Steelcast Ltd (NSE: STEELCAS) Q1 2026 Earnings Call dated Aug. 01, 2025
Corporate Participants:
Unidentified Speaker
Chetan M. Tamboli — Chairman, Managing Director and Chief Executive Officer
Rushil Tamboli — Whole-Time Director
Subhash Sharma — Executive Director and Chief Financial Officer
Umesh V Bhatt — Co. Secretary & Compl. Officer
Analysts:
Unidentified Participant
Arpit Mundra — Analyst
Naman Chandak — Analyst
CA Kaushal Sharma — Analyst
Sahil Rohit Sanghvi — Analyst
Harshil Solanki — Analyst
Sahil Doshi — Analyst
Dhiral Shah — Analyst
Presentation:
operator
Ladies and gentlemen, please stay connected. The call will be starting shortly.
operator
Sam Sa. Sam.
operator
Foreign. Ladies and gentlemen, good day and welcome to Q1FY26 Steelcars Limited Conference Call hosted by Philip Capital Private Client Group. As a reminder, all participant lines will be in lesson 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. Dheeral Shah from Philip Capital PCG desk. Thank you. And over to you sir.
Dhiral Shah — Analyst
Yeah. Thanks Bhavya. Good evening all. On behalf of Philip Capital Private Client Group I welcome you all to the Q1FY26 earning conference caller Silkas Limited. Today from the management we have Mr. Chetan Tamboli, the chairman and the managing director. Mr. Rushil Tamboli, full time director. Mr. Subarma, executive director and CFO. And Mr. Umesh Bhat, the company secretary. I now hand over the conference to Mr. Arpit from EY.
Dhiral Shah — Analyst
Over to you Arpit.
Arpit Mundra — Analyst
Thank you. Good evening everyone. We welcome you all to SteelCash Limited earnings call to discuss the Q1 FY26 financial results. Today from the management side we have with us Mr. Chetan Tamboli, Chairman and Managing Director. Mr. Rushil Tamboli, Whole Time Director. Mr. Subhash Sharma, Executive Director and Chief Financial Officer. And Mr. Umesh Bhatt, Company Secretary. Please note a copy of all the disclosures is available in the investor section of the website as well as on the stock exchange. Further detail safe harbor statement is given on page number 25 of the Investor presentation of the company.
Please note that anything said on this call which reflect the outlook for the future or which could be constructed as a future looking forward looking statement must be reviewed in conjunction with the risk that company faces. Now I shall hand over the call to Mr. Chetan Tamboli for his opening remarks. Over to you sir. Thank you.
Chetan M. Tamboli — Chairman, Managing Director and Chief Executive Officer
Yeah. Thank you. Arpit Bhai. Good evening and a very warm welcome to all of you for Sealcast earnings conference call to discuss company’s performance during the quarter ended June 30th, 2025. We concluded our AGM and board meeting yesterday and uploaded the financial results as well as investor presentation on the stock exchange as well as on our company’s website. I believe you would have got a chance to go through the same. And I have joined today with my colleagues. Rushil Tamboli, Mr. Subhash Sharma, Mr. Umesh Pat. Now let me take you to the highlights of the financial performance for the current quarter Q1 versus Q1FY25.
During Q1FY26 the revenue from operation was 106.7 crore 38% growth compared to corresponding quarter 77.4 crores in Q1FY25. EBITDA during the quarter was at rupees 30 crore or 44% growth from 20.8 crore in Q1FY25 EBITDA margin was at 28.1% and increase of 120 basis points from 26.9% in Q1FY25. PBT during the quarter was at 26.7% a 52% growth from 17.5 crore in Q1FY25. This translated to PBT margin of 25% an increase of 235 basis points from 22.6% in Q1FY25 PAT during the quarter was at rupees 19.9 crore or 54% growth from rupees 12.9 crore in Q1FY25 PAT margin remained at 18.6% and increase of 190 basis points from 16.7% in Q1FY25.
During Q 1FY26 we maintained a healthy and well balanced revenue mix with domestic sales contributing 46% and exports for the remaining 54%. We witnessed a strong rebound in revenue across both domestic and export markets driven by continued customer inventory replacement and fresh orders for new components. This recovery not only reinforces the underlying demand trend but also reflects the strength and resilience of our business model enabling us to deliver profitable growth. Looking ahead, we anticipate the mining and earthworm sectors to lead the momentum in FY26 with construction railroad industries expected to show meaningful improvement. We currently have over three dozen new components under development in the GET segment as well as other segments which will be a key growth driver this year.
Additionally, I’m happy to inform all that we expect to ship out initial orders of defense sector for exports, not for domestic markets where we have already developed and shared product sample with prospective customer. As part of our cost optimization and sustainability initiative, we plan to commission a 2.4 megawatt hybrid power plant under the group captive more by the end of this year. The initiative is projected to yield annual energy cost savings in the range of 3.5 to 4 crores. Our order book remains robust with strong traction across all addressable segments. In response to rising demand, our capacity utilization improved significantly reaching 53% in Q1, up from 32% in Q1 FY25.
With global supply chain challenges continuing to ease, we expect further tailwinds supporting our growth. Together with our OEM’s China plus one strategy. We also anticipate margins to remain stable at current levels, reflecting our disciplined cost management and operational efficiency. Overall, the company is well positioned to capitalize on emerging opportunities, meeting the growing market demand. Interest from both customers and investors remains strong and we are encouraged by the continued confidence in our strategy and execution. Since April 1, there has been uncertainty in the world economy due to imposition of tariffs by the US Government, which has to some extent slowed down decision making by customers and other geopolitical issues.
However, in spite of the above, we will have a growth of 18 to 20% this year compared to last financial year FY25. With that, I would now like to open the floor for questions. Moderator, may I request you to please you to take it from here and thank you all very much.
Questions and Answers:
operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on their touch tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. 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 is from the line of Naman Chandak, an individual investor. Please go ahead.
Naman Chandak
Hello sir, am I audible?
operator
Yes please.
Naman Chandak
I just wanted to ask at 25% tariff rates how are we positioned to pass on these tariffs to our customer in use? Is it a full pass on or do we have first taken from our side as well? Do you have any other question or this is the only question. This is the only question. Thank you for a good set of numbers.
Chetan M. Tamboli
Okay thank you Namanbai and for everybody else I think across India there looks like a lot of anxiety about this additional tariffs being put by the US government since yesterday.
Now all our sales whether it is domestic or exports are all on X works basis. Our customers take the goods from steel cast to the point of use irrespective of the geography. So any additional tariffs whatever may be there has to be paid by the customer. So that is a so as such there’s no effect on us on additional tariffs. I would also like to share the initial analysis done by us. We have two sets of product groups under HSN codes. One is chapter 7325 and other is chapter 8487. In chapter 1725. The total duties for China for us is 89% while that of India is only 38% which includes the 25% kept.
Yes, was applied yesterday on the other product group adjacent code 87 84.87. The total duty on Chinese products is 79% while for India it is 29%. So both the groups together there is a difference of substantial difference of more than half. So we believe there should not be any effect going forward on our businesses. Thank you, Naman Bhai.
operator
As there is no response from the current participant, we will move to the next question. Thank you. Before we take the next question, we would like to remind participants to press star and one to ask a question. The next question is from the line of Kaushal Sharma from Equinox Capital Ventures Private Limited. Please go ahead.
CA Kaushal Sharma
Hi sir, very good evening. Am I audible?
operator
Yes, please.
CA Kaushal Sharma
Yeah. So my question is on your margin side, right? Earlier we are having around 31% margin. Now you can see if the Steven excluding other income. So what was the key reason of dropping this margin? And quarter on quarter it has increased from 2, 6 weeks. Hello.
Chetan M. Tamboli
Yeah, see we had this 32.8% EBITDA margins in Q4 of FY25. Now we have also explained this in the past that about 10 crores have come from foreign exchange. Lower input cost and also cost optimization. So this all happened during the financial year FY25. If you see the quarters before, maybe six, seven quarters we were, we were anywhere from 29 to 28 to 29%. So we have been consistent with whatever the business model we have. And that 32.8% in Q4 FY25 was an aberration because of extraordinary gains because of input prices, cost reductions, power savings and exchange rates.
But we expect for at least coming 2, 3 years to EBITDA levels to be sustained at this level at 28%, sir. No, sir, the 28 is. If you see 28.1% is the Q1 FY26 number.
CA Kaushal Sharma
Yeah, yeah. So sustainable margin you are saying is around 26%, right?
Chetan M. Tamboli
It should, it should be sustainable. Now if you go back to the earlier investor calls, we have said that the designed EBITDA what we target is about 21, 22% and then we end up getting another 4, 5% from different cost optimization measures. Lower input cost, power savings, some exchange rate gains. So if you see last seven, eight quarters, I think even more, maybe 10 quarters we have been managing around 35, 26% so hopefully we should be able to sustain this.
Chetan M. Tamboli
Yeah.
Chetan M. Tamboli
So 25 to 26% over the next year will be sustainable.
Chetan M. Tamboli
Yes.
Chetan M. Tamboli
And there is one point as well that earlier in the earlier presentation I can see that EBITDA margin is being shown in the presentation by excluding other income. Now we are now.
Chetan M. Tamboli
Yeah, but see, in our case the entire other income is from the income from operations only. We as TCAs don’t consider other income, you know, from any other source except the operation of the company. Let me explain you. The components of other income are. One is the interest we are earning on our free reserves. Now those three reserves have been generated from operations only. A, B Even the foreign exchange gains are now being considered part of other income. So now those gains have also come from income from operations. So we at Steel Cast consider EBITDA margins with respect to total income.
We don’t have any other dividend income or rent and incomes or any other dividend income from some other companies. It’s all operations of Steel Cast. Hence we consider total income as Steel Caste, including other income.
CA Kaushal Sharma
Sir, in the last presentation in Q4 Financial 24 we are showing EBITDA income.
Chetan M. Tamboli
So before it was like that, but then we realized that we have to put all this, all this is part of income from operations only or is it incidentally coming from our operations? And hence this other income has been added down on the top line which says income from operations as well as other income. And then we have total income.
CA Kaushal Sharma
Okay, so now on what the other income majorly contributing the Forex. That’s why we are including.
Chetan M. Tamboli
Correct sir. Yes, sir. Yes, sir. Yes.
CA Kaushal Sharma
Okay. Okay, sir, thank you very much for answering the question and best of luck.
Chetan M. Tamboli
Thank you. Thank you.
operator
Thank you.
operator
A reminder to the participants, you may.
operator
Press 1 to ask a question. The next question is from the line of Sahil Rohit Sangvi from Monarch Network Capital. Please go ahead.
Sahil Rohit Sanghvi
Yeah, thank you for the opportunity and congratulations sir, on a good set of numbers. If you can give some more understanding on the defense export related dispatch that you’re going to do this year, what component is it? And I mean what could be the scalability of this product? What is the prospect of this product? That is number one. My second, second question will be that if you can give me the volumes, the sales volumes for this quarter, that that is number two and number three. Number three. I’ll have to do a follow up after that after I get the volume number.
Subhash Sharma
See, the volume numbers are part of the investor presentation. But nevertheless I’ll give the volume numbers were for Q1 3618 tons. And to answer your other question about exports now, if you see historically our exports have been ranging from 45 to about 60% or so. This trend should continue even going forward for at least another three, four years. So while we get lot of traction from the export market, but we also don’t want to miss out the Indian market. So we will continue planning, you know, around 45, 50% domestic business and equivalent export business.
Sahil Rohit Sanghvi
Sorry, go ahead.
Chetan M. Tamboli
As far as scalability is concerned, some components have high volumes somewhere, medium volumes somewhere, some have low volumes. But you know, our capacity utilization has given by given on the exchanges from last year to this year we’ll do 47 to maybe 53% or so next year we’ll do about. We’ll do about 65, 66% in FY27, FY28, we plan to do about 84%. So. So this is the forward trends we have been working on and we are quite on track to achieve these numbers. And sometimes towards the end of 26, 2026, we will decide on new capacity additions because the throughput time required to put up new facilities about two years time.
So once we have very clear visibility on our FY28 numbers of about 80, 84% utilization, we will kickstart this new investments and increasing of additional capacities.
Sahil Rohit Sanghvi
Understood, sir. Understood. Sir, I correct me if I’m wrong but I heard that we are going to cater some defense related export order. Is that correct? Did you mention that in your opening remarks?
Chetan M. Tamboli
Yes, we have made a small about that. Yeah, yeah, yeah. We have made a small breakthrough in defense exports. I will not be able to share on this call about the exit application in the country. But in the month of April we supplied some prototypes. They went through field trials and the parts got approved. Now we are doing another lot which will ship by September and hopefully this should scale up, you know, in the coming months going forward.
Sahil Rohit Sanghvi
And would you be able to name what component is this or you want to avoid that?
Chetan M. Tamboli
You know that’s, that’s what I said that I don’t want to name the country and also the component and the application in this call. But maybe the later date we will see at an appropriate time. We will share this shorts and.
Sahil Rohit Sanghvi
No, no, thank you, thank you. Thank you so much and congratulation for that.
Sahil Rohit Sanghvi
Sir.
Sahil Rohit Sanghvi
Just one follow up on the volume thing. The quarter on quarter or the sequential decline. Is it just the seasonality 1q being a little bit soft for the sales volume or is there anything to read on that?
Chetan M. Tamboli
No, no. If you see historically over last 15, 20 years of numbers, our Q4, whether it’s domestic market or export market, the Q4 is always better. So when you see Q1 you1 would see A. Q1 would see A degrowth compared to the preceding quarter. But we will have a sustained performance in the second quarter of the current year and then a ramp up from third and fourth quarter. And that’s how we are seeing that compared to last financial year. We will have shortly 18, 20% growth over the previous year.
Sahil Rohit Sanghvi
Got it sir, got it. And you did mention that you have a few dozen of components under development. New components if you can throw some light on that. Which particular segment is this? And if you can.
Subhash Sharma
Yeah, these are all, these are all mix of, you know, five, six different industries and maybe seven, eight different customers. And that to going to about at least six to seven different countries. But so these are all part of our base industries like mining, earth moving construction, locomotives, ground engaging tools and a very little for defense. But so they are mix of all this. The mix of industries, the mix of customers and also six to seven countries. So net, net. This is exactly as per our strategy. Where we are wanting to increase our base, increase our base by way of end user industries, increasing our base by our customers and also different countries where we supply.
So as far as the overall strategy is concerned, we are on track and we’ll continue doing this increasing our base.
Sahil Rohit Sanghvi
Got it, Got it, got it. That’s, that’s, that’s commendable. And lastly, just a clarification. The 2.4 megawatt hybrid power plant that will get commissioned by December or March. Just want to clarify.
Chetan M. Tamboli
See it will get. It is designed to be commissioned on or before the 30th of March 26th. And this 2.4 megawatt, as I said earlier will give us some 3.5 to 4 crores of annual sales which will add directly to the bottom line. Also this will meet our increased volumes for next financial year. So, so that is the end. This is in line with our sustainability initiative also.
Sahil Rohit Sanghvi
Amazing sir. Amazing sir. Congratulations and all the best.
Sahil Rohit Sanghvi
Thank you sir. Thank you.
operator
Thank you. The next question is on the line of Mr. Dheeraja. Please go ahead.
Dhiral Shah
Yeah.
Dhiral Shah
Good afternoon sir. Thanks for the opportunity sir. I have two, three questions to ask. So first I will ask that what is our current order book as on date?
operator
Next question please.
Dhiral Shah
Sir, on the railroad side because in last, you know, call you mentioned that you know within 90 days there will be, you know, some, I would say approval that we will be receiving so what is the current status in that? Particularly the remaining component where we were not able to, you know, crack the approval, you know, process. So now where are we in terms of, you know, the overall approval? And regarding again on the defense side sir, how big that opportunity could be for us in terms of revenue? And lastly on the ground engagement side, what is the overall outlook? Sir, with this new component that we are adding up?
Chetan M. Tamboli
See one is the current order book as of 1st of August is about 80 crores. On the railroad side we don’t have any good news to share with you. We are continuously trying to see that one component. How do we, you know, pass the test? I think it will still take couple of more months. Regarding defense, this is just one small component of the whole thing. Maybe the revenue from this could be about 10 crores per year or so. But moment we start doing these volumes the opportunities are quite high. I don’t have any specific numbers to give you for additional opportunities at this point of time, but it is very encouraging.
And then regarding ground engaging tools, as per our plan from FY from the current year we will slowly keep increasing our sales to ground engaging tools and we want to reach about 5% of sales over the next 23 year period.
Dhiral Shah
Okay, got your point sir. Thank you so much.
Chetan M. Tamboli
Thank you. Thank you.
operator
Thank you. Participants. To ask a question you may press star and 1. The next question is from the line of Hershel Solanki from Equity Capital. Please go ahead.
Harshil Solanki
Hi team, good afternoon. One is from the annual report. So you have mentioned that you are trying to increase production of value added products and venture into advanced stage products or specialized area which only few global foundries can do. So if you can elaborate, what are you thinking and what can be the opportunity in this slide is the first question. Second question is last con call you mentioned that we are trying to achieve a 59% utilization this year but this time we have told 53%. So what is changing and why is not? Why are you revising your estimates on the utilization if you can highlight that point.
Yeah, these are my two questions.
Chetan M. Tamboli
Now I’ll just answer your first question on lower utilization. You know if you recollect my today’s earnings call siege that since since April, since the US government have started putting in this additional tariffs, decision making across the world means across all OEM or across bigger companies have slowed down, right? So with this obviously the utilization might go down a little bit. However, in spite of this slow decision making and other geopolitical issues, we will still grow 18, 20% more than compared to last year. So it’s because of this I have scaled down this from 57 to 53%.
Harshil Solanki
Got it. And so the first question was we are venturing into advanced stage products which is a specialized area.
Chetan M. Tamboli
Yeah. So these advanced stage products in, in our line it would, it would mean that. See so far we have been doing casting and machining. We are taking one step forward in doing sub assemblies also. Now this has just been started about six months back. The customer would give us additional few components which have to be assembled on our part. So those initiatives have started this. I don’t have exact numbers but very few people in the world in our line of business do this. We might be a few of them who have just started but going forward this will increase.
So only giving casting or just one value addition of finished machining. This is one more area of doing additional value added activities of assembling few components and then supplying a sub assembly together. So, so we have initiated this. Maybe, maybe over next few quarters we might come back that okay, some percentage of our sales we do as sub assemblies. But so this is initiative and that’s why the comment on the. In the annual report.
Harshil Solanki
Got it. So this will be higher margin I’m.
Chetan M. Tamboli
Assuming because obviously there’ll be, there’ll be some extra thing we should get. No, no, nothing is free in life. Okay.
Chetan M. Tamboli
And this will help us improve our relations with our customers further.
Chetan M. Tamboli
This will also improve relations. You increase your competitive scenario. Your. The. The business barrier also increases, you know. And this is also you can call part of de risking strategy, you know.
Harshil Solanki
Okay, thank you. Thank you.
operator
Thank you. Participants. To ask a question, you may press star and 1. Ladies and gentlemen, we will wait for a moment while the question queue assembles.
operator
If there are no questions, we can close the call.
Chetan M. Tamboli
All right.
operator
Hello. Yeah.
operator
Ladies and gentlemen, please go on, sir.
operator
So on behalf of Sealcast management, I want to thank each and everyone who are part of this earnings call and having participated in today’s call, thank you very much for your time and we appreciate your support and trust in us. We hope you were able to address most of your queries. In case of further queries you may reach out to our investor relation advisor, Ernst and Young and they will connect with you with us offline. Once again, I want to thank each and everyone who are on this call and thank you.
Chetan M. Tamboli
There’s one last question from Mr. Dheeraja. Okay, please go on sir.
Dhiral Shah
So is there any change in the cripit guidance, you know, based on the uncertain global outlook?
Chetan M. Tamboli
Now as far as we are concerned, we are quite confident that we should be on track to, to achieve the numbers. The capacity utilization numbers as we have projected maybe could be a difference of 3, 4%, you know, year or year but we should reach about 80% in FY28. And for that we will decide as we have said earlier, sometime towards the end of 2026 and with the China plus one strategy in place with all OEM customers across the world and moreover our duties are substantially lower, less than half than what of China is. As I said earlier on the investor on this earning call, we don’t see any change in our customer strategy or our strategy.
We should progressively do well over time.
Dhiral Shah
Okay, but again the CapEx that we have mentioned earlier for FY26 where we were looking to, you know, acquired a land and also debottle at some capacity. So that is on track, sir.
Chetan M. Tamboli
Yes, yes, absolutely we on track. Gujarat government is almost on the verge of allotting us this 100,000 square meters of land. Moreover, whatever CapEx we are envisaging for the current year mainly for debottle logging that will be, that is also in line. There is absolutely no change in our strategy or in our execution whatsoever.
Dhiral Shah
Okay, so but sir, since we are running at 53% utilization, so the bottom looking is it for the particular product you know, that we are looking for?
Chetan M. Tamboli
Yeah. See what happens is we on an average now make about 350 different parts and sometimes the volumes of some specific parts go high. So one option is to tell no to a customer that sorry, we don’t have capacity. But the other option is to you add that capacity and you cater to that demand. So these bottlenecks, you know, come up on and off and we, and we sought out that by doing additional investments for the bottlenecking. Okay.
Dhiral Shah
And is there any scope for revision, you know, revising our capacity utilization guidance? As of now we are guiding for 53% utilization. But let’s say after September or October, if you know the India gets lower duty compared to the current range. So is there any scope to revise the utilization guidance?
Chetan M. Tamboli
If he asked me personally, you know, all these turmoils, whether it is because of tariffs or whether it is geopolitics will all get sorted out in the next 2 3/4, life will be very good, the world will grow and we will forget this. These kind of times where you know, suddenly somebody throws us additional duties. So we will, we will come over this as a country, as a company and rest of the world will also will also take this in the full stride. Whatever each country has to do, they’ll do and life will go on.
Okay.
Dhiral Shah
Okay, got your point.
Dhiral Shah
Thank you. Thank you very much. And once again I want to thank each, each and every participant on the call and hope to all.
operator
Sorry to interrupt us. There’s two more questions in the question. Two more participants are waiting in the question queue. Next question is from the line of Naman Chandak from an individual investor. Please go ahead.
Naman Chandak
Can you say about our geographies worldwide geographies on order book, how it is split across the geographies and the second another question was can you speak more on the value added product side like what kind of products are we developing and how better the margins would be for you know, the higher value added products. Thank you.
Chetan M. Tamboli
Yeah. Like we have said in the past that we are doing 16 countries and we will add another two, three countries in the next one to two years. Now I don’t have exactly country wise breakup as of now but I can only tell you that whichever countries which has got lower sales volumes now will grow over the next two, three years time.
Our major concentration now is between us and Germany. So that should get diluted over time in the next quarter. Three years. And then you asked about the other value added product. As I said, we have just initiated this and that is the reason for putting the remark in the annual report. It’s too early to really say what could be the opportunities and what volumes we do for those sub SMEs. But we have this focus and once we have some clarity we’ll share with the stakeholders. Okay, sir, thank you. Thank you.
operator
Thank you. The next question is from the line of Sahil Doshi from Thinkwise. Please go ahead.
Dhiral Shah
Yes. Hi.
Dhiral Shah
Good afternoon sir and thank you for the opportunity. My question pertains to the railroad component opportunity. So could you talk about what’s the status on that and what is the outlook and is there any change? Neither is what we had expected earlier.
Chetan M. Tamboli
Yeah, yeah. This railroad thing, we have been struggling to, you know, get this part approved. But the effort is on. When I’m saying that we’ll grow 18, 20% this year is excluding the railway thing. Okay. If railway things if we’re able to do in the next one or two quarters, there’ll be some additional increase in growth percentage. But excluding this railway thing, we’ll still do 18, 20% and hopefully we will sort this issue of railroad component development in the next one to two quarters.
Dhiral Shah
So could you talk a little more? What meaning taking so long and what’s been the challenge because since last three or four quarters, we’ve been expecting approval.
Chetan M. Tamboli
But there’s been constant delay.
Dhiral Shah
So could you just quantify, you know, articulate what’s really going wrong or what? Taking.
Chetan M. Tamboli
Yeah. What could be a little. Yeah, yeah. Let me explain. You know, every component has got a specified chemistry and mechanical properties. Okay. Now, the component is designed to make sure that we give what customer needs. Now, the component definitely has what is required in terms of the mechanical properties, in terms of composition and all. But when it goes into free trial, we get lesser life. Now, our customers are investigating, we are investigating of why, if the product is right, why are we getting lower life? So that’s the mystery. We are working on it, but what we’ve also done is we are working on several other areas, you know, several other verticals of our existing customers that.
Okay, if this railroad thing happens. Good. If it doesn’t happen, there are enough of opportunities in the world where we could cater to an increase our capacity utilization. Railway is just one part of the bigger picture. So our efforts are on and we are focusing on how to increase our utilization, whether we do railways now or maybe 2/4 later or a year later. But the opportunities are tremendous. And India is a favored nation in the rest of the world as a very, very strong competitor to China. And the opportunities are tremendous.
Dhiral Shah
Sure, sir, I appreciate the response. Just in terms of probability, if you had to put up meaning, is there a probability of this railroad order not converting.
Chetan M. Tamboli
I would say probability of success will be close to more than 85%.
Dhiral Shah
Okay, understood. And secondly, sir, on the defense order which you did talk about, could you talk about the size of opportunity? And is this like a year one or a direct kind of. And I’m not looking for names, but.
Chetan M. Tamboli
As I say, as I said, for this one component alone, it could be an encore business per year. But the opportunities are tremendous. We could do many other components and you know, as. As time goes, we will, we will share this. You know, what are the opportunities, which is the country? What is the application? Only thing is, it’s too premature really to share this, but the opportunities is good.
Dhiral Shah
Understood, sir. Thank you so much, sir.
Chetan M. Tamboli
Thank you, sir. And thank you all. And once again, on behalf of Steelcast, I want to thank each and everyone who has spared their valuable time in coming for this investor call. Thank you. Thank you.
operator
Thank you. On behalf of Philip Capital private client group, we conclude this conference. Thank you for joining us. And you may now disconnect your lines.