Sansera Engineering Ltd (NSE: SANSERA) Q3 2025 Earnings Call dated Feb. 11, 2025
Corporate Participants:
B. R. Preetham — Executive Director and Group Chief Executive Officer
Vikas Goel — Chief Financial Officer
Praveen Chauhan — Head of Corporate Strategy
Analysts:
Mumuksh Mandlesha — Analyst
Siddhartha Bera — Analyst
Abhishek Jain — Analyst
Khush Nahar — Analyst
Basudeb Banerjee — Analyst
Arjun Khanna — Analyst
Mayur Milak — Analyst
Shashank Kanodia — Analyst
Presentation:
Operator
Ladies and gentlemen, good day this is the operator. We will be starting very shortly. We appreciate your patience. Please stay online. Thank you hello, ladies and gentlemen, good day and welcome to the Q3 FY ’25 Earnings Conference Call of Sancera Engineering Limited. 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-date of this call.
These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchstone phone. Please note that this conference is being recorded.
I now hand the conference over to Mr B. R, the Executive Director and Group CEO. Thank you, and over to you, sir.
B. R. Preetham — Executive Director and Group Chief Executive Officer
Thank you. Good morning and welcome everyone. Thanks for joining this call. On this call, I’m joined by our CFO, Mr Vikas Goyal; Mr Praveen, our Head of Corporate Strategy; and Mr Rahul Kale, our COO, along with our Investor Relations Advisor SGA. The results and the presentations are uploaded on the stock exchange and company websites.
I hope everybody has had a chance to look at them. Starting with our quarterly update, we delivered a decent performance in-quarter three of FY 2025 with a revenue of INR7,278 million and an EBITDA margin of 17.5% with a PAT margin of 7.7%. I would like to highlight that generally Q3 is the weakest quarter of for the overall auto industry.
And I think we have delivered this performance despite a challenging external environment and a very strong corresponding Q3 in the last financial year. Following our QIP, the balance sheet continues to remain strong with surplus cash standing at almost about INR4969 million. With this, we are well-placed to expand our capabilities in-line with our order book of new business. During the quarter, the overall domestic demand trajectory remained moderate post festive uptrend.
That said, January began on a positive note and the outlook for the year continues, cautiously optimistic. We expect some inventory correction to take place due to OBD2 Phase B in the coming quarter. As per S&P Global’s 2025 forecast, the global auto sector remains focused on managing production and inventory levels in response to the regional demand patterns, which include slower-growth in the key markets. That said, North-America, which accounts for about one-third of our exports from India is presenting a meaningful opportunity with changing global dynamics. Let’s take a closer look at our performance across sectors in Q3 FY ’25. Emerging businesses, namely Tech agnostic and XEV and non-auto contributed 24.2% of the revenue. The long-term outlook for these remains very strong. The tech agnostic and XV business delivered a healthy growth of 9.5% on the Y-o-Y-o-Y basis. Our business has experienced more than 30% growth year-on-year on a — on a low-base. We shall continue to maintain this high-growth trajectory going-forward as our outlook for this tech agnostic indexing business remains solid with an order book of INR5352 million, including a major proportion from aluminum products. In the non-auto sector, we registered a decline of 6.6% on a year-on-year basis, owing to some softness in off-road and aerospace business. Off-road segment especially revenue stood at INR203 million. Aerospace business recorded a sales of two or INR269 million. The decline here is owing to labor issues with one of our key customers, which were resolved by early November. Since then, we have seen a gradual recovery in orders from their side. Further, we have expanded our customer-base and added a large European base player to our kitty. Previously, we were working with Tier-1 suppliers of this OEM. However, now we have added them as a direct customer. We see a significant momentum in aerospace from Q4 FY ’25 onwards. Speaking of agriculture, just as we anticipated, this business delivered a healthy growth of 65% on year-on-year basis and 75% on a sequential basis. The revenue from the agriculture segment stood at atees INR177 million, primarily driven by healthy rural demand for tractors. Our Auto ICE business, which remained muted on a year-on-year basis, stood at INR5089 million. Our two-wheeler business grew by 7%. However, this does not show a fair picture of scooter performance, which grew much faster at a rate of 21%. For a long — for the long-term, we remain positive on two-wheeler business as we expect the overall industry to grow in the coming future. As we saw channel inventory pile up towards the end of December — December quarter and softness in exports orders, our PV business degrew by 19% year-on-year. This is in-line with the overall industry scenario of lower demand. Having said that, some positive recovery is expected to come on the back of newer product launches by the OEMs. We aim to win maximum business in the newer models for all of our existing customers, both domestically as well as in exports market with a focus on premiumization and critical engineering — engineering requirements. Three-wheeler business being as the smallest in size delivered a decent growth of 10.4% year-on-year. I would like to highlight that our CV business delivered the highest-ever quarterly revenue in this quarter, growing at a healthy study rate of 10.5% year-on-year. We have also received fresh orders from this segment, contributing to 4% of our new order wins. Now let’s turn our attention to our order book. As of December 2024, our order book stood at INR2 billion to billion, that is INR22 billion with more than 60% of these orders coming from international market. We booked around INR1.9 million worth of orders during this quarter and major order inflows are from non-order sector, helping us to move closer towards our long-term vision. Recognizing the strategic importance of the semiconductor sector in covering everything from consumer electronics to advanced technologies such as artificial intelligence and electric vehicles, India is looking to establish itself as a global hub for semiconductor manufacturing. In-line with our diversification strategy, we are also looking at this space very closely. We have won a prestigious order from a global leader in wafer fabrication equipment for supplying parts of high-precision and complex machine parts to these equipments. This strategic deal comes following an extensive evaluation and selection process. This fairly large order is our first-ever order in this fast-growing space. We expect our business with the customer to grow meaningfully in the next three years. This LOI is a testimony to our ongoing efforts to diversify into the related high-growth areas with high-precision. As an engineering focused company, we aim to deliver best-in-class solution across multiple business areas within our paybook. To conclude, I would like to give an update on our subsidiary company MMRFIC. The company is performing well in-line with our plans. And as mentioned previously, we have further invested in the company, for which the shareholding percentage will be determined on the FY ’22 financial results. MMRFIC continues to make strides in the defense space and has recently emerged as a proud winner of IDEX Challenged by the Defense Space Agency DSA for developing a 200 Watt carband solid-state power amplifier for satellite ground stations. MMRFIC has been awarded multiple government grants to support the development process, namely IDEX, Grant III up to INR10 crores for IDEX Prime 1, up to INR1.5 crore each for IDEX this two numbers and TDF grant of up to INR7 crores. We feel privileged to contribute towards Artman program for defense and aerospace sectors, offering them all the support that we can provide in terms of experience and expertise. As through this, we also get to be part of such an industry, which as you know, is a critical aspect for the country. Over a long period of time, we are confident that will continue to be a preferred choice of supplier for global giants with its deep precision engineering capabilities. Now I hand it over to Vikas Goyal, our CFO, to take it forward. Vikas?
Vikas Goel — Chief Financial Officer
Thank you, Priitam. Good morning, everyone. Let me give you a brief about our consolidated financial performance during the quarter — 3rd-quarter of FY ’25. Our revenue from operations rose by 2% on a year-on-year basis to INR7,278 million. The other expenses have reduced sequentially from previous quarter on — and our employee expenses are broadly in-line with our previous quarter. So this is — the other expenses are basically in the result of our continued efforts to improve cost metrics.
The EBITDA for the quarter stood at INR1,271 million versus INR1,207 million in the same-period of last year. The EBITDA margin stood at 17.5%. During the quarter, we were able to maintain our margins sequentially due to our diversified product mix, cost-saving efforts and certain pricing actions. Interest cost also reduced on a sequential basis owing to the funding received through QIP process. That said, Q4 would — Q4 of this year would be even better representation of the reduced interest expense. Depreciation and amortization expenses stood at INR445 million, again in-line with Q2.
Free profit-after-tax margin improved on a year-on-year basis by 90% — 90 basis-points, reaching 7.7%. Talking about the nine months performance on a year-to-date basis, the revenue from operations rose by 8% on a year-on-year basis to INR22,351 million. EBITDA stood at INR3,877 million with a year-on-year growth of 10% and the margin percentage of 17.3%. Profit-after-tax witnessed a growth of 12% from last year and stood at INR1,577 million with a margin of 7.1%. We are also happy to share that ECRA Limited has upgraded the long-term rating — long-term credit rating from AA minus stable to AA stable and reaffirm the short-term rating to A1 plus. And India Rating Limited has also upgraded our company’s credit rating, long-term rating from AA minus to AAA stable. With this, we conclude our presentation and open the floor for question-and-answers. Thank you.
Questions and Answers:
Operator
Thank you, sir. Ladies and gentlemen, we will now begin with the question-and-answer session. Anyone who wishes to ask a question may press star N1 on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star N2 two. Participants are requested to use handsets while asking a question.
Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants are requested to restrict yourselves to two questions. If you have any more questions, kindly rejoin the queue. The first question comes from the line of Mumuksh Shah from Anand Rathi Institutional Equities. Please go-ahead.
Mumuksh Mandlesha
Yeah. Thank you, sir, for the opportunity and congrats on the order wins in the — in the semiconductor and aerospace. Yeah. Sir, firstly, sir, just on the growth recovery from here this quarter about 2% only kind of growth we had seen, which was, I mean a little muted. So just to understand how do you see the growth recovery going ahead of here, sir?
Vikas Goel
Thank you,. See, there were a couple of reasons as I have already stated that while the quarter three generally remains a weak quarter for us among the four quarters, traditionally for most of the automotive companies. Now added to that, exports, especially for Europe as well as uncertainty in US prior to the elections saw — saw a weak demand from the passenger vehicle industry as well.
So I think that things can only get better and we look-forward for a stronger quarters and a much, much stronger coming year because our order books, both by way of our continued orders as well as the new products that are getting introduced looks quite strong for the coming year as well.
So we are quite optimistic about the coming year business. Sir, if you can share for the key segments new segments in terms of guidance for next year. Firstly on the aluminum forging and then on the Aero space and then on the this the EV space. Yeah, see our long-term guidance we have said that 40% of our business would come from non-automotive HCV and tech agnostic products.
Now if you see, we have reached almost 26% in the current financial year as we speak. But then if you really look at the stackup that we have from the current order book to — I mean current revenue mix to adding the current order book, we will almost reach almost about 38% in the next three years’ time. So our diversification strategy and focus on non-automotive XV and also on tech agnostic components have really started yielding fruitful result.
Now having said that, the most of these segments also cater to almost 60% of the business also comes from the export industry, which means that it definitely would be margin-accretive. Now just to take an example on aerospace and defense and semicon put together because this is this is something that we manufacture in one common facility at our Plant 9. So we have a current order book of very close to about INR600 crores.
Now when I say INR600 crores, INR600 crores is an annualized full potential revenue that we have. These are contracts which have already been secured. Now challenge would be to — unlike automotive industry, here the number of products that are involved in development are quite significant.
So we expect that at least 50% of this order book would get executed in the next year. And when I say next year, it is FY ’26. And we expect that by FY ’27, at least about INR500 crores or plus would get executed. Now the risk here remains is that if there is a delay in the development of any particular package of the products, what happens is generally customer would have to resort to the current suppliers for ordering for next six months-to one year and there could — that could impact on the delay in starting of production.
So apart from that, orders are there and we have put enough and more resources, including engineering resources are being augmented and we are preparing ourselves to get deliver this order book as well.
Mumuksh Mandlesha
Very clear, sir. Just also on the alumin forging front,,
Operator
Those were two questions. I would request you to rejoin the queue.
Mumuksh Mandlesha
Yes, sure. Thank you so much. I’ll come back to queue.
Operator
All right. Thank you. The next question comes from the line of Siddhartha Behra from Nomura. Please go-ahead.
Siddhartha Bera
Yeah. Hi, sir. Thanks for the opportunity. Sir, first question is on some of the newer areas which you have got good orders. So some color if you can share what is the size and in the longer-term, what is the quantum of revenues you think you can potentially address in the semiconductor space?
Vikas Goel
Yeah. Thank you, Sidhat. As I said that this space has been — we have keenly been observing and we are being evaluated from the last 1.5 years to two years from potential customers. Now one of them who are the world leaders in manufacturing of missions for etching and deposition have started the business relationship with us post very, very rigorous evaluation over 1, 1.5 years. Now as — so these are the components which go into the missions, which are very, very-high precision.
Some of the operations that we do on a mission are first time in our history, while we have been on this business precision engineering for almost 30, 35 years. This kind of machining requirements, we are addressing it for the first time. It was quite challenging, but we have been able to successfully demonstrate our capability.
We are also setting up a Class a clean room for addressing their requirement. So with all these things, we expect that we are creating a kind of very niche opportunity, which can actually scale-up not only with this customer as well as well as with a couple of more slightly bigger customers as well. Now what is the biggest thing is these customers are looking at India not for any cost advantage.
Basically, they are all looking at India for lack of — because they are not able to expand for the lack of skill-set that is available in either in Europe or in US. So we’ve been able to present these — they are presenting these opportunities and these also come with a good margin profile. Now currently, our order wins in this — from this customer is about $12 million annual per annum, but the LOI that has been signed will go up to about INR30 million in three years per year.
So this is the kind of opportunity currently that has been visible with this customer. But again, it all depends on how fast and how well we perform. And I think once we establish our credentials, this can only be scaled-up further.
Siddhartha Bera
Got it, sir. Sir, second question on the US side. I mean, you also hinted that there are new opportunities also opening up for the US market, while we do see the tariffs impacting demand as well. So how to think about the roadmap for the US market in the next few years, are you concerned with the demand outlook from your existing clients and what other new areas we can look at to offset this? And lastly, for this new US assembly plant also which you were sort of Thinking in the past. Any update there how to navigate these tariff issues in the US market?
B. R. Preetham
Yeah. So that the reason that we haven’t taken the final step on this manufacturing facilities was to wait for the — you know, all the uncertainty around the tariff and structure that the new US government would have in-place. So we would like to just — we have been waiting — I mean, we probably would wait till the end of this quarter to firm up our final plan as to exact location and the scale of the operations that we need to start. But the one thing, one factor is definitely going to be there that it will only be encouraging for people to look at some kind of front-ending facility and manufacturing facility in US.
So that is what is the whole objective of this — I mean, mean current regime to encourage more manufacturing in US, which also would mean that more-and-more OEMs, especially in metal working place are — will look at vendors who would have some kind of facility to offset you know that tariffs. So in terms of the customer, current customer orders, I don’t think there is so much of issue with that because in certain new products that we have started producing, we are almost single-source for that.
So it is on the ramp-up and that will continue to happen. But meanwhile, there have been a lot of engagement with the existing multiple OEMs to look at all the newer programs because IC has got a renewed focus both in terms of multi-fuel engines as well as hybridized engines. So we are engaged in multiple conversation with multiple customers for our traditional components, which would — which would actually go beyond 2035 as well. So we are looking quite positive towards the opportunity in North-America.
Siddhartha Bera
Got it, sir. Thanks a lot. I’ll come back-in the queue.
B. R. Preetham
Thank you.
Operator
The next question comes from the line of Abhishek Jain from Alpha Curate Advisors Private Limited. Please go-ahead.
Abhishek Jain
Thanks for the opportunity and congrats for the giant set of number in a tough time. Sir, my first question on the capex side, you have done a capex of around INR3.7 billion date and looking for around INR4.5 billion in this year. So how much incremental revenue will be able to generate based on these capex next two to three years what would be the asset turnover, sir?
Vikas Goel
Yeah. Generally, I’ll probably take this question and then Vikas can add to my answers. See, generally, we have always maintained that when we are putting up a greenfield facility or expanding the facility. Generally, if you will have to take our overall asset turns around 1.3 to 1.4. So — and we — our order book is also quite clear, it is at INR2,200 crores.
So we will require over the next three years to, you know, invest about INR1,300 crores to INR1,400 crores, which included this year as well. So to make sure that we execute this. But one thing that we would like to add is any incremental consumption in the new facility, especially in aerospace where we have already created the infrastructure and then further addition of only the machining facility and this thing would be at a higher asset turns, which would mean that any incremental investment this year, in fact, we would be investing about close to INR110 crores to INR120 crore in the aerospace facility on the machining alone.
And that would mean that it would have an asset turn of more than two. So it’s a mix of both this thing and I think it is safer to assume that 1.3 to 1.4% is a right mix for us to look at.
Abhishek Jain
Thanks, sir. And next question on the international business, which now accounts for the 31% and new order growth is —
B. R. Preetham
I’m not able to hear it properly. Can you please be a bit slower and clearer.
Abhishek Jain
Sir, my next question on the international business, so which accounts for the 31% now. And most of the order book, around 60% order book is for the international business going by. So just wanted to understand what change in the mix we can international versus domestic business for the next two years?
B. R. Preetham
So I think, see, over the time, we expect that international business should move between 35% to 40%. This also includes our business out of Sweden and exports from India. But again, it also depends on how the domestic market would perform because the domestic market performing strongly, the base is much larger here, 69% is coming from domestic market.
So — but then anywhere between 35% to 40% over the full next three to four years time is what we think it will you know, that is where we are looking at.
Abhishek Jain
Thank you, sir.
Operator
Thank you. A reminder to all participants, you may press star and one to ask a question. The next question comes from the line of Kush Nahar from Electrum PMS. Please go-ahead.
Khush Nahar
Hi, sir, am I audible?
Operator
Please be a little louder, Kush. Thank you.
Khush Nahar
Yeah. Hi, sir. Thanks for the opportunity. Sir, the two questions. First, how do we see demand in general, if you can elaborate a bit more considering the tariffs that might be placed on India also? And second, sir, bookkeeping question, our employee expenses increased year-on-year by 15%. So what kind of manpower are we adding here? Because the revenue has increased only by 2%. And consequently, our tax-rate is also lower this quarter. But is it safe to assume that it will be 25% on a yearly basis?
B. R. Preetham
The first two questions let me answer. The trade impact of trade on India and the Indian suppliers is yet to be seen because the reciprocal tariff is what he’s talking about and the US President is talking about, but nothing has yet been formed up. They are all — they expect that lot of these are kind of negotiation tools. And that is why I said that we would wait till end of March probably where things would become much more clearer before one can come to any kind of conclusion on to what is going to be the effect on each country and each product category.
It’s too early for me to make a comment on that. So I would refrain from making any kind of comments on what is going to be the effect on this. As far as the — as far as the — our labor cost is concerned, yes, see, because it’s an engineering industry and it’s a high-skilled area, we will not be able to, you know, on a short-term, adjust towards big variations. We would rather carry the trained manpower because our long-term and medium-term goals are very clear and the targets are clear.
So we have focused on creating a skilled manpower, especially in the areas of you know high machining like aerospace, defense, aluminum missioning, aluminum forging, these are areas which needs very, very-high skill-set. So any drop-in a temporary drop-in the revenue, we will not have a — we will not definitely make an easierc reaction to cut the manpower. Rather our investment in training and skilling of these people is on a long-term basis.
So in a short-term when the revenues are weaker, you would see a slightly higher percentage, but you know, this is done keeping long-term strategy in mind. I’m talking about the tax-rate for the quarter. Yes, it seems lower for this quarter because of certain pricing actions we did in our Sweden subsidiary because of which we had a relatively higher profit there.
And on a year-on full-year basis, we should be closer to the average for the whole entity.
Khush Nahar
So around 25%,
B. R. Preetham
Around 25%, that’s right.
Khush Nahar
Thank you. Sir, just one question if I can squeeze in. So what kind of revenue growth we are seeing for the next three years considering this uncertainty in-demand and obviously our current order book, which is strong.
Vikas Goel
See, the current order book presents a very, very Aggressive opportunity for growth. But having said that, the current — see, auto is generally a cyclical business. And there would be once in three years, couple of quarters, there would be a dip in-demand. There is also coupled with now there is technology changes that are coming in. So I would still say that high-teens is what we should expect over the three years on a CAGR basis.
Khush Nahar
No, so which obviously sustainable EBITDA margin is around 18% to 20% going ahead considering product mix.
B. R. Preetham
We sustainable — EBITDA sustainable margins, we would not put a number to that.
Vikas Goel
Yeah. I mean the intent is to improve our margins year-on-year, at least by 0.5%. That is how the company is focused on working. And on a long-term 20% is definitely a target on which we are working on. So both on ROCE and margin. So that is where our long-term and vision is. So we as a company are working towards that.
Khush Nahar
All right. Thank you so much for the detailed answers.
Operator
Thank you. The next question comes from the line of Basudeb Banerjee from CLSA. Please go-ahead.
Basudeb Banerjee
Yeah. Thanks. Thanks,. A few questions. Like I can see year-to-date capex at around INR360 crore. And even a year back when we were discussing you are looking at full-year capex of INR300 crore INR320 crore. So maybe post fundraising some more comfort for growth capex?
And on the other side, revenue growth is low-single digit. So how to look at from a strategic angle, next three, four years, your 20 vision of growth margin and ROCE, especially the last one and how are you looking at the ROCE factor-in next three, four years where venturing into semicon and EMS or other areas in the initial phase of scaling up how do you look that as in the transitionary phase?
Vikas Goel
Thank you, Basu, and congratulations for your new innings. So yeah. This quarter, as you said this year or year-to-date, the going has been not as expected because especially in our export markets and domestic PV industry has been muted. Exports, especially in certain of our customers like off-road have had a significant degrowth in this year, which was also expected. But then I see a very, very strong momentum, order book is strong, new programs are quite promising.
The new industries with which we are working on like we have added a — we have added Airbus as our customer directly. Our today aerospace and defense and semicon order book stands at almost INR600 crores. So we are focused on making right investment into these areas. Of course, auto — auto ICE business, which is our traditional business, there’s not much of incremental investment that is going on. This is where our effort in consolidating our product set of our various manufacturing facilities and harnessing that existing capacities we are working on.
So Rahul, our new COO, along with his team have been very focused on having this approach, I would definitely — you would be able to see results in the next few coming quarters of all these actions that have been initiated. I would say that on all the newer investments that we are making, especially in non-automotive sectors, our — both our margin profile and ROC are much, much better and higher than the traditional line of businesses.
But of course, as you rightly put it across, few of the first initial quarters, there would be a learning. We are going through that already because from month of October, the production to these sectors have started. And I expect that over next — this quarter and middle of next quarter, we should be through with the first bunch of that 12 million order that we have received and production has to start. So we — the things are looking quite positive, Basu.
B. R. Preetham
I would like to add here,. Normally, normally the capex that we incur in our business is ahead of almost three to four quarters of the actual sales realizing. So the capex that you see now is not meant for this year, it’s actually going to result in revenue in the coming year. And that also takes a gradual upscale as the volumes increase on any new order. And most of the capex that we incur is actually driven by the new orders that we have.
Basudeb Banerjee
And sir, the new businesses, what will be the fixed asset turn compared to the earlier traditional businesses?
B. R. Preetham
And new businesses should give us about 2 to 2.25 asset tons.
Basudeb Banerjee
Okay. And last question, this year you will be ending up with how much consolidated capex?
B. R. Preetham
Consolidated capex would be between INR425 crores to INR450 crores, not inclusive of the new parcel of land that land included, it would be very close because we have invested in a very big large piece of land, 55 acres in the new a estate that the government of Karnataka is creating very close to the existing facility where a new airport is also proposed to come nearby. So I think with that which should be very close to INR550 crores with the land parcel included.
Basudeb Banerjee
And any last guidance you were giving for aerospace revenue for next year?
B. R. Preetham
Next year, I already said, Basu, that we are targeting about 50% of our order book execution. Our order book is about INR600 crores as we speak. So aerospace, defense and semicon put together, we expect that we would execute at least 50% of that in the next year.
Basudeb Banerjee
And semicon will be how much of that?
Operator
In of, I would request you to rejoin the queue now.
Basudeb Banerjee
Sure.
Operator
Thank you. The next question comes from the line of Arjun from Kotak Mahindra Asset Management. Please go-ahead.
Arjun Khanna
Sure. Just carrying from — carrying forward from question. So what is the revenues we expect from semiconductors this year?
Vikas Goel
Yeah. This year, hi,. Do you mean next coming year?
Arjun Khanna
No, right. For — so just to understand the breakup, while we are saying INR300 crores for FY ’26. So FY ’25, what would this like-to-like number be?
Vikas Goel
Okay. I think, see, in my — in our own estimate, we have taken about INR60 crores as the — as the revenue coming out-of-the semicon in the — in this year, but the potential to do is much higher because our order book currently is almost close to $17 million. In fact, I was — I’ve been just corrected, I was telling about 12 million.
We have recently received one more additional order. So it has been about INR17 million. While the opportunity is slightly higher, I’m being a bit more cautious because the cycle of establishment of these products and FAIs and our customer also. As I said that these also will require that we have to get into that cycle.
If we miss the cycle, we would miss about six months of revenue. So in our current estimates, we have taken about INR60 crores coming out of this?
Arjun Khanna
No, sir, sir, what I — right, ’26. So if I look at aerospace, defense and semicon, we have said we’ll do INR300 crores in FY ’26. So this INR300 crores, what would the number be in FY ’25 for all three businesses, semiconductor may not be there much, but for aerospace defense, what do we expect for closure of FY ’25 hello,
Operator
Sir. Please go-ahead with the answer. Ladies and gentlemen, the management seems to have disconnected. I would request you all to stay online while I get them reconnected. Thank you
Vikas Goel
Can you repeat your question?
Arjun Khanna
Right. Sir, we’ve mentioned INR300 crores of revenues in FY ’26 on aerospace, defense and semicon. Just wanted to understand what would this number be for FY ’25, given that most of the year is done?
Vikas Goel
We should be very close to about 140 sure.
Arjun Khanna
So we are looking at almost a doubling of the business in FY ’26.
Vikas Goel
If you really look at the INR140 crores, there about INR8 crore INR10 crores is only coming out of semicon. So a big amount of that would get added in the next year, plus there is a good amount of defense orders coming through which we are getting into production. So the aerospace will have its normal growth, but that would be mostly be supported by semicon and defense. Right. Sir, the second question is on MMR FIC.
Arjun Khanna
If you could just talk about how do you look at the end game out here? So while we continue to invest, we see a new R&D facility also. So do we envisage just taking a much larger stake in the future. If you could talk about in terms of synergy benefits that are possibly this partnership could represent?
Vikas Goel
Yeah. Actually, see, when we looked at them and it’s been now close to two years since we have invested in them. So coming this March, it will be two years. I think in my calculation from whatever equity that we have already put, it should result between 35% 36% of holding in the current — in the current this thing.
But going-forward, we have the right to go up to about 51% and beyond that it is only whether you know valuation and whether we want to be — because there we need to be making sure that the promoters who are working on the projects also are interested and they have the reasonably good amount of stake in the company.
Now that is something on holding and the resisting. But as far as the order book and the products are concerned, I understand that this — they have a very, very strong now development programs that are going on. They have been working with multiple products with ISRO, with DRDO, with Indian Army, there have been four or five grants that have been given on the IDEX programs from them.
And then according to my information, their current order book backlog is in excess of INR100 crores. So in that way, they are very well-poised to have a meaningful growth in the years to come and also scale it up in the products that have already been developed. And most of this would also result in technology transfer agreements once your IDEX programs are completed. So I think the future this company is definitely in-line with what we have been all anticipating.
And especially there currently as we speak, they are also participating in the aero show where they have a stall and we expect that there would be a lot of interest from the customers also coming out of that.
Arjun Khanna
Sure. Sir. So just to understand, sir, maybe over a three-year period, say by FY ’28, would you expect in terms of milestones, maybe INR100 crores of turnover from this business?
Vikas Goel
And see, June, what has happened is that, yes, these are all — now currently the one big project which they have been working on, which is the Radar 1, which as we speak has been under evaluation and it is just on the cusp of the mass production. Now we — we expect that the field trials to be over sometime in the next two quarters.
And then we have already given five sets for all the field trials. And once this starts, there will be a very stable revenue as significantly higher revenue coming into the company because we expect that about 150 to 200 radars is the piece time requirement per year. So — but apart from that, there are several projects on which is the thing. I am not in a position to put an exact number, but things looks very, very positive.
Arjun Khanna
Sure. Sir, the final question in our —
Operator
I would request you to rejoin the queue. You are done.
Arjun Khanna
Thank you.
Operator
Thank you. The next question comes from the line of Sahil Kanade from Asian Market Securities. Please go-ahead.
Mayur Milak
Hi, hi, sir, this is Millak. So two things here. One, the semiconductor business will be currently safe to believe that you’re reporting it under the auto agnostic segment? No, it is on non-auto. So it will have a separate growth pattern going-forward, right?
B. R. Preetham
Currently, we are reporting under non-auto, because this is the facility which is combined with aerospace and defense and semicon. We have not yet started reporting it separately. But going-forward, as the business of achieve scales up and reaches the meaningful thing, we will separately show, but it will be under non-auto. So under non-auto, it will be off-road, agriculture, aerospace, defense and semicon, it will be like that.
Mayur Milak
So when you say there is a 40% — so there could be a 40% kind of CAGR growth in the aerospace and defense based on your order books with Airbus and gradually the Tier-one supplier as well. The semicon will be over and above the 40% growth that you will be reporting in that space
Operator
Hello ladies and gentlemen, there seems to be a disconnect from the management’s end. Please stay online while I get them reconnected thank you
B. R. Preetham
There seems to be some technical glitch because we are connected, we can hear you guys, but then you can’t hear us. So I think there was some issue. Could you please repeat your question?
Mayur Milak
Sure. So I was just trying to look at the numbers in the Aerospace and Defense segment that you’ve reported so-far. It looks like this year will be a flattish year where you’re saying you already have included about INR50 crore INR60 crore of the semicon revenue to be added into this segment for this year. So clearly the aerospace and defense by itself would have been a negative growth territory this year. But
B. R. Preetham
INR50 crores INR60 crores is going-forward next year.
Vikas Goel
Yeah.
Mayur Milak
Okay. So
B. R. Preetham
This year the revenue has just started. So this year we should be ending up very close to about INR140 crores, INR135 crores to INR140 crores. So we will have a positive growth.
Mayur Milak
Okay. Okay. And so when you guide for a 40% kind of outlook growth in that space, that will be over and above. So the semicon growth will be over and above the growth that we will get-in aerospace and defense space individually. So safe to look at it like that?
B. R. Preetham
Yeah. Basically what I said is that between 140 to 300 crores is what we are targeting for the next year. About INR60 crores will come out of semi-con. So if I remove that this year, 10 has come from 140 from semicon, 130 to 240 is the growth that we expect from aerospace and defense put together. So our orders and There is a good amount of defense orders also getting added into that. So aerospace by itself will grow by about 50% CAGR. That is the minimum that we have taken.
Mayur Milak
Fair point. So coming to the — I think a couple of guys have also asked it, but I was just trying to look at the ratios. So clearly in the last eight years, there are two things here that our asset turn has always been at that 1.2 mark. And our ROCs have always been in that 11% to 12% range. Now I believe we’ve already started our journey on the non-auto side and the heavy growth XV and but some of that really doesn’t seem to be reflecting into the asset turn as well as ROCE. So can you throw some light as to — is there a near-term possibility of looking at a 14% 15% ROC over three years or are they going to be more gradual and slower than because the numbers do suggest that even in two, three years, we should be around the 12% mark only. So just trying to work-out some number on that side.
B. R. Preetham
On the — sorry, this ROCE when you say ROCE, could you just elaborate how are you looking at it? Because according to keep at about 15% mark.
Mayur Milak
So basically, sir, I’m looking at EBIT 1 minus tax net of that.
B. R. Preetham
First tax we are looking at.
Mayur Milak
Yeah, yeah.
B. R. Preetham
We look at it pre-tax because this includes all elements. So see pre-tax, we are targeting to reach up to 20%. So if you do a post-tax, it will definitely be above 15% over a period of time. And various actions in terms of margin improvement in terms of diversification and also capacity utilization improvement are some of the action?
Mayur Milak
Sure. And on the asset turn as well, so you already pointed out that the,
Operator
You’re done with two questions. I would request you to rejoin the queue.
Mayur Milak
Okay.
Operator
Thank you. The next question comes from the line of Shashank Kanodia from ICICI Securities. Please go-ahead.
Shashank Kanodia
Wanted to check upon your QIP proceeds. So out to INR1,200 odd crores, what proportion would you be using for retiring your debt and balance for growth capex of the growth?
B. R. Preetham
Praveen. Praveen, hello.
Praveen Chauhan
Hello.
B. R. Preetham
Yeah, hello.
Praveen Chauhan
Yes, sir. Can you hear me?
B. R. Preetham
Come on. Yeah, Praveen, could you please answer in case that our line gets cut because you are on the line where you could hear most of it.
Praveen Chauhan
No, no, I’ll try and do that
B. R. Preetham
Yeah. Are you answering this question?
Praveen Chauhan
No, I didn’t hear that.
Shashank Kanodia
Yes, I was just asking, sir, out of this INR1,200 crores of proceeds, what proportion you will be using for retirement of debt and what proportion you’ll be using for growth capex? And the gross debt number as on December end versus the March numbers.
Praveen Chauhan
So out-of-the INR1,200 crores, we have already retired INR700 crores of debt, which was the plan as declared in the QYP document. INR200 crores is going towards the capex, out of which INR100 crore is towards the new parcel of land and another INR100 crore is towards some new machine equipment that we are in the process of procuring.
So balance INR300 crores, out of that INR25 crores was the expense of QIP and INR275 crores is what we will basically be deciding in next few weeks. Mostly it will go towards growth capex and certain other developmental expenses.
Shashank Kanodia
Okay. So sir, the gross debt number is roughly about INR100 odd crores as of December end, because I think it was INR800 odd crores as of March-end, if I’m not wrong.
Praveen Chauhan
Gross debt as of December end is about INR350 crores because there is some debt also in the subsidiary companies, which we have not touched as of now and we are retaining some debt in the parent company — in the flagship company because of longer period of the debt and so but on a net basis, we are negative debt.
Shashank Kanodia
Right, like the positive cash — INR500 crores of cash-flow, right, positive INR500 crores of cash.
Praveen Chauhan
So on a net basis, it will be about INR150 crores.
Shashank Kanodia
Okay, let’s basis INR150 crores of positive cash.
Praveen Chauhan
Yes, yes.
Shashank Kanodia
Okay. Secondly, sir, in the past on the order book side, we have been mentioned that we will take roughly two, 2.5 years to reach the peak revenue potential of that order book. So from roughly INR3,000 crores of revenue run-rate that we’re doing right now, it essentially means we should be touching closer to INR5,000 crores of revenues by FY ’27. Is this the right understanding?
B. R. Preetham
I would say by ’28.
Shashank Kanodia
Okay. So by FY ’28, you should be touching INR5,000 crores of
B. R. Preetham
Crossing INR5,000 crore considering everything as normal.
Shashank Kanodia
Right, right. And sir, lastly, if you can put a timeline to your 20% EBITDA margin in ROCE targets as you know, we have been giving this as an aspirational target, but I think we would be more considering what is the timeline that you’re looking at attaining these 20% margins in ROCs?
B. R. Preetham
See, this is a two-way street. If you look at the diversification strategy and new products introduction that we are adding and there is definitely some amount of effort and cost which is incurred in the initial phases whenever we introduce a new product-line into the business. So that keeps up some cost.
Also, there is a learning curve when we stabilize. So while theoretically we are improving our margins on one-side, on the other side, we are incurring additional costs and in the learning curve to stabilize these new products. That’s an ongoing process. And we believe that year-on-year, we should still be able to sequentially improve our margins by about 50 to 60 basis-points. So considering we are about 17.5% now, it should take about three to four years for us to touch or get closer to 20%.
Shashank Kanodia
Understood, sir. Thank you so much and wish all the best.
Operator
Thank you. Ladies and gentlemen, in the interest of time, you would take that as the last question. I would now like to hand the conference over to the management for the closing comments.
B. R. Preetham
First of all, let me apologize for all the inconvenience caused due to some technical issues during the call, we could have done that — done the call without that. I’m sorry for that. And with this, I conclude this call. If you have any further queries, please contact SGAR Investment Relations or us directly. And with a very positive looking next year, we end this call and thank you everyone for joining us today for the earnings call. Thank you very much.
Operator
Thank you, sir. Ladies and gentlemen, thank you, sir. Ladies and gentlemen, on behalf of Sancera Engineering Limited, that concludes this conference. You may now disconnect your lines. Thank you.