Simplex Castings Ltd (NSE: SIMPLEXCAS) Q3 2026 Earnings Call dated Feb. 10, 2026
Corporate Participants:
Ketan M. Shah — Chairman & Executive Director
Avinash Hariharno — Chief Financial Officer
Analysts:
Bhavin Dedhia — Analyst
Praneeth Bommisetti — Analyst
Shrut Bhayani — Analyst
Dhaval — Analyst
Khozem Jabalpurwala — Analyst
Charchit Maloo — Analyst
Ayush Divecha — Analyst
Presentation:
Ayush Divecha — Analyst
Yeah. I’ll just introduce the management. Good evening ladies and gentlemen. On the behalf of Aryan’s Capital Markets and Merlin Capital Advisors we welcome you to the earnings conference call of Simplex Castings Ltd. From the management present on the call we have Mr. Ketan Shah, Promoter and Chairman of Simplex and Mr. Avina Shariono, Chief Financial Officer. We must remind you that the discussion on today’s call may include certain forward looking statements and be viewed in conjunction with the risk that the company faces. Over to you Mr. Ketan for your opening remarks and Mr. Ravinash for financial highlights followed by a Q and A with our investors.
Thank you. And over to you sir.
Ketan M. Shah — Chairman & Executive Director
Thank you. Good evening everyone and thank you for joining us for. 26 earnings second half of FY26. With strong business visibility, a diversified order pipeline and strategic momentum across all our key verticals. The company has delivered a solid performance over the last nine months of this year driven by very good demand across our traditional sectors like steel railway, EPC. And we have also entered the defense. Sector in a very small while the third quarter saw relatively moderate revenue growth and margins. We would like to emphasize that this was not demandless. The quarters was conscious effort from us basically to take strategic initiative, capacity readiness, internal process cleansing and preparatory work for scaling our railway and other areas of working so that for in future these are more it will contribute to our performance in the coming periods. That being said, we remain confident of achieving our stated guidelines that we have we had given earlier. Overall if we even will look at our compared to past year it is much better.
Execution momentum there that has remained consistent. And strong and we have taken our. Best efforts to announce on on the. Exchange as and when they occur. Our current quarterly order book is above. 100 crores providing healthy revenue visibility. During the quarter we have received high. Valued orders and some trial orders from. Companies marquee customers of ours like bhl, Mezgoudoc, Gaza Engineering and others which highlight our technical capabilities and customer positioning across complex engineering segment. A key milestone during this quarter was successful completion of 50 crores 50.15 crores fundraise which enables us to reenter and scale up our legacy on the railway. Bogies business both fabricated and casted. The proceeds from this issue will be. Utilized in a structured manner. About 50% will be allocated towards capital. Expenses for expansion of sheds and fabrication facilities and for the railway bogies and. The balance 50% towards incremental working capital requirements which are required looking at the increased turnover that we are expecting. This enables us to restate and scale the business with the right capacity processes and cost structure in place. Looking ahead and supported by operating leverage. Execution, normalization and strong order pipeline, our. Long term vision has been consistently shared with our investors and we continue to execute on it with disciplined prudence and clear focus on value creation. For the financial part, I would request Mr. Avinash to give a few.
Ayush Divecha — Analyst
Avinaji, you’ll have to unmute yourself.
Avinash Hariharno — Chief Financial Officer
Am I audible right now? Along with the growth initiatives, we have closed the nine monthly figures at around 150 crores and with the bottom line of 15 crores which was the last year’s profit, we remain firmly focused on financial discipline and cash flow strengthening. We have begun working on deleveraging balance sheets, tightening work working capital management and fast receivable realization. Our impanelement with the RXIL platforms, invoicemart platforms under the Treads platform is an important step in the discretion in this direction allowing us to improve cash flow conversion in the lower cost of funds without incremental leverages.
Questions and Answers:
Ayush Divecha
Okay, with this I will open the floor for Q and A for any investors who want to ask any questions. Please note while asking first raise your hand and second when you get a chance please introduce yourself and the firm that you represent. So using the raise hand feature I think we can start with the Q and A. Participants who want to ask a question may raise your hand. We wait for a minute for the queue to line up and then we’ll start with the Q and A. We will take the first question from. Mr. Bhavan Delia
Bhavin Dedhia
hi sir, good afternoon.
Ketan M. Shah
Good afternoon.
Bhavin Dedhia
Congratulations on a decent set of numbers. So just wanted to color on your order book breakup if you could provide of 100 crores and also if you can throw some light on the new order win from Mazda Doc and Gaja Gaja Engineering. So what kind of orders are there? Are they defense orders or is it for the shipbuilding costumes that we have?
Ketan M. Shah
If I have to break it up broadly in the steel plant is still the major contributor. It’s about Almost close to 50% is. Steel plant booking that we have and. A good 30% including Gaza engineering is from the fabrication side of power industry. We are doing equipments and other fabricated. Structures for for BHL and Gaza is. Also in the in tune with in. Line with that area and where 20%. I would say is all distributed between gearbox manufacturers to pump manufacturers to to machine tool industry. McGaun Dock was something shipbuilding which will come which will be which Will be seeing more of it in the shipbuilding industry. This was a restart of an old thing that we were doing old order. And this is about about 5 to 6%.
Bhavin Dedhia
Okay. So this is not defense related.
Ketan M. Shah
It is for the naval ship. It is for the naval ship. Okay. Yes. See most of the. If you look at any of the shipyards, the maximum work that they’re doing is for Indian coast guard and navy.
Bhavin Dedhia
Okay. Okay. So our railway orders have still not started coming in.
Ketan M. Shah
Got a trial order as we have told you. We have told you about the fabricated gogies. The trial order that we have percentage. It might not look nice, but it’s a trial order. So the quantities are less and that is on the first and the second two types of bogies. We already going in for trials railways on the casted bogey. The investment that we have done earlier, that should also bring fruit now because the final, final signature from rds. So that is all that is, that is what we are waiting for. Rest. Everything is done.
Assessment and everything is done. We just waiting for the clearance from them so that we can go ahead and start booking orders for the. The casted bogies. Also the casted fade Bois.
Bhavin Dedhia
So that will come in FY27. The casted ones.
Ketan M. Shah
2627. Yes.
Bhavin Dedhia
Okay. And so. So my understanding was the steel plant you already have 50% order book from the steel industry. But as you were mentioning that lot of the steel companies have already gone into have announced a lot of capex for facilities and they are into. They were into the designing stage currently. So those orders should start flowing in by end of this quarter or start of next quarter or will it take some more time?
Ketan M. Shah
You’ll be happy to know because this is a. Are talking about the first nine months. We have already booked an order. I told you last time that you know the most of the capex those that have been decided, especially PSUs to OEM OEM will go into design phase and start ordering. So the first order of about 12.71, about 30, not crores for one of the steel plants. Public sector sales steel plants through Thyssen Crow. We just got it in this month. Okay, so that process has started, sir. And I think we should be announcing very soon the others that are in pipeline very soon.
Okay. So once their engineering is over, they go for procurement and this is the right time 26, 27. I expect that you know, we should be the amount of offers that we have submitted, even If I take 20, 30%, it is sizable business that will come from OEMs. For the CSUs and the other plants.
Bhavin Dedhia
So one of. So I noticed that our EBITDA margins. Were a bit soft this quarter but. The pat margins were maintained at 10% so that there’s another income of 1.6 crore during this quarter and it’s other normal income. So can we expect to. So what, what is the other income and can we expect it to be recurring going ahead?
Avinash Hariharno
No, no, no. That is not, that is not of a recurring nature sir. That we have. That was an income from gratuity fund. So this is one time arrangement only.
Ketan M. Shah
But the margins slightly have been lower because of the product mix. But, but in this, this quarter we at least I expect the margins to get back to where it was where they were.
Bhavin Dedhia
And we were talking about improvement as well.
Ketan M. Shah
Yes.
Avinash Hariharno
Yeah. This will 26, 27 with a little bit of choosy that the moment we get everything operational and we become a little choosy I am 100% sure that you know the margins, the trajectory of the margins also will improve. Okay. See railways, I’m expecting good, you know, better margins. Once the casted book is then they start again. The margin improvement would be that there is a sufficient scope and improvement of margin there also.
Bhavin Dedhia
Okay. Okay. So just one thing from my end. Can you throw some light how Q4 is. We are halfway through Q4 right now and what will be the moment? What is the momentum of order execution in Q4 as well as Q1 of the coming year? If you can throw some light.
Avinash Hariharno
It. Will be better than last, last year’s quarter, Final quarter, sir. We are geared up and we hope so. And it will remain. Yes, we are working on it.
Bhavin Dedhia
Okay. Okay sir, I’ll fall back in queue.
Ketan M. Shah
Thank you.
Ayush Divecha
Yeah, thank you. Next question will take some. Mr. Praneet. Praneet, you can ask a question.
Praneeth Bommisetti
Yeah. Thank you for the opportunity. So first I’m new to the company. This disclaimer so I just wanted to understand. In 2018, 2019 we had a revenue of 22230 odd crores. Could you explain how was the product mix changed and why is it so over now? And why did the revenue, why are the revenues different scale back.
Avinash Hariharno
In 201819 sir, we had one of the railway dedicated unit at Urla which was continuously doing railway products and some of the high end products like Transom we were exporting to GE and EMD at that moment. So that was the reason why the top line has declined. We had to hive off in 2019 that unit which was continuously doing railway business.
Praneeth Bommisetti
But why did the company have to. Hive up that particular business
Avinash Hariharno
because of some banking challenges. We got the sanction but the reimbursement couldn’t take place throughout the year.
Praneeth Bommisetti
And this was the capex or working capital.
Avinash Hariharno
Working capital. We were geared up having 300 odd crores of orders in hand. So we had started working on it. But we could not get the enhanced working capital limits at that moment of time.
Praneeth Bommisetti
But do you expect such problems to come in the future also? I understand we need a fundraise. But what is going to be different from that time?
Avinash Hariharno
Not with this type of situation sir, where all the sectors are booming and we are having your support also. Apart. From that, not relying on the banking channels right now. So we don’t expect any
Ketan M. Shah
the freight. Wagons, freight wagon bogies, the carted bogies that we talked about. We have already set up the line here also. And that will, that is something that we were doing there for last 15, 17 years to 2019. So we going to, we’ll be restarting that back in our unit here and that should be adding, you know, at least 40, 50 crores in the top line.
Praneeth Bommisetti
Okay, so you expect to restart that particular division?
Ketan M. Shah
We’ve already, we have taken whatever investment was to be done. It’s already done. It’s completely completed. First and second phase of RDSO that is also over. They, they come there for an approval of facilities. Once they approve it, I’m only waiting for the signature. As I told you earlier, once it is signed then we can go for go and start getting orders.
Praneeth Bommisetti
Understood. So and that particular division, was that plant sold off or was it different?
Ketan M. Shah
Yes, we gave it to Texmaco who was one of our customers. It was just 20, 25 kilometers from here. And that top line there, we used to be making anything between 110 to 130 crores.
Praneeth Bommisetti
But going forward you don’t expect any working capital challenges at this point.
Ketan M. Shah
We have done very well in the last three years, five years and the whole focus has been to never get into the same situation again.
Praneeth Bommisetti
Understood. And was there a change, a strategic change of product mix as a result or do you think because the overall dynamics of the industry changed, is it going to get better?
Ketan M. Shah
Both sir. What we are looking and what we were doing is much different. And we have to keep reinventing because we are into contractual manufacturing. So we need to go up the value chain which is a constant pressure on us. And for that the capex that we are suggesting is only for that, so that we keep moving up the value chain. So whether, whether we like it or not, this is the kind of business and we have to move. And at the moment, all the key verticals are doing very well. All the key verticals and the visibility for the next four to five months, four to five years seems to be very, very good.
Whether I look at steel, whether I look at railways, whether I look at power sector, whether I look machine tool, whether I look at defense. See, you have, you have in a company a manufacturing facility which is very, very suitable for customized making of equipment. So we have very, very flexible. We have number of machine tools, lot of CNC machine tools, lot of conventional machine tools. And all of them are big and small flexible. So that is why we are able to cater to this wide range of industries which we are doing earlier also. But we are moving up the chain.
Whether it is defense, we have been doing things, we are moving up the change. Whether it’s railways, we are doing things, but we are moving up the chain.
Praneeth Bommisetti
If you don’t examples of what exactly mean up the chain, what was we.
Ketan M. Shah
Just say, for example, in. In steel plants, if I start, we were giving sittard car assemblies. So from Sitakas and Pellet cars assemblies, we started giving other items also other associated the sprockets, the turning system, the guiding system and all those kind of things which was being imported. So we got into that. So everywhere, everywhere like machine tools, we were giving only as cast castings. Now we have been able to give completely machined casting from us. Well, castings also we are giving totally machine castings now. Soon we will be doing some assembly for some of one or two of our customers.
Praneeth Bommisetti
And is this measure to specifically grow revenues or breadth margins or is it both?
Ketan M. Shah
It differentiates us. First of all, when you look at a foundry having these kind of machine tools and these kind of CNC machine tools available with them, that also differentiates. Now you go, you look at it a little more deeper. Now I am also having a fabrication shop, I have got an assembly shop. I can make equipment. So I am able to assemble and give him sub assemblies or even complete product. So it differentiates me further. Each and every level that we add, we become less of a foundry, more of a solution to the customer.
Praneeth Bommisetti
Understood. And so do you see a large growth opportunity exports compared to domestically? Or is exports not a suitable avenue for such large castings?
Ketan M. Shah
So we have been consistently exporting for. The last 10 years. But mostly the policy of simplex has been very simple. Export the items which you have a proven track record in India. So what we have done Is we have exported a lot of steel plant. Equipment and railway because these were the two major, major items that we were making. Other than that we did a lot of pumps and valves. So opportunity wise consistently many, many years, many, many years. Over years it was anything between 20. To 30% of our revenues was from exports. Now steel plant world over has died out. It’s only domestically which is where it is growing. So I am not expecting too much other than from Russia and Ukraine. So there it will go. Railways, we were out in 2019. We are going back. So I’m expecting that to also grow.
Praneeth Bommisetti
Understood. And Russia and Ukraine because there has been a lot of activity in the steel man.
Ketan M. Shah
So because basically if you look at the kind of steel plants that we have, it’s Bilay where we are based or Bokaro, these are all Russian design. So we are very familiar with the.
Shrut Bhayani
Kind of equipment that they make and. We are doing that consistently for the Indian steel plants. So the moment the war is over in Russia and Ukraine they go back. On the verge of becoming normal again. So those were the first things that they’ll be ordering. And just before the war started we. Had orders worth about 23 or 24 crores from Ukraine.
Praneeth Bommisetti
Okay.
Ketan M. Shah
So we have a presence there. Presence. The people know us in Ukraine and in Russian steel plants. And we are very confident that these two areas will be like India and China and would go for integrated steel plants. You know, the way it’s in India rest would be a different. I mean if you look at the Western world there will be a different kind of steel making compared to India, China and Russia.
Praneeth Bommisetti
So for the Russian designs did we have a technical tie up previously or was it just us renovating slowly later?
Ketan M. Shah
No, it’s always custom built. The designs have come to the steel plants from the, from the Russians that the steel plants are ordering from us.
Praneeth Bommisetti
So basically a Russian consultancy gave the designs to the domestic steel foundry. And those things were given to you?
Ketan M. Shah
Absolutely. I mean if you look at Pokaro it’s. It was under collaboration with Russian government, Russian companies. Similar.
Praneeth Bommisetti
So understood. So steel making is still a huge industry in Russia and Ukraine at this point of time and you expect it to be as soon as the war subsides or whatever happens
Ketan M. Shah
and very similar. To Indians kind of steel making. And those are the equipments that we make.
Praneeth Bommisetti
Got it. So as I understand steel making for Russia and Ukraine is going to be the green shoot. Will be the war ending. And for railways already this it slowly as the production comes back on capacity, it Will grow. But do you what are the other particular verticals you see in terms of growing substantially? Because I understand that you’ve cashed or.
Ketan M. Shah
For Indian market, sir.
Praneeth Bommisetti
Indian domestic market.
Ketan M. Shah
Domestic market. I have seen a tremendous growth in power sector which I see consistently for the next four to five years. We have been the best supplier in. 99 and 2003 for BHL Hyderabad and. Unfortunately India had not gone in for too much of coal based power, thermal based power plant. Now again there’s a huge load, huge. Load on PHL and lnt, both of us, both of these companies we are working with and it is on fabricated equipments, castings, pump castings, pump fabricated pumps, fabricated you know, separator bodies and for the mill, for the coal polarizing mill, various things and including the structures. This business, if value turns me, it. Is so huge that there is, I. Can, I can if I scale. If we scale up, which we will be slowly but there is no limit to the scale up that is, that is possible in these, in the power sector also.
Praneeth Bommisetti
Is it because we need a lot. More plants that’s the reason there’s so much scale up or what is the reason specifically?
Ketan M. Shah
It’s basically too many plants have been ordered. Atani has ordered 16 thermal power plants. Okay. NTPC has ordered 22 and leave us adding to it. You know some state electricity boards have also gone in and ordered. They want to get these commissioned by. 2030 because after 2030 that the decision. Is there that there will be no. More thermal power plants in India. So for the next six years it’s. A huge, huge market. Each, each thermal power plant can keep us busy for our work, only for our work for all the four years. And there are so many.
Praneeth Bommisetti
So one power plant is enough for.
Avinash Hariharno
Keeping us busy for that. Taking our capacity for four years basically.
Ketan M. Shah
Then also we won’t be in a position to do everything because in a power plant normally if you look at the fabricate component, it’s about 5 lakh tons. And the capacity that we are building now would be about thousand odd tons a month. So it’s 12,000 tons. So four years, five years is 48,45,000 and each power plant would need 5 lakhs to 6 lakh tons of structures. Yeah. And leaving aside the equipment also.
Praneeth Bommisetti
So how is it serviced right now at this point of time in the country? Is it all imported?
Ketan M. Shah
It is at the moment. There are plenty of people who are working with BHL and LNT like us. But there has been a, there has. Been some request from power Ministry to PMO that please allow the Chinese because the sufficient capacity is not available in India. I am very hopeful that it will. Be turned down because. Because that goes against the basic principle of Mr. Modi of make in India.
Praneeth Bommisetti
But how so? Okay, I understand philosophically that we do not want Chinese. But apart from that, despite Chinese coming in, we’ll still have plenty of demand left over for us, right?
Ketan M. Shah
Yes. Yes.
Praneeth Bommisetti
So why. Just one last question. Why are we not being more aggressive in terms of adding capacity then? Is it because of the teething issues we’ll have?
Ketan M. Shah
We’re starting at the moment. We are going ahead and adding capacity in the fabrication unit we have. And then we are looking at other areas also. Like you know, we have an offer from Arcel, Vital Nippon Steel. They are putting up a steel plant in Visakhapatnam that for four years, five. Years, whatever you make, whatever fabrication and. Equipment that you make, we will buy. Only thing is, we are still considering that whether we should be having a unit in Vishakhapatnam next to them, next to where the plant is coming. So that is an area that we feel will be more comfortable. You know, if there’s a buyback arrangement for five years. So that is also we are seriously. Considering
Praneeth Bommisetti
what could be the factors that. Could be hindering us from putting up a plant. Is it just the capital requirements, sir?
Ketan M. Shah
No, actually not only that, we need. To understand that how it should be managed. You know, the management bandwidth should be there and the financial bandwidth should be there. Capability and capacity can be added anytime. I mean, sir, it’ll take us maybe about six months to one year to get it operational. And the customer is saying that they will. They will have some clause where, you know, if they are not able to give orders also then they will pay us all those clauses. Kind of. They are inviting us there. So we are considering that very seriously, sir.
Praneeth Bommisetti
So in terms of transportability of these large castings.
Ayush Divecha
I’m so sorry. We’ll give other investors a chance to ask a question.
Praneeth Bommisetti
Just this last question. Sorry. The transportability of these castings, is it possible? Let’s say if Mittel was willing to take our. Let’s say our capacities from our existing units, is it possible to transfer these large castings there or no?
Ketan M. Shah
Yes. Yes. The best part about the foundry, the. Castings is that in the value terms. Transport is a very minimal cost. But in case of light structures, transport. Becomes a cost which is considered and normally procured locally.
Praneeth Bommisetti
So in, let’s say in the steel plant, how. What percentage would be heavy structures versus light structures.
Ketan M. Shah
I would say about 70% would be heavy and 30% would be light.
Praneeth Bommisetti
So we can still cater the 70% that would be required then from here also. Okay, thank you so much for your answers. I’ll just get back in queue.
Ayush Divecha
Yeah, thank you. We’ll take the next question from Mr. Shrut.
Shrut Bhayani
Hello. Yes, sir.
Ayush Divecha
Yes, you’re on mute.
Shrut Bhayani
Yes. Hi sir. So sir, you have enrolled on the invoicemart and you’ve shifted to receivable Receivables back funding now. So sir, how much improvement do we. Expect in this working capital cycle and. The finance costs over the next few quarters?
Ayush Divecha
Avinaji, you’re on mute.
Avinash Hariharno
Am I audible right now?
Ayush Divecha
Yes. Perfect.
Avinash Hariharno
Hello, Shoji. We have done this. The enrollment for BHL which we are starting to supply and we are expecting we’ll be able to scale up. But right now we have not tried it. So anything is not calculatively done. But we’ll be able to manage the cash flows very smoothly. As far as the platforms communication is given to us, we’ll have to check. We have not yet done anything on it on this thing.
Shrut Bhayani
Okay. Also, you have outlined the targeted 40 to 50% CAGR over the next three years with a sustained 10% margin. So could you break this down in terms of like which segments will will be the biggest contributor? Railways, defense or infrastructure?
Avinash Hariharno
Sir, railways will be the biggest. Because we are adding railway products in both the units in casting also we are adding casted railway bogies. And in 20, 27, 28, we’ll be adding fabricated bogie component. These will make the company switch over from a jobbing to a product line maybe for 50% of the top line. And that’s the reason why we are seeing or visualizing these these type of revenues and cagres over the 23 years time. Railway will be the biggest component.
Shrut Bhayani
Yes. Okay. And on the defense and infrastructure castings we see a normal normal growth or do we see some better growth? How is it going to be?
Avinash Hariharno
Defense and shipbuilding? Yes, there is growth, but shipbuilding, as Sara said, we. We rightly have re entered it and we have been doing that business. But yes, it will not be in the range more than 10% and there the margins are quite high. We are definitely looking for that angle also. But railway, yes, that will be a repetitive business. So we are more inclined on that.
Shrut Bhayani
So we are much more confident for the railway sector.
Avinash Hariharno
Yes,
Ketan M. Shah
steel, railways, power, that will be the backbone. And as rightly said by Mr. Vinash, 10 to 15% would be defense Shipbuilding because of higher, higher profit margins.
Shrut Bhayani
Okay, so the last question. Simplex is the world’s largest manufacturer of Coke oven doors and is also a top player in like several niche products. So how defensible are these leadership positions and what barriers to entry protect our market share?
Ketan M. Shah
Two things like you know, two things. If you look at any of these tenders from government e marketplaces and from normal customers credentials are very important in our, in our kind of industry, in our kind of business.
So most of the things would have a prerequisite that you what are your credentials for it and how do you justify your credentials? Fortunately for us it’s an old company and in most of the products we have the credentials the largest being the largest market share, largest Coke on manufacturer, Coke on casting door manufacturer in the world has not come by chance. It’s basically because we entered into a collaboration with the Japanese company which was the world leader in that technology. And that’s what a technical collaboration and a technical you know exchange and they we are working with the same designs and we have improved on that design in the last from 1987 till 2026.
It’s almost like 40 years and we have supplied to cocoons all over the world. So any OEM which is making a cocoan also knows that Simplex casting can design doors and give the Japanese technology doors which are absolutely state of art. We call them the zero emission air cooled doors. So they are very very good for not letting even any gas escape out of any harmful gas escape out. So we have a good, what I should say a lot of visibility because of that product. Simplex has. Simplex casting has got a lot of visibility because of that product.
So we are, I am not worried about protecting my share in cocoa indoors but other niche product. There are other companies also and we have to be as I told earlier that we are giving them a basket now instead of just center cars and pellet cars you give us the loading unloading station, you give us this other areas for the guide rails and those kind of things. So one stop shop we are trying to become for those niche areas.
Shrut Bhayani
Go on it sir. Thank you.
Ayush Divecha
And thank you. We’ll take the next question from Mr. Dhawal.
Dhaval
Am I audible sir?
Avinash Hariharno
Yeah,
Dhaval
I just wanted to understand few things from Ketanji sir. We are hearing a lot of capex science from various industries, from government, from everybody. It’s today’s newspaper also says that you know listed companies capacity at all 13 years high. We understand that from Kittanji. We just want to understand since this opportunity is very big and you know we are entering a new cycle again. Just wanted your views. I understand you have this vision of coming to 500 crores but looking at the opportunity size today that India is offering, don’t we see ourselves even you know, going well above that also? Just, just as a big thought that you know, what, what can probably stop us or what, what, what can we do better than you know we can do? Okay, we have done more than 500 crores also.
I just want your views on this. Looking at this opportunity.
Ketan M. Shah
You’re perfectly right. Those are the questions that are, those are the questions that we keep thinking about a lot of times because you know the kind of what we have built over the last 40, 50 years, it’s just being waiting for getting capitalized. If you look at, if you look at any company in Europe, we could be the manufacturing partner for making of anything that they are wanting. And we have done that for, consistently for 10, 12 years for a German company, the German company called Claudius Peter which was into cement plant equipment. They were using Simplex castings as their manufacturing base for the equipment that they were making for cement plants all over the world, not for India alone.
So those kind of synergies are available to be exploited. If you look at pump castings, if you look at compressor castings, if you look at valve castings, there would be companies in Europe who are looking for the complete pump to be manufactured and. Sold under their brand name and be. Exported to maybe to Malaysia, maybe to Indonesia, maybe to Brazil, wherever. So those kind of possibilities we are yet to work on. So if you are asking me this. I am telling you that you know, including machine tool industry, including railway, including. Steel plant equipment, the trip, there’s tremendous possibilities. Once you have a beautiful manufacturing hub manufacturing facility. China is also winning only because they. Have state of art factories. This is what we are also dreaming that they know with this Capex we should be making a better equipment shop, the fabrication shop and also the foundry. To become state of art and then. Look at those kind of products where we can have a much more value add. Value add will come with design. So we are also thinking of looking. At opportunities to take over some company. Which is into product and then make. A product for ourselves with the design component is also with us. So yes, there are chances. There are enough possibilities available. Let us just first we just come. Out two years, three years. Last three years have been good to. Us to just come out for the. Next couple of years. Consciously we have taken a decision just to Focus on what we are doing, what we are planning after two, two and a half years. Well these things are all streamlined. Yes. Simplex 3.0 will be slightly different. It will be looking at worldview not at a domestic view the way we looking at it now.
Shrut Bhayani
Understood. Just to you know go on with this. We saw budget May. There is 10,000 crore allocated to MSME also. So how does it help us in. In this. In this space or what do we really we get from this funds that are allocated. Do we have something for us from the government?
Ketan M. Shah
I have not really got into that kind of detail. They said it was for cluster. Cluster development, the ways they have in China. That’s what I understood that you know a city is there where they make only postly in the second cities there but they make toys somewhere. Somewhere. So these kind of things that they are wanting to. What happens to Bhilai the cluster? Because the. The asset base that we have is pretty huge. It cannot be duplicated so easily. So if anything happens in this taken as a cluster of making, you know. So we are 160, 170 companies here which are making equipment. So for steel plant and power plant. If that kind of cluster gets developed. Maybe there will be something we will be. We should be looking forward to. Previously there was a time maybe about five, seven, ten years back we used to say that you know anybody who wants to build any fertilizer refinery, steel plant, cement plant has to. Has to come to Bhilai. I don’t know whether we are still that cluster and whether government is going to come for that kind of a. Thing but I am not. That much. I do not have that kind of depth to know what exactly the 10,000 crore is for.
Shrut Bhayani
All right. We hope that you know you get these details so that you know we can. You can intimate us about how it will be beneficial to us.
Ketan M. Shah
Absolutely. Yeah.
Dhaval
And one final question is on the gas to. I remember we had one order from Moscow doc earlier and we were somewhere also anticipating few more orders to be lined up for this financial year or even this quarter. Want your update on that? And you know now since we are shifting gears I want to understand how this next year plans out for us post the fundraiser is done. What. What are the new triggers that we see in our business?
Ketan M. Shah
MDL was the only one that we have got. Three are in pipeline. Three such. All three offers are in pipeline. I am also hoping that in the coming few months, couple of months we should be getting at least two of them. And at the moment I you Know. At the cost of repetition I’m saying. For the next one year I just. Want to stabilize in the areas that we had talked about like even railway freight, freight car book, you know, railway casted bogeys, railway fabricated bogeys. We the whole purpose, the whole thought process behind was that you know we should not be too dependent on steel alone. We should have some other product line where. Which are repetitive in nature. So that is why. And railways. We were doing it and we had the experience of doing it and we had. We are doing a very good job. 130, 140 crores of revenue from just railways was very good.
So we want to go back to that. Fortunately for us, our power sector which was alive till 2005, 2006 again that has come back. So at the cost of reputation for the next one and a half two years we just want to concentrate on steel sector opportunities on the railway sector, opportunity on the power sector opportunity. And keep working on the defence and the shipbuilding side as 10 to 15%. Not. I’m not thinking too many things. Yes, there is something on the. We are looking at, you know to get into aluminum foundry. Look at. We are looking at possibility of taking over some aluminum foundry.
Maybe it could be high pressure die casting. We are in talks with some consultants in Germany. Those things let us see how. When it. When they come out we’ll talk about that. At the moment it is not the target. If it’s viable, feasible then we’ll talk about it.
Dhaval
Just one, one thing to clarify of the total fundraise that we’re doing. How much are we. How much are we planning to deploy for the working capital and what is the current working capital that we have in the business?
Avinash Hariharno
We have a CC limit from Kotak of 34 crores. And from the fundraise we are targeting 25 crores towards capex and 25 towards working capital needs.
Dhaval
Okay, understood. All right. Thank you so much and all the best. Ketanji. We are seeing some exciting news and announcements from your side. We hope that we. We have a good year this year.
Ketan M. Shah
There will be plenty of news coming up because I told you most of the orders will get placed now. 26, 27. So it will be a constant thing. That is what we hope for. That is what we expect, sir. So we’ll be in touch. And I thank you all for your insightful questions and joining us today. Any. Any other questions?
Ayush Divecha
Yeah, thanks. We’ll take the next question from Mr. K. Yeah lot lots of echo from your side.
Avinash Hariharno
My audio is up
Ketan M. Shah
yeah, yeah.
Khozem Jabalpurwala
So just a follow up question to the earlier on the new fundraise that we have done. So we are talking about using 25 crores out of that for capex. So what would be the asset and that we can expect from that? What would be Khuddhal Sahib asset turnover. From the 25 crore capex that we. Intend to do from the new fundraiser
Ketan M. Shah
I would say at least three to four times.
Khozem Jabalpurwala
And so just a very broad level question actually for all the products and the segments that we cater to like say Railways, defense shipbuilding and steel, what would be the. Is it possible to quantify the opportunity size over there and if possible the you know, the margin profile for that for each individual segment.
Ketan M. Shah
So steel we will try to restrict it to 40, 50%. We can always go for the opportunity in steel could be almost 100%. But we would like to quantify. We will be restricting ourselves so that we go up the value, you know, we take, we become a little choosy. We will take better profitable orders and do not go for all kinds of orders. But there is a definite possibility in the power sector and railway sector where we are working very diligently now and that is what we are focusing now for long term. So railway sector you can kind of put a figure of almost like 20, 25%. It should grow in 26, 27 from 0 almost and power sector from say about 10, 15% to almost like 20, 30%.
And that is all. I mean if I want to quantify, quantifying the kind of things that are available, it is too much. It’s just too much, sir. So we will, we will take what we can chew because there is, there are consequential damages also liquidated damages also we will choose only what we can, you know, the execution part, the delivery part also we have to see. But ordering order book is not an issue, sir.
Khozem Jabalpurwala
Sure. Was there any provision for the new labor code? I mean I was not able to kind of individually look at that number.
Avinash Hariharno
Yeah, we have done it sir. And that is very, very minuscule to mother. It will make not an impact. Oh yeah,
Khozem Jabalpurwala
thanks. Yeah, that’s it.
Ayush Divecha
Thank you. We’ll take the Next question from Mr. Churchit.
Charchit Maloo
Hi sir. Am I audible?
Ketan M. Shah
Yeah, yeah.
Charchit Maloo
Sir, I have a question on our Dhanush project. So like what kind of revenue do we have on from the Dhanush and what kind of margins do we enjoy in this product.
Ketan M. Shah
Dhanush? We are still working as far as just machining. So one of the assemblies that they have given us Revenues are in the terms is very low at the moment. But we are trying to build on it. We are trying to build on it. In couple of years time it should be in the range of maybe 10 to 15 crores.
Charchit Maloo
Okay so like earlier you gave the. Guidance of like 200 plus crores in F26. So like till now we have done 150. So are we intact on that and like what kind of revenue like we can expect by the in Q4?
Avinash Hariharno
We I think you can. We. We have done last year q4 67 process and it will be better than that.
Charchit Maloo
And with the Same EBITDA margin of 15.
Avinash Hariharno
Yeah, yeah.
Charchit Maloo
Okay. So thank.
Ayush Divecha
You, thank you. We’ll take a follow up question from Mr. Pel.
Praneeth Bommisetti
Yeah, thank you for the follow up. So I was wondering in terms of the margins I understand that you want to be more choosy and become a solution provider. So but what margin percentage are you expecting as a management to choose or let’s say Bidford, what margins can we forecast in terms of going forward? What is that kind of business?
Ketan M. Shah
Say for example like in our market we make customized products. The margin percentage when I do Coke one doors is much higher compared to when I do other castings because there is an element of design involved and there is some guarantees involved. So there is a higher margin to that and there are fewer players because Simplex is one of those kind of monopolistic player there. So I get better margins say that you know I’ll be choosy. I’ll be looking at first filling up my order book with those kind of orders where I get a slightly better margin compared to being in the normal marketplace.
And you know we’re competing with so many other companies like you know if you look at most of the peers use they have gone for gem portal. So I am looking at more where there is a credential oriented and where we have better credentials than others and the competition is between a fewer players.
Praneeth Bommisetti
Understood. But you already have let’s say a specific idea in mind on what the composition you want as personally for the company. So just wondering in terms of with the ideal composition you want what are the margins you would like to received from the.
Ketan M. Shah
I am targeting at least couple of percentage more than this financial year.
Praneeth Bommisetti
Are you talking in terms of pat or are you talking like. I understand overall it can be the same thing. But yeah,
Ketan M. Shah
EBITDA
Praneeth Bommisetti
got it. And one more question regarding the putting up the capacities. How long do you think what is the timeline of putting up these new capacities?
Ketan M. Shah
So for the for the casted bogies we have already done that. It’s already in place now for the fabricated bogies, this 25, what we are looking at should take us about six to eight months. Sir.
Praneeth Bommisetti
And one last question regarding working capital limit. I understand 25 crores is there but the thing is we have very long working capital cycles, right? Especially because it takes so long to build it in terms of inventory and all of that I was wondering how are we planning on continuing our liquidity Especially with the growth we want 50% CAGR and with the existing recycle we’ll need a lot more working capital than the 25 itself. So what is the plan? Especially because you already face been through this once. How is the management prepared and what is it doing? Specifically
Ketan M. Shah
what we have done sir, the selection of products that we discussed was railway and power sector. That’s. That was also based on the. What will be One of the questions earlier was what did you learn from the mistakes of 2019? So these, these are the things while we were selecting the products, charting our vision for 2.6, 2.0. Railways are consistently based or that’s been our experience. That’s been, that’s been going on even now in the last six years that we followed up. The day they receive within 15 days the payment comes. So this 40, 50, 60, whatever we are doing for the casted or the fabricated bogies in the next financial year the payment cycle is much much more shorter, much much shorter compared to when I look at the steel industry which is like 30 to 45 days.
Second
Praneeth Bommisetti
power sector.
Ketan M. Shah
Yeah, I’m coming to that power sector. As Mr. Avinash said that he has not tried. Number one, we are part of MSME. So most of the PSUs have to give us in 45 days. But with INCRED we expect that to be even shorter by 15 days. So within a month because you know, finally the bill has to go up to the billing section. They have to put it on the computer. Then only incredible. Start working from there. So the 15, 20 days period of transport and receiving and all that. So we expect that we will be shortening that cycle by another 15 days to one month.
Praneeth Bommisetti
Sorry, but I’m not familiar with what INCRED is.
Avinash Hariharno
Without Incred or Invoice Smart or RXIL. Or M1H
Ketan M. Shah
normally for power sector it’s two months, two and a half months.
Praneeth Bommisetti
Okay.
Ketan M. Shah
With this facility of incred for BHL available, what Mr. Avinash was saying, we should be in a position to shorten it by at least 15, 20 days, maybe, maybe a little more.
Praneeth Bommisetti
And for the inventory is going to be similar to all of them. Right.
Ketan M. Shah
Both the inventories also the products have been selected which are very fast moving compared to the other equipments that we will keep making and we’ll keep continuing these two items specifically power sector and railways have a very small gestation time in the small time for that they are with us, they’re fast moving.
Praneeth Bommisetti
So even timeline of production is also. Shorter with the new products
Ketan M. Shah
for these two products. Yes.
Praneeth Bommisetti
Okay, so got it. That’s it from my side. Thank you so much.
Ketan M. Shah
But that is a very interesting question. But good that you know, you could bring it out that you know why these two products that Simplex has selected and why are we saying that for the next couple of years, one, at least one and a half, two years, we want to focus on that. It is, it has been brought down, brought up so that we could explain our position and our thinking on that for everybody.
Praneeth Bommisetti
Sorry, just follow up question regarding that. So in terms of working capital, what working capital are we going to expect from going forward from 26, 27 the number of days, I mean.
Avinash Hariharno
Experiencing it, sir, we’ll try to bring it down to maybe 30 days or 45 days within 40 inventory for these.
Ketan M. Shah
Products that definitely 30, 45. But the balance would be.
Avinash Hariharno
We are, we are coming out from a job into 50 at least repetitive one. Not only balance will be there, balance will be there.
Ketan M. Shah
Yeah.
Praneeth Bommisetti
But the blended level for the next two years, what do you expect?
Ketan M. Shah
My expectation would be on outer side, three months. Okay, 90 days basically my expectation.
Praneeth Bommisetti
Yeah, understood. So but the thing is a quarter’s revenue will be stuck in working capital, right. Will we have enough growth, enough cash sufficient to grow that 50% is still my little doubt on that part of it. Okay, thank you.
Ayush Divecha
Thank you. Dear participants, that marks our last question for the Q and A session. I would like to pass it on to Mr. Ketan for any closing comments or closing remarks for our investors and what’s Next in Simplex 2.0.
Ketan M. Shah
As I always say that, you know, talking to people like all the investors, it always is a very insightful conversation and I also learn every time a few things and that is why I love discussing at meeting and connecting with all of you. So I thank you very, very thank you from really it was nearly nice conversation and with an improving balance sheet we are very sure in the what we just discussed, that railway business and power business and with the capex plans that we have with the things that we are thinking I am very, very sure.
We are very that, you know, we will only rise from here. We’ll become better and better in all fronts. That is what I am hoping, planning and wishing. Thank you so much.
Ayush Divecha
Thank you to the management of Simplex for being a part with us on a Tuesday evening. Thank you to the participants for taking out the time and attending our conference call. You may all now disconnect your lines. Thank you so much and see you in the next quarter.
Ketan M. Shah
Thank you so much.
Ayush Divecha
Goodbye.