Technocraft Industries (India) Ltd (NSE: TIIL) Q1 2026 Earnings Call dated Aug. 12, 2025
Corporate Participants:
Navneet Saraf — Director and Chief Executive Officer
Anil Gadodia — Group Chief Financial Officer
Unidentified Speaker
Analysts:
Purva Zanwar — Analyst
Chetan Vora — Analyst
Aejas Lakhani — Analyst
Jay Jain — Analyst
Avnish Tiwari — Analyst
Chintan Modi — Analyst
Rahul Kumar — Analyst
Koushik Mohan — Analyst
Riya Mehta — Analyst
Ruchit Agarwal — Analyst
Akshay — Analyst
Nihaar Shah — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Technocraft Industries India Limited Q1FY26 Post Result Earnings conference call hosted by Batliwala and Karani securities India Private Limited. As a reminder, all participant lines will be in the listen only mode. And there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star and then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Purva Zavar from Batliwala and Karani securities India Private Limited. Thank you. And over to you, ma’. Am.
Purva Zanwar — Analyst
Thank you. Ladies, on behalf of BNK Security. We welcome you all to the Q1FY26 conference call of Technocraft Industries India Limited. From the management side we have Mr. Navneet Kumar Karaf, Director and CEO, Mr. Ashish Kumar Karaf, Director and CFO. And Mr. Anil Gadodia, Group, CFO. I’ll now hand over the call to the management for their opening remarks followed by the Q and A session. Over to you, sir.
Navneet Saraf — Director and Chief Executive Officer
Yes, thank you. And a very good morning to all the participants on this Q1 investor call of Technocrat Industries India Limited. We are looking forward to an engaging discussion. Overall it’s been, I would say, a fairly stable quarter given the very turbulent economic climate led by geopolitical disturbances worldwide. Obviously one of the main factors contributing is this US tariff on products on which Technocraft is also impacted given our strong exposure to the us.
So we will. I’m sure there will be a lot of questions pertaining to that so we’ll be happy to discuss. So welcome again and we can now start the call. Thank you.
Questions and Answers:
Operator
Thank you very much. We’ll now begin the question and answer session. Anyone who wishes to ask a question may press STAR and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles. The first question is from the line of Statan Vora from Abacus Investment Managers. Please go ahead.
Chetan Vora
Yeah, good morning sir. Sir, would like to understand your comment on the scaffolding demand environment.
Navneet Saraf
Yes. So the scaffolding demand environment in particularly in the US is currently challenging. This is also reflected in our first quarter result where we have seen on the preceding quarter on quarter a flat performance in sales as well as profitability. This is mainly on account of actually due to various changes in tariffs that have been going on since April, there has been some slowdown. Customers are on hold mode. What we are seeing is that there is a delay and pushback in procurement happening in the industry. Amongst all these things. So one of the positives is that we are not seeing cancellations of capital projects. So we are seeing that there are projects awarded and that are going to go forward. But there is being a pushback and customers are only buying what they need immediately as compared to buying anytime in advance. They are increasing utilization of their scaffolding, so they are buying later. So all those things are going on. Having said that, the impact on US tariff is actually not so bad for our scaffolding division because we are not subjected to this additional 25% Russian penalty that has been levied. We are subjected to the 50% steel tariff that has been going on since February and that is applicable to all countries with the exception of the uk, which is not even a competitor. And then we have the reciprocal tariff which Is increased from 10% to 25% on India. So we are still lower as compared to China, which is our biggest competitor in the US as far as tariff is concerned. So we have no concerns about being able to pass on the tariffs to our customers. And the customers are, you know, there’s no competition as such from local production in the US as well. They the effective tariff for us on scaffolding at this point is about 35%, which is quite manageable. But the concern is that this is definitely causing some disruption in the demand environment which I think will be short term. But it’s difficult to say for how long we are coming. Quarter July to September is traditionally the busy season in the US in the industrial sector. So on one hand we are hoping for a pickup in demand, but there’s also a little question mark on what the tariff does. So that’s as far as US is concerned. Outside the US it’s positive. We are seeing no change in the demand environment in India. India, the demand is robust for our formwork products and also the demand is quite strong in the Middle east, which is our other important market and that’s growing substantially. The uae, Saudi Arabia and that region and the rest of the countries are steady. So this is a snapshot of the demand environment.
Chetan Vora
Thanks a lot, sir. But now the situation has only wor right quarter one and the carry for what he has been talking about. Has those carries been implemented or it is just not right now at the uncertainty level at what the effective rate would be.
Navneet Saraf
Certainly the situation is worse than what it was in quarter one. It has deteriorated in July and August as far as implemented. So the. Increase in reciprocal tariff from 10 to 25 has been implemented with effect from August 10th. So shipments that have failed after August 10th, once they arrive in the US they are going to be subject to 25% tariff. That additional 25% is expected to get implemented from 27th August. That’s due on 27th August for shipments failing after 27th August, not arriving
Chetan Vora
And the sheet went out. Okay. And the busy period, what you talked about from July to October, November and now we are in that busy period. So the demand will be certainly getting affected, right?
Navneet Saraf
Yes, it will be getting affected.
Chetan Vora
Okay. And so as you were talking about in the last call that your newly plant has been commissioned. So this year we are looking out for the revenue of 100 crores from those plant and plus 10% organic growth for the scaffolding. And with a profitability of exit margin of 20%. Where do we stand in those guidance, sir?
Navneet Saraf
So the new plant is actually fully commissioned. So that part is actually doing quite well. Our Aurangabad plant is now at about 75% capacity and should get to close to 90, 95% in August and September. So that part is quite good. Unfortunately, I have a concern that the increase in our formwork business that we are expecting this year may be slightly negated by a decrease in our scaffolding business if the demand environment in the US continues to be sluggish. So that is the only concern.
But yes, the Aurangabad plant is not catered for the US scaffolding business. That’s entirely for domestic consumption. And there we are on track.
Chetan Vora
So four day crores of revenue will be getting Approved. But the 10% revenue growth,
Navneet Saraf
We are on track. The, the Mac one. The Mac one sales which was, you know, out of our total sale of 1,300 crores in the last fiscal year, Mac 1 was about 520. So we are on track to see Mach 1 increase to about 900 crores this year. That part on the back of the increase in Aurangabad. That part we are on track. Where there could be a change is the scaffolding sale which was about 800 crores, little less than 800 crores last year.There we could actually see a degrowth this year.
Chetan Vora
What are the degrowth we are working with as of now,
Navneet Saraf
Very difficult to predict right now because we are in such a turbulent environment. First quarter was actually flat. First quarter we did not see much of a degrowth. It was actually flat, maybe about 20 crores. Kind of a degrowth. But you know, this quarter actually we are, we were expecting a significant increase because of projects, capital projects that we know have been awarded, but those may not happen. Those can get pushed in subsequent quarters. But you know, it’s a very dynamic environment. It’s very difficult to at this point in time give a guidance on whether there will be a degrowth. There may not be if there is how much. Very difficult to give that kind of a guidance right now, as you can appreciate.
Chetan Vora
Perfectly appreciated. Right, sir. Lastly, in terms of the revenues are affected, obviously because of the negative operating rate, the margins also will be getting affected. Right? That is.
Navneet Saraf
Yes,
Chetan Vora
It is a logical thing. Right, sir. Expecting the improvement of this cup holding on the lower base of last year,
Navneet Saraf
Obviously the margins will get affected because you know our overhead costs are, are high. So the overhead costs don’t get absorbed fully.
Chetan Vora
All right, but that is the, the one, this pending factor is that the formwork which has seen a good response from the new plant. So the new plant incremental sales will be getting offsetted by the decline in the schedule. Right. So broadly on a y o y basis we should be seeing a nominal growth rate and not the growth rate what we were expecting earlier.
Navneet Saraf
Yes, yes. I mean the good news is that because we have a diversified product base and geography and because of our almost 50% sales in India, we are currently not seeing India business being affected and in fact we are seeing India business growing. So you know, I think, I hope that this turbulence in the US is short term, doesn’t last too long and even if it gets serious, I don’t think the degrowth will exceed the growth in India.
So we should, we should, at the worst case scenario we should at least be flat. We should not see any decline. We should at least be flat or we should at least see some small growth over 25, 26.
Chetan Vora
Right. And so lastly, what is your income amount which is like close to 40 crores. 39 crores. Which was like 30 crores.
Navneet Saraf
Mr. Anil Garodia will answer that. Yeah,
Anil Gadodia
Yeah. The other income of around 39cr consists of mark to market of investment investment that we around 22 crores and forex gain and loss gain of 8.5 crores. So these are the two major.
Chetan Vora
Yeah, and in the segmental thing where it would be sitting, this other income in the down closure or where it would be sitting.
Anil Gadodia
No, no, it will be unallocated.
Chetan Vora
Both these things.
Anil Gadodia
Yeah, Both the things. 19.6 crore. If you see unallocable net after expenses that’s the income? 19.60 crores.
Chetan Vora
Okay. Got it, sir. Thank you. Thank you, sir.
Operator
Thank you. The next question is from the line of ages Lakhani from Unifi amc. Please go ahead.
Aejas Lakhani
Yeah, hi. Am I audible?
Navneet Saraf
Yes,
Operator
Yes.
Aejas Lakhani
Okay, so I am fairly new to your company but I’ve had the chance to look at, you know, your history and you know the. I have one overarching structural question and three semantics on the business. So would you prefer I ask you everything in one shot or go one by one?
Navneet Saraf
Either way is fine, whatever you prefer.
Aejas Lakhani
Okay, so sir, I’ll start with my overarching question. So sir, see as the. My understanding is that the jump closure business, which is a fairly mature business and is growing at lower rates in general, generates a very high roce from that pool of cash flow that you had. You built out the scaffolding and formwork business, which is a relatively more higher growing business but is weaker on the roce side with 15% give or take depending on the year, the roce margin profile.
And then also coupled with that, given that it’s a much smaller size of the business, the engineering business again has a high roce and maybe the potential for incremental growth coming from that segment. So my query is that given that your roce profile of the junk closure is so attractive you’ve chosen to build out the scaffolding and engineering and textile. I’ll just come to in a bit but what I’m trying to understand is that given the mix of your businesses as the growth sort of kicks in
And it’s coming more from scaffolding, given just the size of that piece in the overall scheme of things, is it a fair assessment that the roce profile, which is what it is today, will gradually start declining as the share of the scaffolding increases?
Navneet Saraf
So I can answer that question first then before you go on to the other segmental question. So look, I think as far as the observation regarding how and why we built the scaffolding business, so you know, the scaffolding business has not been built using cash flows generated by the drum closure business. Actually if you go back and see the history the scaffolding, it has a contract manufacturing business and margins single digit for a long time till about 2014, 2015.
Operator
But your audio is breaking.
Navneet Saraf
Sorry, am I audible?
Aejas Lakhani
Yes, sir. Much better.
Navneet Saraf
So from 2015 onwards, when we started our own distribution model, the margins in scaffolding increase. Now, yes, the scaffolding business roce will definitely be lower than drum closure business. As you rightly observed, it’s actually in the 15 to 20%. Our target is 20%. We have been averaging 15%, give or take in certain years. Because of localized factors, the business is in also growth mode. So what happens is as we are investing and building up assets and working capital, there is a lag between investing and seeing the returns of one or two years.
So because the business is in that growth mode, we have not been averaging consistently 20% ROCE. We’ve been averaging 15% ROCE. Plus there have been in the last couple of years local disruptions like this tariff, now freight and so on. Having said that, yes, the rationale is that as the scaffolding business grows, obviously the average roce will come down. It will not be at the high, the late high 25, 26% that we have for the group. It will be in the lower 20%.
I mean, right now that’s where we see the average roce being our Target internally is 20%. We would like to have an average ROCE of 20%. Now what will also happen is that the growth that the scaffolding and formwork business is having is primarily driven by formwork scaffolding. We are almost close to peak level now. The scaffolding business is the one where we have our own distribution model which requires us to have high inventories.
Formwork business is primarily domestic and Middle east tenets made to order. So it doesn’t require the kind of investment in working capital that the excess scaffolding business requires. So as the percentage of formwork business increases from current levels of 40% to about 65, 70% in the next three years, the ROCE effectively of the scaffolding formwork business will also increase from 15% to 20%. Drum closure will continue to be at high roce.
So therefore as a group we will be about 20% ROCE. The engineering design services is also a high roce business that obviously doesn’t need any working capital. In fact, that doesn’t even need any investment. So it’s not like we are requiring cash input for that business to grow. And in the short, in the mid term, next four, five years, yes, the scaffolding business will be driving the lion’s share of the growth. But actually beyond that we see the engineering services business also becoming very sizable. And if I see the next 10 years, that is going to be a very sizable, sizable part of our portfolio. Given the overall marketplace. The engineering business has seen substantial growth in last five years and we are still small compared to some of the large peers like ltts and Quest and Scient and so on. And we are exactly in that market space. So we see this business actually becoming a very dominant part over 1000 crores over the next five years, five to six years. So yes, to answer your question, while the average roce will definitely come down, but not below 20% based on the kind of growth that we are expecting and the business mix of the scaffolding business which is more formwork, less scaffolding.
Aejas Lakhani
Understood. And so just a quick follow up on that response. So formwork out of the 1200 crore from this segment that we report, give or take of scaffolding and today the mix is 40% formwork, 60% scaffolding. And you’re saying that formworks will start to incrementally drive growth which will help the roce profile of this segment, is that precisely?
Navneet Saraf
Yes. Perfect.
Aejas Lakhani
Perfect sir. Next is, you know, I’m just seeking more color regarding the engineering services business. So is this again like the others pure FTE model? Do you have on site edge engineers? You know, how do we compete? Especially given that there are large established players. So you know, why will customers really choose us over those cohort of large, well established customers? And also that we have 84% ownership of the sub. Right. So what is the how is that come into existence?
Do we intend to take it to 100%? Could you give more color on this entire segment? And also do we intend to give get somebody from the industry to run this piece? Who runs this piece? How do you expect it to deliver the growth that you just spoke about?
Navneet Saraf
This is an ernd business and it’s a focused ernd business which provides engineering and product development services in various verticals like industrial transportation. Machinery, etc. We do not do commercial software development like many of the other IT companies do. We are focused on ER and D. Now. Yes, there are some large established players in the ERD segment like L and T, technology services and science and so on. But you know, their share, even with those players. I think this is a segment that is very much in its infancy. It is far from maturity level and the overall share of Indian companies is miniscule compared to the global spend in this segment. Countries like us, uk, Western Europe, Japan are having huge shortages of engineering talent. And so therefore India has a very sweet spot in this segment. We also compete with a lot of domestic companies in these countries where we operate in. And so that’s a large segment of business that is there how we have been able to get established and get our foot in. When we started this company we focused on sectors outside the traditional sectors like automotive. With some of these large companies focus on, we stayed away from the, the passenger car segment which was very crowded and we as a group did not have domain expertise in the passenger car segment. So, you know, a company like Mahindra or Tata for example can make large inroads in that segment. But we didn’t go, we went after segments like machinery and industrial products where the competition was more local players. And as a result our growth was slower because the size of customers was smaller. But we built our profile, we built our team, we built our references. In the last four years, after the company reached just about 100 crores in revenue, which was four years ago, we expanded our sales team. We recruited senior professionals from L and T and other companies in the U.S. we created verticals, we recruited vertical heads with domain expertise and they are the ones who are running the company now. So we are, we have a very seasoned, experienced leadership in sales delivery in this company now as the company is growing and now we are also targeting the large accounts. Now we are competing with the big players and we have been able to successfully make inroads which is what gives us the confidence that the growth will be faster and higher in this business because it’s always more tedious to get from zero to a base of hundred crores. But then once you get that base then the momentum becomes stronger. So we are in that phase right now.
Aejas Lakhani
Understood. And so basically our focus continues to be machinery and industrial applications and products is that. Correct.
Navneet Saraf
We have seven verticals. Industrial products, transportation machinery, plant engineering, medical devices.
Aejas Lakhani
Okay, okay, okay, okay. And you have experienced sort of people who have joined. You are now building the business and you’ve invested in this segment for the last two years from a sales and marketing perspective.
Navneet Saraf
And delivery.
Aejas Lakhani
And delivery. Okay, understood. And so just on that query of, you know, why do customers really choose us and you know, what is the reason behind the 84% ownership?
Navneet Saraf
Yeah, so 84% is owned by Technocraft, 78% is owned by promoters of Technocrats. And then there is about 7% that is held by an individual who used to be in a senior managerial position in the company. He used to be the CEO of this company till 2020. He’s based in the US and then he had to leave due to certain health and personal reasons. But he continues to have that 7% stake. But he’s not involved in the operations or management of the company anymore. So. But other than that 7%, we are controlling 90.
Aejas Lakhani
Understood, understood. And so just so this 7 the individual that held the site for the
Operator
Follow up question.
Aejas Lakhani
Sure. I’ll just complete this follower question and rejoin if that’s okay. Thanks. Yeah, sure, I’ll return. Thanks.
Operator
Thank you so much. The next question is from the line of J. Jain from Astute. Please go ahead.
Jay Jain
Good morning. I wanted to know what is the effect of the tariffs on different segments individually like scaffolding. And also you mentioned that scaffolding is already covered under the general tariff of Steel and aluminium. So what will be the precise number which we should work with?
Navneet Saraf
So on the scaffolding, currently the tariff without considering the Russian oil tariff is 23%. That is the tariff that is applicable on the finished product value reaching the US. That is based on combination of the 50% tariff on the steel content and 25% reciprocal tariff on the residual content of the product. If the Russian oil tariff gets into effect on 27 August, then the effective tariff on scaffolding will increase to 34% on drum closures. Currently we are at 27.6%. Which will increase to 52.6% if the Russian tariff gets into effect. Same situation in textiles. It’s currently at 25% which will increase to 50% if the Russian tariff gets into effect.
Jay Jain
So with the new tariff, if they come into effect, it would be almost impossible to do drum closures and textile. Am I right in assuming that?
Navneet Saraf
Yes. So I’ll answer it segment by segment. So you know, drum closure, no drum closure. Our sales realizations are actually quite high in the US we have currently taken a decision we are not going to compromise on our market share in the us. So in the short term we have taken a decision that should the 25% Russian tariff come in, we will not pass that on. We will take that. We are comfortably able to pass on 27.6% in the drum closure segment to the customers.
But we will not pass on the additional 25% primarily because our main competition is from the EU and tariff on the EU is 15% for drum closures. Our competitors are basic. So at 52.6 we feel we’ll be at a disadvantage. So Therefore if that 25% comes in, we’ll absorb it. So there will be an impact to that extent on the profitability of the drum closure sales. In the short term. We expect that that 25% Russian tariff is going to be short lived.
We don’t expect that to be there for a long term. Should that be there for a long term, we are in wait and watch more then obviously we will look to move to alternate manufacturing locations as a possibility to save ourselves from that incremental 25%. That’s as far as the drum closure division is concerned. That’s our strategy scaffolding. We are able to pass on. So no concerns on that Textiles is a problem. Textiles, certainly 50% is not something we’ll be able to pass on.
So we will see our sales to the US stopping and we are watching the situation closely. Again, if that 25% goes away, then the situation will be better. If not, we will look at diversifying the manufacturing
Jay Jain
Just to understand what will happen to most of these businesses. Are you planning, as you mentioned, you will probably take a call about manufacturing other locations. But competitively, what. What will be your position and what is the percentage of your total revenue in each segment to the U.S.
Navneet Saraf
Drum closure, about 30. Yeah, so drum closure, about 30% of our total sales is in the U.S. and scaffolding, about 40% of total sale is in the U.S. and textile, about 25, 30% is also in the U.S.
Jay Jain
Okay. Okay, thank you so much. Yeah,
Operator
Thank you. The next question is from the line of Avnish Tiwari from Vaikaria. Please go ahead.
Avnish Tiwari
Hi. On this scaffolding you just explained the directs. So even with the Russian LinkedIn you are leading to 34%. We will still be much lower than what China is getting today. So you should, you should not have a problem there in terms of passing it on. Right? Is that understanding correct?
Navneet Saraf
Yes, that’s correct.
Avnish Tiwari
And when you’re exporting this cathode into US the steel you are buying, are you buying, can you buy it imported versus free of duty or you have to buy it domestically hence your disadvantage on the price of the steel.
Navneet Saraf
We are buying domestically and there is no disadvantage. Actually imported steel is a lot more expensive currently. If you are manufacturing in India, it’s, you know, cheapest to buy Indian steel. There is now a safeguard duty in India on imported steel.
Avnish Tiwari
But you’re buying for export purposes. I think these duties are exempted or.
Navneet Saraf
Yeah, but no, no, we are not only buying for export purposes. We are also selling a lot in the US to in India. Sorry. Plus you know, we have special grades so we can’t just buy commercial grade steel. We have worked with JSW and developed special grades that can be used for our scaffolding products because of certain technical requirements and the relationship with JSW is more than 20 years old. So it’s very difficult for us to change that. So no, we are not looking. We don’t buy imported steel.
Avnish Tiwari
In the engineering division, which segment are you experiencing? Very good order, flow and type of work you are doing a strong demand pull over last quarter and as you go forward,
Navneet Saraf
Industrial products and machinery and transportation, these three have been our dominant segment in the last four years. So more than 75 to 80% of the engineering service revenues comes from these three verticals. We added plant engineering only last year and so that is. Now seeing substantial growth over 100% because that’s a new vertical and there we have very large multi billion dollar type of customers. So that’s something where I think that will drive future growth in that. So that’s how it is.
Avnish Tiwari
Okay, thank you.
Operator
Thank you. The next question is from the line of Chintan Modi from Hettong Securities. Please go ahead.
Chintan Modi
Yeah, thank you very much sir for the opportunity. So I wanted to understand your formal business, the Mach one, if you could help us understand that. You know, I understand that it’s a high growth business and this is where the customer adopts to this technology. So what are the key drivers for the customer to move to this technology? What are his constraints and how fast you see this changing across India? How this business is more from, let’s say an opportunity wise that you look at and whether this is a geographically constrained business. This would be very helpful if you could explain it.
Navneet Saraf
So Mac 1 is our aluminum formwork system and you know it’s based on monolithic casting. It is being widely adopted in India and other developing countries mainly because one is it saves labor. You know, construction is in India has historically been done in a very laborious way and availability of labor is more and more becoming a constraint. Second is it reduces the construction time by increasing the speed of construction because you are pouring the concrete and the panels are basically making you being able to pour an entire floor at one time called monolithic casting. So that speeds up the construction process.
And the third thing is the finish, the quality that you get is much better. Doesn’t require plastering so it saves an additional operation. So these three are the main driving forces that is increasing the adoption of this technology. This technology was introduced in India almost 20 years back. It was earlier, 100% imported from company based in Malaysia. And then in the last 10 years we have seen domestic players come in and start introducing systems based on this technology like Mach 1.
Now we are seeing this becoming almost like a de facto standard amongst developers in India. Architects are. Subscribing this technology in their specifications. So, you know, in at least the metros and the tier one cities. So it’s become a de facto standard. And tier two, tier three cities are now also waking up to it. So I think there is still a lot of market left in India to adopt this and these are the three main driving factors.
Chintan Modi
Understood. So. So when you see that. Hello. Yeah, so this is going to be higher than the scaffolding business, which is probably about 20% today. So. So I assume the ROC in this business will be higher than 20%. So you would be confident to reinvest that back into the business and keep growing at a much higher pace over say next five to.
Navneet Saraf
Yes, absolutely. I mean that’s really what we have done and that’s our strategy because currently we are not able to export this. We don’t have enough capacity. Even with the increased capacity that we have done in Aurangabad, the lion’s share of that is still being absorbed domestically. So there is a big market here. There is also a large market in Saudi Arabia, South America, Africa. So yes, absolutely, we see a good possibility here of doing 4x growth.
Chintan Modi
Understood. And what is the market structure today in India in terms of competition?
Navneet Saraf
So you know, there are several companies, I mean there are obviously some international companies from Malaysia, South Korea, Europe that import the product in then now there are Indian companies. So other than Technocraft, there are a couple of companies at the same scale as Technocraft. For aluminum formwork, there’s a company called Knest based out of Pune which is quite a prominent player. And then there are probably 20 plus small sized companies that are catering to this segment as well.
Companies doing under 100 crores of turnover. And there’s demand for all of them. Each of them operates at different price levels and based on their brand recognition, but the market is able to absorb all of them and growing.
Chintan Modi
Understood. And one last question on the same thing.
Operator
Sorry to interrupt but I request you to come back for the follow up question.
Chintan Modi
Thank you.
Operator
Thank you. Ladies and gentlemen, I request you to. Ladies and gentlemen, I request you to please limit your questions to two per participants. Thank you. The next question is from the line of Purva Zavar. From BAL and Karana securities India Private Limited. Please go ahead.
Purva Zanwar
Yeah. Hi sir, I had a question on scaffolding and formwork division. So you mentioned that scaffolding revenue was somewhat constant by and while the quarter and the formwork saw very good growth. So what led to this 8% decline? And also when I look at your volume for June 24 and June 25, they have grown in each of the segments. So what has led to realization drop for the same?
Navneet Saraf
Firstly, the decline of 8% in revenue overall was mainly because the decline in scaffolding revenue was more than the increase in formwork revenue. I mean our overall in this quarter compared to the same quarter it did last year. Our revenue in scaffolding mainly on account of sales in the US through our US subsidiary was lower. I don’t have the exact percentage of how much the US subsidiary sales was lower but it was more than 10% for sure.
And formwork the sales was higher definitely compared to the last quarter. So that was the reason for net Y and Y at a net level, the realization. This is based on the quantity and based on realization. I don’t think there has been a substantial effect in the price realization. I don’t have actual realization numbers on quarter on quarter basis. But I don’t see there is a significant difference in the realization. But we can give those to you separately.
Purva Zanwar
Okay, sure. Thank you sir.
Operator
Thank you. The next question is from the line of Rahul Kumar from Vikaria. Please go ahead.
Rahul Kumar
On the US scaffolding business you mentioned that you’re seeing some challenges in terms of demand. So can you elaborate which industry or sub industry are showing the highest delay in the purchase of this scaffolding?
Navneet Saraf
But you know, our largest share is in the industrial services sector. So the industrial services driven by industries like LNG power, petrochemicals, refineries and also some of the high tech industries where the demand is very strong actually like semiconductor plant, etc. They are all actually deferring or delaying purchases. And like I said, we have not yet encountered any cancellation of projects but we are seeing delays. So these are the industries,
Rahul Kumar
Okay. And again, on the US Scaffolding business only, what is the profitability? How has it moved, let’s say versus last quarter this quarter.
Navneet Saraf
We don’t report separately U.S. profitability. I mean the U.S. profitability is not something that it’s on consolidated basis. But there has been a decline, I would say overall because the sales have been down.
Rahul Kumar
Okay. Okay. And on the map, one business. What was the capacity utilization in this quarter for the new plant and the old plant?
Navneet Saraf
Yeah. So old plant has been running at 95% and the new plant in Aurangabad this quarter has been about 60%. 6. About close to 65%. 60. 65%.
Rahul Kumar
Okay. Okay. Okay. Okay. Yeah. Okay. Thank you.
Navneet Saraf
Thank you.
Operator
Thank you. The next question is from the line of Kaushik Mohan from Ashka Group. Please go ahead.
Koushik Mohan
Hi, sir. So I just wanted to understand one single thing. Do we have any impact from the recent tariffs on. On our inventory that we have currently.
Navneet Saraf
No. No. No impact on the inventory.
Koushik Mohan
No impact on the inventory.
Navneet Saraf
No,
Koushik Mohan
That’s. That’s.
Operator
Thank you. The next question is from the line of Mehta from Equitus. Please go ahead.
Riya Mehta
Thank you for giving me an opportunity. So my first question is in regard to Mac 1. So are we seeing 900 crores of revenue in CY26, FY26 from that?
Navneet Saraf
Yes, yes. That would be our target.
Riya Mehta
And what kind of order book are we currently sitting at? How many months of orders are still there with us?
Navneet Saraf
We are currently sitting on about, in terms of square meters, about three and a half lakh square square meters. So that is, you know, I think in terms of crores times 10,000. So 300. 350 crores of order book.
Riya Mehta
Okay. And that will be around six months. Six to nine months.
Navneet Saraf
That would be 350 crores is roughly about four months.
Riya Mehta
Four months. Okay. And I’m seeing any slowdown in the inquiry pipeline of homework or is it still robust and growing and what
Navneet Saraf
Not at all? Inquiry pipeline is very robust and growing.
Riya Mehta
Inquiry pipeline is strong. Good to know that. And in terms of scaffolding, what I understand is 40% is US the rest 40% would be India.
Navneet Saraf
40% of total segment is US of only the scaffolding segment, 70% is US
Riya Mehta
Okay, 70% would be US
Navneet Saraf
And the remaining 50% is largely middle east followed by Australia, New Zealand, Africa, some India, some Europe, UK all these countries.
Riya Mehta
Got it. And in this Q1, we’ve not seen much tariff impact in our revenue coming in scaffolding, right?
Navneet Saraf
No, no, we have seen. No, because the decline in scaffolding revenues in the US Is mainly on account of tariff.
Riya Mehta
So for the current quarter, how much would be the impact of revenue in U.S.
Navneet Saraf
Our sales in the U.S. this quarter? I would. I don’t have the exact numbers, but my preliminary estimate is that our sales this quarter April to June are down about 35% compared to the last quarter in the U.S.
Riya Mehta
Got it on a Q OQ basis?
Navneet Saraf
Yes.
Riya Mehta
Yes. Okay, got it. In terms of engineering division which we are very. I remember last two quarters we were saying that the expense has been front loaded. Are we seeing incrementally, are we still investing in that or are we will be waiting till we see the operating leverage play out? What is the strategy there?
Navneet Saraf
Also we are investing still. I mean, yes, last year we had invested in. And we are seeing the effect of that in this quarter where the revenue and profitability is higher. We have just opened an office in Japan which is a new territory for us. So that’s a new initiative we’ve taken. We’ve hired a business development head there and we’ve also partnered with a local company there. So that’s the fresh investment we’ve made which will happen over the course of this year.
And Japan takes time. So you know, we are. But over the next two to three years we are looking to build up that market which is the next substantial market after the U.S.
Riya Mehta
Okay. There is no impact in engineering but
Operator
I request you to come back for the follow up question. Thank you. The next question is from the line of Avinash Tiwari from Vaikaria. Please go ahead.
Avnish Tiwari
Hi. Can you quantify this plant engineering revenue you might be clocking right now either quarterly or annually. I know it’s a small dividend for you.
Navneet Saraf
Sorry, I wouldn’t be able to give you that number right now. We can give it to you separately offline. Because we don’t track industry vertical.
Avnish Tiwari
What do you mean you have a strategy in textile? If you were to experience a sales drop in US significantly and it’s already a business which is not profitable. Right. Right now, so how would you revisit this division? How would you tackle the situation if this 50% or even 25% were to continue any sustainable measure?
Unidentified Speaker
We are exploring the possibility of doing some manufacturing outside India, especially for the apparel, the finished product segment, so that, you know, our fabric can be shipped from here and we get it converted in some other geography.
Avnish Tiwari
Right. You are looking at forward integration into garmenting. Yes, I will go. From your current positions in foreign department, you can sell it to us anyway, right?
Unidentified Speaker
Yeah, yeah. Because the business that is impacted due to tariff is our garmenting business. So to tide over that, this is what we are trying to think of now
Avnish Tiwari
And how much time it will take you to transition into this and what are the costs you have right now in India on garmenting side.
Unidentified Speaker
So we are trying to explore other markets for our manufacturing facilities that are already installed in India. We are now aggressively looking at other markets like Europe and UK and even the domestic market, which is quite big. So we are aggressively going after these markets to ensure that our lines are fully paid.
Avnish Tiwari
Thank you.
Unidentified Speaker
Thank you.
Operator
Thank you. The next question is from the line of Richit Agarwal from Unifi Mutual Fund. Please go ahead. Yes. Hi, sir. Thank you for the opportunity. I hope I’m all right.
Navneet Saraf
Yeah, yeah, you are.
Operator
Yes, sir.
Ruchit Agarwal
Great. So the question on the scaffolding division, so could you give us some color on the price differential on, let’s say, the product out of a China facility and out of our facility? And how does the price differential land up at, let’s say, the U.S. distribution center? And another point we had earlier alluded to Europe being a driver for us in the scaffolding. So where are we on that in terms of timeline? And what kind of size do we see for scaffolding in Europe in particular?
Navneet Saraf
So, firstly, the tariff difference on scaffolding between China and India currently is about 45% on the finished product value. So we have a 40. Even considering if that higher Russian tariff is imposed, we will. Will still be about 45% lesser tariffs in the U.S. china has a cost advantage due to lower steel cost than India of about 15%. So factoring in that cost advantage, net net China is about 30% more expensive than India. As far as the scaffolding is concerned. That was the answer to your first question. And then as far as Europe is concerned, so there we are making progress. You know, after we got the certification we have started to be started to sell our scaffolding products in Poland. These are products that we were not selling earlier. So clearly the certification is helping us. Unfortunately, the market in Europe is still soft. It is still reeling from the Russia, Ukraine war and construction industry has not picked up the way it needs to be picked up. We are hopeful that that will change in the second half of this year or again now with the trade war again we don’t know if it will get delayed but we are confident that eventually the markets will pick up. So we are focused on Europe. We have sales and distribution presence in Poland. So things are on track.
Ruchit Agarwal
Sure, sir. Any revision in terms of guidance? Let’s say segmentally or as a. In terms of margins and both growth.
Navneet Saraf
Look, as I said earlier it is difficult to give guidance at this point because of the turbulence that’s happening in the demand environment with tariffs. What I can say with reasonable confidence is that we are on track for the 400 crore increase in our Mac 1 business this year. Because that’s all India based. That is backed by order books and that is backed by production capacity. What I cannot say is how much degrowth, if any we may have in some of the scaffolding export markets led by the US So it’s kind of a quarter on quarter situation right now where we have to take it as it comes.
Ruchit Agarwal
And sir, would it be fair to assume that the margin guidance stays in fact at least for the Mark 1 business?
Navneet Saraf
Yes, that will stay. That will stay intact.
Ruchit Agarwal
Okay. Sure sir. I’ll join back in the day. Thank you.
Operator
Thank you. The next question is from the line of Akshay from Envision. Please go ahead.
Akshay
Just wanted to understand if there is any, any update on the JT Cooler piece of the business.
Navneet Saraf
JT Coolers comes from defense industry. So. As we have informed earlier, also, it takes a lot of time. You know, that’s how, that’s how the defense industry in India works. We are in touch with the France and Israel makers. But frankly speaking, it will take time.
Akshay
Okay. Okay. And in the export segment, which of the markets are we seeing for growth? Because it may. It may turn out to be tough time and we don’t know how long this will last.
Navneet Saraf
Will you please repeat the question?
Akshay
So I was just saying which other markets are we seeing for growth? So for example, in Ukraine, if things go well, then there will be rebuilding of everything. So
Navneet Saraf
You’re talking of any particular segment or in general?
Akshay
In general. And naturally scaffolding. Yeah.
Navneet Saraf
So you know, India is clearly one of the top markets there. There is a very good opportunity for growth. Saudi Arabia is another market where we have just started. South America is another market where we have just started. We have started sales of Mac1 there. These are some of the markets. Europe, of course, we are already there. But I think in terms of markets other than our traditional markets where significant growth can come from, I would say South America and Saudi Arabia.
Akshay
Okay. And we have a distributor network placed in over there
Navneet Saraf
In both these countries. Yes.
Akshay
Okay. Yeah, that’s it. From my side. Thanks a lot and all the best.
Operator
Thank you. The next question is from the line of Via Meta from Equitas. Please go ahead.
Riya Mehta
Thank you for my follow up question. What will be a fixed cost in textile division?
Navneet Saraf
Fixed cost, That’s a different. Yeah. See in textile we have yarn, we have fabric, we have garments. So every division has a different fixed cost on a very average basis.
Unidentified Speaker
One cannot quantify that. It all depends upon which segment you are talking about.
Navneet Saraf
We can share the data.
Unidentified Speaker
Yeah, pull it out and share it. I don’t, I don’t know if you have it offline.
Navneet Saraf
So we’ll give it Ria. No problems.
Riya Mehta
Okay, that’s it.
Operator
Thank you. The next question is from the line of Chintan Modi from securities. Please go ahead.
Chintan Modi
Yeah. Sir, thank you for the follow up. Sir, with respect to the formwork business for the customer, I believe it would be an OPEX cost. Is that understanding correct?
Unidentified Speaker
No, it will be a capex cost for the customer. Formwork is always a capex cost.
Chintan Modi
Okay, understood. And. Secondly, is there a rental model that you are exploring within this?
Navneet Saraf
There is a rental, there is a very active rental model but we don’t directly rent. You know there are rental companies. So in India what we have done is we have got distributors and these distributors they buy from us and they rent. So there is a large market that is actually growing in India for rental and to cater to that what we are doing is we are setting up our partner network and these companies are buying from us and renting.
The reason why we don’t directly rent is because renting also requires you to invest in refurbishment and you need separate facilities, large facilities, so it’s better serviced country wide through a partner network. So we are actually developing that.
Chintan Modi
Perfect. Perfect. Real estate is typically a cyclical business. So you think we will also follow the same cycle or it’s more a linear for us considering we would be exploring new markets. And also you know another question same linked to that it is whether could you, I mean are there any specific markets within India where we are particularly very strong right now and which would be those other markets where we would be we would want to explore?
Navneet Saraf
Yes, real estate is definitely a cyclic business. Currently we are on an upswing in the cycle in India. We expect this to go on for several years. But to de risk ourselves from the cycles we are expanded geographically so we are not just in India, we are in other countries as well. Within India we are currently very strong in obviously the western region, Mumbai metropolitan region, Mumbai, Pune, so on and also the southern territory comprising Hyderabad, Bangalore, Chennai.
These territories, they are constituting currently the lion’s share of our sales in Mac 1 going forward. Tier 2, Tier 3 cities are coming up strongly. We’ve started selling in even small cities like Surat, Jaipur and so on. So that’s how it is.
Chintan Modi
Got it. Perfect sir, that was very helpful, thank you very much.
Operator
The next question is from the line of Niha Shah from Ikigai Asset Manager. Please go ahead.
Nihaar Shah
Hi sir, just wanted some clarification on the scaffolding division. Earlier participant you mentioned that we were looking at the formwork business in a sort of 400 crores out of a jump off this year. And you mentioned that because of the tariff uncertainty we may be kind of flattish to slight growth in terms of cash holding. The. So just, you know, that math implies that we’re looking at about a 30, 35% drop in the scaffolding portion of the business. Is that, is that how you are looking at it as well?
Navneet Saraf
Again, I would repeat, it’s difficult for us to give a guidance for the scaffolding part of the business. I can tell you last year out of the 1250 crore total segment revenue formwork was about 550 and scaffolding was about 700. We are pretty confident that formwork will grow to 950 this year from 550. Whether scaffolding will remain at 700, whether scaffolding will drop to 500, whether it will grow to 800, very difficult to say right now because the severity of the tariff impact will only be visible in the subsequent ensuing quarters.
And I can only say that US is a key driving factor in our overall scaffolding sale. So how the customers react and how much spending gets impacted is going to be a key driving factor. And I think this quarter is going to be actually very significant because most of the key announcements have just happened. So July, August, September, what happens is going to give us more clarity on the remaining two quarters.
Nihaar Shah
Got it. And the demand deterioration you mentioned in the US that you are seeing in July and August, that is a function of the increase in tariff or there is some, you know, just general postponement of CAPEX from the ground.
Navneet Saraf
The postponement of CAPEX is primarily attributed to the tariff because you know, the industry is completely dependent on imports. There is little, literally no domestic production and with the cost escalation that they are seeing, they are weighing options and seeing if they can defer purchases.
Nihaar Shah
Got it? Got it. Clear. Thanks for the clarification.
Operator
Thank you. Ladies and gentlemen, we’ll take this as the last question for today. I would now like to hand the conference over to management for closing comments.
Navneet Saraf
Yes, thank you. So thank you very much to all the participants for these engaging Q and A on our first quarter results. We hope to continue our interactions and please feel free to reach out directly to us if you have any further follow up questions. Thank you and have a good day.
Operator
Thank you. On behalf of the Bhatiwala and Karani securities India Private Limited. That concludes this conference. Thank you for joining us and you may now disconnect your lines.