Synergy Green Industries Ltd (NSE: SGIL) Q4 2025 Earnings Call dated May. 14, 2025
Corporate Participants:
Nilesh Mankar — Secretary
Shreya Shirgaokar — Management Executive
V Srinivasa Reddy — Executive Director
Analysts:
Aditya Mutha — Analyst
Niteen S Dharmawat — Analyst
Darshil Pandya — Analyst
Kumar Saurabh — Analyst
Parth — Analyst
Keshav Kumar — Analyst
Riken Gopani — Analyst
Jiten Parmar — Analyst
Chandresh Malpani — Analyst
Mohit Jain — Analyst
Khush Nahar — Analyst
Pratik — Analyst
Kunal Mehta — Analyst
Prem Luniya — Analyst
Presentation:
Nilesh Mankar — Secretary
Hello, everyone. Thank you for joining today’s call. My name is Nilesh Mankar and I’m hosting today’s call. Before we begin, I. 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 for your understanding. This meeting is being recorded so shall we move to the disclaimer Ma’ am? Yeah, so this is a disclaimer from company’s point of view. You may take a print screen of the same and you can go through in detail. Yeah this is today’s agenda. First I will give brief introduction about the company. Later on Shreya Ma’ am will give the Investor presentation for Q4 of the financial year 202425 and later on Redisa will take all the questions of the participants. So these are the guidelines of the call. All the participants are kept on listen only mode by the host. All the participants are requested not to record the call. Questions from the participant will be addressed in a Q and A session at the end of the investor presentation by the management. During the Q and A when called out by the moderator, we request you to introduce yourself with your name, organization and the question. Participants having multiple questions can email us on email ID mentioned in the chat box and management will make best possible efforts to respond within seven days. Thank you for your cooperation. So Dear participants, welcome to the quarter four earnings call of the financial year 2024-25. An investor presentation of Synergy Green Industries Synergy Green Industries Limited is one of the India’s leading start of art start of the earth state of the art foundries producing SGI gray iron and steel casting for wind turbines, wind gearbox and general engineering industries in the weight range of 3 metric ton to 30 metric tons. Synergy Green Industries has an install capacity of 30,000 metric ton per annum and is in the process of upgrading up to 45,000 metric tons. The company houses best in class equipment, IT infrastructure and quality testing facilities and is a top supplier to major wind OEMs as well as leading gearbox players in the world. Agile is a part of the Shingalker Group which has diversified business interest over its 80 plus year history spanning across sugar manufacturing, foundries. Hospitality and market research among others.So these are the panelists for today’s meeting. First, Mr. V S Reddy, Executive Director. He 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 plastics. Over his career he has worked for corporate like Lit, ISGEC and Simplex in establishing clients and managing businesses before joining Synergy Green from Exemption. Secondly, we are having with us Shreya Shirgaokar, Management Executive. She has completed her MBA in Finance and has worked with Deloitte as part of their energy and industrious research team for over four and a half years before joining Synergy in 2020. And myself, Nilesh Mankar. I have done MBA from Indira Gandhi National Open University and I have completed my company Secretary and working with Synergy Green Industries for more than 13 years in Secretary Department. So now I would request to start the Q4 Q4 presentation for the financial year 2024 20.
Shreya Shirgaokar — Management Executive
Sure. Thank you Nilesh and good afternoon everyone and thank you for taking the time to join us today. I’ll be walking you through the performance for the last quarter and the full year along with a quick snapshot of the industry landscape and then finally talk about what we see ahead in the business. It’s been a year of steady progress for us with strong momentum on our strategic investments and encouraging signs from the broader industry. So I’ll start with a quick look at the industry trends, we’ll move into the highlights of our performance and then finally touch upon the outlook for FY 2526.
So as we know, climate urgency, geopolitical disruptions and fragile supply chains are all around us and the global economy as we know it is being redefined and it’s being redefined around resilience, renewables and sustainable manufacturing. Renewables and therefore the wind industry are not just clean, they are critical at the moment. Simultaneously, India is also rising as a global manufacturing hub. As we know the global economy is expected to grow to $112 trillion by 2025 and renewables are expected to form about 70% of the world electricity generation by 2050 by 2050. And the world is also betting on renewables. We see that there are at a global level, net zero targets, Paris Agreement, climate financing and also at country. Levels such as India’s Panchamrad goals at COP26 coming to the wind installations at an India and global level so India has had 4.10 gigawatts of onshore install new capacity additions in FY24 25. This is a 20% growth over the previous year. There are some key growth drivers that are supporting this kind of growth. One is the minimum renewable mandate to discoms. There is a 10 gigawatt of annual windbits and wind RPOs which are expected up to 2030 and this is all in line with the targets that are set by the government for a carbon neutrality by 2070. Looking at a global level, global wind installations have they’ve achieved 117 gigawatt of capacity additions in 2024. This is nearly equal to previous year’s highs but still falls short of the 320 GW annual installations which are required as per the COP28 startup which is to triple global renewable energy capacity by 2030. What the GVEC or the Global Wind Energy Council is projecting is a compounded annual growth rate of 8.8% through 2030 for additional wind capacity and adding nearly 1 terawatt of capacity during this period. Just to put this into perspective, there is a magnanimous growth Runway for the industry which has taken the last 40 years or historically. It has reached its first terawatt mark in 2024 and it’s set to achieve the same feat within an accelerated timeline of just seven years by 2030. Looking at the market that we operate in, that is the large castings market. As we know at a global level the total demand for all castings is 110 million metric tons. We are mainly focused towards wind and wind demand for castings is 1.5 million metric tons which is estimated to cross 2.3 million metric tons in the next five years. Additionally, large castings market is estimated to be over 8 million metric tons for us. I’ll quickly go through the company profile. As Nilesh mentioned, SGL is one of India’s leading manufacturers of large size critical castings for wind and general engineering products. Our weight range is between 3 to 30 metric ton single piece castings and we’re in the process of upgrading to 45,000 tons per annum capacity. We have state of the art facilities and to draw your attention to the quality certifications that we have, in addition to the ISO 9001, 14001 and 18001, we’ve also added a TPG certification as well as ISO 27001 and 5001, which stand for information technology management as well as energy management systems. Respectively, our products are mainly catering towards wind castings which account for about 70 70% of our overall product portfolio. Besides these we also cater about 15% of our portfolio to gearbox castings and the balance goes towards non castings such as to applications in mining, plastic injection parts as well as pumps coming to our customers which are one of our key strengths for Synergy. Looking on the left hand side we have a chart showcasing the leading wind OEMs in 2024 globally. Out of these, Synergy is a trusted partner to 50% of these top 10 wind OEMs globally. Vesta, Siemens, Gamesa, GG Vernova are already clients that are onboarded for us and Envision and Nordex are in the process of getting onboarded. Besides these we’re also partnering with Adani, Senveon as well as Flender and ZF in the gearbox space and at the bottom we have some of our key non wind customers. Finally looking quickly at some of our strengths, opportunities as well as weaknesses and threats and how we plan on overcoming them. Our strength is the ability to produce large size castings up to 30 metric tons and to build large capacities with highest capital efficiency. We’re also, as I mentioned, established. We also have established products with top global OEMs. We see excellent growth opportunities in renewables with high entry barriers in terms of both knowledge as well as technology. India has also been converted as a manufacturing hub and that is offering excellent potential for growing casting demand. Trade wars and global sentiments are also favoring India’s demand. Some of the weaknesses that we see are the limited capacity that we have compared to some of our peers. This we’re kind of mitigating by scaling up in the current year to 45,000 tons per annum. Secondly, we’re also outsourcing 100% of our machining of which in the current CAPEX cycle we’ll be taking some of this capacity in house. Some of the threats that we foresee are a concentration to the wind industry. However our facilities can produce large size castings to any other industry with some lag. We also see that there are volatile commodity prices could impact profitability. However, our key commodities are hedged with customers on quarterly basis coming to the business performance. Looking at our annual capacity utilization over the years we’ve increased our capacity utilization with sustainable growth and production. FY2425 marked a milestone year with our foundry operating at near peak utilization of 88%. This reflects our strong execution and a robust demand environment. It’s also reflecting a strong alignment. Between our production capacity and customer demand and it validates the need for our expansion projects which are already underway. Moving to the Income statement, our total income for the quarter ended 31st March 2025 stood at 97.91 crores. This is an 18% growth from the same quarter in the previous year. For the year ended March 2025 our total income stands at 363.68 crores, an 11% increase over the previous year. PBDIT for the quarter stood at 15.31 crores, a 45% increase over the same period in the previous year. And for the entire year of FY25, PBDIT stood at 53.70%. This is a 31% increase over the previous year where PBDIT was 41.10 crores. Looking at the PBDIT margins, margins for the quarter stood at 15.64% or 294 basis points increase over the same quarter in the previous year. For the entire year FY25 PBTIT margins stood at 14.77%. This is a 224 basis points increase over the 12.53% PBDIT margin in FY24. The profit before tax increased by 90% in the fourth quarter of FY25 and stands at 7.67 crore for the entire year. PBT stands at 24.99 crores a a 60% increase over the previous year. Finally, profit after tax clocked in an 18% increase in the latest quarter and stands at 3.84 crore. Similarly, profit after tax for the entire year stands at 16.89 crore, a 46% increase over the previous year which stood at 11.56 crore. Looking at some of the key highlights of the balance sheet which remains healthy and positioned to support our growth plans, our net worth has strengthened by nearly 2.5 times which is supported by solid internal accruals and the successful rights issue which we completed in October 2024. This capital raise has improved our leverage profile and it also reflects the confidence of our shareholders in our long term growth strategy. Coming to the Borrowings We’ve undertaken to increase the long term borrowings to support our CapEx program and remain comfortably within reasonable debt levels. Our trade payables have remained stable and within our working capital norms and our vendor relationships remain strong. Our payables position. Reflects our healthy procurement cycles which are aligned with our expanded operations. Coming to the to the Assets Non current assets have increased in line with the execution of our CAPEX rollout and includes investments already underway towards equipments, civil, etc. Trade receivables saw a slight increase during the year. This is primarily due to last minute receipt of certain letters of credit near the year end as well as growing business from MNC clients. Many of these MNC clients operate on open credit terms, but these are high quality receivables with very low risk and that’s why they are also aligned with our strong customer profile. Our inventory levels are within the controlled expected levels A brief overview of our Revenue streams and PPDIT Our revenue streams are split into five areas Wind, domestic OEM exports, Direct exports, Gearbox and non wind. During the year FY25 we recorded a revenue growth of 11% over the corresponding period of the previous year. This was largely driven by direct exports as well as gearbox segments. Based on the executable order book projections for the coming year, we expect a 20% growth for FY 2526. In terms of revenues, looking at the PBDIT, PBDIT margins expanded by 224 basis points from 12.53% to 14.77%. As I mentioned earlier, in absolute terms we’ve had a 31% increase in PBDIT and standard 53.7 crores for the year. Additionally, the Board has also recommended a 10% dividend on equity for the year. Coming to our overall cost structure and CAPEX plans and the status of our CapEx, the CapEx plan for about 187 crores has been split into three areas Foundry Capital, renewables and in house machine. The foundry capacity expansion is well underway and we’re expecting to receive these operational receive the operational capacity in Q2 of FY26 the renewable project to increase from 2 megawatts to 10 megawatts is already underway and we’re expecting it to be operational this month in the first quarter of FY26. In house machining was split across two phases. The first phase we expected to be operational by the third quarter of FY26 and the second phase to be operational by the fourth quarter of FY26. At SGI, we also believe that environment goes hand in hand with economics and we’ve taken various initiatives to triple the bottom line. These include technology leadership such as process automation and digitization Energy optimization. Reducing our carbon footprint through. Renewables and achieving 50% green production by 2030 and also waste management. In terms of waste management we will start. We have also enhanced our sand recycling from 92% to 98% with the help of thermal reclamation. Finally we come to the performance outlook and some medium out medium term outlook for FY2526 we’re expecting a 20% revenue growth supported by robust order book projections from major OEMs as well as some benefits of capacity expansion. We’re expecting export revenues to remain stable close to the previous year and PBTIT margins are expected to expand by another 100 basis points from the previous year supported by partial contributions from some of the strategic ongoing investments. That said, many of you know that as a part of our expansion, including capacity additions and new infrastructure, these will be actively underway during the first half of the year. So we do expect some operational disruption in Q1 and slightly more in Q2 because construction activities as well as commissioning activities will be picking up pace. This may have a marginal impact on our output, but it’s something we’ve already factored into our planning and customer schedules. And most importantly these are temporary and well managed adjustments and they tie into the long term capacity and capability building and we’re confident that we’ll begin to see some partial benefits of these investments in the second half of the year. Finally, in terms of medium term capabilities and the path ahead, we do see an opportunity for one more greenfield expansion in the next three to four years. But at the moment we’d like to concentrate on seeing through the current round of capex over the next year and then give another couple of quarters before we begin planning for the next leg of growth based on a very strong balance sheet. With this I would like to end the investor presentation and hand it back to Nilesh to open the Q and A. Thank you.
Questions and Answers:
Nilesh Mankar
Thank you Shaina. So I can see four by hands has already been raised. So without wasting much time I will start with the Q and A session. First I would request Aditya Muthasar. You can unmute yourself and ask your question.
Aditya Mutha
Hi ma’ am. Congratulations on getting back on the growth part one question. Ma’ am, you are constantly missing your guidance. So what? What gives you confidence to give a 2420 growth guidance for FY26
V Srinivasa Reddy
Myself ready here. See if you look at the the last year guidance what we gave around 200 basis point or 150 to 200 basis point growth in the EBITDA margins and also we given a guidance of 370 crores top line. If you look at the actual outcome, EBITDA remains same, more or less within a just a half a percent deviation. And the top line has against 370. We did about 364 or maybe around 2%. Short of the guidance what we gave. But there is a increase in our EBITDA margins as we are almost reaching closer to 15%. So I don’t see there is a big gap between what we have guided and what is really happening as far as growth is concerned. We don’t see any challenge actually. No. So we have already backing with a good order book. One of the constraint part we have last year is the capacity constraint because we are working with almost 88, 90% kind of the capacity utilization. Once the new capacity comes in place, I don’t see any reason there should be any challenge. In fact, if you look at the current year, the order book is much, much higher than what we are given a growth guidance. But we’re constrained by the capacity constraint. So we need to push back some of the schedules to this third and fourth quarter because once the capacity comes in hand, we’ll be able to take the 100 more orders.
Aditya Mutha
Sir. So I was reading a Note from Novama. September 23rd, they visited your plant and you were. You were about to expand your capacity at that time also. So still the capacity is not expanded. So that is also a pushback.
V Srinivasa Reddy
Please put the period when, when you are talking about
Aditya Mutha
September 23, Novama came to visit your plant and there was a note from Novama. They clearly mentioned you were talking about you. You were you talking to take a capacity from 30,000 ton per annum to 45,000 tonnes per annum. But
V Srinivasa Reddy
Yeah, I understand. You see there are two in it. One is the. We were expecting this fund to be capital to be raised in the May 2024. But actually by the time we complete the approvals with the stock exchanges and the investors and all, we ended up in raising these funds in the month of October. Once we have a funds then only we’ll be in a position to commit these orders. So accordingly it is aligned. So again, at the end of the day, capacity expense is not a world issue. It is. It’s going to take at least six to nine months to do that. We are well aligned to complete that expansion, you know.
Aditya Mutha
Okay. And one question on bookkeeping side, what is this 3 crore of deferred tax which came up in this quarter?
V Srinivasa Reddy
See, since we are in an expansion mode, there are certain assets where as per the income tax, we are entitled to get the income tax benefit. Actually, no. So this is a notional entry into the balance sheet. This will be the future obligation once the corresponding depreciation comes. That will be getting knocked up. But as far as the physical cash flow is concerned, actual tax paid is only 5.1 cr. Actually it is mainly because of the expansion equity. For example, there are electrical equipments or certain asset class. We are allowed to take 100% depreciation in the day one. It’s the income tax calculation related thing.
Aditya Mutha
Okay. Okay, I’ll get back in the queue. Sir.
V Srinivasa Reddy
Yeah, N. Sir? Yeah
Niteen S Dharmawat
Yeah. Thank you for the opportunity. Am I audible, sir?
V Srinivasa Reddy
Yeah, please go ahead.
Niteen S Dharmawat
Yeah. Okay. So towards the end of the presentation, Shia mentioned about the impact of disruptions in. There are some likely disruptions in Q1 and Q2 results. So I would like to understand the impact of that disruption. And if that is there, what is the overall impact on the financial year 26
V Srinivasa Reddy
See whatever the growth is going to come predominantly it is going to happen in the second half of the year once the full capacity is in place. As far as the first quarter and second quarter is concerned it will be at par or it will be better than the previous quarters. But if you look at the growth because somebody may be counting every quarter uniformly getting 20%, 20% and all because majority of the growth is coming in the second half of the year and we have also aligned our order book according to accordingly. See we have taken a lot of new orders like NVZone or Nordics, even Adani and all right now development activity is going on so it is also getting aligned with our capacity, addition and completion of the product development activity.
Niteen S Dharmawat
So will there be any impact on the EBITDA in Q1, Q2 because of that or
V Srinivasa Reddy
I don’t see any impact under the margins actually it should be more or less in line only growth may be coming in the second half of the year. That’s how I say
Niteen S Dharmawat
I got it. My next question is what is the total debt that we have on a console basis now?
V Srinivasa Reddy
Total debt just one second as of March closing we have about 121 crores. But we are not utilizing the complete sanctioned lines from the bank because still cash out payments have to be done during the first quarter and second quarter of this project execution actually. So finally we are looking at it may be around 100. There are two parts. One is the long term borrowing, the second is the working capital. Working capital may slightly go up because of the increase in the business. As far as long term is concerned we are expecting somewhere around 160. 170 crores is the in total actually.
Niteen S Dharmawat
Okay, so we are actually we announced dividend. That’s a a good thing to do. However, my concern was that since we are having some debt and long term debt as well as working capital requirement and we are going through a capex mode so would it not be a prudent idea to know defer this. As a shareholder I welcome this. But on the other side I have to look at from that perspective as well.
V Srinivasa Reddy
The dividend cash outflow is a very small amount actually because this company is into operations for almost 15 years now. So since continuously last three, four years we’re making good profit. So we also need to take care of the shareholders as well actually because total dividend output is just 1.5 across. So it is a small portion of the whole earnings.
Niteen S Dharmawat
I Got it. My next question is what is the additional tariff that we may have from the usa? What will the impact on our profitability because of that, if any?
V Srinivasa Reddy
See, as of now there is not much clarity on the tariff because the proposed tariff of 26% is put under pass as as in date just 10% is there. We believe the government of India will be negotiating further without anything there may be a 10%. I don’t think a 5% or 10% is going to be. Have any impact on the our business relationship with the US clients. But we need to closely see how the tariffs are going to be on the China. Actually, you know, red. So that’s how we look at. But at the end of the day I don’t see much impact because of the tariff either on the demand or on the the profitability. In fact, if you look at previously the way US and China were continuously increasing the tariff, I was getting a lot of calls from US clients. Can you increase your schedule this thing, you know, dispatches actually. But again since we are already concerned with capacity, we are not in a position to take additional schedules actually. So as and that I don’t see any negativity. In fact whatever is there, it seems to be a little positive only from the tariff point of view.
Niteen S Dharmawat
Yeah, I missed to introduce myself. My name is Nitin Dharma from Maur Capital. One final question is I just wanted to check why the depreciation was lower. We had done expansion and some of that must have been on stream now. So expectation was of a higher depreciation. So that’s the reason for asking this question.
V Srinivasa Reddy
Yeah. As far as the last Q4 depreciation is concerned there is a marginal reduction over the previous quarter. One of the reason is when we did a Q3 reporting we were calculating solar projectors also with the WD method. That’s the written down value method. Actually this is methodology used for the all the asset class. But during final audit auditors have got clarification that this solar asset class need to be follow straight line method. That is the reason why there is around 65 lakhs worth depreciation has to be reversed. So that’s the reason why you see in the Q4 there is a minor reduction in the depreciation. Actually
Niteen S Dharmawat
I got it. Wishing you best, sir.
V Srinivasa Reddy
Thank you. May I request Mr. Daril Pand from Pinterest Capital.
Darshil Pandya
Yes sir. Hi. Thank you. Good evening.
V Srinivasa Reddy
Good evening.
Darshil Pandya
Sir, just to understand from the previous participant question what will be the depreciation for this financially?
V Srinivasa Reddy
This again depends upon the the how timing of the capitalization of the assets and all those kind of things. But how we look at is what is more important as a. The next year. Actually you know, so at peak level it may go up to as high as around 24, 25 crores. This year it may be closer to 18 to 20 crores is what we are estimating. Actually we need to detail calculate based upon the asset capitalization.
Darshil Pandya
And sir, just to understand is from your understanding the I saw one of the presentation slide where you know, where we have discussed about the wind installation where you know, it grew by 20% this year and last year was 71%. So is the capacity only the issue that you know that we are not able to grow with the. With the industry or something? What is it?
V Srinivasa Reddy
Yes, because we are already utilizing 88% kind of the 88 is not a this thing. It’s a big number as per the utilization is concerned actually. So one of the reason is main. Yes, you are right. It’s a majorly is the capacity constraint actually today.
Darshil Pandya
And what capacity? Today we are adding around 15,000 tonnes. What kind of revenues can this give us?
V Srinivasa Reddy
See as we quoted earlier we are expecting somewhere above 550 to some or up to 600 plus is what we’re expecting from the existing new capacity addition. But actually if you look at the order book what we are taking and the new customer we are adding it’s already appearing that it’s exceeding overshooting the 600 crores kind of the order book. Actually no
Darshil Pandya
600 crore is the order book is what you’re saying.
V Srinivasa Reddy
No, not like that. The products which we are developing, the visibility for exceeding the 600 crores kind of the order book
Darshil Pandya
By one. By what time?
V Srinivasa Reddy
See the next year we should be able to do another 30 plus growth what we are expecting. Actually no. So next year majorly around closer to 530, 550 crores we should be able to reach.
Darshil Pandya
Absolutely. And one last question is on the cash flow statement side sir, so what is this? Other current financial assets of 48 crores in the cash flow.
V Srinivasa Reddy
See this is mainly because of the GST amount. When we do the capital expenditure we get a GST credit that goes under other financial assets but it will get diluted during the course of business. When we do the invoicing some of the portion of the the GST will get diversity to our books.
Darshil Pandya
I’ll. I’ll get back into the some few more questions.
V Srinivasa Reddy
Thank you. May I request the scientific investing to unmute yourself and go ahead with your question please.
Kumar Saurabh
This is Kumar Sarath from Scientific Investing Congress and good set of numbers. So sir, my question is around. If we look at the current P L of the company From EBITDA to PAT we lose 66% of the number. So 52 crore of EBITDA and we end up with 17 crore of PAT. If I see 33% goes to interest, 33% goes to depreciation in the market. This gives an impression that this is a very very asset heavy business. That is why we are able to convert only 33% of EBITDA into PAT. I know it’s a business which is in high growth phase. Last two, three years, we are doing well. But if you see this business five, six years down the line, do you see only 33% of your EBITA converting into PAT or this business will transition? That is the question I have.
V Srinivasa Reddy
Okay. See this is always when you do a Capex, if you look at the WDV method calculation, depreciation of the methodology, there will be steep depression in the initial phase of the this thing, you know, after completion of the capex, I don’t see this number is going to be remain like this. There is a significant portion is going to get converted into the profit probably two or three years down the line. For example, if I have to quote, we need to do the detail. But I am giving just for an example, say first year, As I mentioned, 25 crores is the peak the depreciation. But later here it may significantly drop to say 21 crores or 20 crores. So gradually. Actually the ratio the PBD versus the EBITDA will significantly change within 2, 3 years actually no.
Kumar Saurabh
Okay, thanks for the clarity on the depreciation side sir, even on the interest side right now our interest cost is as equal as our PAT Again I know we need capital and that is why we are taking this debt Also we have raised capital but again five, six years down the line do you see us becoming, you know, more asset light in terms of our interest to PAT ratio or do you see that number staying there? Because this business would require capital for grow
V Srinivasa Reddy
See I would like to request you to look at the EBITDA numbers for a manufacturing growth organization actually no, it doesn’t take much time to EBITA to convert to pat the reason is once the depreciation comes the depression is going to knock off the borrowing is actually known so both depression will come down and also the interest also come down so whatever EBITA we have in our hand so that will be straight away converting into the PBTR Pat actually no, so I don’t see there is any this thing it’s just because of the Capex cycle you are seeing that kind of numbers you should look at a matured level actually you know even if you look at the current year number the capex will be peak there may be a good amount of depreciation but still that asset is not put to use which is going to come in the next financial probably two years down the line if you look at there will be steep increase in the the profit and because the depression and interest are going to come down dramatically actually you know but if you look at the financial numbers last two years consistently we are continuously expanding our margin as per the guidance even this year also very healthy expansion of 225 basis points we could margin and we are giving further expansion guidance in the next two years
Kumar Saurabh
Thanks a lot sir. One last question on the industry I don’t know one of the videos or one of the con calls so you had a view on, you know, the wind energy versus solar energy and you had your points why wind energy is better compared to solar There is an antithesis to this where land acquisition and all is very very difficult in wind energy and hence the rate of growth of wind energy maybe you know it’ll be lesser than solar so what is your point of view on this sustainability of the growth rate of wind energy given the antithesis points which are prolific Good.
V Srinivasa Reddy
See you should look at two aspects. One is the growth of wind industry in India second is growth of Synergy Green okay, Synergy Green revenues dependent upon domestic market and the international market. As far as coming to your point, comparison between wind and the solar See, both the technologies have got their own pros and cons. If you have to put up a solar per megawatt, you need to acquire 4 acres of land, as against wind you need only 1/4 of AC land. So the challenges involved in land is much lesser in wind compared to the solar actually. But again, you may be getting biased because of the kind of growth solar had in the last five, six years. It is mainly because the size of the capex what it goes in a solar it’s much simpler as you know it’s a panel and installed and it goes. But at the end of the day a country like India if it has to move towards the net zero wind cannot stay back because solar cannot generate electricity in the evening and night. So there has to be time to catch up along with the solar at the industry. At the end of the day both has to match for the power generation to achieve the round the clock energy. Actually no.
Kumar Saurabh
Okay. Okay. Thank sir and I’ll come back in the queue. Wish you all the best for coming quarters.
V Srinivasa Reddy
Thank you Mr. P.
Parth
Hi Reddy Sir. I hope you’re doing well. Am I audible?
V Srinivasa Reddy
Yeah, yeah. Please go ahead. Thank you. Yeah.
Parth
Yes sir. So I have a couple of question. A lot of my questions have already been answered. One you mentioned we’ll be able to post a 20% question growth next year. Considering that our capex would be coming in the second half of the year we probably need to fully sweat the capacity in H2. Do you think that is achievable?
V Srinivasa Reddy
No, we are not targeting for a full capacity relation Even in the Q3 or Q4 we have considered factored in only partial enhanced capacity coming into the picture. Actually no. So full capacity utilization will be happening during FY 2027 but the growth what we have projected that can be easily done with a partial increase in the capacity itself.
Parth
Okay, noted sir, noted. Second sir, on Chinese cost differential previously it was noted that Chinese castings were about 25% cheaper than domestic products. With current global cost and tariff dynamics in play, what is the present cost differential between synergies, offerings and Chinese imports?
V Srinivasa Reddy
See these numbers are changing on a daily basis. Actually no, just I have to give you some example. When Trump had a 10% tariff and all those things there was a fear in the domestic steel manufacturers there may be dumping from the China to India. Then India government came back with a what you call safeguard duty of 10% all of them. So there is a lot of change in structure of the tariffs and duties but at the end of the day one thing I would like to tell actually no, I don’t see any impact onto the demand because of all these things are happening and at the end of the day Western OEMs one who is placing hard on us they are not looking at a purely at a 2% 3% price going up, going down and all those kind of things. Actually no, they are looking at a China plus one and significantly trying to diversify away from China. And as far as margin is concerned, the strategic investment which we are taking up both on the machine and also the solar. And apart from that capacity increase, all three are going to give a good increase in our margins. Actually.
Parth
Perfect, sir. That’s it. From my side. Thank you for taking my questions. I’ll join back the queue.
V Srinivasa Reddy
Mr. Kesha.
Keshav Kumar
Hi. Yeah. Sir, what will be the IRR of this 97 crores of machining capex? More specifically, if you could help understand how it will affect the revenues and the margins.
V Srinivasa Reddy
See, I think we already put up a presentation in the detailed about the margin contribution and all just to again repeat. We are expecting a 3% kind of the minimum EBITDA expansion because of the machining. Another 2% from the solar. Actually no. So 3 plus 2, 5% is the what we are expecting as far as payback period of both the investments are less than three, four years. For sure, anywhere between three to four years.
Keshav Kumar
What will be the impact on revenue? Sir,
V Srinivasa Reddy
As far as revenue is concerned, we are expecting 50% increase in the the capacity. And if you take the baseline of say current year closes to 360, maybe around a 60, 70% growth in the revenue should be possible.
Keshav Kumar
No, no, I meant not the expanded castings capacity but because of the machinings coming.
V Srinivasa Reddy
No, no, there will not be any increase in revenue because of the machining because that is a backward integration. So that will only improving our contributions.
Keshav Kumar
Okay, so essentially we’ll be also invoicing to the same counterparty.
V Srinivasa Reddy
Yeah, we’ll be doing it ourself actually. Because today also we are having a scope with machining. But only thing is we are getting it outsourced with our supply chain and tomorrow we’ll be doing it ourselves.
Keshav Kumar
So would there be any benefit in the working capital when that comes in?
V Srinivasa Reddy
Yes, we are expecting some marginal improvement, maybe a week or two improvement in our total working capital cycle. Because today there is a lot of waiting time on transportation time, our vendors and coming back that time we should be able to reduce.
Keshav Kumar
Okay, and so lastly, what was the tunnet sales in SY25 and Q4?
V Srinivasa Reddy
Q4? You want maybe around 6200 or something like that. Because if you have posted this question earlier, I would have answered because this is the number somewhere close to 6200. I think we are having around 140 rupees is the average realization you can back calculative. Yeah.
Keshav Kumar
Okay, so just to sum it up, the 50% expansion in the castings capacity will be directly contributing to the revenue and we’ll benefit 2% on the overall margins because of backward integration.
V Srinivasa Reddy
Machining 3% and solar 2%. Totally 5.
Keshav Kumar
Okay.
V Srinivasa Reddy
Yeah.
Keshav Kumar
And what are the timelines for this? The utilization of whatever schemes we have right now.
V Srinivasa Reddy
See, this project will be getting completed this year. Next year we should be able to realize the world majority of the things what we are doing now.
Keshav Kumar
Okay, so FY27 should be.
V Srinivasa Reddy
Yes, it should be a good representative year for the complete investments.
Keshav Kumar
Okay. All right, sir. Thank you. That’s all from my side,
V Srinivasa Reddy
Mr. Rican. Gopani.
Riken Gopani
Hi, sir. Thank you so much for the opportunity. And congratulations on a good set of results, sir. Firstly, I would like to just understand a little bit on the a topic that you mentioned in the first half there may be because of cap. Capacity constraint. A little bit of a flattish. I just trying to understand. So in the first half of last year we did about 165 crores of sales and then the second half we have done about 195. So of course there have been maybe some debottlenecking which has helped the second half do better top line. So are we saying that we can maintain the second half run rate or how do we look at your flattish commentary that you mentioned?
V Srinivasa Reddy
No, actually if you look at the order book point of view, many of the Indian clients have the trend of the first quarter and the second quarter little slow takeoff. Actually know our consists of MNC clients and domestic clients. The second is particularly Q2. If you look at the total wind industry trend, generally due to rainy season the installation has moderate action. Then Q3 and Q4 significantly it picks up. Nevertheless, what we see is there will not be. There should not be any drop in the revenue in the first half. Result there should be, we are expecting some growth and once the capacity in place, significant growth in the second half of the year.
Riken Gopani
Okay, so you’re saying basically some growth on a Y and Y basis in terms of revenues is what you expect. And then the 20% should primarily be dependent on second half numbers.
V Srinivasa Reddy
You’re right.
Riken Gopani
Got it. And secondly, I wanted to understand your gross margin trajectory in this quarter. Again we have seen an expansion in gross margins. And if I look at your segmental breakup that you mentioned in the presentation, it seems that the domestic revenues were larger in this quarter compared to the export revenue. So despite that you’ve seen a healthy gross margin expansion. If you could outline what has helped the gross margins and how should we think about it for the next year.
V Srinivasa Reddy
See, there are multiple things are happening simultaneously actually. One is the sourcing of the raw material. The second is the nature of order book, for example the exports and the currency the realization. And also we are doing a lot of capex. Like we have added a thermal declamation in the Q3 which has come into the operation in the Q4 which was contributing another half a percent kind of the margin. Actually even if you take current year also it is a dynamic nature continuously we are expecting a margin expansion probably in Q1 also if not Q1, Q2 for sure there should be a good amount of margin expansion because solar project will be coming in, generation will be coming in place. So that will be contributing to our additional margin.
When I go to Q3 partially mentioning capacity is also coming into the picture. So we should not look at a very short period of a quarter or like that. But if you look at overall weighted average trajectory, we see as per the overall guidance, there should be margin expansion.
Riken Gopani
No, I understood that bit, sir. I’m just basically saying that RM2 sales has seen a meaningful improve. So I think Q3 was at around 59% gross margins and that has been at about 61% in this quarter. So this basically. Is driven by these measures that you mentioned the thermal insulation and the product makes send the dollar rupee so that those that that number that you’ve seen this quarter do you see that sort of sustaining towards and then of course the other benefit that will come because of power and machining are on top of that but this performance on gross margins is expected to sustain
V Srinivasa Reddy
Should be closer to these numbers we don’t see significant thing because we also need to look at for example when we go for a sourcing of the material Sometimes we get a good opportunity source at a competitive prices Sometimes it’s a this thing depending on the availability actually no. So the current quarter also like as I mentioned because of the tariffs and other things there was a marginal increase in the. The steel prices but it will take a quarter or so to pass on to my client actually no. So we should look at a broad level action no, this margin guidance what we’re giving half a percent year then keep all. There should not be any significant impact actually no,
Riken Gopani
Got it. Sir sir, also just one clarification I wanted you. You I think got an ESOP scheme approved so has there been any cost associated to there in your P L in this quarter?
V Srinivasa Reddy
Yes, that is already built into the. The salary structure employee cost what we have mentioned actually no.
Riken Gopani
Okay. No, so there was no one off cost related to that in. In the P L in this quarter. I just wanted to sort of
V Srinivasa Reddy
The regulations we’ll be splitting across like if we are allotting for three years that will be every year the equivalent proportionate amount will be debiting to the balance sheet under the employee cost.
Riken Gopani
Understood? Okay, got it, got it. Thank you so much. And from my side thank you.
V Srinivasa Reddy
This is Jiten Parma
Jiten Parmar
Good evening. Red on good set of numbers. So most of my questions have been answered but one is I want to know how much is the contribution of U S exports to our revenues
V Srinivasa Reddy
Last year is about 25%
Jiten Parmar
Okay, so now I know this has been topped in the previous questions also but assuming that you know current tariff structure stays like 10% for India, 30% for China and China being our main competitor, let’s say in the U S market how, how. How much competitive do we get? I mean are we able to. I think in previous calls you had mentioned like the 20 differential they have and all that. So will that if this. These structures stay are we in a much better position as far as competitiveness is concerned Especially in the US market?
V Srinivasa Reddy
Yes, See the. One of the reason for doing this capex is two things One is to expand our margins. Second, also improve our competitiveness. Actually, no. And as far as the order book and the impact of. The tariffs is concerned. I don’t see much significant debate. Again, the majority of the exports are coming from Westers actually know. It also depends on what Vestas want to do. Many a times they get incentives for assembling the turbines in us Sometimes they also prefer to do it in India based on their own cost. They keep on shuffling between India and us. As far as our revenues test is more or less consistent. Actually no. The export, export part of it is coming mainly from the both Westers and the ge. But we should look at as a. Overall there are so many business dynamics. Something goes up, something goes down and all. But overall we see there is not much of an impact on the export business. In fact we are given a guidance. The current year also should be closer to the similar number. Not percentage but similar number because there is going to be revenue growth, maybe flattish kind of thing from the export revenues.
Jiten Parmar
Okay, and what about would there be any impact of dollar weakens? How much would that impact us?
V Srinivasa Reddy
See, generally when we do the pricing, we do the updated dollar pricing. Actually no, because at the end of the day it is a competitiveness. So customer also expects some person because same thing, when it goes against us, we’re going back to the customer to knock them. But at the end of the day when you do exports apart from the dollar, there are some others, some passive benefits like export incentives and other things. So we get slightly better contribution on the exports compared to the domestic market. Actually
Jiten Parmar
Perfect. And just one more question. Why was the tax rate higher in this quarter compared to
V Srinivasa Reddy
I think earlier? It is mainly because of the deferred tax. This thing liability is mainly because of the. There are certain assets as per the income tax we are allowed to take 100% depreciation on the first year itself like electrical installation and all those things. So that calls for a creation of the equivalent liability that needs to be paid during the course of time. Like next, whenever the depreciation act happens, according to the company act that will get. It’s a notional transaction in the balance sheet actually.
Jiten Parmar
Oh, perfect. That’s all from myself. Thank you
V Srinivasa Reddy
Mr. Chandra.
Chandresh Malpani
Hello. Am I audible?
V Srinivasa Reddy
Yes, please.
Chandresh Malpani
Yeah. So myself Chandrish Malpani from N. Thank you for the opportunity, sir. So my only question is regarding the MNRE new guidelines with respect to, you know, more local sourcing of blades, generator, gearbox, which will be required going forward. So how do you see that amendment? Will that, you know, impact the installations of wind in the country or does the local manufacturers have the capability which can, you know, be sufficient
V Srinivasa Reddy
According to me, India is already doing more than 10 to 12 gigawatt as far as the supply chain is concerned. Actually, even though domestic market is performing around 4 gigawatt level, a lot of exports are happening. One is a. Direct export of the components by the supply chain. And also OEMs assembling the turbines and exporting. Actually I don’t see any constraint in the supply chain side. Actually no. Today there are Some of the OEMs Chinese O directly they are importing the turbines in a CKD condition. They may have challenges. But at the end of the day there is enough supply chain in India to take care of the.
Chandresh Malpani
Okay.
V Srinivasa Reddy
Mr. Mohit Jain. Mr. Mohit.
Mohit Jain
Yes. My question has been answered. Thank you.
V Srinivasa Reddy
Yeah, you’re welcome. Mr. Aditya, you want to ask any further questions?
Aditya Mutha
Yes, sir. Yes, sir. Sir, in your presentation you are. You are increasing your machining capacity also. So the phase one you said. You have mentioned phase one capex will take around 67 cors. And phase two will take 30 crores. And the amount of capacity which is coming live is same. So why is this difference of 37 crores between phase one and phase two?
V Srinivasa Reddy
See, basic infrastructure is common for both phase one and phase two. So that’s the reason why you see there was only a partial increase in the cost to add additional 10,000. Even if I have to add another 10,000 capacity I’ll be spending same similar around 30, 35 crores. Kind of the level. Actually no. Because the land, the building, the base infrastructure is created in the phase one itself.
Aditya Mutha
Okay. And sir, on the guidance part August 24th presentation of your company said you will grow 20% in FY24, 25. But somehow you grew by 13%. And this is. This is what. This is what is concerning me as an investor. Sir, when we can grow. When the industry is growing very rapidly. We can grow very rapidly. Sir, how can capacity be a constraint for us to grow? You should go full with full flow. And in last five years equity markets have been so kind. Whatever amount you want to raise you can raise from equity markets.
V Srinivasa Reddy
No. See it doesn’t happen like that. Just. I would like to give a couple of examples. Actually know if you look at today’s this year which has gone by three customers. Basically SIM, my revenues have dropped by 50%. You know what is happening in SIM? Again there is a turnaround is happening. That customer is coming. There are another two customers like ge. They have closed down their plant. And they are building a new plant in Pune. Looking at the Indian growing demand. So their installations were also almost near zero. Means their revenue has dropped away 50%. In spite of three clients, revenue dropped by almost 50%. But still we have grown by 10%. See, when we give a guidance in the beginning of the year based on the outlook and all we give action. No, that way. You are referring to a guidance which was given maybe 18 months kind of. Time you should also look at the what is really happening surrounding. And based upon that you should factor in actually know. And second thing, coming back to the capacity addition and all, it’s not an easy job to just go and pick up something and dilute the plant at any level. And it’s not that easy in the manufacturing sector to pump in money and create capacity, go and sell those kind of things. Doesn’t happen. Actually no, because you have to understand the critical manufacturing life synergy. You have to build a skilled manpower and you have to build a product base. You have to build customers. And at the end of the day you have to protect yourself if any uncertainty happens like whether it is India Pakistan war or the Trump tariffs or any kind of thing. Actually no. Even if you go back one step, still you should be in a position to stand strong. So we factor in lot of things before. Yes, growth is very important. But created growth, you also look at the sustainability. Actually if you look at last two, three years, we are steadily constantly growing. We are not a company of growing 100% over year. And there can be many companies wherein whether there is a simple sourcing under this thing, they can grow. But this is a hard, hard manufacturing activity. Takes time for a growth. Actually no. And I believe see for any engineering organization, if you take as an example, 2025% growth is a very decent growth. And that too we are in a phase wherein continuously year on year we are doing the margin expenses. So that’s how the EBITDA margins are growing around 4050 per second level. I believe it should be a very decent growth. Actually. No.
Aditya Mutha
Exactly sir. 2025 point growth is very decent growth. Got it sir. So that was the reason why you pushed back on your guidance. Also because some of your customers were undergoing restructuring. And some of your customers were not doing business in full throttle. That’s why, right?
V Srinivasa Reddy
Yes, yes. Say for example, there are a lot of dynamics are happening. Like one of the customer the previous year has done extremely well and he has given me the forecast. But when it comes to reality, he is having a 2 megawatt platform. But the today market conditions are demanding for a 4 megawatt platform. So he has to launch a new. But that’s not a warrant activity. It takes six months, eight months to before you launch a new product. And the finally come to the utilization. Actually no.
Aditya Mutha
Okay, sir. Okay. Okay. Thank you. Thank you very much.
V Srinivasa Reddy
Mr. Daril, you would like to ask any further questions?
Darshil Pandya
Yes sir. I would like to ask.
V Srinivasa Reddy
Yes, please.
Darshil Pandya
Yes sir. So sir, just to understand what kind of order do we have currently?
V Srinivasa Reddy
See, as part of the order book is concerned, it is exactly matching with our execution capacity. Actually, you know, like as I mentioned, this year I am pushing back almost to 40, 50 crores worth orders request given by the some of the OEM section because of the capacity constraint. Again, when I say capacity, say for example we are operating with six or seven OEMs. We are committed some capacity for the one of the OEM. If one of the OEM goes down, I cannot immediately switch that capacity someone else because this is a 6 months to 12 months kind of alignment. Happens before taking the order book and the execution actually, you know, so as far as the order book is concerned, like as I mentioned the projection, the potential today looking at, as I mentioned, it’s almost exceeding 600 crores. Of course we have to create capacity product and all be aligned actually.
Darshil Pandya
Got it, got it. And with respect to sir, this our you know, casting, we can do up to three to 30, uh, metric, uh, this, what is it?
V Srinivasa Reddy
Metric Concussion. Yes.
Darshil Pandya
Yeah. So with respect to our peers, what, what can, what can they do? And just to understand now, where are we standing in this?
V Srinivasa Reddy
I did not get it. What is that?
Darshil Pandya
I mean we can do up to 30, right?
V Srinivasa Reddy
Yes, in the present capacity we can do up to 30 ton largest casting.
Darshil Pandya
Okay, so what kind of, you know, weight range other our peers can our competitors can actually do?
V Srinivasa Reddy
I think in the similar range probably Synergy has produced the largest wind turbine casting in India. That is a 5 mega platform, 30 ton maybe doing 23 to 25 ton kind of range. They must be doing.
Darshil Pandya
Okay, and the one question would be on the sir, on the borrowing side just I’m not able to figure it out how, how our short term borrowings has almost, you know, doubled over the last year. And while our revenues has been, you know, grown at 13, 14%. So so are. Are these borrowings just for the you know, working capital requirement or this is some use somewhere else also?
V Srinivasa Reddy
No, no, actually this particular there is a special impact in the borrowing because of the rights issue money. What we got, we did not park the current account. We parked under deposit against the deposit. We have taken a FDR loan. Actually that is showing at the short term D that is backed by the deposit. So it is, yeah, this not exactly loan. It is a notional transaction. If you see on the top side there will be 52 crores worth. 56, 57 cross worth deposits also there. So just to get some interest during this project period, we have made that arrangement. Actually no, that is not exactly loan.
Darshil Pandya
So what could be the actual figures of you know, borrowing?
V Srinivasa Reddy
J has presented her this thing after knocking off that, that anyway, we’ll be putting in the site is I think 56 crores or something like that.
Darshil Pandya
56 crores.
V Srinivasa Reddy
Yes.
Darshil Pandya
Okay, got you. So thank you sir, thank you so much.
V Srinivasa Reddy
May I request Mr. Kush Nahar.
Khush Nahar
Yeah, hi sir. Am I audible?
V Srinivasa Reddy
Yeah, yes, please go ahead.
Khush Nahar
Thank you for the opportunity, sir. So my first question is after we are live with this 45,000 tons, what kind of capex and what is the timeline that is required to set up extra 30,000 tons to go to 75,000.
V Srinivasa Reddy
What we are showing that 75,000 is a partial portion of the second greenfield project, which is 200,000 tons is what we are planning. So that 60,000 tons total project execution should be. Somewhere around 250 to 300 course kind of the capital which is required actually. But that will be done in a phased manner. Base infrastructure will be created. Maybe 60% of the invest will be done in the first phase. And the balance 40% to complete the total capacity. Like the way we are doing in the machining the base infrastructure costed as but the second 10,000
Khush Nahar
Just the timeline to set up this 60,000 in total will be around two to three years.
V Srinivasa Reddy
No, our thought process is today order books appears to be very strong. Actually no. We want to make four quarters after completion of the expansion. So if I take fairly the Q2 all the majority expansion gets completed. So say next to Q3 we’ll initiate the reconsider the whole. Looking at the demand and everything we can think of adding the capacity. But again it will take another four to six years waters from thereafter to add capacities. In a nutshell, if you look at three years timeline you should be considering.
Khush Nahar
But we’ll start planning from this Q3 FY26 only you’re saying.
V Srinivasa Reddy
I’m talking Q2 of FY27 Q3 right now we are focusing on ourselves on the existing project expansion which are going on and thereafter. We would like to give everything period of at least four quarters. Then go for.
Khush Nahar
Okay. And one last question. So I think considering the demand and all, since we are going to raise 2, we’ll need 250, 300 crores. So would there be another fundraise or we will have enough positive cash flows to create it?
V Srinivasa Reddy
We do in combination of three things. One is internal cloth, some partial fundraising and also some debts. We’ll be doing in combination of them. Our main objectives. We don’t want to exceed debt equity ratio. Anything closer to 1. One is to 1 or 1.5. We don’t want to exceed this ratio.
Khush Nahar
Okay. All right Sir. Thank you.
V Srinivasa Reddy
Mr. PD. I don’t know what is your name but it is written. Please go ahead with your question, please.
Pratik
Yeah, thanks. Thanks. I’m audible, right?
V Srinivasa Reddy
Yes, please go ahead.
Pratik
Yeah, this is Pratik here. I’m an individual investor. So I just wanted to check when your capacity comes live in this financial year, how do you see the utilization level scaling up? Do you see it getting to say 80, 90 immediately or it’ll be a gradual increase over the quarter.
V Srinivasa Reddy
We’ll take two, three quarters to reach that kind of number. Actually you know, first part is doing the equipment installation. The second is adding the people and aligning the thing. Third is aligning the customers and the product demand? Actually, no. So this will you can expect 2, 3/4 to take off. Actually, considering all those capacity coming in and the commitments what we made to the customer, we have already given you the revenue growth guidance.
Pratik
Okay, so then from the presentation you mentioned some capacity that will come live in Q2. So the peak utilization will be around Q3 or Q4, is that correct?
V Srinivasa Reddy
See, yes, Q4 should be good. Utilization should come. And it was an ongoing thing. Actually no, again next year. Q1 maybe some this thing means if you compare quarter and quarter it will not grow continuously because of the demand side. Actually like some of the Indian clients there may be a moderation in the demand in the first quarter. Again next year. Full capacity utilization coming in the Q3F the next year.
Pratik
Got it. Okay, thank you
V Srinivasa Reddy
Again all those kind of the utilization things in our guidance.
Pratik
Fair enough. Water. Thank you.
V Srinivasa Reddy
Mr. Kunal from Sunili.
Kunal Mehta
Hi sir. Good evening. So one question is on the receivables. It. I think it sharply increased from last year about 22 crore. So is it that the revenue was building towards the end of the financial year. That’s why it’s just showing up a very huge spike?
V Srinivasa Reddy
No, not like that. Actually we have a bill discounting arrangement with Vestas GE and some four or five clients which are old clients. But we added new clients. Some of the clients like Flender they are operating with a open credit. So their business has grown up three, three folds in the this year. That’s why the resuble has gone up. The second thing is two of the clients LC’s we have received in the last minute somewhere around 23rd or 24th of March to the tune of 12 crores. Actually you know generally if it given another one week that is already into cash. Actually no. So because of the last minute receipt of the lc that is how the closing year point it shows a higher receivables. Actually no.
Like last 44 crores it has gone to I think 56 crores or some kind of number. 8, 10 crores would have been gone up. But it has gone 15 or 20 crores. Because of these two factors actually.
Kunal Mehta
Okay, and so what is the any guidance on the work the working capital days the company going ahead
V Srinivasa Reddy
Should be fairly able to maintain around 45 days. Actually no.
Kunal Mehta
45 days. Okay. Okay. So thank you.
V Srinivasa Reddy
Mr. Prem Lunia.
Prem Luniya
Hello sir. Congratulations on the numbers. Sir. I wanted to understand that we have grown quite well in the export market. But in the last three, four years around let’s say FY 23, 24, 25. Our domestic sales have almost been stagnated. Although last quarter has received a good amount of domestic sales. But can you tell me about why is this the case? Because the Indian market installation is growing way faster than the world market.
V Srinivasa Reddy
See, mainly if you look at our revenue split is coming from the Vestas Vistas. Again they’re doing sometimes for the local assembly. Again turbine is expected or when the assembly happens in US Market. We’re doing a direct export. So. So that is as far as Vestas is concerned. So as far as the other clients are concerned, we have added recently the SEN is one client again, the domestic Indian clients have got a tendency to what you call lift higher material in the Q3 and Q4. This is what we have seen in the Indian engineering company’s trend actually.
Prem Luniya
Sure, sure. But sir, do you see this number of 98, 97 crore going to let’s say 120 crore. Let’s say next year. Or there must be some growth because the. Or is it because the companies which we are catering to have their own units which are set up.
V Srinivasa Reddy
There is a discussion is going on with the two clients the US market. If those things get through, we do expect a growth action. But we need to wait another before we come to that conclusion.
Prem Luniya
Sure, sir. And also on the guidance of top line. What I understand. I understand the difference which we have made from the last quarter to this quarter is like only 15 crore of difference in the guidance. But what I understand is that the last time Q3 guidance of 450 crore was given before announcing the envision order of 10,000 metric tons. And it was expected that the expectation of top line growth would be higher. But we have given a slightly lower number. What would have been the reason for that?
V Srinivasa Reddy
The key is the this capacity. We were expecting to come before March. Actually no, that is by end of the March. But this is spilling over to the almost Q1 or Q2. The second thing is as I mentioned in one of the earlier investor question. See the total planning and the communication what it was done. We were expecting these funds to be rights issue money to be raised somewhere in a Q1 of last year. Actually that is in the April or May actually know. But it overshoot up to October. That is where we completed the rights issue exercise. Because of various approvals and other things which are required in the market action. You know, because of that the whole thing has pushed back. So then the due to capacity concern this year revenue also the that impact is.
Prem Luniya
Sure, sir, sure. Thank you,
V Srinivasa Reddy
Mr. Keshav. I rested. We’re already five o’ clock. I will take last two questions. Mr. Keshav, can you please go ahead?
Keshav Kumar
Yeah. So the 2% margin expansion due to machining. Is that impact being considered on a full scale capacity? I mean this base of 2045,000 tons of castings capacity should benefit 2% on the margin front due to 20,000 tons of machining capacity. Is that the correct understanding?
V Srinivasa Reddy
Yes, we have considered only partial machining. The present installation. What we’re doing the that’s what we are considering our margin expansion guidance.
Keshav Kumar
And how much more capacity can this current machining setup handle?
V Srinivasa Reddy
We can add at least for another 10,000 tons for sure. And again, we don’t want to add 100 of our machine capacity in house. Because if there is any flexible demand then there will be idling of the capacity considering that. And also we have developed a lot of supply chain when as part of the this thing in partnership, we know we should continue with the existing supply chain. So we are expecting around 60 to 70% kind of the in house machine capacity at peak levels.
Keshav Kumar
So how is this ROC accretive? Because it’s a 2% expansion on a. On this 97. Crore of investment yields about 11 crore benefit. So we’ll be losing on the RoC front.
V Srinivasa Reddy
No, no. You should not look at like. See we. I think we are given a 3% guidance not 2% actually. And solar is 2% actually. And see we are expecting a lot of other positivity. Things are happening like optimizing the logistic cost inventory and other things Only thing we are also expecting some negotiation with the customers. Some person may happen. So considering all those things we are giving a guidance to the market that 4 to 5% margin expansion like current year we’re expecting only somewhere around 13 or 14% kind of the thing. But it went closer to the the 15 actually. So if you look at our overall guidance at the peak level we are given 18% kind of thing. But today without even expansion we are already standing up closer to 15%. Actually no. So you should look at as a world guidance what we are given somewhere on 18 to 20% the EBITDA margin is what we are looking at. Because we need to get additional business. We need to grow further. Actually. No.
Keshav Kumar
Okay. Got it sir. Understood. Thank you.
V Srinivasa Reddy
I’ll take last question. Mr. Kush Nahar.
Khush Nahar
Yeah. So thank you for the opportunity again. What would be your execution timeline for a new order when we get from a customer?
V Srinivasa Reddy
What? I meant project or new order. You are talking about
Khush Nahar
The new orders that we get from customers. And average execution cycle for our company.
V Srinivasa Reddy
Generally development cycle takes between six to nine months. Actually after that you can go to the regular exhibition.
Khush Nahar
Within nine months we are able to start the delivery.
V Srinivasa Reddy
Yes, we can go to the serial production. There will be tooling development. It takes about four, five months. Then sampling, trial, assembly and all those things takes about another two to three months. So nine months is the. The maximum time it takes for a development of a new product.
Khush Nahar
And then. So serial production on an average is over one year. We fully execute the order.
V Srinivasa Reddy
See, it depends on the customer schedules and all it can be done within a quarter. Actually it doesn’t take much time for the. Because during the journey of this nine months we also make a preparation for the serial production. Actually it doesn’t take much time to ramp up.
Khush Nahar
Okay. All right. Thank you.
V Srinivasa Reddy
Thank you. I think I see one hand. Mr. Prem. Lunia. Would you like to ask any question or your hand is up? Yeah. Mr. Prem.
Prem Luniya
Sorry sir, I forgot to lower it. Thank you.
V Srinivasa Reddy
Thank you. Nish, you can conclude.
Nilesh Mankar
Yes. Yes. So there are couple of question in the chat box. But I would request them to send us an email. We will be happy to revert on. So with the time constraint I conclude this meeting on behalf of entire synergy I would like to thank all the investors for participant to the participating in today’s call. Thank you once again.
V Srinivasa Reddy
Thank you all for joining this call. Thank you once again.