Steelcast Ltd (NSE: STEELCAS) Q4 2025 Earnings Call dated May. 29, 2025
Corporate Participants:
Unidentified Speaker
Chetan M Tamboli — Chairman & Managing Director
Rushil C Tamboli — Executive Director
Subhash R Sharma — Executive Director & CFO
Umesh V Bhatt — Co. Secretary & Compl. Officer
Analysts:
Unidentified Participant
Ronak Parekh — Analyst
Kanav Khanna — Analyst
Kaushal Sharma — Analyst
Harshil Solanki — Analyst
Rushabh Shah — Analyst
Sanchit Narang — Analyst
Pranjal Mukhija — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the SteelCast Limited Q4 and FY25 earnings conference call hosted by Philip Capital Private Client Group. 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. Conclude, should you need assistance during the conference call please signal an operator by pressing Star then than zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ronak from Philip Capital PCG. Thank you. And over to you sir.
Ronak Parekh — Analyst
Thank you Manav. Good afternoon everyone. On behalf of Philip Capital Prior Client Group I welcome all of you to the Q4 and FY25 earning conference call or SteelCast Limited today. From the management we have Mr. Chetan Damboli, Chairman and Managing Director Mr. Rushil Tamboli, Full Time Director Mr. Subhash Sharma, Executive Director and CFO Mr. Omesh Bhatt, Company Secretary. And I now hand over the conference to Mr. Kanav Khanna from EY Investor Relations. Over to you Kanav.
Kanav Khanna — Analyst
Thanks Ronak. Good evening everyone. We welcome you all to Steelcast Limited’s earning call to discuss Q4 and FY25 results. Before we begin the call, let me take a note that a copy of disclosures are available in the investor section of the website as well as the stock exchange. Further, a detailed safe harbor statement is given on page number 30 of the Investor presentation of the company. Please note that anything said on this call which reflects the outlook for the future or which could be construed as a forward looking statement must be viewed in conjunction with the risk that the company faces.
With that said, now I hand over the call to Mr. Chetan Tambouli for his opening remarks. Over to you sir. Thank you.
Unidentified Participant
Thank you Kanavai. A very good afternoon to everyone on this call. We welcome you all to the earnings conference call of Sealcast Limited to discuss the company’s performance during the quarter and year ended 31st March 25th. We concluded our board meeting yesterday and uploaded the financial results as well as investor presentation on the stock exchanges. I believe you must have got a chance to go through the same. We shall begin with an update about the global economic scenario followed by our company’s performance.
Let me begin with a comprehensive overview of the global economic environment before we turn to our company’s performance. In 2024, the global economy expanded at a moderate pace of 3.3%. This growth, while steady, reflects a world still adjusting to multiple multiple cross currents including lagged effects. Of tight monetary policies, ongoing geopolitical tensions and persistent supply chain realignments. While the global economic landscape has stabilized compared to the variety of recent years, the overall growth momentum remains relatively subdued. Advanced economies in particular have seen a slower rebound, weighed down by high interest rates and cautious consumer spending.
At the same time, emerging markets and developing economies have shown more resilience, supported by improving domestic demand and stronger trade flows. One of the key themes continues to be inflation. After peaking in the aftermath of the pandemic and energy shocks, global headline inflation is now on a downward trajectory, albeit more gradually than previously expected. Revised projections indicate inflation will ease to 4.3% in 25 and decline further to 3.6% in 26. This adjustment is largely driven by higher than anticipated inflation in advanced economies, partly offset by marginal downward revisions in emerging and developing markets. Central banks across major economies have responded with a cautious pivot, initiating measured rate cuts as inflation expectations begin to anchor but remaining vigilant against upside risk.
This evolving backdrop is shaping global investment flows, consumer behavior and trade dynamics and will continue to influence corporate strategy and performance in the quarters ahead. The recent increase in tariffs by US Government has thrown a lot of uncertainties in the global economy. We are cautiously evaluating the after effects of additional tariffs and the corresponding demand scenario in North America. Now let me highlight the financial performance of the current quarter vis a vis that of Q3FY25 and Q4FY24. During Q4FY25 the revenue from operations was at 120.8 crore or 19% growth from 101.8 crore in Q3FY25. EBITDA during the quarter was at 38.3 crore, a 35% growth from rupees 28.3 crore.
In Q3FY25 EBITDA margin was at 31.7%, an increase of 387 basis points from 27.8 in QCFY25 PBT during the quarter was at 36.1 crore or 40%. Growth from rupees 25.8 crore in Q3FY 25. This translated to a PBT margin of 29.9%, an increase of 454 basis points vis a vis Q3FY25. PAT during the quarter was at 26.8 crore or 39% growth from rupees 19 per 2 crore. In Q3FY25 PAT margin remained at 22.2%, an increase of 331 basis points vis a vis Q3 FY25. During Q4FY25 the Revenue from operations was at 120.8 Crore, a 23% growth from 98.4 Crore in Q4FY24 EBITDA excluding other income during the quarter was at 38.
3 Crore, a growth of 35% from 28.2 Crore in Q4FY24EBITDA margin was at 31. 7%, an increase of 240 basis points from 29.9% in Q4FY24EBITD during the quarter was at 36. 1 Crore or 44% growth from rupees 25.1 Crore in Q for FY24EBITD margin stood at 29.9% PAT. PAT during the quarter was at26.8 Crore or 43% growth from from rupees 18.7 Crore in Q4FY24 PAT margin remained at 22.2% at this juncture, let me share with you CAGR Snapshot of last 4 years Revenue from operations 24.27% EBITDA excluding other income at 35.41% EBIT excluding other income at 51.54% PAT 56.56% during Q4FY25 and for the full fiscal year our revenue mix remained well balanced with domestic sales contributing 46% and exports according to 54% of total sales.
As anticipated earlier, the second half of FY25 saw a strong recovery in revenue as customers resumed inventory replacement. This rebound not only reaffirmed underlying demand but also underscored the strength and resilience of a business model driving profitable growth. We have continued to deepen our engagement with key customers supported by long standing relationships and proven track record of reliability. This is especially visible in newer model programs where demand for our components is gaining meaningful traction. Additionally, our collaboration with existing clients has expanded into new geographies. We are seeing strong momentum in Eastern Europe, particularly in Poland and Slovakia, and have recently established presence in Brazil and Canada too.
The rollout of new components across our portfolio helps us diversify further and reduces our exposure to cyclical end user demand. It may be noted that for FY25 we have benefited by continuous reduction input prices throughout the year amounting to rupees 4.36 crore. Steelcast senior management team has brought in cost reduction programs to the tune of rupees 5.22 crore and exchange rate benefits of rupees 2.78 crore all totaling to rupees 12.36 crore. Adding to the bottom line, I’m also pleased to report that for the second consecutive year we have maintained a debt free position reflecting our disciplined capital allocation and tight working capital management.
This financial prudence enables us to maintain a lean cost structure while enhancing returns to stakeholders. In spite of company spending of Rs. 86.5 crore on capex and quarterly dividends of rupees 43.7 crore totaling to Rs. 130.2 crore in last three years, it continues to be totally debt free with rupees 75 crores in free reserve. This remains an exceptional occurrence despite our scale. We believe that being debt free and deploying capital judiciously gives us the flexibility to navigate through economic uncertainties and industry shifts without pressure from interest or repayment obligations. This not only strengthens our profitability and credit profile, but also builds investor confidence.
Our focus on reinvesting in high return, strategically aligned projects ensure that our capital works harder supporting growth, sustainability and long term value creation. We are also delighted to share that Steelclass Limited has been featured in Fortune India’s Top 100 Emerging Stars, a recognition awarded to companies demonstrating exceptional performance. The selection criteria included a minimum 20% CAGR in net income over the past three years, an average return on net worth of at least 10% ROCE of 15%, a 20% CAGR in share price and a debt to equity ratio below 2x. None of this would have been possible without the unwavering dedication of our people.
The success we achieved this year is a reflection of their hard work, resilience and commitment. I would like to extend my heartfelt thanks to our entire team at Steelcast. They have been the true drivers of our progress. With that I would now like to open the floor for questions. Moderator, may I request you to please take it forward? Thank you.
Questions and Answers:
operator
Thank you very much sir. We will now begin the question and answer session. Anyone who wish to ask a question may press star and one on the touchtone telephone. If you wish to withdraw yourself from the question queue, you may press Star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have a first question from the line of Kaushal Sharma from Equinox Capital Ventures. Please go ahead.
Kaushal Sharma
Hello. Am I audible?
Unidentified Participant
Yes, please.
Kaushal Sharma
Hi sir. Very good afternoon and congratulations for good set of numbers. I have a few questions like.
operator
Sorry to interrupt you. The caution. Can you please use your headset? Your voice is quite muffled.
Kaushal Sharma
Hello, How Is it fine? Yeah, yeah. So my. I have a few questions first that you have suggested in the last call that we have significantly improved our capacity utilization from 40% to 15%. So what is our current capacity utilization and how much capacity optimum level are we expecting going forward and when, how long will it take to be at optimum level? And sir, we have achieved a very good margin in this quarter, like 30, 32.7%. So will this margin be sustainable for the future? And we are moving towards improving our capacity utilization. So we have there any scope in increasing the margin.
And my last question is on your railroad component development issue that earlier you have said that we are facing some issues in developing. So what is the current status on that and how much revenue do we get from this segment?
Unidentified Participant
Yeah, our capacity utilization for FY25 is at 45, 45% as per the current year’s financial production and financial plan. We will end with 62% and hopefully we should cross 90% over the next two to three years. In terms of EBITDA margins. Yes, the margins have substantially improved. I just said in my investor speech a few minutes back that we had an extra benefit of about 12 crores which which was added to the bottom line because of lower input prices, benefits of exchange rate and cost reduction programs. Why we will keep on starving for enhanced bottom line.
But obviously 32% EBITDA margins is not sustainable. One can say that maybe we might be around 25, 26% over a longer period of time for two to three years. Regards to we had some development issues in railroad components. The efforts are on and we are quite hopeful that we should be successful over the next 90 days time.
Kaushal Sharma
Okay sir, thank you. And could you please give me any guidance regarding our revenue for post two years or third of the line, two to three years.
Unidentified Participant
Please repeat your question.
Kaushal Sharma
Could you please give me any revenue guidance for the future like two to three years down the line?
Unidentified Participant
I think it’s difficult to give, you know, in absolute numbers but as I said we will cross 90% over the next two two and a half years time. So you could extrapolate those numbers and see possible values.
Kaushal Sharma
Okay, thank you very much for answering the question.
Unidentified Participant
Thank you.
operator
Thank you. A reminder to all participants, if you wish to ask any questions you may press star and 1. We have a next question from the line of Hershel Solanki from Equity Capital. Please go ahead.
Harshil Solanki
Hi team, good afternoon. I had two questions. Firstly to the last participant you told that we would be doing 62% utilizations this year. So in volume terms that comes to 18,000 and this year we have done 12,500. So that’s a significant jump, 43%. So is my understanding. Right. And what are the drivers for this? Because when I listen to the end customers, their commentary is muted both for domestic and export. I understand we are adding new parts, new geographies, etc. So that is the main thing which is giving us the confidence for this growth. If you can share your thoughts on this.
Unidentified Participant
Yeah,
Harshil Solanki
the second.
Unidentified Participant
Yeah. Yes please.
Harshil Solanki
The second one is you plan to give some update on the new industries you were planning to enter. So if you can throw some light, if you have finalized something on the new headwinds. Third point would be in the defense side. Have we started seeing any uptick given the recent conflict which happened? So any progress or things are still at the same stage and we should not consider defense in our assumption. Yeah.
Unidentified Participant
Yeah. Okay, thank you. I said few minutes back that we are planning to have utilization of 60, 62% for FY26. I’m sorry, I want to be stand corrected. We are planning to reach 59% and not 62. Obviously from the FY25 volumes to FY26 volumes there is a reasonable jump in volumes. And this is mainly happening from newer parts which we have been developing and getting approvals and then culminating in serial supplies. So. And I agree with you that we also keep hearing on and off with a very muted commentary on the global economy. And as I said, we still have to wait for the after effects of the increased tariffs from United States.
All this put together. Yes, there is a certain amount of uncertainties, but we’ll have to learn to navigate and you know, keep working. On the defense side, we don’t have any encouraging news. And you know, generally in our kind of industries there is no overnight spurt in demand because of Operation Sindhur like events happening in the country. So we are continuously working on the defense sector and obviously not, not very aggressively but doing whatever comes in on our way. Hello.
operator
So we have the participant disconnected. We’ll move on to the next question. The next question is from the line of Keshav Kumar from RACS and investors. Please go ahead.
Unidentified Participant
Hi. Firstly congrats for a great quarter. And sir, this 59% utilization target for the year. So is it the right math that the tonnage sales should move to near about 18,000 ton?
Chetan M Tamboli
About 17,000 tons.
Unidentified Participant
Okay. So we should see a sharp jump year on year.
Chetan M Tamboli
Hopefully. Yes. Next question please.
Unidentified Participant
Okay. Yeah. And so sir, I just wanted for the sake of repetition, you had said that there was some one offs on the ebitda. So what is our pertinent normalized EBITDA that we target?
Chetan M Tamboli
See, you know, our focus is not on, you know, per ton ebitda. Our focus is on pricing levels and EBITDA percentage of sales. We really don’t monitor EBITDA target per ton. But as I said 25, 26% EBITDA margin will be a sustainable number. And for FY25 we almost added 12 crores in bottom line because of cost reductions, exchange rate benefits and lower input prices.
So this was an extra benefit which came and gave it impressive EBITDA margins. And this 12 crores is roughly about 3.2%.
Unidentified Participant
Right. And sir, lastly again for the sake of repetition, this quarter we saw a sharp rebound in tonnages. So can you give the factors that played a part in that?
Chetan M Tamboli
As we had said, you know, in the earlier calls that we see increase in demand and also the inventories being exhausted in the supply chain and both put together, we will have higher volumes in Q3 and Q4. And this is exactly what has happened. So inventories in the system has been absorbed and together with higher demand and new requirements.
Unidentified Participant
Okay. And sir, we are seeing this demand continuity even in the current quarter.
Unidentified Participant
Yes, we are targeting this 70,000 tons of output this year. And if we have to do 17,000 tons then quarter on quarter there will be improved volumes going forward right up to FY26.
Unidentified Participant
Okay, great sir, that’s all from my side. Thank you. Thank you. Thank you.
operator
Thank you. We have a follow up question from the line of Hershel Solanki from Equity Capital. Please go ahead.
Harshil Solanki
Sorry sir, last time you couldn’t answer the new industries for a which we are planning. So any thoughts on this? If you have finalized anything or are at a more concrete stages on this. Part.
Chetan M Tamboli
The new industries we are focusing on, which is also part of the investor presentations, it is railroad ground, engaging tools and defense. And we are continuously focused in all these three areas. So all put together we will have nine industries which we will cater over time. And the reason of focusing on newer segments is to de risk ourselves as much as possible reduce concentration. Also we also added additional countries where we are exporting. We are now exporting to about 18 countries. Hopefully in one or two quarters we’ll add one more country, maybe 19 countries. So this will further de risk ourselves.
Harshil Solanki
Okay, got it. And sir,
Chetan M Tamboli
thank you.
Harshil Solanki
Sir, one more question on the Our inventories have increased. So is it because our customers are asking US to delay shipments because of the tariff related uncertainties. If you can answer why the inventory.
Chetan M Tamboli
See when the output goes up, you know for a quarter you will see inventory buildup which will be then converted to sale in the following quarter. So, so there is no delay of shipments from the customers. This is a normal phenomena.
Harshil Solanki
So this is not linked to the tariff. And everything is nothing business activity,
Chetan M Tamboli
not at all. Not a single kg has been deferred for shipments by any of our customers because of tariffs.
Harshil Solanki
Okay,
Chetan M Tamboli
thank you.
Harshil Solanki
Thank you for answering.
operator
Thank you. We have our next question from the line of Roshab from RBSA investment managers. Please go ahead.
Rushabh Shah
Just had one question.
operator
Can you be a little louder?
Rushabh Shah
Yeah, I’m audible now.
operator
Yeah, please go ahead.
Rushabh Shah
You just mentioned about the 90% utilization in the next 2, 3 years. So you already have some, some sort of in a firm visibility from the customers or.
Chetan M Tamboli
So. So these are. I cannot say it’s a form visibility but we derive this from interaction with our customers, the new projects which are likely to come. So on all these basis we are predicting that we will cross 90% into two and a half years time.
Rushabh Shah
And last time in discussions you always said that indirectly that customers are shifting their product supply from China to India. So we are seeing more inquiries from existing customers. Is that the reason the optimism?
Chetan M Tamboli
These are some macro reasons why we are seeing that we will cross 90% over two and three. So the one is obviously China plus one strategy. Second, our customers have their own newer designs. So we need to develop paths to. So these are basically reasons. Plus we are also factoring the new segments which we are going to focus going forward. So all this put together, we do believe that we should cross 90% over two two and a half years.
Rushabh Shah
And just the last question, we are targeting a new capacity, new plant. So that is on track. Maybe in one and a half years from now.
operator
So see we will be at 62% capacity utilization by FY26. So maybe in the second half of the current year we will take a call depending upon the geopolitical situation any if there is any slowdown in world economy. So with all this we will take a call in the second half of this year for additional capacities.
Rushabh Shah
Okay, thank you.
Chetan M Tamboli
Thank you.
operator
Thank you. We have our next question from the lineup. Ronak Sabarwal from Philip Capital. Please go ahead.
Ronak Parekh
Thank you for the opportunity, sir. I have a couple of questions on mind. So as I’m first April, what was our order book for the overall business? The second question be what is the potential revenue we’re seeing from the American railroads in FY26 if our product gets approved. And my third question would be what are CapEx plans for FY26?
Chetan M Tamboli
So the last question.
Ronak Parekh
What are our capex plans for FY26 and FY27?
Chetan M Tamboli
We have a firm plan for capex of about 38 crores. About 15 crores. Out of that will be for debottlenecking. Keeping in mind the change in product mix and then a land purchase of about 20 crores. So a total capex of 38 crores in the current financial year. The order book is at about 95 crores as of now. And the railroad sales in FY26 will be roughly about 25 crores.
Ronak Parekh
Thank you. Sir, one more question.
Chetan M Tamboli
Thank you.
Ronak Parekh
What is the contribution from the. From the American and German geographies in FY25?
Chetan M Tamboli
I think US will be about 130. 100 you said for FY25 or FY26.
Ronak Parekh
25. And if you can share for your guidance for 26 also that would be helpful.
Chetan M Tamboli
So for FY26 North American sales will be about. Hopefully about 130. 135 crores. And Europe area will be another 140. 145 crores.
Ronak Parekh
Thank you, sir.
Chetan M Tamboli
Thank you.
operator
Thank you. A reminder to all participants. If you wish to ask any question you may press star and 1. Anyone who wishes to ask a question, you may press star and one. Now we have our next question from the line of Heyman, Soni and individual. Individual investor. Please go ahead.
Unidentified Participant
Thank you for providing me with opportunity. And just wanted to ask you one thing. What is the capacity utilization in Q55?
Chetan M Tamboli
In Q4 it was 55%. It. It was 55%.
Unidentified Participant
Can you come again? Hello.
Chetan M Tamboli
Hello.
Unidentified Participant
Hello.
operator
Sorry to interrupt. Mr. Heman, we can’t hear you.
Unidentified Participant
Open a. Thank you.
operator
Thank you. A reminder to all participants. If you wish to ask any questions you may press star and one. We have our next question from the line of Sanchit Narang from Narang family office. Please go ahead.
Sanchit Narang
Hello. Is my voice audible?
Chetan M Tamboli
Yes, please.
Sanchit Narang
Yeah. Sir, what I’m failing to Understand is in FY22 or 23 you check your volumes went from like a lower level to similar level. 30% increase. But that time your margins went up. But now you are guiding that you are seeing a 36% increase in capacity utilized in your volume. But your margins would be stable. What I am just. I understand the points that you got. The one time expense, one time savings and everything. But Is it something that we are guiding conservatively? I can’t. I am failing to understand that of operating efficiency operational efficiencies would increase also capacity utilization would go up.
Chetan M Tamboli
Yes, I fully agree with you. Operative operate operating leverage will also kick in. They should have increased margin. But we have to also factor in this one time gains of about 12 crores. What we did in FY25. So why we. So that’s the reason we’re seeing that the sustainable number EBITDA number period of two, three, four years. Maybe 25, 26%.
Sanchit Narang
Got it. So you are you this 90% that utilization guidance you are giving is. Is like confirmed talks with your vendors. And everything that demand is there that you are certain of. And we regarding the margin issue. Only time will tell. I can understand your.
Chetan M Tamboli
Yes, thank you. And the volumes going forward are part of investor presentations maybe uploaded a few months back. So if you can go through you’ll have a fair idea of the capacity utilization volumes going forward.
Sanchit Narang
Okay sir, thanks a lot. Thanks a lot.
Chetan M Tamboli
Thank you.
operator
Thank you. We have a next question from the line of Kaushal Sharma from Equinox Capital Ventures. Please go ahead.
Kaushal Sharma
Hi sir.
Chetan M Tamboli
Yes please.
Kaushal Sharma
Yeah. So my question is on your US market side like you said that we are generating around 30 to 35% revenue from us. So there is some tariff war is going on. And we are being imposed to implicit local tariff. And also what is the impact of that in our business going forward? Will it affect our margin?
Chetan M Tamboli
See as of now the additional tariff of 10% has already been kicked in from April 2. Our customers are absorbing this increasing cost. Because our sales are all on X verse basis. So any increase in cost X works onwards is it to customers account. I would say that the tariffs on India might be far better than few other countries in the world. So hopefully there should should not be any adverse effect of the additional tariffs what we may have.
Kaushal Sharma
Okay. And our model is like cost.
Chetan M Tamboli
Yes, it’s a cost plus model. We have a sales price variation formula with all of our customers with improved prices going up and down. The sales prices are corrected upwards or downwards as the case may be.
Kaushal Sharma
Okay. So sir, as you suggest that our margin is also improved just because our input price is down. So how can it possible like if we are at a cost plus margin. So how are we getting benefit of low input cost?
Chetan M Tamboli
See what happens is when input prices go down, the price corrections happen with a 1/4 time lag. So from Q1 to Q2 they were lower input prices. So we gained for it. And Q2 to Q3 again input price were down so we got a benefit for that. And again from Q3 to Q4 obviously subsequently with the lag of one quarter the prices would be corrected upwards or downwards.
Kaushal Sharma
Okay. Okay sir. Okay. Thank you very much.
operator
Thank you. We have our next question from the line of Praneet an individual investor. Please go ahead.
Unidentified Participant
Hello. Thank you for the opportunity. So I understand that we are geographically expanding our market in terms of gaining a product, overall sales, Right. What industry you see growing in these particular new locations that we’re going? I understand we are in multiple industries, right? Earth moving or construction, all of that. So which industries do you see going forward in those locations? And during the first like the last few quarters, which industries affected us the most? Because in the North American market there’s a lot of slowdown and construction was one of the key factors. Were there any other industries that affected us? And going forward how do we see the them restocking their inventory or growth in terms of customer guidance? Because I understand to our plan of production we need some kind of guidance from them.
So do we have any yet or how is it going?
Chetan M Tamboli
Basically we have been on a continuous drive of adding new parts. So once we have addition of new parts even if there is an overall slowdown in a particular industry it may not be affecting us A B the base industries which we have been doing, earthworming, mining, locomotive construction across all industries we. We are on a drive for new path development. So even if there is a slight slowdown it may not affect us.
Unidentified Participant
So you think at this point of time the slowdown is. This is the worst. The slowdown has already reached and it’s going to stabilize from here and the only way it might be is a little up, it’s not going to fall further. That’s what you hope, right?
Chetan M Tamboli
Absolutely. I cannot say that the slowdown has. Is already over. We have seen some signs of slowdown but we are very confident of growth in volumes from FY25 to FY26. So with that we will have improved volumes in fruit sales top line.
Unidentified Participant
But do we expect these volumes to come from the new customers and new products or do we expect them to come from the existing ones?
Chetan M Tamboli
I think generally it’s a combination of existing products with existing customers, new products from existing customers, new products from new customers. These are all bundled together.
Unidentified Participant
I understand that I was just one of the question because I wanted to understand how was. How was our new adoption, how was the adoption for new products? Because we had a legacy of excellent Engineering, we were able to sell the old products. I was wondering about the new product development, how that is getting absorbed by the market. So I was wondering in that sense.
Chetan M Tamboli
See, our development of newer products are based on customer specs and designs. We don’t have our own proprietary products. So we really don’t have to worry about once the products are developed, will we be able to sell in the market. Because these are specific products for specific end user industries, end user customers. And these are being developed on our customers requirement. So this is an ongoing drive. So whatever increased volumes we are anticipating is based on all this.
Unidentified Participant
But are we. So the new products that we are developing, are these likely to be a higher margin than what we already have or are going to be in similar lines?
Chetan M Tamboli
It will be all similar lines. Whatever we talk about, EBITDA margins, sustainable levels, whatever we talk is all, all put together. There are no differences in margins.
Unidentified Participant
Got it. And in terms of. I don’t know much about this particular part of. But is how much what percentage of our sales goes to OEMs and what percentage of it goes to aftermarket? I understand that a split in OEMs also they might use for aftermarket. But I was wondering do we have channels that we directly sell to only aftermarket use cases? And is there channels that we apart from OEMs? That’s just wondering.
Chetan M Tamboli
So all our sales goes to only OEMs and not in any aftermarket a some portion of the sale. Our customers may be selling in the aftermarket, but as far as we are concerned it all goes to OEMs.
Unidentified Participant
Understood. But can you also explain how is the Europe looking? We understand we are expanding there specifically. Right. Are we taking existing market share from the players and how are we able to do that apart from our modes in terms of engineering and double relationship with customer, how are we able to acquire market from these particular customers? Because they must have already existing suppliers. Right. How are we able to get into the market and grow our share there.
Chetan M Tamboli
In terms of our manufacturing and quality control facilities? People see and once they know that we can make products matching any good companies in Europe or US Customers are bound to come. And because for them it’s a cost advantage to be to source from here.
Unidentified Participant
So the main difference are more to be cost advantage compared to the European suppliers at this point?
Chetan M Tamboli
Absolutely. Yes, absolutely. Thank you.
operator
Thank you. A reminder to all participants, if you wish to ask any questions you may press star and 1. Anyone who wish to ask a question, you may press Star and one. Now we have our next question from the line of Pranjal Mukhija from Growth Sphere Ventures. Please go ahead.
Pranjal Mukhija
Hi sir. Am I audible?
operator
Yes.
Pranjal Mukhija
So first of all I’d like to say congratulations on a very good set of numbers. So I have a couple of questions. Sir, so you mentioned in this call repeatedly that like the volume growth that. You’Re seeing, visibility for FY26 is going to be led by new product development. And new products at the end, OEM is sort of going to make. So can you give some sort of. Qualitative insights and description of what kind of new designs, new products these are and what kind of industries these, these products will cater to?
Chetan M Tamboli
Is this the only question you have?
Pranjal Mukhija
So the second question I wanted to. Understand a little bit on the size. Market size, opportunity of the ground engaging tools.
Chetan M Tamboli
See, basically the increased sales which we are anticipating from FY25 to FY26 are all in our majority in our existing segments. Earth moving, mining, locomotives, transportation, cement machinery, constructions. And we are trying to focus on new segments like North American railroads, ground engage, fuse and defense. So the increase volumes will come from the base industries, it may come from existing parts, it may come from newer parts. So this is all bundled together.
Pranjal Mukhija
But sir, could you provide some qualitative insights into what newer parts are we going to make?
Chetan M Tamboli
So these are all parts. Let me explain you. These are all equipment parts for construction equipment, for mining, equipment, for locomotives. So these are parts going into these different equipments of. For this different industries.
Pranjal Mukhija
Okay. And so will we. Are we the only suppliers for these newer parts? Or like there are a couple of other suppliers for these parts?
Chetan M Tamboli
There are suppliers all over the world here. How can we, we have, we could be the only one in this world. The suppliers in North America, there are companies in India. So there are plenty of people around the world.
Pranjal Mukhija
And sir, a little bit on the market size of the ground engaging tools like what kind of opportunity do we see there?
Chetan M Tamboli
So opportunities is vast. I think the overall worldwide ground aging could be 200,000 tonnes. Because what we are looking is, you know, two, three thousand tons of business.
Pranjal Mukhija
Okay. Okay, sir. Thank you.
Chetan M Tamboli
Thank you.
operator
Thank you. We have our next question from the line of Sanchit Narang from Narang family office. Please go ahead.
Sanchit Narang
So my question on the tariff has been answered. Thank you.
Chetan M Tamboli
Thank you.
Sanchit Narang
Thank you.
operator
Thank you. A reminder to all participants, if you wish to ask any questions, you may press star and 1. We have our next question from the line of Praneet, an individual investor. Please go ahead.
Unidentified Participant
Thank you for the opportunity again. So in addition to the previous contestant I was curious about the competitive landscape in terms of these international. So how is India faring in terms of the overall sourcing for European countries or North American countries Or are we seeing competitive intensity from other countries, other Asian countries or who are on par with our cost advantage. And how is China faring in terms of domestic entry? So in the domestic market also a percentage that is consumed by the Chinese imports. Right. How are we faring in terms of that? As Indian domestic manufacturers able to increase their contribution in the domestic market and abroad or are we seeing some other countries jumping in the race?
Chetan M Tamboli
I think in the Indian market there are only Indian players. There are no Chinese players coming into India. That’s a b. The two emerging markets which are dominating our kind of industries is India and China. And obviously due to cost advantage with North American and European suppliers we do have cost advantage and that is the reason of increased volumes or new opportunities for newer developments, opportunity for new customers. All these are there.
Unidentified Participant
But we do not see any competitiveness from like Indonesia or we are from these other Asian. Countries.
Chetan M Tamboli
Not at this point of time.
Unidentified Participant
Okay, so far Indian Indian players are able to gain the mark so take advantage of the China plus one. So in the international markets how? What can’t. Let’s say China was 80 and India was 20 or let’s hypothetically India was done and this was 20. How is the contribution mix changing? Where do you think the Indian producers can grow in terms of international market share.
Chetan M Tamboli
As a country? India and I’m saying the entire engineering industry, India has a lot of potential to grow. People want to de risk themselves and reduce dependence on China. And after China, India is the best bet for the world. So any good companies good in manufacturing will do will do exceptionally well going forward.
Unidentified Participant
Understood. Thank you for your insight.
Chetan M Tamboli
Thank you. Thank you.
operator
Thank you. We have our next question from line off. Pranak Sabarwar from Philip Capital. Please go ahead.
Unidentified Participant
Thank you for the follow up opportunity. Sir, two more questions from my side. What is the contribution of new products in FY25 and how do we see it panning out in the years to come? The second question would be what is the contribution of new geographies such as the one we added in eastern Europe in FY25 and how do we see the contribution of new geographies like Eastern Europe, Brazil, Canada etc. In the coming years?
Chetan M Tamboli
So on an average each year the contribution of New York pass will be the region of 5 to 7% every year and the sales for newer geographies year on year will be around 4, 5%.
Unidentified Participant
Okay, thank you so much.
Chetan M Tamboli
Thank you sir.
operator
Thank you. We have our next question from the line of from solidary advisors. Please go ahead.
Unidentified Participant
Hello. Am I audible sir?
Chetan M Tamboli
Yes, please.
Unidentified Participant
On margins I understand the one off impact in FY25 sir, because of which the margins look so high. But sir, in FY24 as well we did 28% EBITDA margins. So was there any one of impact in that year as well? Because we have been guiding for 25, 26% normalized margins every year there will.
Chetan M Tamboli
Be extra benefit coming from cost reductions, exchange rates and lower prices. We thought to highlight this now because it turned out to be about 12 crores in the year. But every year generally this extra benefits is always there. We are only highlighting it now. And that 12 crores is roughly about 3.3.2, 3.2% of the of the total EBITA.
Unidentified Participant
Okay. S including this if the benefits are going to be coming in every year. So do you think are this actually one of us. Should we include this in our numbers? Like this should be included in our normalized EBITDA margin number, right?
Chetan M Tamboli
I think it’s not fair to add this because these are, these are not designed by us. This comes subsequently. Like if now if the exchange rates are stabilized they may not be any gains in exchange rate in the current financial year. If the input prices stabilize, they don’t go down then they may not be apparent any gains. So, so these are always extras not designed by us in the pricing and all. So we should keep it out.
Unidentified Participant
Okay. Can you just give me the impact number for FY24?
Chetan M Tamboli
We don’t have this number. You mean the additional benefits number?
Unidentified Participant
Yeah, like it was 1225.
Chetan M Tamboli
I, I’m sorry, we don’t have FY24 numbers offhand now. But you can give us give your contact details to Eny and we will have it responded to you.
Unidentified Participant
Okay sir. Got it. Thank you.
Chetan M Tamboli
Thank you. Thank you.
operator
Thank you. A reminder to all participants. If you wish to ask any questions you may press star and 1. Anyone who wishes to ask a question, you may press Star and one. Now we have our next question from the line of Rahul, an individual investor. Please go ahead.
Unidentified Participant
Greetings. Congress was a great set of members. My question is regarding if you look at your power cost per ton, so do we see a decrease over the years and if you can quantify how that fall would be. Thank you.
Chetan M Tamboli
What was your question? Your question is power cost per ton of production?
Unidentified Participant
Yes. Yes sir.
Chetan M Tamboli
I’M sorry we don’t have this number offhand, but power cost is roughly 7, 8% of the cost of production. Roughly. So.
Unidentified Participant
Okay, I’ll frame it another way. For example, if you, we see that, you know, your power cost on percentage of sales is right now 11%. So you, you have been guiding that each year there will be an extra 10 crore order saving in terms of power and fuel costs. So should we assume that over the years, like in the next three years, your percentage cost of power and fuel would go below 10% or it would be a steady at 10% on the percentage of.
Chetan M Tamboli
See what happened? Yeah. What happens is with the increase in volumes there will be additional cost. What we have now planned is a saving of 1314 crores. We will have 2.4 megawatt more which will be commissioned by FY26. We will have saving of about additional 3 crores. But if the volumes keep going up. So the idea is that the power cost as a percentage of sale, which should remain stagnant, we are trying to mitigate the additional cost by way of cost reductions.
Unidentified Participant
Okay. And if I have a chance, I have one more question. Is basically your gross margins are at around 81 percentage. So is it that there is a mix change? Like you are doing 75% of, you know, of finished product for your clients. So in this year has this person increased to 80% or what is the explanation for a significant jump in cross margin?
Chetan M Tamboli
So you see about 75% of our products go fully, fully machined, ready to use. And as I said, About 12 crores came from additional benefits of exchange rate, input prices and cost reduction programs done by our people. And that 12 crore comes to about 3.2%. So if our EBITDA margin is 32, we need to knock that out by 3%. So the net EBITDA margin from overall operations is about 29%. Time.
Unidentified Participant
Okay, and last question, and I end over here is you have been, you know, guiding a declining. So is it that the newer parts would command a lower margin than the existing parts?
Chetan M Tamboli
No, I see. I am giving a realistic sustainable levels of EBITDA margins. Right. For example, if you, if you reduce the extra benefits we got this year, then we are at 29%. Now, 29% is obviously from, you know, from increased volumes here the operating leverage kicks in. But then going forward there would be a lot of uncertainties and maybe slowdown also. So it’s good to have a conservative approach that 25, 26% might be a sustainable level.
Unidentified Participant
Okay. Okay, sir.
Chetan M Tamboli
Thanks thank you. Thank you.
operator
Thank you.
Chetan M Tamboli
I think we are almost, you know. Nearing 4pm
operator
yes, this was the last question. On behalf of Philip Capital pcg, we thank all the participants for valuable time and especially the entire team of Steelcast Limited. I now hand the conference over to Mr. Chetan Tambori for his closing remarks. Over to you, sir.
Chetan M Tamboli
Thank you all and each and everyone who is part of this earnings call and we appreciate your support and trust in us. We hope we’ve been able to address most of your questions. In case of further queries, you may reach out to our investor relations advisor Ernst and Young and they will connect with you offline. Thank you very much and thank you to Philips Capital also. Thank you. Thank you all.
operator
Thank you.
Umesh V Bhatt
Thank you all.
Chetan M Tamboli
Thank you.
Umesh V Bhatt
Thank you.
operator
Thank you. That concludes this conference. Thank you for joining us. And you may now disconnect your lines.