Synergy Green Industries Ltd (NSE: SGIL) Q3 2025 Earnings Call dated Feb. 12, 2025
Corporate Participants:
Nilesh Mankar — Company Secretary & Compliance Officer
Shreya Shirgaokar — Management Executive
V Srinivasa Reddy — Executive Director
Analysts:
Unidentified Participant
Presentation:
Nilesh Mankar — Company Secretary & Compliance Officer
Hello everyone. Thank you for joining the call. I am Nilesh Mankar, company secretary of Synergy Green Industries Ltd. Before we begin, I would like to inform you that we will be recording this call. And in case any participants are not comfortable, you may feel free to drop off before we start the recordings. Thank you. Just a minute. Some participants are getting there. Chairman, can we move to the disclaimer please? This meeting is being recorded. Yeah. So this is a disclaimer from the company’s site. This presentation has been uploaded on the website of BAC as well as nse. It is available on the website of the company also. So you may go through this disclaimer as per your convenience. Yeah. This is the agenda of today’s meeting. First I will give the brief introduction about the organization. Later on Ms. Shreya will give the investor presentation for quarter three of this financial year and in the last Q and A session will be held. Yeah. These are the guidelines of the call. All the participants are kept on listen mode only by the host. All participants are requested not to record the call. Questions from the participant will be addressed in the Q and A session at the end of the investor presentation by the management. During the Q and A when called by the moderator, we request you to introduce yourself with your name, organization and the questions. Participants having multiple questions can email us on the email ID mentioned in the chat box and management will make best possible efforts to respond within seven days. Thank you. So dear participants, welcome to the Q3 of the financial year 2024-25. Earning call and investor presentation of Synergy Green Industries Limited. I will just give the brief introduction of the organization. Synergy Green Industries Limited is one of the India’s leading state of art foundries producing SGI gray air steel casting for wind turbines, gearbox and general engineering industries in the weight range of 3 metric tons to 30 metric tons. Synergy Green has an installed capacity of 30 metric ton per annum and is in the process of upgrading up to 45 metric ton thousand. The company houses based in class equipment, IT infrastructure and quality testing facilities, is a top supplier to a major wind OEMs as well as leading gearbox players in the world. Synergy Green is a part of the Sri Lanka Group which has diversified business interest over its 80 plus years history spanning across sugar manufacturing, foundries, hospitality and market research. So I’ll just. I would like to introduce the management team. Mr. B.S. reddy, Executive Director Mr. Reddy is a BTech in Mechanical Engineering, MTech in Manufacturing and Executive MBA from IIM Bangalore. He has over 30 years of experience in manufacturing of large casting. Over his career he has worked for corporates like Lit, ISGEC and Simplex in establishing plants and managing businesses before joining Synergy grip from inception. Second Ms. Shreya, Management Executive Ms. Shreya has completed her MBA in Finance and has worked with Deloitte as a part of their energy and industrial research team for more than 3.5 years before joining Synergy in 2023. And myself Nilesh Mankar. I’m a Company Secretary and also completed MBA from Indira Gandhi National Open University and having more than 10 years of experience of secretary matters of the company. Ms. Shreya will now be presenting us with the highlights of quarter three earnings and take us through the key areas of the development in the investor presentation. So I would request SH to take over and give the presentation for quarter three financial results.
Shreya Shirgaokar — Management Executive
Thank you for the introduction and hello everybody. Thank you for joining the call today. Before we proceed, I would just request Nilisa if you could just make sure that if there’s anybody not on mute, if you can just physically put them on you so there are no disturbances during the presentation. Right. So we’ve divided the presentation into three major parts. I’ll be spending a little bit of time on the industry overview as well as the company profile and then finally walk in detail through the business performance comments and update. So we all know about the climate change. It’s, you know, not in the future, it’s in the present. We’re seeing it in the form of floods, heat waves, cyclones, droughts, forest fires, everything. So climate change is really not something that we’re debating, but we’re seeing that numbers, very alarming numbers that are coming as a part of it, because about 14.5 million lives are at stake by 2050 due to climate change, which is equivalent to a world war. So it’s really bringing out a sense of urgency and it’s really unparalleled. So the action on climate change is already underway and we’ll be talking more about that going forward. The energy transition to renewables is a part of this fight against climate change that we have now. Just to look at a few numbers, the global economy is expected to reach around US$112 trillion in 2025. And energy, all resources, all sources of energy put together are expected to account for about 7% of this economy. Now looking at the chart on the left hand side of this page, the world electricity generation by power sources is outlined here. The key numbers that we’d like to bring your attention to is that by 2030 there is an expectation that conventional sources of energy. Mr. Rajdeep, if you could just go on mute, please. Thank you. So by 2030 we’re expecting conventional sources of energy to peak, peak as a part of the evolved electricity generation. And this will be overtaken by renewable sources. So renewable sources are expected to account for about 25% of the overall global electricity generation in 2030. And this number is expected to rise to about 70% of the whole mix by 2050. So that’s the kind of potential that we see in renewables. Besides this, renewable sources are also a great way for countries to achieve energy security, sort of reduce their dependence on importing oil and coal, saving foreign exchange, all of that and all of this is when these resources are now energy cost competitive as well. So definitely because of all of this, the world is betting on renewables at a global level. We already see that there are net zero country wise goals that companies have set. We have the Paris Agreement which has a goal of keeping global warming within 1.5 degrees Celsius. We have climate finance goals and deforestation targets as well. At an India level, we have the India Pancham Brit which was released at COP26. This includes India’s target to achieve net zero by 2070. Two things that we would like to draw your attention to is that the India renewables target says that we would want to source about 50% of energy from renewables by 2040. And India’s green electricity goal, which is to install 500 gigawatts of non fossil fuel electricity capacity by 2030. This is besides the countrywide emission goals and carbon targets that we’ve set as a country. Three. Beyond renewables, we’ll go a little bit deeper to look at India and global wind installations and how that trend is shaping up. So in 2023 we have published numbers for both at a global as well as India’s level. And we see that wind installations have globally grown by over 50% in 2023. At an India level, this number has actually been surpassed in 2024. So there were India’s installations in 2024 between January to December were 3.42 gigawatts. So there has been a 71% increase over the previous years and we’re expecting this to continue growing in the coming years. What are the key growth drivers for this is that the first thing is 10 gigawatts of annual wind builds as well as wind or renewable purchase obligations up to 2030 that has been mandated by the government. There are also minimum renewables mandates to discoms. This is besides the increase in renewables targets from 145 gigawatts to 500 gigawatts by 2030. And also of course the carbon neutral target by 2017. At a global level, if we look at the chart as well as what has been adopted by nations in the COP28, the target is to triple annual wind installations from 117 gigawatts in 2023 to take it to 350 gigawatts by 2030. And this should really accelerate global volumes. And a major portion of this is driven by onshore. We are now going to be talking about the castings demand where synergy. Of course we cater largely to the wind market, but we’re majorly a large casting supplier. So when we look at the overall total castings demand in the world, the total demand is around 110 million metric tons globally, led by China. And a far second is India. The major consumers of these castings are the auto industry, railways, industrial machinery, agriculture, power, etc. So I’ll only talk about figures specific to our target market. So number one is the wind demand globally is around 1. Wind castings demand, that is is about 1.5 million metric tons. This is estimated to cross 2.3 million metric tons in the next five years. However, if we only look at large castings markets, and this goes beyond wind as well and can cater to large castings in other industries, that is estimated to be around 8 million metric tons current. So the 7% of the overall total castings market demand total worldwide. So this was a broader sense of the renewables industry, wind within itself as well as castings Now, I’ll quickly go through the company profile, and then we talk about the business performance. So, synergy. Green is of course as mentioned earlier, one of India’s leading manufacturers of large size critical castings for wind as well as general engineering products. We produce products in the rate range of 3 metrics tons to 30 metric tons in the materials SGI, cast iron as well as steel with the majority of our production being SGI. Currently our capacity is 30,000 metric tons per annum which we’re in the process of updating upgrading to 45,000 metric tons per annum. Our facilities are located in Kolapur and Maharashtra and we have all the equipment from the leading brands in the world. We have, our systems are powered by SAP and we also have the best in class equipment for simulation softwares and other metallurgical tests. We also have an ABL certified quality testing facilities and our quality certifications we keep, you know, upgrading ourselves with the lead latest as well as most relevant quality testing certifications. So we’re certified for the ISO 9001-140001-18001 TPG certification which is a very stringent transportation and power generation supply chain certification granted by a third party American Institute, ISO 27001 and then ISO 5001 which is the energy management system. The last two certifications are something that we’ve achieved in the current financial year, in the previous year, calendar year. Taking a look at our product mix. So a majority of our castings go to the wind industry with our wind castings forming about 70% of our total products. Dior box castings which again are also finally going to the wind industry are another 15% of our total product mix. And the balance 50, 15% is coming from non wind castings. So in Nonvin we cater to mining, plastic injection machines, pumps and some other engineering applications as well. Looking at our customers which are our greatest, greatest strengths, there’s a chart on the left hand side which shows the leading wind OEMs in 2023 globally. And of this 50% of them are already our customers. I’ll just call them out, they are Vestas, ge, Siemens Gamesa. We’re also in the process of development of products with Envision and Nordics. Besides these we also have Adani and Seneon in our customer basket. Flender and ZF are two of the leading world’s leading gearbox manufacturers and they are also our customers in the gearbox segment. And then in the non wing segment we have leaders from respective industries that I called out earlier which is Terex, Thermo, Ferramatic, Millichron, Willometherinplat. These are just some of the customer names in our non well segment. We’ve done a quick SWOT analysis of the company. So to call it out, our strength is the ability to produce large size castings up to 30 metric tons. We are established products with top global OEMs in our basket. We’re an efficient foundry and we’ve achieved revenue growth in 11 of the last 12 years. The opportunities for growth are excellent with what we’re looking at in the terms of renewables growth and there are high entry barriers in terms of technology, in terms of knowledge. India is also being converted as a manufacturing hub and that offers a very sort of consistently growing casting demand for us. Some of the weaknesses that we felt and we’re trying to plug as we go along are one is the limited capacity which we’re now scaling up from 30,000 to 40,000 metric tons per annum. Currently also our machining activities are being 100% outsourced. So this is something that with the new project expansion project that we’re working on, we should be able to take about 20,000 tons per annum of our machining in house with our own machining facility. Finally, looking at some of the broad level threats there, 80% of our business is dependent on the wind industry. But our facilities are very much able to produce large size castings that can be applied to any other industries as well. Well, so this also shows the 15 portfolio that we maintain for the non bid segment. Secondly, volatile commodity prices can also impact our profitability. But the key commodities are being hedged with customers on a water basis. So with that I’ll jump into the business performance. Here’s the summary of the unaudited financial results for the nine months of FY25 ended 31st December 2024. So if we look at the total income in the quarter ended 31st December, we have 97.84 crores as total income for the quarter. This is a 10.5% growth from the same quarter in the previous financial year which was 88.54 crores. If we compare the similar numbers for the nine months ended 31st December, we’ll see that there’s an 8.6% growth over the previous period and we’re at a 265.77 crores of total income. Looking at the PBDIT, we have a PBDIT of 14.65 crores in the quarter ended the recent third quarter of 2025. This is a 45.4% growth over the same quarter in FY24 which was 10.08 crores. Similarly for the nine month ended period, we stand at the PP. PDIT of 38.39 crores which is a 26% jump over the previous period in this in the previous week. So PBTIT margins are have expanded from 11.38% in the Q3 of FY24 to today we’re at 14.97% which is a 359 basis points increase and we see a healthy growth story for the PBDIT margin in the 9th month ended Q3FY25 which is 14.44% is the PBDIT margin currently and this was 12.45%. So this is in line with our expectations and forecast which is 200 basis points increase over the previous year. So the main reasons for the margin expansion this has mainly been driven by export revenues which were higher export revenues in this year and this last quarter especially there have been improved operational efficiencies as well as stable raw material costs. And then of course there’s also the favorable currency movements. So all of these have helped us realize healthy PBDID margins that are grown. If we look at the PBT we stand at 7.01 crore which is a 61% growth over the previous quarter in over the same quarter in the previous period. And at a nine month level we’re at 17.32 crores which is a 49% growth over the same period in the previous year. And finally drawing your attention to the profit after tax. The profit after tax is 5.95 crores, 128% growth over the same period in the over the same quarter in the previous period which was 2.61 crores. Similarly, where a 57% growth in the nine months ended Q3 FY25, the profit after tax stands at 13.07. So this is a quick snapshot of the financial results for the nine month ended Q3. Now I’ll also go into the brief overview of the financials. Largely we’ve divided our revenue streams into five major parts. First is the wind domestic consumption wind domestic revenues. Second are the OEM exports of turbines. Third is direct exports of castings. Fourth is gearbox and fifth is non wind revenues. So the nine month FY25 period recorded a revenue growth of 10.5% as I mentioned over the corresponding period of the previous year. This was largely driven by growth in OEM exports, direct exports which have grown by almost 200% this year and also in growth in the gearbox revenues. So these are the major growth drivers for the revenues. This year we’ve also given the guidelines for the guidance for the executable order book projections for the complete year FY 2425 as well as FY 2526 based on the executable order book schedules that are available with us. Looking at the PBDIT over the period looking for. I hope my voice is audible. I see your comment in the chat box.
Nilesh Mankar — Company Secretary & Compliance Officer
No Shreya, we are able to. Yeah we are audible. Go ahead, go ahead.
Shreya Shirgaokar — Management Executive
Looking at the PBDIT over the period we have As I mentioned earlier, there’s been a PBDIT margin expansion of 200 basis points from 12.44% to 14.44% in the nine month ended FY25. The margins for the rest of the year are projected to remain stable and our PBDIT stands at 38.39 crores as of 9 month period FY25 going to the cost structure, going to the capex and the margin expansion plan and where we stand in terms of execution as well. We divided our CAPEX for this year in three major areas. The first is the foundry capacity expansion. This we’re expanding from 30,000 to 45,000 metric tons per year and we’re well on track to do it. So the completion should be in the first quarter of FY26. A major portion of all of our ordering has already been completed for this entire project, not just for the foundry but the rest of it as well. So we’re well on track to achieve what we had earlier outlined. We’ve also allocated 30 crores to captive renewable power. So we’re planning the plan to increase from 2 megawatts that were installed last year for capital Solar project to 10 megawatts by adding the balance 8 megawatts in this year is well over under construction and the completion should be in the fourth quarter of FY25. In terms of in house machining, the first phase of the in house machining facility that will take care of 10,000 metric tons per annum that should be ready for commissioning and commissioning in the second quarter of FY26 as per our guidance. In addition to this we also see that there is a positive business outlook and besides this there is also a longer lead time for the machines that the superior quality imported machines that we are ordering. With this we’ve also initiated the second phase of this in house machining facility which will take care of another 10,000 tonnes per annum which is going to be completed by the fourth quarter of FY26. This is the progress update about the project, as well as the capex a quick look at the other initiatives that. We’ve taken in terms of the triple bottom line. So we truly believe that environment goes hand in hand with economics. And here there are four major areas that we’re, you know, working on. So the first is carbon footprint renewables. As I already spoke, we are, we aim to reduce our carbon footprint through renewables and we’re achieving 50% of our production by 20 of green production by 2030 by establishing renewables as a capital source of power. The second thing is waste management. So we’re improving our sand reclamation capabilities. So earlier we used to reclaim and recycle about 92% of our of the sand consumed in the foundry. So in the current year we’ve established a thermal reclamation system which will take this to 98%. So material recycling and waste management is something that we’re constantly working on. The third thing is technology leadership. This is for two things. One is for efficiencies and the second is for a safer work environment. So we’re doing constantly working on process automation and digitization and we should be in a position to give more details about these kinds of initiatives in the coming few quarters. Energy optimization is another major area that we’re working on. And besides the energy management system audit and ISO that we have been undertaking, we’ve also taken various initiatives including centralized energy monitoring systems, equipment balancing, etc. So this all together really ensures that we’re taking care of two things. One is environment and secondly it’s the impact on economics. Finally coming to the performance outlook in the medium term. So for the FY24 25 for the full year we’ve given a guidance of a 13 rejected revenue growth based on our present order book status. The exports revenue as I mentioned in the revenue slide is estimated to grow to 25% as against just 11.5% in the previous year. And then finally the raw material prices are stable as well as all the other factors that I mentioned earlier, we’re well on our way to expand our margins for the year by 200 basis points from the present, well from the previous year’s 12.5% levels. In the medium term for capacities we’ve given, we do see that there is a good opportunity after the expansion to 45,000 metric tons. We see that in the next three years as an opportunity to grow and ultimately make up a capacity increase it to 100,000 metric tons in the next three to five years. So this is the overall outlook in the medium term as well as for the year end. With this I will end my presentation and open the floor for Q and A.
Nilesh Mankar — Company Secretary & Compliance Officer
Thank you, Shayana, for walking us through the investor presentation for quarter three. I would like to. To note the presence of Mr. Sachin Shirgapar who is the chairman and managing director of the company who has joined just now. Now I request all the participants to be ready with the with their questions. Please raise your hand and we will unmute you. Just as a reminder please keep the questions very crisp and precise question repetitive in nature will be avoided. On your turn please introduce yourself your organization and then ask the questions. Also note participants having multiple questions can email us on the email ID mentioned in the chat box and management will make best possible efforts to respond within seven days. We also request you to mute yourself after your questions is answered. Thank you for your cooperation with these guidelines. Now the floor is open for question and answers.
Questions and Answers:
Operator
Just I will go through the the list of Participant 1 who has raised the hands. Good evening. Once again I request Mr. Jiten Parma to go ahead with this question. Please please unmute yourself and go ahead with your question sir.
Unidentified Participant
Good evening Reddy.
V Srinivasa Reddy
Good evening,
Unidentified Participant
Good to have you also on the call and congratulations on good set of results. Now my first question is basically on the sales growth obviously I mean it is in single digits and we are targeting at 13%. Now is this because there is a capacity constraint or I mean are we running close to full capacity? What is because I think we were expecting higher sales growth though margins have a definitely surprise. On the positive side there is no doubt but sales growth is something which I would like to get more color of and what we are expecting for next year.
V Srinivasa Reddy
There are two parts into that. You are right actually we are 95% kind of capacity utilization so we have very little headroom to get for a very significant revenue growth. That’s one. And the second thing is whatever the existing customers we have seen as per the plan export revenues are going well but domestic revenue some of the OEMs take off is little slow. Actually no, we were expecting the earlier quarters to have a better lifting but overall we have seen two areas. One is domestic wind a little bit of slow IC and also non wind also little bit of slowdown but still we could get a good growth because of the the exports are extremely doing good and also OEM exports are also doing good. The second thing is on the gearbox side as per the position they are really lifting well actually. This is what is contributional growth. But coming back to the next year revenue growth order book is good. Mainly we have added two major OEMs. One is Nordics. We are happy to share with you that for the first time in India, 5 megawatt hub casting which is weighing 30 tons is being produced in Synergy Green. We already successfully produced that casting. So we are expecting a good order book from the new OEM that is Nordics for both hub and mainframe. Apart from this, we have already intimated to the investors about the signing a contract with Envision. Envision is another big oem. His demand is more than 30 40,000 tons per annum for Indian consumption. Actually no. So as of now, tentatively we have committed for a 10,000. But I see there is an opportunity to increase further. But we’d like to take as and when it comes. So looking at all those things, as far as next year revenue is concerned, we should be in line with whatever the guidance are. If Envision another they lift as per the according to their projections, we should be able to even beat the expectation again for achieving all these numbers, we need to complete our expansion. Out of each Q1 majority of the expansion gets completed. So we are initiating to production from the new facilities. From Q2 onwards, that is where we are expecting to increase our revenues. Actually no. Perfect. So with all these initiatives, how much can the EBITDA margin expand further too? Like we have already given a guidance actually roughly about 18%. See one is EBITDA margin. If market prices doesn’t disturb, it will go 20, 22%. But I do believe there is some pressure on the pricing as well. So we are factoring some 4,5% kind of pricing to be passed on to the market. So considering that we still we don’t see any problem on 18% guidance, what we are given interesting thing is commodity is very stable. So that is also positive for us actually.
Unidentified Participant
Okay, and how much of our exports to us do we export to us at all or.
V Srinivasa Reddy
Roughly about 20% of our earnings are coming from the US exports.
Unidentified Participant
Okay, so my question is next on basically what is coming out of the US and what Trump’s obvious thing and about the Paris agreement and everything. Do you envisage a slowdown of exports to US or. Or what do you think? I mean, or is it only optics?
V Srinivasa Reddy
And I seen the this comments are on two parts. One is on the withdrawing the support and wind. That is one thing which is going on Twitter. The message is going around in the circles. First part is whatever his objection is for the offshore wind because today, offshore. Offshore is not competitive. For example, the cost of electricity generation through offshore may be 10 rupees or 12 rupees. As against off offshore gives onshore gives just 3 or 4 rupees. Actually no. So he doesn’t want to burn cash to make it the offshore projects executable? Actually no. But as and date synergy exposure to offshore is zero. Even though in India government of India has allocated about 1 billion per year marking to initiate the offshore. But we had lot of interactions with the industry leaders and we see it is going to take quite a good amount of time before offshore becomes a reality in India at least. So as of now, at least for next three to four years we are not all banking up on anything from the offshore side. We believe by the time US policy also will get aligned. But all our present next to three to five years business growth are absolutely not all dependent on the offshore. So that is the first part of the tweet. The second part about couple of days back mentioning about the tariffs on India. So. So that was also another thing which we did a quick check. Basically his tariff is onto importable semi finished product and steel and aluminum. These are the two areas whatever the HSN code we are exporting to us. That is not in the the. The tariff list actually no, that we have verified. And the second thing is the castings what we produce for industry. They are basically declaring they are neither steel nor aluminium. Second thing is the what he has imposed the tax is mainly onto the semi finished product so that they can manufacture some of the thing in made in US. That is the. The objective behind those kind of tariffs. What we understand. So as of now I don’t see any such kind of negativity on account of the tariffs coming on our exports to us. This is what it stands today actually know.
Unidentified Participant
Okay, thank you sir. Now may I request Mr. N. Dharma sir. Sorry, I put myself on mute. I have one more question if you don’t mind.
V Srinivasa Reddy
Yes sir.
Unidentified Participant
Yeah. So. So regarding this machining. Previously we had talked about 10k and in this presentation we first time saw that you’re planning to do it to 20k. So that is obviously a pleasant surprise. And I want to know. I mean the first 10k, the. The. The cost is 67 crore and for the second 10k it is being shown as only 30k. Cr. 30. 30 crore. So is there any, I mean reason for that this being lower or.
V Srinivasa Reddy
Okay, I’ll answer this question. There are two parts initially we were planning for go ahead with a 10,000 tons only. But with the business doing good and a lot of other OEMs negotiating. We felt we should be adding additional 10,000. Anyway. This was there on our cards, but we were thinking of taking it later. Actually, two things we have observed in the negotiation of the first machines. One is the lead time is going up to 15, 18 months. So we took a decision to go ahead with the balance of the 10,000. Tons which will be getting added by end of the FY26. Actually no. So that’s the second thing. Second part of your question regarding the cost. The first 10,000 tons we spent about 67 crores. But second we are spending only 30 crores. Because first set of even though we are saying 10,000 tons capacity but actually we are building a machining capacity for a 30,000 tons basic infrastructure. So that infrastructure is going to be common. The second 10,000 and even third 10,000 also it’s going to remain same. Actually know that’s the reason why you see a difference in that project cost.
Unidentified Participant
Okay. Oh, thank you sir.
Operator
May I request Nitin Dharma sir to go ahead with your question please?
Unidentified Participant
Yeah. Thank you for the opportunity. My. My question is regarding the the raw material prices. So how is the trend right now you mentioned that there can be some pressure in terms of passing on the benefit. So that’s why you are factoring in 1822 percent which is a possibility. So how do you see the trend from the raw material perspective? Does it remain same or is there any change in the pricing from the last quarter?
V Srinivasa Reddy
Input cost is improving. That is also another thing. If you really look at we have given a guidance of 18% after completing solar and machining altogether. But we are already clocking 15% plus even without realizing any of the investments right now. As you know. So apart from the exports, because the earlier contracts were negotiated at a different dollar value which dollar went on depreciating some benefit came from the dollar depreciation. But another positive thing is the raw materials are very stable are giving little bit of better contribution actually. So I don’t see any the risk on the raw material side. But the whatever the pricing pressure that what we are discussing about since we are trying to go for the next level of order booking say from 400 crores to 600 or 700 crores kind of level. We are hand splitting some of the negotiation. In fact there are a couple of contracts are already in discussion which are getting aligned with the forecast. What we are giving 18% considering the machining, solar and all. Everything in place.
Unidentified Participant
Actually. Got it. My next question is the order that we received in the last quarter that we announced so by when the revenue will be started realizing in that order.
V Srinivasa Reddy
This we are expecting Q1 will go for a development. Q2 onwards. We are anting revenue started flowing from this. The envision order book which we are given.
Unidentified Participant
Is there any possibility of upside division in that order book or will it remain the same as announced in the in the notification.
V Srinivasa Reddy
Yes, because next year that order book forecast what we again, we are not considered big quantity from that new development. But the way customer is talking today, it seems there may be a little bit of positive upside opportunity is there. But we need to see how he executes because in the initial period
Shreya Shirgaokar
Last January we had a discussion and finalized the commercials. But it took almost one year for us to signing the contract. Actually that’s why we’re little conservative in giving any revenue consideration from that oem. But now the way he is chasing us, it looks positive. We need to wait and see how he lifts that thing. Yes, there is an opportunity actually.
Unidentified Participant
Okay, my next question is since there is a possibility of upward revision also. So what is the revenue guidance that we have for this year?
V Srinivasa Reddy
This financial year that is 25 if an EBITDA guidance and for the next year see EBITDA we are almost 3/4 are done for the current quarter. For the next quarter also I see a similar kind of the quarter what we have in the Q3 actually though numbers actually no EBITDA and also the top line because again one of the domestic oem. The challenge what I saw is with the domestic OEM is today the market is becoming very popular for a 4 megawatt platform. But the schedules what I had with one of the OEM is mainly for the 2 megawatt so there is a little bit of slowdown in. So hence he gave us the 4 megawatt order as well. That execution is a development is going on. That’s why there is a gap in that execution of that. So in terms of the current year I see EBITDA margin should be stable means whatever the some current quarter also should be doing like the what we did in Q3 as far as the next year revenue is concerned. We have given a guidance of 20% plus. I think we should be comfortably able to do 20% plus kind of the revenue growth actually know EBITA margin point of view we are expecting because solar and partially machining will be coming into the picture at least 150 to 200 basis points additional expansion during the next financial. That’s what we are targeting actually. So we’ll get more clarity in next one quarter pro. We’ll be sharing with all of you actually.
Unidentified Participant
Okay, thank you and wishing you best sir.
Operator
Thank you. Sir, may I request scientific investing to unmute yourself and go ahead with your question please.
Unidentified Participant
Scientific investing. I hope I’m audible.
Operator
Yeah, yeah. Please go ahead.
Unidentified Participant
Yeah. Sir, I have a question. So each gigawatt of wind energy which is getting added into India My understanding is it opens up 400 crore of revenue opportunity for casting players. Is that estimate correct? If you can highlight then I will ask next set of questions.
V Srinivasa Reddy
See, you can say it is a 12000 tons is the 4 gigawatt consumption actually so that translates to 150 crores, not 400 crores. Okay, 150, 150, 180. Yeah, depending on the pricing.
Unidentified Participant
Okay, so sir, next 6, 7 year whatever is the 8% kind of growth and additional gigawatt capacity which is supposed to come and given there are three players which are like having 70 to 80% in the market and we also have 20% plus for this incremental opportunity. What is the kind of incremental market share you are? Planning to take it in next five, six years.
V Srinivasa Reddy
See today we are almost around 35, 40% kind of the market share what we have for the domestic market. But we look at the total Indian casting demand again that is in three streams apart from the domestic consumption, OEM export and also direct exports. Actually no synergy is unique because we are also operating into other segments like gearbox and non wind segment. Actually no. So overall looking at the market size we would like to continue with this 35, 40% kind of the market share from the demand from the Indian requirement. Actually
Unidentified Participant
No. Okay, okay. And so my second question is when we look at the installation versus machining this ratio is different for different players. Like Suzlon’s ratio is very different from yours. So I mean I don’t belong to the industry. So how this technically plays out and what is the ideal ratio or why certain ratio is maintained? If you can, you know, just highlight for a layman.
V Srinivasa Reddy
See it depends on the organizational this, you know, policy and also the investment appetite. Actually you know, because when we start the investments into the machining will be as good equivalent of a foundry investment. That’s the kind of the capex is required for investing the machine. Since you want to show your presence in the market. So our primary focus will be on to build top line and and establish the customers. This is what we did last 12 years actually. Now there is also need for expanding our margins. That is where we go for a backward integration to add machining facilities. Now to specific to your question. Our competitors are having for example one of the competitor in Chennai, he is having zero machine facility. Another competitor in Kul, he’s having a sizable thing, you know. But our objective of I can spell out on the synergy perspective. We are looking at around 50 60% of our install capacity as our in house machining facility. The reason behind this ratios rationally is for example if for three, four years down the line, if there is any marginal underutilization by 10, 20% still we’ll be able to utilize our machining capacity 100%. That is the logic. Second thing is all along these 12 years we have grown with our partners the supply chain actually you know, so we cannot say no to them overnight because we have to take care of their interest as well. So considering both the business interest and also the utilization perspective. So we are targeting around 50, 60% kind of in house machining facilities.
Unidentified Participant
Thanks. That explains two more questions. So one, given our growth will depend a lot on how the, you know, wind power growth happens in India and globally. What are the risks? We you see that, you know, the projected growth in wind power addition may not happen. That is one. And second, historically our growth has been very nonlinear. Like one year had tremendous growth rate and then we didn’t have. And given we are going to almost triple our capacity in next four or five years. Do you expect growth to be more nonlinear or should we expect more linear kind of growth so that we are mentally prepared? Accordingly.
V Srinivasa Reddy
Okay, I’d like to put it in this way. If you look at 2015-16, India did about 5.6 gigawatt. As against today they are doing about 3 gigawatt which is 40% less than what the India has done means. During last six, seven years Indian market has got dropped by 40%. But synergies revenues have grown up by 400%. So the synergies revenue are coming from the various streams, you know. So whether industry growth is happening accelerated form or non accelerated there are certain strategic things are happening. One is relocation of the Chinese demand to non China. That is a China plus one, what we call it. So one source of demand is coming from there. And the second thing is the domestic market itself is growing. So these two put together, it should be. I don’t see any problem in achieving utilizing those kind of capacities which we are projecting for 27 and 28.
Unidentified Participant
Actually no. Great. And sir, I just forgot to introduce myself. So I am Kumar S from Scientific investing and wish you all the best for coming quarters.
Operator
Thanks a lot. May I request Mr. Kunal Mehtar to go ahead. Your question please.
Unidentified Participant
Hi sir. A very good afternoon to you sir. Shreya and my name is Kunal. I am from sun securities and actually sir, my question is based on the current capacity. 20,000 tons is currently utilized by Vestas and 10,000 by Gamesa. Am I correct?
V Srinivasa Reddy
10,000 ton by Vestas, 5,6000 by Gamesa, 5,000 tons.
Unidentified Participant
Okay, so Gammasa is 5 and 10,000 Vestas. The remaining is from whom? See we are operating with the seven OEMs which I shared during our customer list.
V Srinivasa Reddy
One is this thing, you know, Adani is there then on the gearbox front, Jedf is there, Flander is there and Normand is there. So we have around 12 to 15 customers are there. So it is spread across. Okay, so. So right now 90 is utilized, right? 90 of capacity. And you’re saying envision. Yeah, envision will be another. Yeah, Envision will be another 10,000. So again now as Shreya was mentioning that you are in line to you know, onboard Nordics also. So don’t you think we’ll again have you know, you know, capacity constraints even with 45,000 metric tons. Like we will be almost at 70 to 80% and then onboarding more customers. And so what is the plan from 45 to 1? Like how is it going to go? Yeah, see Synergies philosophy is we just don’t want to invest first into the capacity and go for searching the business. Actually no, we always line up the order book and then go ahead with the investments. This is how we got an opportunity to do like that. So today, 45,000 tons fairly. I can see almost order book is visible, actually. You know, with the V OEMs which we are in discussion but I see this 45,000 tons, you are right likely to go around 55, 60. I. I can see that kind of order flow is coming in. There are two opportunities either we creep only the capex which we are thought considering the total global events, how they are going to unfold and other things. The second there is also opportunity to push further in the existing capacity. That’s what we are trying to re evaluate because recently government of India has changed certain regulations in India because the earlier our space index was allowed only 50% due to land constraint now they relax those kind of the regulations with that now we are reassessing whether we can push another 10,15,000 tons in the existing capacity Actually that we need to see but before going to those levels since we are already taking up a big capex so. So first we would like to focus on the existing task in hand and then we revisit the whole thing. So at the end of the day I’ll be happy to have a 10% pressure from the customer so that my capacity utilization goes 95% plus this is how I look at. But if there is a continuous pressure from the customers we will find some ways to add additional capacity. Actually no.
Unidentified Participant
Okay. And sir, one more question is based on the proceeds from the rights issue that has been utilized so I see that based on the expansion of the foundry capacity out of you know the allocated let’s say total of 13 crores you’ll have just utilized up till now about one and a half crore. So like is there a delay in work that is being done or. Or maybe after from January. I mean it is not the latest one because it shows the 31st of December.
V Srinivasa Reddy
Actually what happens now? We don’t pay the orders in advance. The significant cash flow is scheduled for February, March probably cash outflow is there probably by next quarter when we file the returns we might have completed the utilization of the all the rights funds
Unidentified Participant
Actually. Okay, so it is towards the end so by Q1 of, by.
V Srinivasa Reddy
By Q4 end it will be done right by Q1 majority of the cash outflow happens. Q1 and Q2 is the significant. See there are two parts as far as foundry cash flow is concerned that will get completed by Q1 machining will happen Q2 barring that new additional 10,000 tons which we are planning. So that will go by Q3 actually no.
Unidentified Participant
Okay. And sir, based on the margin expansion how much of you know the margin will be affected by the. The power that will get completed Solar power that gets completed by the end of this financial year. And how much by machining? So how much will machining impact?
V Srinivasa Reddy
No, we have already given a guidance. Solar expected to contribute about 2% margin. Another 3% is coming from this thing. What you call the machining,
Unidentified Participant
The 5%. That was for 10,000 ton. Now that you are doing 20,000 ton, how much more additional impact?
V Srinivasa Reddy
Will be actually the initial the margin expansion of the machining. We take the high value items. So that is where the margin expansion is higher in the initial 10,000 tons. But incremental 10,000 tons may give another 2% kind of thing. But we need to see in a comprehensively totally how the business the pricing, the raw material and all those kind of things and capacity relation, so on, so forth. So we are taking a overall the guidance of around 18 to 20% kind of the the margins which are achievable. That’s how we are looking at actually.
Unidentified Participant
Okay sir, thank you and all the best.
Operator
May I request Mr. Vidisha to go ahead with your question please?
Unidentified Participant
Hello sir, can I get a guidance of your pad margins and your cost of debt? Because earlier you had mentioned your cost of debt as around 9.5%. So are you in line with that same guidance?
V Srinivasa Reddy
No, I did not get your question. Can you repeat your question please?
Unidentified Participant
Can I get a guidance on your pat margins and your cost of debt?
V Srinivasa Reddy
See pat margin is dependent on the things we focus upon the what you call EBITDA margins. So that is the thing because what happens now the initial period there will be a depreciation. So we need to see how the year on year these things will again. The key is we should focus upon the operating margins. Actually no. So that we are given a guidance of 18 to 20%. Once the depreciation amount comes down the pat margin can go up significantly. Means about 10 12% kind of the numbers. But initially we need to go through this CAPEX cycle and appropriate way of looking at the growth organization is at the EBITDA level.
Unidentified Participant
Got it. And your cost of debt that you expect for the coming capex.
V Srinivasa Reddy
Yeah, I think there is some clarity is missing in your voice. Yeah. Can you just to repeat your question please.
Unidentified Participant
Can I get a guidance on your cost of debt?
V Srinivasa Reddy
Cost of Debt is around 9.25% what we are paying today.
Operator
Thank you sir. May I request Mr. Good Evening Team.
Unidentified Participant
My name is Adhan Sekri. I’m representing Arthur India Ventures. First of all congratulations for a good quarter. I just have a couple of questions. I think most of my questions have been answered by by you already. Just a question. On the average realization per kilogram for castings I think you’d mentioned a figure of about rupees 140 in the previous phone call. Is that still consistent or is there any change to this?
V Srinivasa Reddy
See, 140 was the last year but this year since the raw material also getting coming down it may go down to 135, 136 kind of thing.
Unidentified Participant
I see, I see. Okay. The next question would be on the order book estimate. I think you’ve spoken about this before as well. The estimate that.
V Srinivasa Reddy
Given in the previous Investor call was 370 crores. If I’m not wrong in for FY26 that could go up to 450 crores. Now again with the envision development, I think it can go up even further. So if you can just give updated estimates for the order book as well, that’d be pretty great. No, see as of now we are standing at a 450 close to the forecast for the next financial year. But once the Development act is completed and the way customer is talking, if we start lifting in that direction because our experience in the past was not this thing, you know, in line with our experience. That’s the reason why we’re little conservative and giving the the further additional forecast. But maybe during Q1 or Q2 we will relook at the whole guidance what we’ll be updating you.
Unidentified Participant
I see, I see. Are there any new clients that are about to be onboarded? Is there any new contract that is that we be signed?
V Srinivasa Reddy
See there is a one. This thing, you know, Tata Power project is going on. We believe any one of our OEM will be back in that. That’s a big project. I think 8 gigawatt or 10 gigawatt. So if that contract goes through it is for almost five years tenure. So that should be a big contract which is under discussion as you know. So it should be concluding anytime. So that will be a good stability for our order book. Understood, Understood. Just a final question on your employee benefit expense. It seems to be that it stays stable at an average of about 7 to 8% as a percentage of total income over the past three or four quarters. Do you expect this to be consistent going forward as well? Which percent? 7 to 8%. What is that? The employee benefit expense is a percentage that’s going to be a concert. Yes, that will be stable. It may marginally improve with capacity going up. But because we are doing a brownfield expansion, we do see some kind of improvement in the manpower cost.
Unidentified Participant
I see, I see. And just a final question on the capacity utilization. I know you mentioned it was around 90%. What is the sort of ideal estimate that we’re looking at going forward till 27 for this?
V Srinivasa Reddy
Yeah, our aim is to use above 90%. It’s extremely this thing, you know, unless you have a very strong order book constantly every quarter because it’s very difficult to switch between the OEM. Sometimes some of the OEMs have a higher schedules during certain quarters and lower schedules in a different quarter. How we manage is we try to distribute the production schedule in such a fashion that considering the 52 weeks rolling forecast schedule from our customers, we try to adjust so that our capacity l goes above 90%. So 85% minimum should be able to target. But if things are very good, it may go up to 95% kind of the inflation. So you can take a range of 85 to 95 depending on the the flow in the market.
Unidentified Participant
I see, I see. Just a final question. I think I missed this information before. I think you had mentioned this. If you can just give me the numbers for the revenues generated from exports till Q3FY25 and also the revenue generated from Gearbox castings. Because I think those were two of your biggest growth characters.
V Srinivasa Reddy
You can go through the presentation. It is already clearly displayed. Those numbers are there in our presentation.
Unidentified Participant
Okay, perfect. Thank you so much.
V Srinivasa Reddy
Just to answer quickly, it’s around 75 crores because I need to look at the chart. But those numbers are already there in public domain, actually.
Unidentified Participant
Understood, thank you so much. Those are all the questions.
Operator
Thank you. May I request Mr. Pratik?
Unidentified Participant
Yeah. Hi. Am I audible?
Operator
Yes, please go ahead.
Unidentified Participant
Yeah, thanks for the opportunity. So, I’m an individual investor. So my question one is on exports, can you throw some light on what are the realizations as compared to the domestic market? And two, you mentioned about lead times leading resulting in you increasing your machining capacity. So if you can throw what is the current lead time on some of the raw materials? Is there a bottleneck? And if you can realize more margins.
V Srinivasa Reddy
Okay, the first part is exports. Generally what we do is we consideredly fix the currency. So. So generally the domestic price and export prices are same because we are going to supply to the same client. Only the difference is say for example, now dollar is running around 87 or 88, but while finalizing the contract, it was under 82. So during the period, whatever, the depreciation happened in rupee. So that helps us in achieving a margin depending on the currency, how it is going. That is one. The second thing is we get a little bit of export margins and also some of the working capital benefits that will be to the tune of another 3, 4% actually. So there will be around 5, 6% better margins with exports compared to the domestic market. That’s what we see actually.
Unidentified Participant
Okay, and your guidance that you shared for margins, does that incorporate higher share of exports as well, is that correct?
V Srinivasa Reddy
Yeah, the current year there is a significant growth in the exports. That’s the reason why you see already the margin expansion is happening. But next year we expect a similar kind of export numbers. Means if business grows by 20% as the export business proportion may come down from 25% to 20% because that is going to be more or less constant because we have done a very good exports to current year, actually.
Unidentified Participant
All right, got it. And second in terms of lead time, can you.
V Srinivasa Reddy
Yeah, see today we take about eight weeks. Eight to 10 weeks is the total lead time. The raw material, what we keep with machining in house coming in place, we are targeting to reduce it by at least by two weeks. That should be reducing our working capital cycle.
Unidentified Participant
All right, fair enough. And does that also give you some debottlenecking benefits?
V Srinivasa Reddy
No, as of now today we don’t have any bottleneck on the machining. Actually there is already. But only thing there are certain timings are involved in transporting to our vendors and some waiting times and all those things. Otherwise I. I don’t see any bottleneck either in terms of the machining supply chain or in terms of the raw material. There is no such bottleneck today.
Unidentified Participant
All right, fair enough. Thank you.
Operator
Thank you. May I request Mr. Rajiv Par again back. Can you go ahead please sir.
Unidentified Participant
Good evening Reddy Garu. Good evening. Congratulations for another great quarter. All the best to you and your dream. Just one question. Most of the financial and the business questions have been answered. You know the. I would like to know a little bit more about the HR policies that you have and practices because you are starting a new line of machining. So how. How you have planned for acquiring the manpower or training them in house or whatever. If you can briefly share in that will give a comfort because people are at the root of success, you know, in most businesses including yours.
V Srinivasa Reddy
So. You are absolutely right, sir. In fact one of the strength of this organization is we are already having an in house machining capability. People are there, senior people are there. And in the last five, six years in fact our team only helped the local supply chain to develop in Kolapur. We developed around three, four suppliers here. So of course we need to recruit. We are in the process. But the key knowledge and other things already there on board with our ordination. And during next say 1/4 or 1 or 2/4 we’ll be onboarding the workforce including machine operators, the supervisors and all that activity is on actually. So we should be able to manage this. I don’t say unlike in foundry in machining what happens is we get a good support from the machining supplier. O so generally majority of the technological support comes from two guys. One is the tooling guys. Someone like Sinewick and Te and all these guys, they have excellent knowledge base. The second is the machining well and plus our in house facility. We should be able to sail through this technological transformation towards the machining as well.
Unidentified Participant
Okay, thank you sir.
Operator
And may I request Mr. Kunal again.
Unidentified Participant
Hi sir. My one question is the capex that I have mentioned that includes maintenance capex also or just the new capex that we’ll be doing this capex you are talking about.
V Srinivasa Reddy
So in the capex plan that you have mentioned in the presentation that is total capex or just the incremental capex for that. I mean that 190. 7 crore that is mentioned over I think the next two years. See today what we are targeting is certain capacities like 20,000 to kind of machine and 45,000 tons of foundry. And third is 10. What are power supply? Actually no. So depending on the situation actually this solar power can be taken up to 15 megawatt actually. But we can’t commit all the capexes in one go. So depending on the financial flow, cash flow we may consider additional capexes both in solar and also in the machining.
Unidentified Participant
Actually no. Okay. And sir, how will the like how will be capitalized? Like the new capacity of 45000 tons will be capitalized from next year itself.
V Srinivasa Reddy
Yes. Yeah. Capacity will be capitalized. Yes, it will be operational.
Unidentified Participant
Okay, so then how much is that make a depreciation to be considered straight line or.
V Srinivasa Reddy
Yeah, we need to do the detailed working. I can give a very rough projections again because these machines have had a good life of 20, 25 years. So we are doing a capex of close to say 200 crores. Additional depreciation may come in existing also the the difference because we are the current year and the next year. So it may be around 30 course kind of.
Unidentified Participant
And sir, you just mentioned. I think someone had asked about a new maybe an order that is being developed from. From Tata which one of your OEM might get. And you said about 8 to 9 gigawatt is somewhere. So that would boil down to about 20,000 tons of capacity and about 200 crores of revenue.
V Srinivasa Reddy
Actually that order may not go through 100. To us generally they give a share of business. Okay. Of course it’s too early. I cannot disclose all the numbers because once I’ll be able to put in a public domain. But this is on the discussion. It will be in line with the the revenue growth what we are given that will be strengthening our this you know growth that has already been incorporated in like the
Unidentified Participant
FY26 projection that you’ll have given or that can be revised up like certain businesses were already factored in.
V Srinivasa Reddy
Certain businesses it will be taken even as of now the whatever the 20 plus kind of growth. And we’ll upgrade what you call update our guidance soon after all the things are in place. Actually no, because see you need to look at the overall order flow because somebody projected something there may be a marginal drop. Somebody new business may be coming in. So we need to continuously see. Once we are sure about it then we’ll definitely let you know. So we’ll inform the investment community see about our guidance.
Unidentified Participant
Hello. Okay, thank you, sir.
Operator
Yeah. Thank you. May I ask, Mr. Kush goes running? Yes, sir. How are you?
V Srinivasa Reddy
Yeah, fine, thank you. Please go ahead.
Operator
So two questions. One is if in one mega mode turbine, let’s see if it’s a 1 megawatt turbine. How much casting is required? Around 12 tons. 12 tons. And today we can go up to what 7 megawatts or 5 megawatt is the maximum. And for offshore? Offshore? No, offshore sizes are quite big because in offshore today initial turbines were 12 megawatt but now 15, 18, even 25. Also getting installed? Actually, no. Yeah, it’s a open question. So then we are just now building capabilities for the onshore ones.
V Srinivasa Reddy
You’re right because Today onshore itself 6, 8 minutes, also running in China. But India predominantly is running on 3 megawatt platform. But somebody is trying to go into the 5 megawatt as well. But next three to five years I don’t see any this, you know, bigger megawatt of 6 or 8 megawatt coming into India.
Unidentified Participant
So Siemens has launched a 5 megawatt,
V Srinivasa Reddy
If I’m correct, in Europe, not Siemens. Nordex is running on 5 megawatt. Adan is running on 5 megawatt. Siemens MSI is running on 3.3.
Unidentified Participant
3.3. Okay, sure. Thank you.
Operator
Thank you. Yeah, I’ll take last question already. 5, 8. Mr. Daril Pand
Unidentified Participant
. Hi sir. Good evening.
Operator
Good evening. Yes please.
Unidentified Participant
I hope you’re doing well.
V Srinivasa Reddy
Yes, fine. Thank you. Yes, sir.
Unidentified Participant
Sir, just one question. I joined a bit late. I just wanted to understand. We have, you know, increased our capex. That was, I guess it was 157 and now it is around 197 and we are adding it in the machinery side in the in house machining part. That’s phase two. Actually. Initially we were targeting for 10,000 tons. But looking positive, business environment. Plus considering the lead time for installing the machines because of the controllers and chips involved in that, the lead time for the machines are going up to 15 months. Actually no. So if I go and order after completion of this project. So these new machines will not be available even during FY27. So to avoid that we have gone ahead and the place the order which are lined up for installation by Q4 of FY26.
V Srinivasa Reddy
Okay. And so just to ask you, in first phase we are, we are adding 10,000 TP and there we are, you know, taking up 67 crores. And in phase two we are just utilizing 30 crores. So how is this different coming difference coming. I think this question I have already answered really sorry, really sorry. No problem. See the base infrastructure is already built for 30,000 tons only machines we are adding so that’s the reason why there is a less amount for the incremental capacity addition.
Unidentified Participant
Okay, okay. And final thing will be on the whatever capex we are doing till date is it through internals or debt? How have we done this? You can go through our earlier presentation it is given a very detailed, elaborate.
V Srinivasa Reddy
Thing. It is in combination of these three things. One is the rights issue, money. Second is internal. Third is through debt. So all those numbers, breakups are given in our presentations.
Operator
Okay. Okay then. Then I’ll. I’ll. I’ll. I’ll see that. Thank you so much. Thank you so much. Thank you. I don’t see any other queries. You can go ahead and conclude.
Nilesh Mankar
So from my side, I once again thank all of you for joining this talk. And I’ll request Niles to conclude this meeting.
Operator
So thank you everyone. On behalf of entire synergy and management team, I would like to thank all the participants and investors for joining today’s meeting. Thank you once again. Thank you all. Thank you. Thank you. Reddy sir, the recording has stopped.