very good lead indicator for what our revenue for. The next quarter is going to be. So Q2, I mean so us uses. A different use the calendar year system. So our US Q3 is our India Q2, the quarter we’re in right now. So that quarter is quite strong. December, as I mentioned to the answer. To the previous question, December tends to be the weakest quarter in the US. But again Q4 for US or Q1US. From 2026 point of view also looks quite strong. Now do bear in mind as an. Acquisition we have made that has not started hitting our books as yet. So that will start Q3. Right. Q3 Q4. So in the second half of the year that’s another additional growth push that. Will come in for our US business.
Rahul Kumar
Okay, okay. And no, I was asking more in the context of, you know, the tariff related uncertainty and you know, industrial activity in US is do you have any fear on what is the outlook by your customers?
Aditya N Rao
I mean I think I can credibly comment on our revenue streams, our order. Backlogs and what we are seeing and how far out we are seeing it. So our US revenue streams are metal buildings. We manufacture precision tubing, hydraulics and engineering services. Metal building seems to be going strong and stronger and with the acquisition revenue. Coming in, I don’t see any possibility. Of a decline there in this, in the near term to medium term. Engineering services. The same narrative. I think structural engineering is quite strong and with the introduction of class A structural as well, we expect growth there too. We’re not seeing a decline there.
Hydraulics has given a narrative. I don’t think the hydraulics market itself. In the US is being impacted, but. Most of that is imported so don’t see an impact this quarter, but next quarter onwards we don’t know. We have to see. This is specifically of US Revenue. As I mentioned, our other hydraulics revenue streams are good and strong. Our order backlog is quite strong. Precision tubing. Also we have tended already not because. Of TEL, but before that also we had moved it to Europe and Canada and other geographies. So that is not impacted by a lot of at all. So based on what I’m seeing right now, our US revenue streams because of the tariffs, neither our order backlogs nor. Our revenue is being impacted. The one exception to that is hydraulics. Which I mean as I mentioned about 2.2% of our revenue overall. We can, we can mitigate that reasonably with a reasonable amount of ease.
Rahul Kumar
Okay. Okay. And on this diversified engineering segment, what is the progress on the defocus business? I mean what is its share of business now and.
Aditya N Rao
Again, I mean I. Don’T want to sound like a broken record but again because we didn’t have. That extra revenue come in, the percentage stayed where it was. So it’s at that 30, 35% reach. But I can definitely guide you to. Reduction in that percentage quarter on quarter.
Rahul Kumar
Okay. Are there any new updates on those segments? I mean in terms of strategic actions or anything else?
Aditya N Rao
Yeah, so each of those we need to, we need to this as I mentioned on my previous conference calls, we need to make sure there’s no value destruction. We need to know, we make sure there’s value realization. So what we’ve done with solar we. Want to do with other business as. Well as, and when we set this. Up, we are hard at work making. Sure that Pinar realizes a fair amount. Of value from our, from our revenue streams here. So it’s about a thousand crores. It’s a substantial revenue stream. All of these other views. So we will, we will come back. To you when we have it. But as of right now, I have. No further narrative to give.
Rahul Kumar
Okay. Okay. And the last question which I have was, so let’s say if I take the US sub revenues and if I subtract that from the, the PV revenues which you disclose. So the India PEB profitability seems to be pretty strong in this quarter. What would have driven that?
Aditya N Rao
I think the US PEB is not. Just, I mean our PGI revenues would not under profitability would not be only. The U.S. there’s other revenue streams as well. So that might change the picture a little bit. But India, I mean Q1, our PEB profitability was actually lower than what we had anticipated. So we expect that to actually increase in Q2. So quite frankly our US PEB margins were quite strong in Q1 and we expect that also to sustain. But Q1 was not a great profit. Number for Q India PEB. So we’ll work on the math and. See what you’re seeing. But it was not the case that India PEB was strong.
Rahul Kumar
Okay. And what is the engineering services, revenue and profits for EBITDA for this quarter?
Aditya N Rao
We typically don’t report segmental Ebitdas. But it was quite strong.
Rahul Kumar
Okay. Okay. Okay. Thank you.
operator
Thank you. The next question is from the line of Dilip Sahu, an individual investor. Please go ahead.
Unidentified Participant
Yeah. Hi Aditya. My first question is regarding the 37 crores of other expenses. Around 11 crores you said has come from legal and consumer. Looks like truly one time. And the labor. If I say around 10 odd crores, is it fair to assume that around 20 odd crores are truly non repeating expenses and won’t be there next quarter out of the 37 crores?
Aditya N Rao
I wouldn’t say that, sir. There’s some steady state legal spend which. Will always be the case. I don’t see. I don’t think it’ll go to zero. For those what Srikanth has mentioned. I’ll request him to add some clarity. There will be some moderation, a significant moderation in it, but they won’t go to zero. So I would not guide you to. A 20 crore reduction in other expenses. I think the healthier way to see. This is to mix other expenses in our raw material because it tends to be a mixture of fixed plus variable component. But overall what we as a company. Try to do around our business units try to do is get to a certain operating margin in the business we are present in. So I think a better reading of the P and L would be for. Us to look at revenue, operating margins, EBITDA for the company, pbdt, PBT and pat. And on all of those metrics we have defined growth factors, other expenses being. Pulled out and that number can tend to be.
I would like to state that even. If you were to look at it. Historically, it is the way we have classified it. It can be a very volatile number. But mix it into our variable, mix it into our EBITDA and our ebitda. You’re not seeing move around all over the place. There’s no 20, 25% swings down or up for it. So I think it’s better to from. An analysis perspective, I think it’s better to .
Shrikant Bhakkad
Just to add to your point, in terms of other expenses, other expenses includes some portion of variable expenses as well. So as the revenue keeps on increasing in terms of the variable expenses though those variable expenses also keeps increasing extra always as a percentage of of the thing that we define it here, which will have a significant role. We will have a look in terms of what we can do better in order to explain you the analogy of other expenses in terms of investor presentation. So that we classify these other expenses, how much is variable and how much is fixed and then we start giving you maybe the contribution margin.
We are thinking internally, we will have the discussions with our investor community and then we will come back in terms of better representation of other expenses. And to elicit the point, there are certain one time acquisition cost which is relating to telco and other things have been added in that 11 crores increase in subsidiary cost predominantly is what you would refer to. Will there be the entire 11 crores get removed away? The answer is no. But to a significant portion of the legal and professional cost which was one time can reduce it.
Unidentified Participant
Great, great. I think the new representation is better. What I was trying to understand is that next quarter with this hundred crore postponement getting into Q2, we most likely will hit thousand crores plus. And I was just wondering at thousand crores will he read that 7.5% PBT, 5% PAT kind of a margin. I was just working backward in terms of one time cost plus finance cost which will come down by 0.2% hopefully because most of the working capital will get normalized. That’s what I was coming from.
Aditya N Rao
We won’t give a revenue guidance but. Obviously if you add up everything that we have said, we are expecting similar numbers from a revenue standpoint. From a pat and margin point of. View, I think that would be explicit guidance. So we will not be. But you can definitely expect improvement in. Our PBT and pat margins. Q1 to Q2.
Unidentified Participant
Great. My second question was regarding the body in white. You are talking about a lot many customers apart from Stellantis. And Stellantis also had one particular platform with us. So you know how is.
While I understand you don’t give individual division wise number, but if you can give some more color on body in white and the process equipment business, how is the revenue and Profitability moved over last 3, 4, 5 quarters and client client representation. What kind of client you get in that?
Aditya N Rao
So let me describe the business. First, Body and white refers to the structural components that make up cars. These are passenger cars and also Include some commercial vehicles. We go through a process of use. Technology such as hot stamping, tailor welded blanks and also cold stamping in order. To make these parts, assemble them, convert them into assemblies and give those to. Our to our customers who are all OEMs directly.
We don’t do auto component, we do OEMs directly. These are long term contracts with a tremendous amount of revenue sustainability in them. Because typically these six, seven years in terms of programs. So the expansion in our customer profile. In biw which is you can think. Of it as a form of an order backlog is putting a lot of. Positive pressure on every to scale revenue for that. So again as I said, high double. Digit growth in revenue will definitely be what is what we are going to achieve. Again segmental revenue EBITDA we have not. Given so we will not be able to provide. But I’m trying to see how expensive can give you a good picture on it. It will contribute materially to our revenue. And profitability this year.
Shrikant Bhakkad
Yeah, just to add to Alex’s point, I think BIW revenue and other things initially to get into a long term contract it takes time. While we have added these customers in our portfolio in terms of start contributing to our revenue and profitability, it is a path which we’ll go through and it’s a multi quarter program that is revenue and the profitability will get added.
Aditya N Rao
And on boilers and process equipment what. We provide are industrial boilers, power sector boilers. This goes to power plants, cement, steel, sugar and others. And we also provide heat exchangers and other equipment like ESPS and others. The order backlog has grown strongly. It’s just early days for it but it’s over 100 crores. But the potential addressable market is massive. So we are, I mean again I keep saying double digit growth but it. Is a high level of growth in. Both these business verticals. Both are profitable, both we are expanding. Capacity and they will very soon start. They are already contributing to our revenue and profit growth. But very soon they will become along. With the three other prioritized views, they will become the drivers of our growth.
operator
Thank you. The next question is from the line of Ankit, an individual investor. Please go ahead.
Unidentified Participant
Hello sir. Thank you for taking my question. Almost all of my questions have been answered. So on the US side you said tariff would be like only 2% type of impact. So not much issue. And on the hydraulics I just wanted to clarify that sir.
Aditya N Rao
No, we are not going to have. A revenue decline in the US or in our consolidated or in our any standalone business. What the 2% was referring to is our current revenue base that is sourced. From hydraulics US revenue. So what we are going to do, what we have already done to a. Large extent what we are going to do is this quarter save the next quarter also largely spoken for. We will be diverting our order backlog. And our customers to other. No, it is entirely possible that this issue gets resolved in a month and. Then we don’t need to do that. But should that not happen within the. Next quarter we will move most of.
Our revenue to a mixture of domestic also because we are increasing. But if move to Canada we will. Move to the Europe, Australia and even New Zealand for example. So we have undertaken good product development. With many of these firms and we. Will not see a decline in revenue. Even in our hydraulics business for that matter. And overall it doesn’t impact anything. I am not guiding you to a. 2.2% impact on our revenue or our projection. It’s. It’s just the put right now that’s the revenue, it affects the tariffs.
Unidentified Participant
Got it. Answer on this hundred crore labor labor related impact. So almost all of that will be covered in Q2 is what I understood sir.
Aditya N Rao
The hundred crore revenue that we had lost will be covered over the course of the year. Not entirely that but that 100 crore revenue loss which we had in quarter one will not be there in Q2. But overall yeah I can definitely state. Right now that India PEB from in. July, in August have had very good. Quarters, very good performance. I’m sorry, very good output, very good production with railway firing on that. We are looking forward to reaching peak. Capacity utilization and then of course increase capacity further after that. But that is very very close now. So we will see a big growth number in PEB India. That’s, that’s what I’m getting to covering. Up the 100 crores will we will. Do it over the course of the year?
Unidentified Participant
Sure sir. Last question would be can you comment on how is the overall market? Do we expect more order of book to increase? How should we look at overall? Company wise.
Aditya N Rao
We don’t see in any of our priorities bu a market risk right now. PEB order backlog is strong and going strong. The issue we had was all internal. Which we have fixed in boilers. Again order backlog going up process equipment. With the exception of hydraulics where the addressable market if you remove the US has declined. I have not. I don’t have addressable market declines in. Any of our revenue streams. So the best way for me to answer that Question is we will have. Issues in generating revenue if our order. Backlog reduces and our customers reduce and that will only happen if our addressable market declines. So we don’t see declines in anything. Except in hydraulics and that’s also restricted to hydraulics us, which we will compensate for.
Unidentified Participant
Sure sir. Thank you and all those.
operator
Thank you. The next question is from the line of Amaya, an individual investor. Please go ahead.
Unidentified Participant
Hi. So I just wanted to ask you about the impact of the competitive intensity in the PEB sector. We’ve seen another player getting listed. So what do you think? Like are you guys having an impact. To the competition or what is overall. Landscape looking like for you guys?
Aditya N Rao
No, I think it’s a very good thing for these listings and I see. It as a, as a massive plus. Point because when you are listed I think there’s a higher degree of margins become important. Undercutting doesn’t become a possibility. So once more and more PEB companies. Become listed, I think there’s three right now to my knowledge. I think it becomes very likely that there’s an added layer of discipline in terms of capital efficiency in terms of margins and quite frankly, I mean our. PEB India margins are lower than our competitors. So we are hard at work trying. To, to get that up. We need, we are about 200, 300 basis points less than our competitors on a PBT basis.
So there’s work that we are doing continuously and improving on. So if anything I think it will help. I think there’s a lot of help. We can gain from them. From a market share addressable market point. Of view, I don’t see an impact. I don’t think the market will prevent us from growing. We are right now picking our orders. We say no to most orders and I don’t feel there’s an issue in sustaining revenue profitability growth in this business in the near term to medium term because of, because of increased competition.
Shrikant Bhakkad
Yeah, I just wanted to add in terms of questions that are over. So we have engaged with the investor community, others in the last quarter after our results we continue to engage with the investor community even after this call. We, in case you want to reach out to us in terms of any of these things, please do connect with our team and when we, when we are there for our road shows or for decisions, we’ll be happy to chat and we will learn from you and then we will give what best information that we can share with each one of you during our roll calls. Before we end, I thought I’ll just reiterate that, that we had the calls with investors, and we will continue to have those calls as we. As we go along.
operator
Thank you, ladies and gentlemen. We’ll take this as the last question for the day. And I now hand the conference over to the management for closing comments.
Aditya N Rao
Thank you. Thank you to all of our stakeholders. Who have joined us today. We will be hard at work to make sure Q2 is a great quarter. And thank you for all of your support as we look to grow Bennar from strength to strength. Thank you, sirs.
operator
Thank you. On behalf of Philip Capital Ltd. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.