Shilchar Technologies Ltd (NSE: SHILCTECH) Q4 2025 Earnings Call dated Apr. 22, 2025
Corporate Participants:
Alay J Shah — Chairman & Managing Director
Analysts:
Ravi Swaminathan — Moderator
Abhi Jain — Analyst
Ninad Sarpotdar — Analyst
Mahesh Bendre — Analyst
Samyak Jain — Analyst
Sunil Jain — Analyst
Prolin Nandu — Analyst
Balasubramanian — Analyst
Arpit Shah — Analyst
Aman Soni — Analyst
Ruchita Ghadge — Analyst
Shantanu Srivastav — Analyst
Unidentified Participant
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Silsha Technologies Q4 and FY ’25 Earnings Conference Call hosted by Avendus Spark. 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 Ravi Swamanathan from Avendus Park. Thank you, and Over to you, sir.
Ravi Swaminathan — Moderator
Warm welcome to the Q4 FY ’25 Earnings call of Technologies. To take us through the results today, we have with us from the management, Mr Shah, Manacking Director; Mr Rajesh Shah, Executive Director; Mr Shah, Manager Operations; and Mr Pradesh Purohit, the CFO.
We will start with a brief opening remark on the business performance of the quarter and full-year from Mr Shah and then open the floor for Q&A. Thank you, and over to you, sir.
Alay J Shah — Chairman & Managing Director
Hello, everyone, and good evening. I’m Shah, Managing Director of Technologies Limited. Thank you for joining us today. Before we open the floor for questions, I would like to provide a brief update on our performance for the quarter and the full-year. I’m pleased to report that both Q4 and year ’25 have been exceptional for Technologies with strong results across all key metrics.
Operationally, we achieved significant milestones, including the successful commissioning of capacity expansion in month of August and a subsequent ramp-up in-production in the following quarter. Notably, we reached full capacity utilization in Q4, well-ahead of our original target in year ’26. As a result, we delivered our highest-ever top-line and bottom-line performance, both on a quarterly and annual basis.
This robust revenue growth has driven positive operating leverage, while maintaining healthy gross margin, leading to a market improvement in our EBITDA and net profits. The transformer industry continues to benefit from several favorable trends. India’s electricity consumption is rising and is projected to peak at 273 gigawatts in June ’25.
Investments in generation capacity across both renewable and conventional source remain very strong as complemented by significant capital expenditure in power, transmission and distribution sector. Sub-segments such as renewable, including solar and wind are poised for continued growth supported by the Government of India’s ambitious plan of 500 gigawatt green energy roadmap for 2030.
Given this demand trend, there is potential for further investment in our manufacturing capacity. While we have not yet finalized specific, I want to assure you that is fully prepared to capitalize on the emerging opportunities in the transformer sector. For the immediate future, our focus remains on optimizing existing operations and consolidating our recent gains.
I would also like to address the recent updates regarding reciprocal tariff by the new US administration. As of now, there are no reciprocal tariff on the export of from India to US and thus, there is no immediate impact on exports. We will, however, closely monitor the situation as the 90-day tariff pause concludes and we’ll adapt our strategy should any change arise.
Our outlook remains positive for both domestic and export markets, though we expect the domestic business to experience higher-growth in the coming financial year. Accordingly, we anticipate a somewhat greater share of domestic revenue in the upcoming financial year.
Finally, in recognition of this year’s strong performance, the Board has recommended a final dividend of INR12.5 per equity share subject to shareholders’ approval. Additionally, the Board has approved the equity bonus issue, one new fully paid-off equity share for every two shares paid by eligible shareholders.
In conclusion, we are optimistic about the future and remain committed to achieving our growth objectives while maintaining operational excellence. Thank you for your attention. I would now like to open the floor for your questions.
Questions and Answers:
Operator
Thank you. 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. Participants are requested to use handsets while asking a question.
Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Abhi Jain from AJ Capital. Please go-ahead.
Abhi Jain
Good evening, sir. Am I audible?
Alay J Shah
Yes, we can hear you.
Abhi Jain
Yeah. So a couple of questions, sir. One is, I discussed the last-time on the con-call also. What are the plans on listing on NSE? Because last-time you said that in the 4th-quarter of FY ’25, you would plan to do that, but since we have past that, so we wanted to understand that.
Alay J Shah
Yeah, so that plan is already the — so for NS listing, we need to have a minimum INR10 crores of paid-up capital, which we will be eligible by giving this bonus share. So once the bonus shares are issued, our authorized capital will be to INR11.44 crores. And after that, we will be applying to NSP for the listing.
Abhi Jain
Okay. Thanks. Sir, second question was, obviously you’ve covered in your presentation and in your opening remarks also that for the current situation of the US tariffs is moving and it is nobody can assertain right now what will happen. But I just wanted to understand that internally, have you come up with a mitigation — risk mitigation plan?
Are you thinking of de-risking? Are you thinking of reducing your reliance on US in terms of revenue? Because domestically that the demand that is there and all the other competitors of yours who are more focused on domestic market, I mean the demand is there and you might have also been seeing it and witnessing it.
So there are a lot of options available in terms of derisking from US. So just wanted to understand from your perspective, what are you doing?
Alay J Shah
Yeah. So I mean we have you have our own strategy, suppose after 90 days, if there are tariffs from export of transformers from India to US, I would not like to go much in detail, but I mean, we are very confident that we will — our business will not be that much affected with those tariffs.
I mean, we are very well-placed in terms of our product, our quality, our service with our customers. And also the North American sales is only like less than 20% of our total revenue. So is all other countries and domestic market. So there will not be any significant impact.
Abhi Jain
All right. Thank you, sir. Final question, sir, given that the outlook for the industry is pretty strong and everyone in the industry is currently seeing more demand than supply and obviously you have also indicated something to the tune of same. And you have also indicated that as and when it is necessary, you will disclose to the shareholders in terms of our expansion plan. But I just wanted to understand that since you’re already achieving your capacity utilization before time, what is the probabilistic capacity expansion that you’re looking in the next 12 to 18 months?
Currently you are at 7,500. So how do you see it ramping-up in the next 12 to 18 months? Just a glide part would be helpful.
Alay J Shah
So we have still not finalized a concrete plan, but we are already working on the expansion that how we would like to do it till what capacity we want to do it and what is the maximum rating which we would like to have with this new capacity. Everything is going on in detail and we are also working on the budgeting, what will be the cost, what will be the land area, which will be required and all those things.
Once everything gets finalized and once we are ready to start the expansion project, we will definitely come back to all our shareholders and give presentation with complete detail.
Abhi Jain
Thank you so much, sir. I like your candle and honesty. Just wanted to tell you that if we can have these calls every quarter, that would be helpful rather than having it after six months of.
Alay J Shah
Yeah. Thank you. We’ll keep in mind here. Thank you.
Abhi Jain
Thank you so much.
Operator
Thank you. A request to all participants, please restrict yourselves to two questions. If you have any more questions, you may rejoin the queue. And the next question comes from the line of Ninad from Aditya Birilla Money. Please go-ahead.
Alay J Shah
Hi, I’ll yes, can you speak a bit loudly?
Ninad Sarpotdar
Yes, is it better now?
Alay J Shah
Yes, good.
Ninad Sarpotdar
Yeah. So I wanted to ask the first question regarding the TAM, the addressable market, like you discussed in previous con-calls, for taking a hypothetical numbers, for 1 gigawatt of solar energy, you need 1 gigawatt Of transformation power. And am I correct? Is that the right ratio?
Alay J Shah
Yes, that is the right ratio.
Ninad Sarpotdar
And your product is only installed at the generation point. Ideally for transformation, it’s at the generation point and as well as the end-consumer — consumption point. So if you put up a 1 gigawatt solar energy per se, so you’ll need 2 gigawatts of transformation power. Is my understanding correct? So your time is half because your product is put at a generation point.
Alay J Shah
No, I actually — I don’t understand your question. Technically what you are trying to say, but what I can explain to you is that our transformers are used for generating voltage of — and they are stepping up the voltage from the solar panel, which are like 800 volts or 700 volts to 33 volt. Okay. And those volts are into the grid. So against the 1 gigawatts of generation, the total capacity of transform required is 1 gigawatts.
Ninad Sarpotdar
Okay. So that’s for only stepping up the power, right?
Alay J Shah
Correct, yes.
Ninad Sarpotdar
And for stepping down also, you need transformers like on the opposite end, right?
Alay J Shah
Yes. Yes, but that is at the consumer level or at the substation level. Distribution level or substation level? Yeah. So the product you don’t —
Ninad Sarpotdar
Yeah, you are not. Understood. Understood. And sir, second question that since now US is focused on more on to conventional power and they have shifted their focus from renewable development or growth. Do you see any demand fluctuations from that market or how is the export scenario looking for US?
Alay J Shah
No, right now, the US market is very, very robust and there is lot of demand in all segments. And we are not specific to any one segment for our export business. So we cater to all kind of transformers.
Ninad Sarpotdar
Okay. But your 60% sell is from inverted duty transformers, right?
Alay J Shah
That is for local business.
Ninad Sarpotdar
Okay, got it. Yeah, that’s all from my side. Thank you so much.
Operator
Thank you. The next question comes from the line of Mahesh Bendre from LIC Mutual Fund. Please go-ahead. Mahesh, please go-ahead with your question. Not quite. Please speak a little louder.
Mahesh Bendre
Am I audible now? Yes. Hi, sir. Thank you so much for the opportunity. Sir, I just wanted to understand the opportunity for us in terms of a step-up transfer transformer requirement in domestic market and export market. What kind of inquiry flows you are witnessing right now, if we are to look for next 12 to 18 months, what kind of opportunity is going to come on our way?
Alay J Shah
No, so demand is very strong in both the domestic market as well as for export market. And we are flooded with inquiries and we have at present a very good order position, orders on-hand. So I don’t see any downfall in the demand in coming in near-future?
Mahesh Bendre
In terms of — I mean, do you see a strong demand in domestic market or is it both domestic and export side, we are witnessing the same.
Alay J Shah
No, we are witnessing the same very strong demand in both domestic as well as in export market.
Mahesh Bendre
Yeah, because what we are currently witnessing is in the transmission side, there is huge demand for transformers across 400 KV. So when we look at the distribution transformer, is it the solar is the only driver or is it some other capex that is coming up on distribution side that will drive the growth?
Alay J Shah
So locally, we don’t supply any distribution transformer. We only supply locally the solar IDT transformers and wind transformers and some power transformers station.
Mahesh Bendre
Okay, sure. Thank you so much, sir.
Operator
Thank you. Thank you. The next question comes from the line of Jain from Marcellus Investment Managers. Please go-ahead.
Samyak Jain
Thank you for the opportunity. My first question is, so if I recall our discussion in-quarter two’s con-call, so you had mentioned that you will be — you will be finalizing the capex plan or expansion plans by Jan ’25. So just wanted to understand if we have so strong demand visibility, why haven’t like what are the reasons that plants are still under discussion stage?
So just wanted to know your thoughts on that
Operator
Sorry to interrupt sir, you are not quite audible.
Alay J Shah
Hello
Operator
Yes, sir, there’s a little bit of disturbance at your end.
Alay J Shah
Actually there is no disturbance. I’ll start once again. We are already working on you know the all the datas and drawings and you know what kind of capacity we want to increase, what will be the cost, what kind of land which we will be requiring for this new capex. We are going a bit slow because we are bit conservative.
We want to make sure that any expansion we do has to be manageable and sustainable and — but the plan is already going on and at the right moment, we will make a formal announcement.
Samyak Jain
Got it. Sir, just a follow-up. So I believe once the plan is finalized, it will take a year’s time for the capacity to go-live. So don’t — do you foresee any loss of revenue or loss of orders due to any delay in finalizing the investment plans? Is there a case? Is there a chance of any loss on that front?
Alay J Shah
No, I don’t think so because once the plant is ready, much before that, we will be start marketing for that particular plant and acquire the orders. So I don’t think there will be any loss of any orders.
Samyak Jain
Understood. And a follow-up to your previous participants question, so you mentioned that for your expansion plans, you are also considering are going for a higher rating transformers. So does that mean that you are going for higher KVR transformer? So just wanted to understand a bit more about what’s the plan on that front?
Alay J Shah
Yeah. So again, it is not finalized, but we are considering higher MBA and higher PV class of this answer.
Samyak Jain
All right. Thank you so much.
Operator
Thank you. Thank you. The next question comes from the line of Sunil Jain from Nirmal Bank Securities Private Limited. Please go-ahead.
Sunil Jain
Yeah. Am I audible, sir?
Alay J Shah
Yes yeah.
Sunil Jain
Just confirm, once you decide on the expansion and put up start making this implementation, how much time it will take for first production to come
Operator
Hello, sir, yeah, not quite audible.
Alay J Shah
Yeah, it will take anywhere between 12 months-to 18 months-to complete the project and start the production and since you had done recently expansion, so land is already there or you need to acquire additional land? No, we already have a land. We have a 70 meters of lot and hardly 40% is utilized so-far.
So we have an ample land for further expansion.
Sunil Jain
Yeah. And said in other utilities like connectivity to grid and all will be available. Yeah, that is already available. Okay, okay. Fine. And this order book, can you quantify, is it possible how much is the order book or no?
Alay J Shah
So at present, I think our order book is close to INR400 crores.
Sunil Jain
Okay. Great, sir. Thank you very much
Operator
You. Thank you. The next question comes from the line of Prolin Nandu from Public Alternatives. Please go-ahead.
Prolin Nandu
Yeah. Mr Shah, thank you for taking my question. Couple of questions from my side. On the state-of-the industry, right, while you are thinking of capacity expansion, a lot of your peers have already announced capacity and I was looking at, let’s say, some of the top-10 players are expanding capacity in next three or three years by almost 50%, right?
So do you see a condition in the market where there is an oversupply and there could be some pricing power? Could you help us understand you know that why a Lot of players are expanding capacity and you are also probably thinking of doing it. So how — how — I mean, is there a high probability of oversupply in the market in, let’s say, next couple of years? And could that lead to some sort of a high competitive intensity and pricing erosion in the market.
Alay J Shah
So I mean, you know, we were ahead of all our competitors. We have already done our first expansion and started production in-full swing. What we are talking right now is the second phase of expansion where all our competitors are still doing their first phase of expansion. Yes, everybody is expanding, so there will be a you know huge capacity coming in the market in next two to three years.
But at the same time, the government data shows that there will be a huge demand for the transformers also because there will be very huge demand for the power and government is doing their best to meet this power demand. So it’s very difficult to say, but there will be a lot of production.
Prolin Nandu
Okay, understood, sir. Sir, my second question is that one of your peers have gone for backward integration in terms of lamination of CRGO, right? So is it — is it something we are also probably thinking to do and if not, we are fine with our vendors who are doing it for us. Can you help us understand what could be the — I mean, when you will think about backward integration on this aspect?
And is it critical to for you to probably move into higher KVA, is this a backward integration one of the important things that needs to be done?
Alay J Shah
So personally, I feel that this backwards integration is not required at all because there are enough suppliers of you know, I’m very close to our city,. So — and we are able to get — we never face any shortage or any of the problems of lamination from any of them. So personally, I feel that we should concentrate on our customer and not it raw-material and in every company is in-house, where our model is only to manufacture transformer and get everything from outside.
Prolin Nandu
Understood. And can I ask one more question, sir, is that okay with you?
Alay J Shah
Yeah, good.
Prolin Nandu
Yeah. So sir, in the export market, right, where some of your transformers also go for the export market and probably US is one of the key markets that you also highlighted to the previous participants question. Could you help us understand that in US market, what could be the share of transformers which are coming from, let’s say, China?
And because of these tariff issues, do you see an opportunity for some of the Indian players to probably gain market-share in US
Operator
Sorry to interrupt, sir, you’re not audible at all
Alay J Shah
Hello,
Operator
Yes, sir, please go-ahead.
Alay J Shah
Yeah, so as far as US market is concerned you know there are no Chinese transformers going into the US market because there are tariffs on that product since last so many years. But there are other countries which are exporting transformers to US market. And of course, there are lot of opportunities over there.
Prolin Nandu
Okay, understood, sir. Thank you. That’s it from my side.
Operator
Thank you. The next question comes from the line of Subramani from Arihant Capital. Please go-ahead.
Balasubramanian
Good evening, sir. Congratulations for good set of numbers. Sir, you mentioned about North-America sales at less than 20% of revenue. I have seen the presentations like could you please share that exports take-up for this five continents, America, Europe, Middle-East, Africa and Russia for FY ’25.
Alay J Shah
Yeah. So I don’t understand your question.
Balasubramanian
Sir, for exports, we are supplying to five continents, America, Europe, Middle-East, Africa and Asia. And like if you could share approximate exports breakup for these countries — for these continents?
Alay J Shah
I cannot give you, you know, a precise number, but at least I can say that North-America is about 20% of our total export and the rest is around 80%, mainly Middle-East and North Africa.
Balasubramanian
Got it, sir. Sir, on that capex trend, I’m looking at the historical data. It took the first 18 years to achieve 1,000 NBA to 4,000 MVA and from 4,000 MA to 7,500 MBA, it took only six, seven years. So based on the historical capex air capacity expansion, so whether we can able to take another 3,000 to 4,000 additional next three, four years? Is that a right assumptions we can look at?
Alay J Shah
Yeah, there is a possibility.
Balasubramanian
Yeah. Thank you, sir. That’s it.
Operator
Thank you. The next question comes from the line of Shah from Stallion Asset. Please go-ahead.
Arpit Shah
Hello. Hello. Yeah, congratulations. You’ve just done a fantastic job executing such a large number of transformers. Just wanted to understand — just wanted to understand how sustainable is this number INR20 crores on a quarterly basis or you think this number has been led up by in anticipation of a tariff to be raised and leading to higher orders in the last 15 days of the month.
So just wanted to understand how sustainable is the INR220 crore revenue number going ahead?
Alay J Shah
Sure. So first of all, I mean the tariff issue started only from first week of April and we cannot have pool of numbers in 96% of tariffs in last year. So that is the wrong assumption on your side. But I mean, if you look at our track-record, I mean since last 11 quarters, we have been performing very consistently as far as our margins are concerned.
And I’m sure that we’ll continue to do that. That will be our goal to maintain this profitability.
Arpit Shah
Got it. So you’ve continued to surprise us with 28% margins now has come up about 31%. So how should we look at this number going on? Should it continue to go higher or this is the number that you will be looking at a sustainable run-rate?
Alay J Shah
Are you talking about the level?
Arpit Shah
Yes, sir. Yes, EBITDA margins, EBITDA margins.
Alay J Shah
Like I said, we will try our best to maintain this, you know, or maybe even improve it, why not?
Arpit Shah
Got it. And you will be looking to double the capacity or you’ll be looking to announce it in a month or so.
Alay J Shah
Like I said, we are still working on it. At the right moment, we will give you all the details.
Arpit Shah
And what is the aspiration that you’re looking at, what kind of ambition you are looking at in terms of numbers to build-in? How big do you think in terms of what kind of PAT targets you have, maybe, let’s crores PAT number means by what you are expecting?
Alay J Shah
So again, it depends on the complete project viability. We are working on numbers. And once we finalize that, okay, this is the capacity which we want to increase and this is the capex which we want to incur for this increase in capacity, we will give you all the numbers and what will be the revenue from that and what will be the PAT? Sir, I was Write-down very difficult to say.
Arpit Shah
Sir, I was just trying to understand one thing perfect. Just one just one in here, just one question, just one question. Just trying to understand one thing, sir, that Abnak CapEx so it’s only INR30 crores the last-time we spent capex. Even if we double capacity and assuming you go wrong, okay, you lose probably 1/4 of profit. This is other top of loss is why so conservative in capacity addition? Just trying to understand.
Alay J Shah
So like I said, I mean, I said this earlier also that any expansion has to be manageable and sustainable. And you know why are we doing the best EBITDA — why our company is having the best EBITDA margin in the industry among all our peers. So we are doing something which you know something extraordinary, which we would like to maintain it.
Arpit Shah
Right, right. So competition cannot come in basically that So easily in our products, even if assuming there is a market out there, we are not like even though we are not increasing capacity very fast, we don’t — we are not scared that some other competition will come and take our market a bit.
Alay J Shah
We are increasing capacity fast, like I mean, we did increase our capacity from 4,000 MDA to 7,500 MDA and that was only in this year. So further expansion, we will be doing it. But again, like I said, we are working in detail with all the numbers and we’ll inform you at the right moment.
Arpit Shah
Got it, sir. Good luck, sir. Good luck. So nice to. Thank you.
Operator
Thank you. The next question comes from the line of Aman Suni from Invest Analytics Advisory LLP. Please go-ahead. Please be a little louder, Aman.
Aman Soni
Thank you. Hello. Is it right now?
Alay J Shah
Yes, I can hear you.
Aman Soni
Yes. Good evening to a decent set of numbers. Just in with earlier participants only, like you are saying demand is very decent, particularly in domestic market. And in your opening remarks, you also mentioned exports are also having a decent demand. So my question is like in this quarter, we are operating at fuller utilization. So do you see for rest of quarters, obviously, for all the quarters in ’26, are we going to maintain this kind of utilization levels?
Alay J Shah
Yes, that’s the plan.
Aman Soni
And is there any scope of — yes, sir, please.
Alay J Shah
Yes. So for this coming year, year ’25, ’26, we are targeting around INR750 crores in sales in top-line. But in this quarter, we did around INR230 crore revenue. So going by that, should not get me close to INR950 full-year. So if you look at historically, you know the first-quarter for transfer industry is always the low sales and then gradually every quarter the sales increases and Q4 is the maximum sales for all the companies for being a capital equipment.
So same — if you consider the same scenario for this coming year, I think we should be able to comfortably reach to 750 or more.
Aman Soni
Understood, interest, I think 20% kind of growth from our numbers, right? That’s what you are targeting.
Alay J Shah
Sorry, I cannot hear you. I did not hear you.
Aman Soni
That means 20% kind of growth we are targeting for next year, right?
Alay J Shah
Yeah. 20% 25%, yes.
Aman Soni
Understood. Understood. Understood. Okay, sir, all of my questions are answered. Thank you very much thank you.
Alay J Shah
Thank you.
Operator
Thank you. Thank you. The next question comes from the line of Ruchita from High Wealth. Please go-ahead.
Ruchita Ghadge
Hello, sir. Very good evening. So sir, first of all, I would like to understand on the export side of business. So during this year, what is the kind of revenue level that we have done on the export side and what are the products like what kind — where are we selling these transformers to? I understand it’s not the solar inverter duty ones.
So which other transformers are we selling there?
Alay J Shah
No, I think we have done an export of almost 44% of our total revenue in this year. And we supply all kind of transform. We export IDTs also for solar and then we supply distribution transformers also. So it’s a complete mix range of transformers which we export.
Ruchita Ghadge
And sir, would the realizations be different in domestic versus export because I’ve been seeing some data point of your export and it looks like on the export side of it, you make around 20 lakh 22 lakhs of realization versus domestic around INR6, INR7 lakhs. So there is like a steep difference. So just want to understand like how different is the product so I mean the domestic we supply the higher rating of transformers like 10 MBA, 15 MBA, 20 NBA, that is our major sales.
Alay J Shah
Therefore export, it is smaller ratings of transformers. So that is why you cannot compare the price. Transformer is a big area and very big spend and there are many, many different types and size and ratings of transformers. So if you cannot generalize the cost thing based on this.
Ruchita Ghadge
Okay. Understood. Understood. Understood. So just on core MD, I was just calculating so just trying to understand like why the difference was,. And sir, on the margin side, right, we are doing better than the industry. Is it mainly because the export portion for us is higher than what the industry is doing like around 10%, 20%?
Alay J Shah
Yes, so I have said this in past also that exports gives us better revenue compared to domestic. But at the same time, we run this company very efficiently with very less expense and that is how our margins are on higher side compared to our competitors.
Ruchita Ghadge
Understood. Understood, sir. Thank you so much.
Operator
Thank you. The next question comes from the line of Shantanu Srivastav from SMIFS Limited. Please go-ahead.
Shantanu Srivastav
Hi, I think my rather — my name has been wrongly said. My name is Shantana. So the question that I have is, and I’m from this benefit. So the question that I have is when I’m not what I’m looking at is balance sheet, so basically I’m seeing a huge jump-in receivables disproportionate to the revenue increase.
So can you please explain as to why this receivable position went up so high? Can you
Alay J Shah
Please repeat the question? I could barely hear you.
Shantanu Srivastav
Okay, can you hear me now, sir? Yeah, okay, sir. I was saying that when I looked at your balance sheet, the FY ’25 trade receivables portion is very-high compared to FY ’24. There has been very good growth in revenues, but the growth in receivables is disproportionate to that. Very-high.
So can you please explain as to why this happened?
Alay J Shah
Yeah. So there are two, three reasons. One is that when the revenue increases, you need more working capital, the majority of the sales which has come in last quarter and we have a the terms of healthy with all our customers with 180 days of payout. And we can encash this LC if we need the fund, but we don’t do it and we wait for 180 days to receive the fund, which we get it with interest.
Because we have surplus one, we don’t encash the LC. So that is why the number look bigger, but actually it is not an outstanding. We are running interest out of that. So I mean, in essence, has your receivable increased compared to historical terms so like with customer, I have a payment term of 100 — I mean LC with payment term of 180 days, where 30 days the interest is to the seller’s account, but the rest is with the buyer’s account.
So technically, I can enter the LC within 30 days and get my money, but I don’t do that because we have surplus funds. So we wait till 180 days and get the interest and then receive the money. But on-balance sheet, it looks as it’s receivable. Okay. Okay.
Shantanu Srivastav
And how much percentage of receivables this tax, which is healthy tax?
Alay J Shah
I think the domestic market is entire — almost entirely is against the.
Shantanu Srivastav
Okay. Domestic Q2 against healthy.
Alay J Shah
Okay. Not the export. Even export also with healthy or with advanced payment, I mean there are various terms with various customers.
Shantanu Srivastav
Yeah. So on an aggregate, how much percentage would be LC roughly ballpark figure, sir?
Alay J Shah
Ballpark figure would be about 70%, 75%. And
Shantanu Srivastav
Is this your normal strength? Have you already know?
Operator
Those were your two questions. I would request you to rejoin the queue. Thank you. The next question comes from the line of Janab Bora from Saltaro Investment Advisors. Please go-ahead.
Unidentified Participant
Hello, am I audible? Yes., please. Yeah. Congratulations on a great set of results. My question was similar to what Shantani was asking. So I’ll just ask my first question regarding that. So on an overall basis, how much of the trade receivables is is what I would want to
Unidentified Participant
Know first and then I’ll ask my second question.
Alay J Shah
I think I already answered that. It’s almost like 70% to 75% ballpark figure.
Unidentified Participant
Okay. And with the share of domestic increasing, as you have said, continuing on the same question with the domestic share increasing, do you see, A, increase in this LC and trade receivables days increasing as well as the margins kind of getting deflated because the share of domestic would increase.
So what are a sustainable level of margins and receivables that you are trying to look at if you could share that it will be great. Like I said, this receivable is not actually a receivable.
Alay J Shah
I mean I already explained earlier. So it doesn’t matter. I mean, you know, if we need money, we can get it any day, but our cash-flow situation is very good and we are totally a debt-free company. We have surplus funds. So we just keep our LP with us and on the due debt after 180 days, we get the payment with interest and that is another income for us.
Unidentified Participant
So none of your receivables are more than a year. Is that a fair assumption?
Alay J Shah
Yes, or you have.
Unidentified Participant
What is your receivables for more than a year?
Alay J Shah
No, no, no.
Unidentified Participant
Okay. Okay. And what about the margins because of the fact that domestic shares is going to continue to improve given as I said, the government trust and solar IDT and all that, as you said is that going to lead to a different margin and given how the export situation is overall as well as the deglobalization trend starts kicking-in, what is trying to do to continue to maintain those kind of margins and deal with the competition?
Because I think in terms of competition as well, one of your competitors has announced a 15,000 MVA capacity increase out of which about half of it is going to be for IBT transformers. So if you could provide some color about that, it would be great because your journey so-far has been great, but coming into the future with so many variables at hand and as you’ve said that you continue to do extraordinary things. If you could talk two to three years out, what are the things that you’re going to do to be good?
Alay J Shah
So we are going to continue to be innovative and we are going to be continue to be efficient in managing the company and keeping our overheads low, margin will remain as it is, margin will remain as it is because we will be growing and our overheads will continue to be on lower side.
So even if there is a price pressure, there will be a different margin which we will be able to have.
Unidentified Participant
So — but do you see price pressure actually happening in terms of?
Operator
Those were your two questions. I would request you to rejoin the queue. Thank you. The next question comes from the line of Ashitosh Garud from Ambit Well PMS. Please go-ahead.
Unidentified Participant
Hello. Yes, please go-ahead. So please be a little louder. So on the kind of capacities which have come and given the fact that the demand outlook is so good domestically and internationally and even you are confident from a margin perspective. So are you expecting just a 20% growth from a revenue say in the — for the next year because wouldn’t there be a case of much faster growth given the kind of scenario you just mentioned.
Alay J Shah
Yeah. So I mean, 20%, 20% 25% is a conservative figure which I’m telling and if you look at our track-record, we have always been projection what we have said at the beginning of the year. So we do our best to even grow much more than what we have said.
Unidentified Participant
Okay, okay. And any particular reason why from a tariff perspective, transformers are being exempted, exempted any particular reason for that.
Alay J Shah
Sorry, can you repeat the question please? Any particular reason why the transformers have been exempted from US tariff list dancing? I have no idea, but it’s good for us right?
Unidentified Participant
No, absolutely, absolutely. Yeah. So any thoughts around if at all that would happen in future? I mean, just wanted to get a sense around that because although they are not included in the list, but will it be a case where you see that it could very well happen with a 10%, 20% tariff come in coming in? That is what from an industry sense which I wanted to understand.
Alay J Shah
So frankly, I don’t think that will happen and you know, I mean we have been talking to all our customers and they are also very confident [Ends Abruptly].