Technocraft Industries (India) Ltd (NSE: TIIL) Q3 2026 Earnings Call dated Feb. 12, 2026
Corporate Participants:
Ashish Kumar Saraf — Director and Chief Financial Officer
Anil Gadodia — Group Chief Financial Officer
Navneet Kumar Saraf — Director and Chief Executive Officer
Sudarshan Kumar Saraf — Co-Chairman and Co-Managing Director
Analysts:
Purva Zanwar — Analyst
Chetan Vora — Analyst
Avnish Tiwari — Analyst
Riya Mehta — Analyst
Bhavya Bhogar — Analyst
Nilesh Doshi — Analyst
Ruchit Agrawal — Analyst
Anubhav Mukherjee — Analyst
Prateek Bhandari — Analyst
Priyankar Sarkar — Analyst
Pawan Nahar — Individual Investor
Devang Patel — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Technocraft Industries (India) Limited 3Q FY ’26 Earnings Conference Call hosted by Batlivala & Karani Securities. [Operator Instructions]
I now hand the conference over to Ms. Purva Zanwar from Batlivala & Karani Securities. Thank you and over to you, ma’am.
Purva Zanwar — Analyst
Thank you. On behalf of B&K Securities, we welcome you all to the 3Q FY ’26 Conference Call of Technocraft Industries (India) Limited. From the management side, we have Mr. Navneet Kumar Saraf, Director and CEO; Mr. Ashish Kumar Saraf, Director and CFO; and Mr. Anil Gadodia, Group CFO. I will now hand over the call to the management for their opening remarks followed by the Q&A session. Over to you, Ashish sir.
Ashish Kumar Saraf — Director and Chief Financial Officer
Good morning, everybody. Welcome to Technocraft’s investor call. Everybody has already seen the results as well as the investor presentation that the company circulated yesterday. Overall, it’s been a balanced quarter for us. We are looking forward to engaging with all the investors on the call and answering your questions. So with that, I would like to start this call and request our CFO to take it forward. Thank you.
Anil Gadodia — Group Chief Financial Officer
Yeah, we may start with the question and answer as per the queue.
Questions and Answers:
Operator
[Operator Instructions] The first question comes from the line of Chetan Vora from Abakkus Asset Managers. Please go ahead.
Chetan Vora
Yes, sir. Hi. Good morning, sir. Thanks for the call. I would like to understand the situation on the scaffolding, particularly after this trade deal, sir. Where do we stand?
Ashish Kumar Saraf
Yeah. So firstly, before the trade deal, just want to mention a few things that I think I had mentioned in our previous investor call as well, that we have been seeing a slowdown in demand in the U.S., mainly because of some delays in capex as well as uncertainty created with tariffs and more than that changing tariffs. The slowdown has been very prominent in the months from July till November. This has obviously adversely affected the scaffolding segment results of December quarter, which we had expected. Having said that, from November onwards, we have actually seen a pickup in demand in the U.S., and that’s before the trade deal got announced. December was a very strong month in sales, and we have also started the year pretty well. And the trade deal has followed.
So as of now, the trade deal has not had a major material impact. There is also a question mark on whether the trade deal is really going to positively impact the tariff on our scaffolding products because the scaffolding comes under steel and aluminum under Section 232, where there is a 50% tariff irrespective of the country where it is produced. There is a difference in interpretation of that. Currently, we are paying 50% on only the steel content, and we are subject to the reciprocal tariff on the non-steel content. That reciprocal tariff until now was also 50% because there was 25% reciprocal and 25% Russian oil tariff. Now the Russian oil tariff has gone away with immediate effect. So to that effect, it has come down to 25%, which will further come down to 18% once the U.S. administration releases the official notification of the same, which we expect in a few days. So we will see a reduction in our tariffs, but there is a potential question mark on whether the interpretation going forward imposed by the U.S. customs is going to be 50% on the full product value or just the steel value. If they go with the latter then we may continue to pay the same tax. So that’s the situation.
Chetan Vora
So if possible, how do we see the segment perform in terms of growth for the quarter coming ahead and for the next year…?
Ashish Kumar Saraf
I’m sorry, I did not hear that. Chetan, your voice is not clear. I think there is a background disturbance.
Operator
There is a lot of background noise, Chetan.
Chetan Vora
Just a second. What I was asking, how do you see the growth trajectory for scaffoldings in quarter…
Ashish Kumar Saraf
Again there is background disturbance, Chetan, but I’ll answer your question based on the limited. Yeah, so look, it’s very difficult to give you a generic remark because we are living in volatile times. Overall, currently, the demand is pretty good in the U.S. We are seeing a good traction. And I think this quarter, the demand will be good. So we are expecting this quarter to do quite well. The demand in India has also been quite strong. And so, I think in the near term, the demand is good. I think the volatility that we saw in the last two quarters is behind us, and we expect better demand at least this quarter and the next quarter. But giving a long-term view is difficult because geopolitical disturbances have become the norm.
Chetan Vora
Profitability margins — the scaffolding margins have dropped to the all-time low of close to 8%. So how do we see the situation going ahead, sir? As the revenue improves, the operating benefit should kick in logically, right?
Ashish Kumar Saraf
Absolutely. The margins have dropped only because of decrease in volume. There is a 400 — from INR400 crores to INR300 crores. So that’s the big effect. There has also been some reduction in operating margins in the domestic aluminum formwork business. That’s getting a little more competitive. Aluminum prices have been rising, so that’s been putting pressure. Competition has also increased drastically in India, but demand is also strong. But overall, we are seeing some competitive pressures in India compounded by increase in raw material costs. But the main reason is the volume reduction.
Chetan Vora
Right. So would it be fair to assume that next year as the situation normalizes for the full year as a whole, that the margin can restore back to 13% to 14% as we used to do previously?
Ashish Kumar Saraf
Yes. Our target is always 15%. We budget at 15%, and that’s what we operate at. So I think we are very optimistic, and we are positive that we should get to that level.
Chetan Vora
All right, sir. Sir, coming to the engineering front, sir, the execution was strong, but I was not able to decipher the reason why the margins declined to 9.5%?
Ashish Kumar Saraf
This is seasonal. December quarter traditionally is always due to holidays, November and December in particular. So there are a lot of the employee costs rise because a lot of our employees around the world take their paid leaves and things like that. So as a result of that, we always have reduction in gross margin. Even last year in the December quarter, it was the same. We’ll be back to our normal 15% margins in the March quarter.
Chetan Vora
Right. And lastly, sir…
Operator
Sorry to interrupt, Mr. Chetan.
Chetan Vora
Sir, last question. Just a last question. On the other income front, the other income has shot up quite sharply. What would be the reason for this from INR6 crores to INR28 crores Y-o-Y?
Ashish Kumar Saraf
I would let my CFO answer.
Anil Gadodia
Yes. Year-on-year from INR6 crores to INR28 crores is because of mark-to-market of the investments. So last year, third quarter, it was minus INR8 crores and this time, it is plus INR14 crores. So delta is of around INR21 crores. That is the difference between the other income.
Chetan Vora
Right, sir. Thanks a lot, sir.
Operator
Thank you. The next question comes from the line of Avnish from Vaikarya. Please go ahead.
Avnish Tiwari
Hi. As you said, July, October, November was a pretty rough period in scaffolding. What volume growth you have experienced, let’s say, in December and January because we’re just measuring it as it goes. But as the demand is coming up, could you have some sense year-over-year what volume growth you are experiencing in the last two months?
Ashish Kumar Saraf
Yes. So July to November, we were at about 50% of our sales levels averaging of ’24. December, we were back to our original sales levels. And January also, we are close to that. So at the moment, December, January and even February, our sales is almost similar to the levels that we had in 2024. And the outlook is quite good. We are seeing a lot of capex projects that were delayed start now getting green-lighted in the U.S. and so the demand outlook is actually quite strong in the short to medium term. Medium term, I mean, about the next three months. So that’s where we are.
Avnish Tiwari
In the formwork and Mach One business, what is your level of order books you probably would have in December end versus September end?
Navneet Kumar Saraf
The order books are stable.
Ashish Kumar Saraf
They are similar to the levels we’ve had. We’ve been on an average clocking about 100,000 square meter a month of new order booking in the last couple of months. But we don’t track our business so much by the quantum of order book. Demand is very high. We can easily capture a lot more orders than what we have, but like I was saying in the other question, we have to be very selective about the orders we take because we have to protect our margins. So we are being quite choosy, picky, and we are focusing on taking the right margin orders as compared to any order.
Avnish Tiwari
Our volumes were slightly soft in December quarter over September quarter. If our orders are strong, then what caused that?
Ashish Kumar Saraf
There are site delays with customers, which is leading to delays in getting the drawings approved from their architects and MEP contractors and that results in material not being able to get dispatched. This happens in this business quarter-on-quarter. So while the order books are there, even now we are sitting on a fairly large order book, but offtake can vary month-to-month depending on readiness of sites at customer end.
Avnish Tiwari
Okay. The last one for me. Drum Closure, how much rupees crores tariffs you would have paid last quarter? Because there should be some reduction with these tariffs coming down to this.
Ashish Kumar Saraf
I don’t know the exact quantum in INR because we don’t pay the tariffs, our customers pay the tariff, but the percentage was 50% on Drum Closures, and that has now reduced to 25%. So that will certainly have an immediate positive effect in our margins.
Avnish Tiwari
Sir, in last call you said 25% you have passed on and then 25% you were trying to take on your own costing because…
Ashish Kumar Saraf
So what we have absorbed now will go away.
Avnish Tiwari
Correct. So that contract only will take separately, but there is some quantum sitting in your cost of tariffs which you would have incurred effectively, in a sense that you would have baked that into your costing to your customers?
Ashish Kumar Saraf
Oh, no, I think there is a misunderstanding. That’s not how it is. The tariff used to be 50%. We were absorbing 25%, and we were passing on 25% to the customer. Now the tariffs have reduced to 25%, so we don’t need to absorb anything.
Avnish Tiwari
In fact, if I think the amount you absorb, there was some amount you absorbed in last quarter, which you don’t need to absorb any further, right?
Ashish Kumar Saraf
Yes.
Avnish Tiwari
That’s what I was trying to come to.
Ashish Kumar Saraf
Yes.
Avnish Tiwari
Okay, okay. The quantum, I will probably try to understand separately. Thank you.
Ashish Kumar Saraf
Yes. Thank you.
Operator
[Operator Instructions] The next question comes from the line of Abhinav Mandowara from Aequitas Investment. Please go ahead.
Riya Mehta
Hello. This is Riya this side. I have a couple of questions. First is in regards to the Drum Closures. So lastly, we were seeing that China, we were seeing some demand improvement, and we were talking about increasing our ship. So we have also seen that some of the chemical industry in China is doing better. So are we seeing any growth in Drum Closure segment as such?
Ashish Kumar Saraf
Yes, we are. Our volumes in China, this year are higher than last year in the 9-month period. Currently, we are selling close to two million sets a month in China. And we are continuously growing that. So I think going into FY ’27, we should be able to average maybe a 10% to 15% increase in this volume and the capacity is available.
Riya Mehta
Got it. Second is in regards to scaffolding segment. Since the aluminum prices have gone up, could you help me with what is the inventory we keep and how is the pricing linked to the aluminum? And what would be the margin impact in this business given aluminum prices at today’s high levels?
Ashish Kumar Saraf
So we are fully backward integrated as you know. So we have our own aluminum extrusion plant. We keep about six weeks or so of inventory of aluminum scrap, which is our main raw material. We don’t absorb any in this business, because aluminum is so volatile, all our contracts are variable. We don’t have fixed price with any customer, and it’s all the pricing is entirely linked to NALCO. So we won’t be absorbing any — we don’t absorb any fluctuations. Once the engineering is completed, the price gets frozen. So our contracts are that typically. Once the engineering is completed and the order is ready to go into production at that time whatever is the NALCO that freezes the price.
Riya Mehta
Right. Also in terms of when we had announced our backward integration plans last year, we were mentioning around INR500 crores of incremental revenue coming from that and we’re getting 50% utilization in this year ramping up. So could you help me with numbers there? How is that happening? And what is the capacity utilization there and the ramp-up progress?
Ashish Kumar Saraf
There, we are on track. Our Aluminum Formwork business this year is poised to do INR400 crores or so higher revenue than what we did last year. And that is the reason why in spite of almost INR180 crores reduction in scaffolding sales that we are going to see this year on account of slowdown in U.S., our net revenue of the segment is still higher, and we’ll probably be higher by about INR150 crores or so for the full year.
Riya Mehta
Got it. I think that gives a lot of clarity to me. In terms of Mach One, I just wanted to understand that order book generally used to be around six to eight months. That remains the same, right?
Navneet Kumar Saraf
About six months, yes.
Riya Mehta
Six months, right. And in terms of real estate demand, there are some news articles floating that the inventory has gone up significantly over the last couple of years, last one year predominantly. Are we seeing any reduction in real estate demand? Are you personally seeing that?
Ashish Kumar Saraf
No, absolutely not. It’s actually we are seeing the contrary. in spite of all these news articles, even I have read them, but in terms of new project launches and new construction, it’s totally the opposite.
Riya Mehta
Got it. And like you mentioned, from next quarter onwards, we would be back on track with the margin range, which you’ve been mentioning 10% to 15%, right?
Ashish Kumar Saraf
Yeah.
Navneet Kumar Saraf
Yes.
Riya Mehta
Lastly, just from the IT division, your designing division, the margins have reduced. Are you seeing any impact because of AI coming? I am assuming we are also using it in our execution.
Ashish Kumar Saraf
This is a very — ours is not the traditional software development business. So we are really not impacted by AI to replace any of the work that we are doing. We are using AI in a limited way in our business and increasing our own involvement. But no, the work that we do is not something, and that is not a reason also for the quarter-on-quarter reduction in margins. The reason is what I had explained earlier.
Riya Mehta
Okay. That’s it from my side. I’ll join the queue for further questions.
Operator
The next question comes from the line of Bhavya Bhogar from Astrolite Investment. Please go ahead.
Bhavya Bhogar
Hello.
Ashish Kumar Saraf
Yes.
Bhavya Bhogar
Am I audible?
Ashish Kumar Saraf
Yeah. You are audible but be louder please.
Bhavya Bhogar
Okay. So my first question is regarding the capex guidance for the coming years. Like you mentioned that you will be expanding like doubling your capacity in FY ’29, I guess. So is this still intact?
Ashish Kumar Saraf
Yes. FY ’29 is some time away. So we will be doubling our capacity for sure in scaffolding. But whether it will be FY ’29 or FY ’28 or FY ’30, it’s a little difficult to give. The capex guidance is on track. We are almost at 100% capacity utilization in the new Sambhaji Nagar plant where we completed our capex 1.5 years back. We do plan to add Phase two probably sometime towards the later part of 26, 27, where we will put up another extrusion plant and further increase in Mach One capacity. That will probably be towards the end of 27 or maybe early 27, 28. So yes, I mean, we are on track.
Bhavya Bhogar
Okay. And then you stated that in Europe, you have started picking up the scaffolding better. So what is the update there?
Ashish Kumar Saraf
Europe is still very slow. After we got the certification in Europe, we have begun sales of our scaffolding products there, which we did not have earlier. But the volumes have still not picked up to a level that we are satisfied with. But we are hopeful, I think it’s gradually coming back. The India-EU trade deal also should help somewhat, although it does not have any material impact on tariffs or anything. But overall, the demand outlook should help. It should get better. We are seeing some pickup in demand in Western Europe as well as Central Europe. So we are cautiously optimistic.
Bhavya Bhogar
Okay. And lastly, for the Mach One side, the Saudi and South America markets, how is it picking up?
Ashish Kumar Saraf
South America is doing well, quite positive. We are getting sales in Brazil, Mexico, Colombia, Uruguay, all these countries. Saudi has been a disappointment. We have got very few orders. And I think a lot of what we are seeing is that Saudi is still not ready for advanced systems like aluminum formwork. There is a lot of traditional scaffolding is selling there, but not Mach One.
Bhavya Bhogar
Okay. And then you said that you do not take any impact from rising aluminum prices, then the EBIT margins for this quarter, they have compressed largely. So what would be the reason for that?
Ashish Kumar Saraf
Mainly due to the decline in volumes of scaffolding sales in the U.S., we’ve not reduced our fixed costs. So mainly that is the main reason.
Bhavya Bhogar
Okay, okay.
Operator
Thank you. A request to all participants, please restrict your questions to two per participants. For more questions, please rejoin the queue. The next question comes from the line of Nilesh Doshi from ACME Securities. Please go ahead. Mr. Doshi, you may proceed with your question.
Nilesh Doshi
Yeah, I’m audible?
Ashish Kumar Saraf
Yes.
Nilesh Doshi
Yeah, good morning, everybody. It’s like that since long, one thing is not coming out in the market, the liquidity is very low in our stock, right? So are we planning to have any stock split or like that, so the investors could be facilitated if they want to do trading?
Anil Gadodia
Yeah, basically, liquidity in the market is relatively low for Technocraft because 75% shares are held by the promoters and promoters do not buy or sell single share in the market. And rest of the shares are distributed to about 75,000 to 80,000 shareholders. So over a period of time, the liquidity has spread significantly. But splitting of the shares so far is not with the board. Maybe in future appropriate time, the board may consider that. But as of now, there is no such proposal.
Nilesh Doshi
Okay. Another thing, always we have gone for majority of buybacks, right? Why are we not planning for any type of bonuses to the investors who are getting invested since long in our company?
Anil Gadodia
So buyback has always been tax effective and beneficial to all the shareholders and everybody participated in the buyback. We had four rounds of buyback. And once the buyback was made non-tax effective, we switched to dividends. So we have been rewarding shareholders either by way of buyback or by way of dividends. So these two things result into transfer of funds from company to the shareholders. Bonus share doesn’t lead to any transfer of funds from company to the shareholders. So bonus share will only multiply number of shares, which relates to your first question of liquidity. So that will be part of question number one, whenever it is taken up by the board in future.
Nilesh Doshi
Yeah. Thank you so much.
Operator
The next question comes from the line of Purva Zanwar from B&K Securities. Please go ahead.
Purva Zanwar
Hi, sir. My question is regarding formwork. So in your call, you had mentioned that you will be expanding capacity from 75,000 to 100,000 square meter per month by the year end. So is that on track? And what can be the incremental revenue post this expansion from the formwork side?
Navneet Kumar Saraf
We are currently at about 75,000 square meters.
Ashish Kumar Saraf
We may not actually be expanding it immediately by end of this quarter itself to 100,000. We already have installed capacity partially available for that. So we don’t really need to do much capex in order to get to 100,000 per month. But we are currently consciously keeping our Mach One capacity at 75,000 because as I was saying earlier, we are seeing some pricing pressure because there are more suppliers getting into the aluminum formwork business. There are some not so organized suppliers getting in. So we are right now focusing more on quality of customers as compared to quantity. And right now, that is our focus and not so much immediate increase in volume. Having said that, it will go to 100,000, maybe not by March, but maybe by June, our volumes are increasing in South America markets. There, we are seeing much higher margins actually. So I think combination of India and some export markets will get us there, but maybe not by March. I think it will go by up to June. And there is not going to be much capex needed for that.
Purva Zanwar
Got it, sir. And what would be the current quarter formwork revenue? And are we on target to achieve that INR9 billion guidance, which we had for the formwork for the full year?
Ashish Kumar Saraf
I think — December quarter, what was formwork revenue? I don’t have the bifurcation exactly with me. But I think for the entire year, we should be on track to do INR900 crores or maybe close to INR900 crores.
Purva Zanwar
Got it. And last question from my side. What would be the capacity utilization on the yarn, fabric and garmenting side? We have seen yarn turned EBIT positive in recent quarters. So are we expecting that fabric should also reach positive profitability in near term?
Sudarshan Kumar Saraf
Yeah, the capacities are being fully utilized, yarn, fabric and garments. In yarn, we expect the quarter four to be better than quarter three because the markets have improved and the margins have improved in the orders that we have booked now for the next two months. So that will reflect in the books in quarter 4. And in fabric, we are almost breaking even, and we expect it to turn a little bit positive in the next couple of quarters. Garments is at the moment still losing money, but with restructuring internally and strengthening our team and execution and operations, we hope that this will also improve. We are now moving towards higher-value garments and the U.S. market will again reopen up. And there, in garments, we could not fulfill our entire capacity utilization. We operated at about 60%, which was also one of the reasons why we are in the red. So we expect the capacity utilization in garments to go up to 80%, 90% in the next two to three months when orders from U.S. start coming in.
Purva Zanwar
Got it. Thank you.
Operator
The next question comes from the line of Ruchit Agrawal from Unifi Mutual Fund. Please go ahead.
Ruchit Agrawal
Hi, sir. Am I audible?
Operator
Yes.
Ruchit Agrawal
Thank you for the opportunity. Just on the formwork bit, we alluded to an order book of 350,000 square meter last quarter. And as you mentioned that we’re booking about 100,000 square meter per month across the last quarter. Is it safe to assume our order book would be about 500,000 square meter plus around that number?
Navneet Kumar Saraf
Our order book is around close to 350,000 to 400,000.
Ruchit Agrawal
Okay. So we are assuming about 50,000 to 60,000 monthly run rate with six months of order book. Is that still possible in terms of new order booking?
Navneet Kumar Saraf
No, sir.
Ruchit Agrawal
350,000 square meter order book that we have, you mentioned that it’s about a monthly run rate of about 60,000 square meters.
Ashish Kumar Saraf
You are talking of monthly run rate of dispatch?
Ruchit Agrawal
Yes correct.
Ashish Kumar Saraf
About so much right now.
Ruchit Agrawal
Okay And sir, any update on the defense part? We had mentioned that we were in advanced stages with discussions with Israel. Anything material there?
Sudarshan Kumar Saraf
Nothing material at the moment.
Ruchit Agrawal
Okay. Have you been working on by any chance…
Sudarshan Kumar Saraf
I’m sorry?
Ruchit Agrawal
Any new product that is under development on the defense front?
Sudarshan Kumar Saraf
Nothing material at the moment.
Navneet Kumar Saraf
But in the defense, we are expecting orders from Israel.
Ruchit Agrawal
Okay.
Sudarshan Kumar Saraf
Okay. It’s the last update that we’ve been given.
Ruchit Agrawal
Got it, sir. And on the formwork bit, the 350,000 square meter, does that also include any orders from South America? Or is that all additional?
Navneet Kumar Saraf
No, no, that includes everything. That includes the entire world.
Ruchit Agrawal
Okay. So are we facing significant competition when it comes to the domestic market because we’ve seen volumes drop as well. And you mentioned that realizations are also under pressure, margins are also under pressure. So where is the gap when we look at the formwork divisions? And also the volume decline, has there been any operational challenges as well?
Ashish Kumar Saraf
No volume decline is, as I said earlier, it is purely as a result of approvals from external agencies, which creates a situation where sites of customers are not ready to use the material. So that leads to delays. This happens in this business quarter-on-quarter. Yes, there has been clear influx of competition, new companies coming in and adding aluminum formwork because the demand is growing in India. So I think that is something that is going to gradually play out and filter out. What is India is still at, I would say, a relatively nascent immature stage with regards to adoption of these technologies. India has suddenly moved from using traditional wooden formwork to now a situation where aluminum formwork is becoming like a de facto standard. In terms of there are no set standards, there are no set quality adoptions, things like that. So as a result of that, new players are coming in. We have seen this happening before in scaffolding also. What’s going to happen is that over a period of a year or 2, it’s going to get filtered out. We are going to see a lot of the smaller players getting weeded out of the system because they’ll not be able to compete and they’ll not be able to afford to sell products at the pricing at which they are currently willing to sell it. So therefore, we take a very long-term view, and we are bullish about the Indian market. And that’s why I said earlier that our strategy is not to blindly chase volume, but to responsibly chase the right type of customers and protect our profitability.
Ruchit Agrawal
Got it, sir. That helps. Just last question. If you could help us with any guidance on margin and growth outlook for the next year? And if you could give some segmental guidance, that would be very helpful.
Navneet Kumar Saraf
In the scaffolding segment, which has been really volatile, I think, as I said earlier, our outlook is to be at 15% margin next year
Ashish Kumar Saraf
Barring any more major geopolitical disturbances, if the implementation of the trade deal remains intact, if the U.S. demand continues to be like it is right now, I think with our product mix, with our strategy, we should be able to have growth in revenue as well as deliver a 15% net margin. And as far as the other segments are concerned, Drum Closure has anyway been steady. So I think Drum Closure will remain that way. It will probably be only positive because tariffs will go down in the U.S. Engineering Services segment will also continue to be steady and continue to grow the way it has been growing. And textiles, we are seeing an improvement. We are already at positive EBITDA in two of the three divisions. And hopefully, we’ll also be the same in garment next year.
Ruchit Agrawal
Got it, sir. Thank you for that and wish you all the best.
Ashish Kumar Saraf
Thank you.
Operator
A reminder to all participants, please restrict your questions to two per participant. For more questions, please rejoin the queue. The next question comes from the line of Anubhav Mukherjee from Prescient Capital. Please go ahead.
Anubhav Mukherjee
Am I audible, sir?
Operator
Yes.
Anubhav Mukherjee
Sir, my first question is that will it be possible to share what is the margin profile for the aluminum formwork and Mach One business and for the scaffolding business separately?
Ashish Kumar Saraf
It is difficult to give it quarter-on-quarter because it’s been very volatile, as I explained earlier. But on an average, in general, the scaffolding segment operates at anywhere from 15% to 20%, whereas the aluminum formwork operates from 10% to 15%.
Anubhav Mukherjee
Okay. And this quarter, the 10% to 15% for the aluminum formwork has seen a further decline. Is that correct interpretation?
Ashish Kumar Saraf
No, not actually, the aluminum formwork has not seen so much of a decline. It may have been close to 10% or maybe a percentage or two point low. It’s the scaffolding segment where the revenue has been 50% lower that has seen a decline.
Anubhav Mukherjee
Okay. Yeah, get that. So it’s mainly an impact of the product mix between the two?
Navneet Kumar Saraf
Correct.
Anubhav Mukherjee
And my second question is, sir, how much of the Drum Closure business do we get from exports to here?
Navneet Kumar Saraf
About 30%.
Anil Gadodia
Yeah, anywhere between 25% and 30% it goes.
Anubhav Mukherjee
Okay, thanks. I’ll get back in queue.
Operator
Thank you. The next question comes from the line of Prateek Bhandari from AART Ventures. Please go ahead.
Prateek Bhandari
Hi, sir. Thanks for the opportunity. Just a couple of questions from my side. If you can quantify the quantum of sales we did for Mach One during the quarter and nine months FY ’26?
Ashish Kumar Saraf
We did about in just a 3-month period, actually, this data is available in the investor presentation that we shared. So in just the 3-month period, October to December, we did 117,000 square meters. And for the full 9-month period, I’ll have to check. But that data is available in the investor presentation. Anilji, can you clarify which page it is on?
Prateek Bhandari
No, sir. I was asking about the value of sales for Mach One during the quarter.
Navneet Kumar Saraf
You were asking about the value, not the quantity.
Prateek Bhandari
Yeah, yeah.
Navneet Kumar Saraf
Okay. So in just the December 3-month period, the value was about INR200 crores. And for the 9-month period, the value is about INR550 crores.
Prateek Bhandari
INR550 crores. Okay. And sir, what would be the gross debt and the cash and the net debt levels in our books as on date?
Navneet Kumar Saraf
Anilji will answer that.
Anil Gadodia
Yes, sir. The cash and cash equivalent you are talking about, right?
Prateek Bhandari
Yeah, gross debt, cash and net debt.
Anil Gadodia
Yeah, so the cash and cash equivalent is around INR405 crores and the working capital against that is around INR390 crores. And this is so far as Technocraft Industries standalone is concerned. There are some term loans also in the subsidiary companies.
Prateek Bhandari
Okay. Yeah. And what would be the quantum of the same?
Anil Gadodia
Subsidiary company. One second. Yeah, I’ll give you. One second. How much?
Navneet Kumar Saraf
Around INR200 crores in two subsidiary companies of Aurangabad and one subsidiary company, which is Technocraft Textiles Limited.
Ashish Kumar Saraf
All three combined, INR200 crores, yes.
Prateek Bhandari
So in totality, the gross debt is around to the tune of INR600 crores, right?
Anil Gadodia
Correct. That’s right.
Navneet Kumar Saraf
On consol basis.
Prateek Bhandari
Yes. And cash you mentioned INR405 crores?
Navneet Kumar Saraf
Correct.
Prateek Bhandari
And sir, if you can also quantify the net impact of tariffs on the scaffolding business, considering the Section 232, 50% tariff, which is irrespective of the country. So what has been the net impact of tariffs on scaffolding during the quarter?
Navneet Kumar Saraf
Actually, as I said earlier, nil. Absolutely nil during the quarter.
Prateek Bhandari
Okay. Yeah. Okay. Thanks a lot.
Operator
Thank you. The next question comes from the line of Avnish from Vaikarya. Please go ahead.
Avnish Tiwari
Hi. You said about close to INR900 crores for Mach One this year. And if you were to also include scaffolding, so total the line segment you report is a scaffolding based combination of scaffolding and Mach One. What revenue you would look at for this full year?
Navneet Kumar Saraf
We should be looking at close to INR1,400 crores.
Avnish Tiwari
INR1,400 crores. And this Mach One, within India sales, what is the dominance of, let’s say, Mumbai or Maharashtra versus other states?
Ashish Kumar Saraf
We have quite a high concentration in South India. That is our largest market, followed by Maharashtra, followed by North India.
Avnish Tiwari
Okay. Lastly, in any of your businesses, are you seeing…
Operator
Thank you. A reminder to all participants, please restrict your question for one per participant. For more questions, please rejoin the queue. The next question comes from the line of Priyankar Sarkar from Square 64 Capital. Please go ahead.
Priyankar Sarkar
Hi, sir. Sir, my question is more in the engineering segment. So could you give us [Technical Issues] kind of customers-that we cater to. And what is our split like?
Ashish Kumar Saraf
Your network was not very good so your voice broke in between. But it’s okay, I gather your question as pertaining to engineering services segment and customers that we cater to. So we have seven different industry verticals in this segment. Of these, our dominant verticals are industrial products, machinery and transportation. In this segment, the customers are basically large machinery manufacturers, heavy equipment manufacturers, companies making earthmoving machinery, companies making process plants, companies engaged in producing, let’s say, chemicals and food products and things like that on continuous process basis, so running large process plants. So more I would say 50% of our customers would be companies in these three verticals. And then in the transportation vertical, there would be companies making specialty vehicles like trucks, buses, coaches, etc.
Priyankar Sarkar
Got it. Right, sir. Sir, just a follow-up. What would be the split between our offshore and onshore in terms of the revenue? And another question, just follow-up is what would be the stable margin going forward because we have aspirations to grow this segment over the next two to three years. So what can be a stable margin going ahead?
Navneet Kumar Saraf
Currently, offshore is about 60% and onsite is 40%. Going forward, we’ll probably see offshore further increasing. Stable margins are about 15%, even with the growth and that we continue to have. So with the growth of 25% year-on-year that we expect, we should be operating at about 15%.
Priyankar Sarkar
Okay. Thank you very much. I wish you all the best.
Operator
Thank you. The next question comes from the line of Riya from Aequitas Investment. Please go ahead. Ms. Riya, you may proceed with your question.
Riya Mehta
Thank you for the follow-up. I just wanted to know in scaffolding business, what would be the fixed cost as a percentage of total cost?
Ashish Kumar Saraf
Again, it varies because the revenue has been varying. Fixed cost so as a percentage, it will vary. But this quarter in September, the fixed cost would have been I mean, I don’t have an exact number, but my guess is it would probably have been close to 20%. It will be about 20%.
Riya Mehta
Okay. Got it. Coming to the Drum Closure, you mentioned that this quarter we have absorbed 25%. However, the margin impact has been negligible. So is there an inventory lag which happens while booking? Or we are assuming that going forward, the margins will get retracted to the original level?
Navneet Kumar Saraf
The inventory is minimal in the U.S.
Ashish Kumar Saraf
A lot of our sales is direct customer sales. I mean, yes, it’s not been very significant because there has been increase in sales in other territories, higher contribution there. I don’t think perhaps this quarter, our contribution from U.S. as total may have reduced. We have had more sales in other countries. The rupee depreciation has also helped to some extent because rupee has become INR90 plus. So all those factors have contributed to minimize the reduction.
Riya Mehta
Right. Also, you’re seeing a good growth in…
Operator
Sorry to interrupt you, Priya. We request you to return to the question queue for the follow-up question. The next question comes from the line of Pawan Nahar, an individual investor. Please go ahead.
Pawan Nahar
Yeah, thank you. So Navneet ji, I was just reflecting on the last five years, and then I would like your thoughts on the next three years, assuming everything is normal. In fact, you said that U.S. is looking good. So if I look at the last five years and our four segments, business segments, two have done much better than what we would have envisaged. One is Drum Closures, other is the Engineering business, right? And two have done lower or less than what we would have envisaged, like scaffolding was supposed to be a big opportunity. Hopefully, it will happen at some point. So and we have invested in the latter two segments, capex we did on scaffolding and formwork and we’ve done it in the textile business, right? Now let that be. My question is next three years, where do you see the opportunity? And is there a new category that you see, which may emerge, say, for example, our Defense or in the Engineering business if there are opportunities to do some prototyping beyond the design, right? So if you can talk like next three years in these segments, where do you see the opportunity? [Foreign Speech]
Ashish Kumar Saraf
So the opportunities are in the scaffolding and formwork segment for sure. Like I said earlier, the demand in developing countries like India and South America will continue to grow. So we are bullish and optimistic about that. There will also be opportunities in developed markets like U.S. in the scaffolding segment, led by the investment in energy that is happening there and also the investment in high tech that is happening in the U.S., semiconductor plants and things like that. So I think next three years, we continue to be quite bullish that the scaffolding and formwork segment will cross revenue of INR2,000 crores. And that’s what we are moving towards in terms of our product mix, in terms of our sales, marketing focus, etc.
Then the next opportunity is in the Engineering Services segment, our Technology Services business. There, we will continue to see very strong growth. And there, we may be surprised like we have been in the last five years. I think we may see growth higher than our own estimates. This is being led by all the high-tech enablement. And actually, we are already doing prototyping. We are already doing manufacturing. So other than just designing services, we are now doing a lot more of manufacturing automation. We are doing a lot more of prototyping, and we are actually building products for customers, not just designing. So that will continue to grow. And so, I think these will be the fast-growing segments for us. And we are not really looking at this point in time getting into any new business, which is radically different. So scaffolding will do good. Formwork, we’ll see how it goes. Engineering will do good. And there are opportunities, or we are already doing prototyping and stuff like that. I can elaborate on that one. Two is within Drum Closures, we’ve spoken about opportunity in Plastic Drum Closures, but there are some litigation issues in the U.S.
So what is the outlook? I mean, apparently, that is another huge opportunity is what I had understood earlier, right? And Defense, how big can that be?
Navneet Kumar Saraf
We are already doing Plastic Closures even now. And yes, the opportunity is good, and we are capitalizing on that cautiously because we don’t want to dilute our margins. The Plastic Closure business at scale does not have the same margins as the Steel Closure business, depending on the type of containers. So we are catering to the Plastic Closure business with similar margin profile as our Steel Closure business. And that’s on track, and that is going to see growth in volume as well as growth in bottom line, which is why the Drum Closure business has been growing in the last two to three years in spite of fairly stable drum production, the steel drum production.
Operator
Thank you. The next question comes from the line of Prateek Chaudhary from Saamarthya Capital. Please go ahead.
Prateek Bhandari
Good afternoon, sir. I’m slightly new to your business. So in the scaffolding division, I understand that primarily or majority sales are through exports. Is that correct?
Ashish Kumar Saraf
It’s about 50-50 now. It’s almost half, 50% export, 50% domestic.
Prateek Bhandari
And in domestic, that’s where my question is stemming from. In terms of outright sales to distributors or contractors versus, say, a rental model, I mean, are we majorly focused or going to focus on the rental side as well going forward?
Ashish Kumar Saraf
No. So we don’t do rentals. We are focused 100% on outright sale. In the domestic market, we sell primarily to developers, real estate developers, and also construction contractors. Rental is somewhat prevalent, not in the aluminum formwork, but in the steel formwork as well as steel scaffolding space. So we have distributors of ours. And we are actually increasing the number of distributors in India who buy from us and rent, but we don’t directly rent.
Prateek Bhandari
No, because I was seeing a couple of companies in the private space also in one company that just got recently listed, MSafe. So there, the payback periods are maybe less than 15 months for the rental equipment that they buy and for rent on. So why have we not wanted to explore this market?
Ashish Kumar Saraf
Because two reasons. One is that, firstly, it is not true that the payback period is 15 months. That’s only at gross level. You have to also take into consideration holding cost, utilization cost because you can’t expect 100% utilization of your rental inventory. Then you have to take into consideration cost of lost material, damaged material. You see India is not a very mature market when it comes to protecting somebody else’s asset. That maturity does not exist in India. So it is okay to say that on paper, you have 15 months payback period, but wait till the material, the contract finishes and you have to get back material. Because typically, if you don’t own the material, you will abuse it and you will use it the way you are. We have experienced that in India in the past. So we know the entire economics of the rental business.
Having said that, it is a good business, but it has to be done in the right way. Hence, there has to be pure-play rental companies with yards, with refurbishing services who have sales teams who are able to continuously redeploy the material and get the utilization up. Manufacturing companies can’t do that. Worldwide, you will find that there are the segment is divided. There are manufacturing companies who only manufacture and sell, and there are service companies who rent. Rent is for a service company, not for a manufacturing company.
Prateek Bhandari
Understood, sir. Thanks a lot.
Anil Gadodia
Thanks.
Operator
Thank you. The next question comes from the line of Devang Patel from Sameeksha Capital. Please go ahead.
Devang Patel
Hi, sir. My question was on formwork, where it seems we have an order book of about six months compared to our current capacity. What is the time it takes for us to deliver an order on average? And how do we hedge our costs during that period, considering our scrap inventory mentioned earlier was for 1.5 months?
Navneet Kumar Saraf
It takes typically three months to complete an order from the time it is procured.
Ashish Kumar Saraf
Like I said, our pricing is variable and gets fixed only after engineering is completed. Of the three months, two months is the engineering process. So it takes two months to complete the engineering, then the price gets fixed and then it takes one month to manufacture and deliver.
Devang Patel
So when you take an order, the pricing is not decided, only take a volume order at that point of time and the pricing would get fixed once the engineering is completed?
Anil Gadodia
Has that question been answered? Or are we still waiting for it? Can you repeat the question?
Devang Patel
Yes, sir. I just move on to the other question was that when you mentioned INR1,400 crores of revenue for the scaffolding division for the full year, are you expecting a recovery in the next quarter?
Navneet Kumar Saraf
Yes, we are expecting next quarter to be better than the December quarter in terms of profitability.
Devang Patel
Okay. Because you mentioned earlier that volumes were still restricted till November and you do consolidate with a lag of a quarter?
Navneet Kumar Saraf
Yes. Volumes were restricted till October.
Ashish Kumar Saraf
November and December sales were better, which is why we are saying that the Jan to March quarter will be better than the October to December quarter.
Devang Patel
Thank you so much for that clarification. Thank you.
Operator
Thank you. A reminder to all participants, please just stick your question to one per participant. For more questions, please rejoin the queue. The next question comes from the line of Anubhav Mukherjee from Prescient Capital. Please go ahead.
Anubhav Mukherjee
Sir, I have a follow-up question. The 100 days of inventory at the end of this quarter, is it mainly for the scaffolding division or even for the aluminum formwork division we have to maintain like because of the raw material, some level of inventory?
Ashish Kumar Saraf
No, it is primarily for the scaffolding division because of the reduction in sales. Hence -, and we have not reduced our inventory in the U.S. So hence, the increase in inventory in days. Aluminum Formwork on the contrary, the number of days of inventory has come down this quarter.
Anubhav Mukherjee
Okay. And typically also…
Operator
Sorry to interrupt. We request you to…
Anubhav Mukherjee
A small follow-up. Just a small follow-up. So I was asking, sir, typically also, it’s the scaffolding division that requires this higher level of inventory. Is that right?
Navneet Kumar Saraf
Yes. That’s right. That’s right.
Anubhav Mukherjee
Okay. Thanks.
Operator
Thank you. The next question comes from the line of Pawan Nahar, an individual investor. Please go ahead. Mr. Nahar, you may proceed with your question. As there is no response from the current participant, ladies and gentlemen, that was the last question for today. I now hand the conference over to the management for closing comments. Thank you, and over to you, sir.
Ashish Kumar Saraf
Thank you, and thank you to all the investors and analysts for participating in this call. We appreciate your detailed analysis and questions. Please do reach out to us if you have any further follow-up questions, we are always available to answer those and look forward to continued dialog. Thank you. Bye.
Operator
Thank you. On behalf of Batlivala & Karani Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.