LMW Limited (LMW) Q2 2027 Earnings Call Transcript

Yeah, now it's pre-putting it.

Ladies and gentlemen, good day and welcome to Earnings Call of LMW Limited for Quarter 2 of FY2627 hosted by NSCL. As a reminder, please note that the participants' line will be in this and only more, and there will be an opportunity to ask questions after the brief by the company officials. Should you require any assistance during the conference call and raise questions? Please signal the operator. By raising your hands. Please note that this call is being recorded. And this is Samir from NSDL. We have with us Mr. V. Sentil, Chief Financial Officer and Ma'am Meedhana Lakshmi, Associate Vice President of the Company. And now over to you, sir.

Thank you. Good afternoon, everyone, and thank you for joining LMW limited earning call for Q2 FY2627. We will have a brief about the overall performance of the company for the period ending September 26, followed by an interactive session. I would like to clarify that certain statements made in the discussion of the conference will be forward-looking in nature. To begin with, let me explain the overall performance of the company. Followed by the consolidated performance and the segment-wise performance. The financial results have been posted on the company website, and I hope you have had an opportunity to go through the same. The revenue for the quarter ended September 26 is Rs.153 crores, as against 815 crores for September 25, which is an increase of around 30%. The company has achieved H1 revenue. The PPD stands at Rs 204 crores for the current period as against 93 crores for the previous period. Now, as we go into the division wise, Textile Missionary Division for the quarter ended September 26 has clocked in a turnover of Rp639 crores as against 432 crores in the previous quarter, resulting in an increase of 32%. When compared to the quarter-end at September 25, the sales increase is 38%. TMD revenue for H1 stands at 1,121 crores as against 876 crores for the corresponding previous period, resulting in an increase of around 28%. Profit for H1 stands at Rs.48 crores as against Rs.2 crores for the corresponding period last year. With respect to the order book, we hold an order book currently of around Rs.3,400 crores, of which an active order book is roughly Rs.2,600 crores. With respect to sales which has been flopped, the domestic versus export versus spares stands at 67% domestic, 8% exports, and 25% spares. The capacity utilization is around 60% in textile machinery division. Now, as I move on to LMW Holding, which holds LMW China and LMW Global at Dubai, the turnover for LMW Global stands at 100 cores for the half year ended September 26, as against the comparative number of 71 cores for the half year ended September 25. The order book in export is closer to 163 cores on hand for LMW Global. In elementary China, we have been able to clock a turnover of 36 crores, and for the comparative period last year, it stood at 41 crores. The order book stands at around 128 crores. Now, as I move to machine tool division and foundry, the turnover in the machine tool division and foundry is 794 crores for the first half ended September 26, as against Rs 555 crores for the corresponding previous period. Out of this, 9% relates to foundry turnover. The balance is towards machine tool division turnover. We are operating at a utilization of around 75 to 80% at the machine tool division. With respect to ATC, the turnover for the first half stands at 135 crores as against a corresponding turnover of Rs. 97 crores in the previous year, first half. With this brief, I would like to stop and we can start the discussion and the interactive session. Over to you, Mr. Samir.

Thank you so much, sir. Ladies and gentlemen, we would request people to please raise hands so that we can unmute you and we can have the queries discussed. Sir, we have Mr. Poojan Shah with the first question.

Go ahead, Mr. Hi, Sentin, sir. Am I audible?

Yes, sir. Yes. Yes, okay. Sentin, sir, my first question pertains to the ATC division. So, just want to understand we can do a revenue of 300 crores. So, just want to understand what is the current capacity and the peak revenue we can achieve from the current capacity. Second, we are investing 150 crores in this division. So, what could be the peak revenue we can achieve when we can expect the commissioning and when we can reach the peak revenue for this specific division after the capex.

Okay? You can please continue with all your questions, and then I'll give you a...

Okay, please continue. In textile division, we also see that there is a free trade agreement which is getting concluded. That's where the textile business is also booming. So that's ultimately flow to our order book as well. So how are we seeing in this division? Because last two years, our EBITDA margin has been negative in this segment. While currently, if you look at the last two quarters, we are a bit positive or at a break-even. So, what are more or less expectations in terms of remitter margin going forward specific for revision when such a tailwind is being, we are seeing such a good tailwind. And so, we are also expanding machine tool division. So, what are our core expectations of doing? Building such, what are the core aspirations to that and how we are planning to scale this division going forward. And I just want to also understand the ATC division. So we are also associated with TO and players like Boeing or Airbus. But also wanted to understand, are we associated with new programs which can eventually contribute to our order book, which is right now a thousand crore order book, which can contribute to our order book, which is right now a thousand crore order book, which can We are going to conclude to a 2000-3000 in going forward basis. So how we are seeing this specific segment as well. Yeah, these are my few questions. I will find you back in the queue.

Thank you. So, I will take it up in terms of the same order what you asked. So, let me start with ATC. ATC, from a capacity standpoint, we will be closer to 70% capacity utilization in this As you know, ATC is comprised of two divisions. One is metallics and composites, and the spare capacity available on the composites is little bit higher and the turn around is Mainly, on account of we having good traction on the composite segment as well, apart from the metallic segment. For the numbers, numbers in question, yes, we will be the current capacity, generally the. The ratio of turnover to investment in this type of business is always closer to 1 to 1, 1 to 1.23, depending again on the mix as to whether some of it is what type of material are we fully supplying the component with material costs, are we only doing job work, because in this business you have a combination of job work and with material as well. That, again, depends on who we are operating with domestic exports. So there is a lot of combination of factors. So it will be very difficult to give you a particular number to say this is the number we would, is the right number for the current location. But from the thumb rule, you can always calculate. With respect to the new investments, the new investments are able to go in. I think we have discussed this right from Q3 of last year, where we had gone in for an investment, MOU signed up with the TN government, and the work is going on with respect to... I'll be planning, etc. And yes, we will, at an appropriate time, we will be giving out the timeline over which this investment will become, I mean, the plan will basically get commissioned, etc. With respect to the type and nature of business, we do work with tire 1 and more to do with tire 2 as well. I mean, for example, we have engine. The way we look at it is we supply to engine parts, we supply special process, we supply structural. So it goes into tire Tire 2 for further supply into Tire 1. That is the way it works. But very clearly, we have always had in the past at least 90% exports and 10% focus on Indian ecosystem. And right now, this transition and the increase what you see is basically because of we addressing more of the Indian ecosystem. The stability in the business has always been the metallics with long-term contracts. This business generally comes with long-term contracts when you deal with the Tire 1 and Tire 2 players, and that has been quite good, and there the focus is to increase what we could serve them in terms of their wallet share, how much more we can serve these customers. And Indian Defense Program. And the domestic defense program is something which is definitely a value add for us as well. And we do participate in a lot of tenders which do come through. And we should also understand and appreciate the way the Indian ecosystem is going to develop this. Yes, you get large contracts, not in few thousand crores, it is multiples of thousand crores. But the ecosystem is such that you would get a drop, I would say it would filter down to many, many players. So if there's a 15,000 or a 20,000 contract which is given out by the defense, we are all in the same ecosystem where we are all able to chip in and contribute to that ecosystem from our side using our capacities. So that is the way the Indian ecosystem currently is. So it is not that one company or someone would be in a position to cater to the entire requirement which just because one order is getting signed with them. And it's a very healthy, I would say it's a very healthy ecosystem and where everyone knows each other's capabilities and capacities and we are ready to work with each other. That is with respect to the ATC division, textile division. I think it is well noted that this year has been quite good in terms of an uptick, what we see in the Textile Missionary Division. But the... A fact also remains that from a government standpoint, a lot of new policies have also been announced. I think the Karnataka government has introduced a 4,000 crore textile policy. The textile ministry as such is trying to develop very focusedly exports with closer to 5,000 to 10,000 new exporters over the next couple of years. And on top of it, things like a New Zealand FTA policy, which supports the end customer's customer or the customer's customer is definitely positive. However, we are very much aware that at this point in time the challenges what we face are probably, we are in quite a few uncharted territories. I mean to mention a few how the impact, the second order. Impact of the war, because of which the material cost, all that is going to impact, I think these are all, we have to wait to see how these things play out. We are still very cautious. Yes, we are seeing the numbers go up, but I would say we are still cautious as to how these rollouts would continue to happen over the next six months. As you know... All the commodity prices have gone up, the availability of electronics have become a challenge. So there is a lot of work which currently which everyone as OEM supplier we have to do to ensure proper ecosystem and very strong supply chain is functional right now to ensure that we are able to deliver. I think those are the challenges within the textile division. You have mentioned the word tailwind. I think that would be a word which would be more suitable to machine tool division rather than textile division at the moment. Going to machine tool division. Yes. It is doing well. We are seeing consistently orders, order inflow happening. A lot of the industry as such is also growing quite well. The aspiration there is definitely we if you see the growth pattern as of now, I think it is closer to 50% growth for the current year and There are a lot of positive signs and which we have again mentioned even in the previous call as well, which, for example, the China plus one, which we spoke about a few years back today, we are actually seeing it happening on the ground. So, similar to that, the demand as such is also good. The upgradation of machines are happening because people are wanting to upgrade into much more modern machines. So, there is a lot of demand which is there in the ecosystem, and that is where we have We have increased our capacities a couple of years back. What we see now is we have to further increase our capacities, and that's what we are in the process of doing. And like I always maintain here for us, the capacity is nothing but enough space available for us to machine and assemble. So it's much, much more Thank you very much. So, in a short span of time, we can always ramp it up. So, as we touch 80% kind of a utilization, then we always look at how to keep it at 80 and keep increasing the capacity, which is what we are doing now. Thank you. I hope you have answered the question.

Over to you, Mr. Sir, I have some follow-up question. Should I ask for a daily joint in the queue?

I think you should join back in the queue. Okay, thank you, thank you. Thank you very much.

So next we have Mr. Jai Unatgar.

Thank you. I hope I'm audible.

And I had two different questions, one related to the capacity expansion that's happening in yarn in specific. Since also, if I may, like, you know, the capacity expansion that is getting announced across textile companies is more towards garmenting, fabric, and technical textile area, right? Nobody focusing on really advancing larger capacities in yarn. I am looking to understand that is there a possible situation where there is a significant demand supply mismatch. That can happen. And this is specifically more pronounced given the situation of Bangladesh in terms of geopolitics, cost of energy, as well as the recent events where they have had difficulty in being able to keep their share in terms of exports as well, right? So if there is one on that, and then we will move to the machine tool ADC part later.

Well, you can give us the questions, Jay, and then we will, I will answer them together. Please go ahead.

Sir, in machine tooling, we are advancing capacity at a slower, more cautious pace, given what we are experiencing in the textile division, or this is the kind of visibility we have, given the statements that you made of experiencing China plus one, as well as upgrades and continuous demand. Is this a more calibrated expansion or is this something which reflects a cautious approach towards expansion if I may read through it. And if there are any sectors which are specifically driving this shift of demand, since you know the segment from which the demand is coming or the end user, if there is a specific sector you can highlight it will be of help. And finally, on the ATC division, where on the annual report, there was a mention of saying that we have capabilities of being able to deal with metals like Now, to the best of my understanding, there are very severe limitations of the number of players that are available in India to be able to do titanium forging or having titanium capabilities of being able to maneuver through that metal. So sir, I wanted to understand if this is an area of focus in the future, if there is any kind of significant expansion of this capability that the company is undertaking and what's Other than the fact that, you know, there is a couple of lines mentioned around this in the annual report, if you can.

Thank you for the question, Jay. I mean, from a textile missionary division, see, you would like to again look at the fact that over a period of two years of long term. Some amount of spindles are shut, right, and I mean the numbers are varying probably, we are talking about 8 million plus kind of scenarios, but yes, there's come some amount of spindle have got shut.

Yarn is a commodity and it's a global commodity.

The demand from both China and Bangladesh has been quite strong because of the obvious reason. One, China demand has been growing. Bangladesh, because of its own challenges of local spending, and to some extent, some financial constraints, the demand is actually quite... The local spinning demand is subdued, but the unbuying is quite good. So, yes, I mean, your analysis to say that at some point are people not investing enough into spinning. I think I am with you there, but at the same time. The fact that we have been able to or taken orders, if you see in the month of, I think in two, four of last year, we were able to get some decent orders inside the system. Even this quarter, if you see the numbers, our net order inflow is up by around 200 odd crows. I think this is an indication. And when we actually look at the flow of order book, it is closer to 70 percent is basically project orders. So, there are... I mean, the fact remains that people who are placing these orders are very clear and they are all project orders. They are looking into expansion to a larger exchange because 60 by 70 percent is still majority of them are going that way. But the pace at which this is going to get added is, of course, a question. And on top of it, the challenges, and as you know, from a cotton tray standpoint, from a synthetic fiber standpoint cost, I think there are a lot of factors right now playing. But ultimately, the garmenting and the fabric people are doing well and government has given, I mean, is looking at very positively the incentives again. And it has also given us, I mean, a cotton for duty exemptions between 1st of June to 31st of October. I think there are enough positive things out there to help sustain the growth momentum which is expected to, which is expected of the industry, right? I think that is the way we would look at it. And last point on that, yes, from 45 to 50 million knot spindles, moving up to 70 million spindles or whatever the numbers are would eventually happen. Again, we have also maintained in the past that, okay, by when, the pace is a question. But industry is going through both the positives and negatives of it as we speak. And we hope for more positives than The negative is minus 2. Now, coming to machine tool division, both are independent. The way we are expanding, I think what has come out is basically a statutory requirement because we have a unit. It was not used, but as per the norms, we are supposed to identify it as a third unit because we are going to do our assemblies there. I think as per the exchange requirements, we had to file the filings which said that we are getting into another smaller unit. But basically, it is a unit which is already existing, fairly large space, where we can quickly ramp up the numbers. So, it is not a calibrated expansion. It is a planned expansion, and this has nothing to do with the way TMD is growing. These are totally independent businesses, totally independent drivers for the business. With respect to the sectors, Surprisingly, auto sector is still a predominant one. It is still a little bit, I would say, a little bit upwards of 50% is where we are delivering into. The rest of it, the entire sector, I mean… Be it defense, be it EMS, be it tooling, everything is expanding. The way I would look at it is what types of missions are going there. Is it more turning centers? Is it more missioning centers? And because of the kind of order flow, there's more missioning centers which are kind of increasing in its footprint for us. Right? I mean, for us, the ratio of machining centers to turning centers, machining centers are able to generate more turnover, have a bit more growth than turning centers. But all sectors are going. With respect to APC, see, we are not into forging. We are into, when we say metallics, we are into basically machining, special process, etc. Thank you. And the course, our courses were quite steady and it remains the same. We will. And we will continue to invest as we see fit, if we are able to recover. And it makes sense for us to invest long term for a particular project in a metallics division or composite division. So the future focus is to ensure that we continue to ramp this up. And as I said, our focus in the past couple of years from the turnaround point of view was always on exports. But today we are also looking at Indian defense and we will continue to do these investments as we go forward. Thank you. Over to you, Mr. Samir.

Thank you so much, sir. Next we have Mr. Manish Goyal to go ahead with the next questions. Yes, Manishi.

Yeah, thank you so much, sir. Sir, just to continue on MTD, the exchange filings is we are increasing capacity by 10% on a base of 6, 7, 5, 0 machines, and the capacity utilization over is at 90%, which is mentioned over there. And what we mentioned in your opening remarks is that we are at 75-80%. So just want to clarify on that aspect, number one, and we are investing 10 crores toward that. So that was the first question, sir. And so like, I would also like to ask as to why we probably looking at such a small capacity increase in machine tool vendor demand when we are growing at 50% and And the competition on other side has been increasing capacity significantly. So if you can highlight on that, and what would be now a mix between machining centers Thank you. And the turning centers. So, that is first set of questions if you can give us perspective on the MTD side. Sir, just to clarify this revenue breakup in textile machinery, what we are providing, it is for standalone numbers, right, sir? And what you gave in the opening remarks, it is for quarter two or it is for half one? And maybe if you can give us the respective numbers as well, that was one. And even for LMW Global and LMW China, the numbers were for half one, what you gave, and maybe if you can share the quarterly numbers, and also what is the pack level numbers, profit or the loss number. And in respect to this last year in as per annual report, what we see is that LMW Global seems to have incurred a ...very large, lost number of 29 and half thrones on our 184出去 revenue? So was there any particular reason for such a large loss last year and how should we look at in the current year, for the overseas operation for both UAE and country? So one more clarification about the spats business, what we share the number, it is for domestic regulatory rights. The breakup does not include so basically what components we send to our overseas subsidiaries, I understand.

Thank you, everyone.

Thank you. Thank you. Thank you. Sir, in annual reports, sir, what we probably see is that investments has increased in overseas, basically LMW holding from 206 crores to 377 crores. So are we probably investing more in terms of capacity creation or working capital, if you can give us perspective on that as well, sir.

Sir, there is a land parcel development of

basically land parcel of 4.2 acres, which is mentioning annual report and we have entered in JV with one entity called Mrs. Infinium developers on basically development on revenue sharing. So, what could be the potential value for this and over how many years should we be able to realize that? I'm sorry. It's so nice. You're seeing what would be our auto book now and how would the breakup of that auto book between metallic and composites look like. Thank you. And sir, annual report mentioned that in TMD. Okay, let me first complete ATC. So ATC, sir, again, continuing with the auto book details. It's mentioned that the growth driver for us would be a defense sector across spanning drones, missiles, radar systems. Apart from export led commercial business. So what in particular, we will be looking for this defense sector like considering drones, missiles and radar system, would it be structural parts or electronic components? What would be the areas we will be looking at in this? And it also talks about composites, probably looking at more complex So maybe if you can give us perspective, what kind of opportunities we have and we have also mentioned that we probably look for further margin expansion in ATC from probably what we have seen, they already are improvement to 22% in the segmental numbers. Sir, in TMD, should I ask later, sir, there are so many questions.

No, no, no, please go on, Mr. Manish. I am noting it not an issue. I won't miss it.

Okay. So in TMD, sir, like there is a mention about good demand for robotic auto PC as there is a labor shortage and especially in export markets like Turkey. So how is it? And this particular product is picking up and also if you can give us perspective about Laxmi winder, how is it ramped up in terms of demand and how should revenues look like? And And yeah, in MTD, I've already asked the question, sir. That's it, sir.

Thank you so much. That's fine. That's fine, Mr. Manish. You're always welcome. So I'll do the same order. So MTD, we'll have to understand capacity ramp up first. The fact that the amount is very small is nothing to do with the area or what we are trying to do. It is a clear immediate requirement to ramp it up and we have got place there. And like I was just mentioning, it's a statute requirement we have to declare in GST, we have to declare in, you know, a plethora of government agencies as to what our new division is. We could, as such, occupy that new location and put out everything, but, you know, that's why there's a very small amount, very, very small minor amount which is going there, but there is enough place for us, there's a place for us, and we believe very clearly in repurposing Using it, so that is what we are trying to do in here. And we always maintain as we as we hit that 80% 85% mark we will keep expanding our capacities. So linking the numbers to the 10 crore I think is not perhaps the right way to look at it. But it is that we'd like to do a very quick. Ramp up is what we are trying to do here and there is an ecosystem around this and it is just not 10 crores, there is a fairly large ecosystem around it. With respect to turning centers, machining centers, it is around 23 to 24 percent machining centers and 76 percent turning centers. Textile Machinery Division, the numbers of... What we have given is standalone, which is basically 67% domestic, 8% exports and 25% spares. The spares are purely domestic spares and export here includes OEM and what we export to our subsidiary abroad. With respect to the turnover, the turnover which I mentioned, which is 100 crores, again, I did make mention that is for the half year ended. I mean, you may have to just to look at the last, this one, we had to reduce it. I do not have the number right away with me. And 36 crores is for the LMW China. Yes, there is a loss, and as what I would kind of look If you look at it, the markets where you operate has had its challenges, and it continues to have its challenges, and the two countries which are doing well, and India being one of them, and of course, China, there is pintle-edge addition, but… We have not been able to add as much in terms of top line there, but rest of the markets where we generally operate will be Bangladesh, Turkey, etc. has had its challenges. But the idea basically there is that, like I mentioned, we now have an order book, an active order book, which I gave out around 300 odd crores of order book is available. So that will be due for execution over the next six months and a little bit more than six months. So idea there would be to recover as much as what we have lost. Of course, these are expensive locations. We have our offices all over, which all comes under the LMW holding company in Dubai. So that's the reason for the loss. It's the fact that we are unable to absorb because top line has not come through. But there has been over the last few months a decent amount of order book being built up which will get delivered. With respect to the overseas holding and investments, the idea for us is kind of to create an external arm and as what we have done is to bring all foreign entities under one entity. And we had invested initially to buy off LMW India, a subsidiary, LMW China has to be a subsidiary of India. We had invested initially to make that transfer, and we got that money back. So we had sent in whatever the amount what you had mentioned, I think it's 200 odd crores we had sent in, but that money was actually... We used to buy the subsidiary and then that money was brought back. Only now we have started actually doing the investments. And the idea is to create not only a capacity but also to create a possibility for us to look at expanding and making our presence stronger. So, for example, to give a very basic example, for us the reach to Africa as a subcontinent that is, be it Egypt, Kenya, where we operate, is much more easier from Dubai rather than from our current location, right, from Coimbatore. So, the flexibility the international operations This is quite good, and we are trying to leverage that, of course, the markets. I have also expanded. So, the machine tool division, till the war had started, we were having some traction in terms of export into the GCC market, especially where pumps and valves and, you know, the oil and gas segment is very, very strong. So, we were having a good traction of our machines going inside, which is a new market where we are exploring. So, there are, I mean, there are multiple advantages to it, but yeah, these are a couple of them. The land parcel of the 4.2 odd acres, infinium, I think the realization probably is around 20. 25% of that is what we will realize. In terms of a value, we may have to, I will have to put it around anywhere from 20 to 24 crores value. In terms of timeline, it will be anywhere from 24 months to 30 months is timeline which we are looking at. But already it is in place. I am just giving the door-to-door timeline. Some realization would come through this year and some realization will come through next year. Moving on to, yes, with TMD, you had two other questions in terms of the auto piecing. Yes, auto piecing is a manpower saving thing and generally considering the pricing of these automation solutions, these things are absorbed initially at a very high cost country like Turkey, right, where the cost of a mill worker goes up Upwards of $1,000. So in these locations, it makes a lot more sense for it to be absorbed to start with. But as we know, a country like right now, Turkey is actually having its own challenges, and there's not much investment going in there because of... For the last couple of, I would say, two years or so. But these machines are there with our customers and being accepted. But the automation will take time. But the solution is out there right now for the customers to adopt if required. Autovinder has had a start. It is there. It has been sold to a few customers in south. I think the ramp-up would probably happen by next year in terms of more deliveries, but as of now, it is a well-accepted machine, and it is right now being given only to the... South at the moment. Now, going on to ATC, the order book still remains the same number. It is around 1000 odd crores. The percentage of metallics versus composite is around 30% on composite side and 70% would still be metallics. With respect to the question on... The defense drones, radar systems, missiles, etc. From ability to address the client, we have everything from structural, assembly, special process, etc. Of course, except the electronics alone. So, like I already mentioned to the first question, there is enough when a defense program comes out, there is enough for us to And we have enough capabilities to address various parts of it. So, it could be a sub-assembly. It could be a machining. It could be a special process which we could address. I think I thank you. I think I have covered all the questions. Over to you, Mr. Smith.

So, thank you so much for answering that one. Thank you. The next queries would be raised by Mr. Manisha.

Hello, sir.

Yes, Mr. Manish, please go on.

Yes, sir, about entrepreneur, sir, can you give us an idea about what is the market size in India, what is the percentage of imports, and what is the scope for LMW, and that. Another thing is in machine tools.

Yeah. Can we have a...

So, I will just give you a brief overview of what is the 2-3 axis machining and this part and whether we are going for the 5 axis thing, where we are there on that and what is the total market size in India, what are the imports of it and what is our market size, something to throw light on that.

Yeah, that's all sir.

Okay. See, Autoconer market size, Autoconer first of all is an imported machine, right. It is not manufactured in India, and we are the first ones from an Indian context to manufacture the Lakshmi Winder, and which is the last of the… This is a spinning process, which is a packaging machine, actually. From a textile machinery investment standpoint, if you invest in a spinning mill, the winding segment would account for around 25 to 30 percent of the entire cost of investment. Right, that is the thumb rule which we all follow. So, yes, you are looking at probably 1,500 plus crores to start with in terms of the market which is available immediately or a little bit more as well. I mean, now all the prices are all. There is a pricing impact. There is a currency impact because everything is imported. So, yes, there is a fairly large market and it is a market which is falling within our segment of spinning. And that is where we have introduced these machines and they are available at the moment. It is commercialized and available with everyone. With respect to the 5-axis, I think a very interesting question. Predominantly, the industry as such was and is still predominantly on up to 4-axis. The demand for 5-axis comes in when you would like to do multiple of settings and machining, but all at one shot. Right. And now we see because of the availability of labor, you know, technically people want a single solution. There is a gradual increase in the demand percentage. But traditionally, if you see, it used to be less than 5% of the market would be a 5-axis machine. But we are of the opinion that for a period of time, this would, of course, increase because of the reasons what I just now mentioned. That's about it. Over to you, Mr. Samir.

So, thank you so much for helping us with the answers on those. The next questions would be raised by Mr. Suraj Malu. Surajji, let's proceed.

Thank you, sir. Sir, I had two questions. One is, what is the potential for the J2 machines or other SKUs that we sell for the EMS business? And second is, like, recently there was a change in the articles of association, right, where we laid out, like, many verticals with pharmaceuticals, specialty chemicals, electric vehicles, electronics, manufacturing, robotics. So, can you help understand what are the plans there?

Can you kindly repeat the first question, please? I couldn't get that.

Sir, it was on the potential for the J2 machines that we sell or any other SKUs that we have built specifically for the EMS business.

Ah, okay.

What is the potential for that?

Okay, okay, okay. Yeah, I mean, from the articles of association, like we mentioned, it's an enabling resolution. We are, as what we see fit, looking at all possibilities. You know, all opportunities out there. So, that was an enabling resolution. And when anything concrete evolves, of course, we will be informing and you will all be informed. With respect to the EMS machine, I think it's basically specifically for EMS segment. The machines are doing well. I mean, it is not only for Thank you very much. The EMS, it also goes into tooling segment, which is for EMS, and that is where I did mention That this forms part of the machining center family, right? It is not a turning center. It is a machining center family. Fairly good demand and offtake and it is part of a regular product of a new NPD. That's about it. There is a family. Again, if you go again, you can go to our website. These machines are all available. There is a lot of data on our website on these machines. So you will start with Thank you.

Thank you. Vote to you, Mr. Samir.

Sir, thank you so much. I believe Mr. Poojan has a follow-up question.

Yeah, thanks for the opportunity, sir. So, just want to understand, as we have mentioned in the PTC division, that we are right now at a capacity utilization of 70%. Assuming, considering that scenario, we can do a peak revenue of 374 crores. And once you expand with 150 crores as well, given the context, the asset term could be 1.2, 1.3. Assuming on a higher side, that could do an achievable of 200 crores. So, sir, I just want to understand on the incremental order inflow, are we able to cater because we already have an order book of 1000 per hour, which is obviously should be completed in 3 to 3.5 years, but then incremental order inflow from tier 1, tier 2 suppliers or any specific program. Are we able to cater then to specific things, because ultimately the capacity will also take time to come up and ultimately contribute to the... Second, we also sustainably think that 20 to 23% EBITDA margin has been easily doable in this segment going forward. Third, just come to understand, sir, in terms of defense, order book for ATC, which are the programs we have been associated? Is it more on the missile side? It is more on the submissile assembly? How the program has been built upon? And sir, just want to also understand, we also mentioned about the post escalation in our textile machine division, And that's why we have been cautious, but also want to understand that what is the pass-through we have been expecting going forward. In terms of price escalation, whenever we are planning to do or we have already done in terms of price hikes or specific hikes and then discounting method. And I just want to also understand, you have also mentioned about this. The machine tooling system, we have seen a very such a tailwind in each and every segment, but we have also seen many of the companies have also expanded their capacity. Obviously, a few people have expanded in 3xs versus a few people have expanded in the 5xs segment. So I also wanted to understand on a broader aspect, do you feel there would be a demand supply issue which might be eroding on margins? And second, once we are building up on a 5-axis, do we see a shifting margins from going to a 10% kind of a better margin to roughly say 15-20% kind of a margin in 5-axis because it's a high margin. This is a high-value, low-volume kind of a product.

Okay. I think you worked out certain numbers. I think it's a fair point to you. I think I can't comment on the numbers what you worked out, but ballpark figure might seem right. With respect to incremental order flow, there is a very clear plan where we can only take orders which we can execute. Because generally we cannot take orders which we can't execute because there is enough penalties available in this contract process. So as we pick up orders, we ensure that we have enough capacities and we continue to add capacities to match that. I am not clear on your systemic 3% EBITDA question, so I leave it out. We can't answer what different specific programs we We are associated with But everyone knows what the programs are out there for picking up, but we can't specifically get into every program. Cost escalation pass through. Yes, we do pass through some of it. I mean, it is a system. I mean, most businesses in terms of foundry, in terms of ATC, we got losses, contract losses. All that happens. With respect to specifically on OEM, I think for us, it is a fixed price. It is one of a... For the entire domestic industry for TMD. So as of now, there is no past, but it's an active discussion internally. Whilst at the same time, a lot of effort is going internally to have control on the cost. There is a lot of VAV, our team does a lot of effort which is being put to ensure that we maintain the margins in these divisions. Absolutely spot on with respect to MTD, 5-axis missions are high value, low volume, yes. The ideal scenario is when we place our machines against the imported machines. You expect to get more value for the machines and thereby a higher margin. But like I said, you will see two things happening in a machine tool division. We have got enough. The volume has to still flow through. All right. As you increase volume, you will see incremental operational efficiency is coming through and higher margins also coming through.

Okay. Thank you. Over to you, Mr. Samir.

Thank you so much, sir. Next we have Mr. Mahendra Jai.

Hello. Yes, sir. Yes, sir.

I am audible, sir.

Yes, Mr. Mayer, please go on. Thank you. Thank you, sir.

I just want to understand in aeroplane business, exactly, sir, are we in commercial plane also, as there is a huge demand in aerospace in all parts. So are we in wall, nozzle, what kind of parts and engine parts are we in like that? To understand just aeroplane business, what we are into there. Secondly, sir, in future, I mean, in next two, three years, are we planning to The next question, sir, is are you planning anything to increase your shareholding in company? As we are going into very high margin business in the future, are you really planning to increase your stake?

I think two of the questions is not something for me to answer, Mr. Mahender, but I will take the first question. Yes, we are in commercial planes, and we are in defense, defense even externally, in exports, and also, of course, all commercial planes are exports, right? And the answer to that is yes. The other two is not something which I can answer, but thank you for the questions. Over to you, Mr. Samir.

So, thank you so much. So, we have two follow-up questions.

Yeah, please do. I think we can see two hands. Please go on.

Sure. We have a request, Mr. Jai Unatka to please proceed.

Thank you again. Sometimes I'll be very quick if possible. Sir, if I look at it on the reverse basis, thank you again, yes. That machine tool, if it's a certain number, right, if we have to look at it that way and reverse math it, can the asset on this time around be a significantly higher number, which requires, let's assume, a lower capex to deliver better asset on efficiency? Is that the way to look at it? Because, again, I am just trying to decipher the. Sorry, three data points you put together. You answer to somebody on five axis that demand is improving. You also suggested that the industry demand is positively moving. And you suggested we are at 80 to 90. Let's assume the press note and what you mentioned on the call is a combination of 80 to 90% utilization. Then this doesn't exactly come to the math of even delivering a 25% growth next year. So is it that this net expense that we are incurring in CAPEX will have a significantly higher appetite?

I think the, let me answer it like this, right?

The capacity, what I think they have mentioned This is a capacity of what we actually sell. It is very easily possible for us to make multiple of that, doing the right methodology. Now, if it were to go back to this small addition and say, okay, is this addition going to give, if your question is, is this addition going to give me the 25% growth next year, will it come, will it not come? I think there are a lot of things we do. And I don't think it is practical for us to explain everything though at the moment. But having said that, you can always turn on the tab with multiple shifts, right? And the same holds good. And this is a business where it is more into more of assemblies. So it is possible for us to scale. There is absolutely no issues on that. What we will have to understand is this particular investment what we declared is basically for a particular type of machine which is going to go into that particular location which will be kept separate from a manufacturing Thank you. So, that is where this very small amount was spent to just take over a site and then that site is all ours. It's not that it is an external. It is everything is available. We just have moved into it. That is the only reason. But otherwise, from a growth point of view, yes, we are quite focused and I mean, the industry is growing, you would see. And we would like to ensure that we grow, you know, way beyond what the industry grows. That's that is the idea. Okay. Thank you.

Over to you, Mr. Sameer.

Thank you so much, sir. Another follow-up question from Mr. Manish Shah.

Machine tools only, sir. Yeah, so I wanted to have a brief idea, sir, what is the market size in India, what is the import as of now, what is our market share, and how much growth you are anticipating for the overall market?

Mark, okay. I would say currently it is in the range of 17. There's 17,000 to 18,000 machines. See, again... The market, if you take our addressable market versus the overall market, probably the overall market, if in terms of value, put it at 2 billion or 2.5 billion dollars. Our addressable market size would only be a particular range of machines, which is like I said, up to 4 access, 4.5 access machines. And again, not very large machines, the sizes will be a little bit smaller. That's why it is very difficult to put a clear correlation Okay. This is the market. Because market size is there, but you will have to build out machines for that. So, to give you an example, if you have to build out a 4-meter table machine. Then I can address a particular market size out of the $2.5 billion. I will be able to address a particular segment of that market. But I do not today do not make a 4 meter table size machine, right? So market size is yes, we can take it at around $2.5 billion, almost Almost in terms of value closer to 45 to 50% or even, sorry, in terms of volume, 40 to 45 to 45%, I would say is in terms of value would be still imported. In terms of volume will be still imported. In terms of value, probably around 50% or 55% would be imported in nature. Right. And one thing is this imported missions are going down as such because all of them. Are today available in India, manufacturing India and supplying within India. So that is also a thing you will have to take into account. As the imports go down, probably imports will go down less than 50% in terms of value, but it is being replaced with the manufacturers being available in India to supply to the Indian market. The market is growing, so everyone is there in India, both from the East and the West. Thank you. Over to you, Mr. Samir.

Thank you, Sumitra. I just wanted to confirm if we have time for more questions, sir.

I think there are no hands raised, right?

No, sir. At the moment, we do not have any.

Then we can close it.

Thank you. I believe Mr. Jai has a question. Mr. Jai, just raise the hand. Yeah, please go. Mr. Jai, we can go ahead with your final question, sir.

Thank you again. I'm sorry for this, Ankhil. Sir, on the textile division, if I look at it on a like-to-like basis, when we did a similar revenue 23, our margins were significantly superior to where we are today. Is there necessarily a price hike that is underway there or is it fair to assume that the margins in that business despite having premiumized the product portfolio and focused on services will remain low margin this cycle around?

I think I tried answering that question, I think when it was asked by Mr. Pujan, where we were very clear, where I was very clear that, yes, The costs are hitting us, and I think the discussion on prices always is there, it's on the table, but right now the unprecedented level of cost increase, availability, so if you look at copper, aluminium, we just look at apart from steel, which is probably coming much later, the availability of electrical electronics, it's a very tough situation out there. And it's not very easy. So, the costs are all going up, right? And you have seen this in every other component, every other product, every other item what you probably use and buy. So, yes, the discussion there is how do you make it? Price is a discussion, but at the same time, like I mentioned, a lot of VAV is being done. We continue to work on what is possible and in our control to get control on the cost. So, yeah, then, I mean, we have to basically wait and see where it's going to end up, right? And that's what I started off with saying that very tough situation to predict anything with the tariffs, with the geopolitics and the cost associated with it at the second order of cost, which is flowing through to every one of us.

Great. Thank you. Thank you. Thank you. Over to you, Mr. Samir.

So, thank you so much. So, Mr. Manish has his hands raised.

Please go on, please go on.

Sure, sir. Mr. Manish, over to you, sir.

Yes, sir. Thanks a lot. Just to clarify, this revenue break up for TMD, what you gave, it was for quarter two or it was for half first half?

H1, H1, Mr. Manish, H1, Mr. Manish.

Okay. And on the margins front, sir, one observation that what we see is that our other expenses, increase in other expenses is much lower than the growth in revenue, particularly in Q1 and Q2. And even it was visible last full year as well. So is it a function of? We have a change in the mix where we have strong revenue growth from machine tools and ATC, which are traditionally higher margin business for us as compared to textile machinery. And that is what it is leading or there has been benefits of some cost control initiatives, which we have taken in last couple of years. And so that was my second question. And last question, what is the CapEx plan for the current year and what it is, what is it pertaining to? Thank you.

Yeah, so the first one was... On H1, which I mentioned, and second thing, fixed cost, I think, I remember you did ask me last quarter also exactly the same question, why the fixed cost is not going up versus your turnover. Absolutely, you're right. It's a lot of effort, and it is a lot of effort from our side, knowing what we know, seeing what we see, and what's happening out there, and the way the markets are there, like I already explained, you know, where the Bangladesh, all the export markets, There's a lot of effort goes into us trying to rein in cost and do something internal, which is what is in our control. So absolutely, yes, it is both on fixed cost and also this doesn't come with just cost control. It comes with lot of digitization, automation. A lot of effort goes into trying to keep it at the level. Some... A portion of it also has helped in the COGS and the fact that you see a COGS but not significantly increased COGS when the costs have all gone up, you know what the prices have gone up as. So that is a function of the VAV effort which we do. Right, and with respect to CapEx, yes, the idea is to invest as similar to what we have in terms of depreciation. However, the slight change what we have adopted is in certain cases which will I think as the machines will roll in, CapEx will roll in what you will see at the end of the year, there will be some lease assets also will be coming in because we feel there There are enough opportunity for us to leverage and get, you know, maximum usage of his assets because the way the business operates are also changing. You get a five-year contract on an ATC, absolutely. Right, and we need to deliver everything and we need to invest everything and we need to make that return within that set period. So, there is a way which we are going to operate, which we are operating already, but from a capex point of view, it will be similar to what the depreciation we will be having in the current year. Okay, thank you. Thank you, Mr. Samir. Over to you. Sorry, thank you, Mr. Manish. Over to you, Mr. Samir.

Thank you so much, sir. Sir, at the moment, we do not have any hands raised for further queries or questions, sir.

Oh, we can close the meeting, please.

Sure, sir. So, thank you so much, everybody, for joining this meeting. Thank you so much, everybody.

And thank you. Thank you, Samir. And thank you, everyone. And wishing you all a happy new year for 2027. And we'll see you for the Q3 next year. Thank you.

Thank you so much, everybody.