Menon Bearings Limited (MENONBE) Q3 2026 Earnings Call Transcript

Ladies and gentlemen, on behalf of Captify Consulting Investor Relations team, I welcome you all to the Q3 and 9 months FY26 post earnings conference call of Menon Berries Limited. Today on the call from the management we have with us Mr. Arun Aradhyay, whole time director and CFO, Mr. Aditya Menon, part of the promoter group. As a disclaimer, I would like to inform all of you that this call may contain forward looking statements which may involve risks and uncertainties. Also, this is a reminder that this call is being recorded. I would now request the management to detail us about the business performance highlights for the period ended December 2025, the growth perspective and the vision for the coming years, post which we will open the floor for Q&A. Over to the management team.

Okay, thank you. So good afternoon, everyone. Wish you all a very happy and prosperous new year. And also thank you for post earnings call to discuss our performance for the third quarter and nine months ended on December 2025. I am pleased to share Q3 FY26 has been a strong quarter for the company, reflecting Healthy demand across key segments, and continued improvement in profitability. On a consolidated basis, revenue for the quarter stood at Rs 76.9 crore, representing a 32% year-on-year growth. Total income was 78.5 crore, also up by 32%. Profitability So, a sharp improvement with profit before tax at Rs 12.4 crore up 69% and tax at Rs 9.3 crore also up 69%. Earning per share for the quarter increased to Rs 1.65 compared to Rs 0.98 last year. For the nine months period, consolidated revenue reached 206.6 crore, an increase of 18% year-on-year. FAT grew by 34% to 24.5 crore, reflecting sustained operating leverage and improved efficiency across our business. Looking at the business mix. OEM continues to be our largest segment contributing about 48% of Q3 revenues. Exports accounted for over 36%, underscoring the strength of our international customer base and diversification benefits. The replacement market contributed around 8% and will continue to see steady improvement in this segment as well. At the business unit level, Menon Behring benefited from healthy OEM demand, stable export orders, and improved capacity utilization, which supported margin expansion. Menon Alcov delivered stable performance during the quarter, with continued focus on higher-volume alloy products and customer qualification initiatives. Mennon breaks while steel at an early stage is progressing as planned, and we expect a gradual ramp-up as customer approvals and volumes increases. On the cost from raw material prices, volatility remains an area of closed monitoring. However, a combination of partial price pass-through, better product mix, and operational efficiencies helped us to improve the quality of the product. to protect and improve margins during the quarter. Apart from that, we have completed installation of 3.8 megawatt solar, rooftop solar installations, covering all plants, which will curtail electricity expenses by about 2.25 crore per year. As we move forward, We see a stable demand environment across, OEM and export markets, with major capital behind us, our focus remains on sweating assets, improving return ratios, and driving profitable growth. Our subsidiaries continue to add long-term strategies and value and optionality to the business. And with that, We will now be happy to take your questions. Thank you.

Thank you, sir. We will now start the question and answer session. Anybody who wishes to ask a question, please use the option of raise hand. We will wait for a moment till the question queue assembles. We will take the first question from Mr. Bhargav Bhuddhadev. Please go ahead.

Yeah, good afternoon, sir, and congratulations on a good set of numbers. Yeah, thank you. My first question is that, obviously, we've seen a very strong growth in exports. So, the share of exports has also now improved to about 36% versus 33%. So, if you can spend some time in terms of despite this tariff scenario, how are we managing such a strong growth in exports? If you can just explain that, that would be my first question. Okay.

As I told you last time also in the audience call, we have already started additional business with one of the major customers from USA, that is Admission Transmission, and that alone business has added value of around more than 2.5 crores a month. Apart from that, DRIV, Federal Mughal DRIV is also there, and other... Customers also added in the fold of our company. So far, the exports are concerned. So, we hardly have any impact due to the tariffs imported by USA. On the contrary, our exports are poised to grow further in future as well.

So the second question is that obviously in the last one month, we have seen a significant increase in copper prices and also steel prices undergoing some inflation. So in this scenario, how are we poised to basically pass on these to our customers because copper in particular has seen a significant rally. So is it fair to say that despite such an inflation, we will continue to maintain our gross margins or EBITDA margins going forward as well?

Yes, very right question. As you know, there is a tremendous volatility so far as non-ferrous materials are concerned. The prices are increasing like anything and it will definitely have adverse impact on the margins. But at the same time, what we have done that our contracts typically allow for partial pass-through. We are in the process of passing the increased raw material cost to the customers, and that is the process, maybe depending upon three months contract, six months contract for revision of rates. So that is a continuous process that we are following. Apart from that, we focus on product mix improvement, yield, then yield optimization, and then cost efficiency to mitigate impact. And we are constantly having a visit on the raw material prices and to ensure that through the process improvement and yield improvement, our margins will not be affected to the greater extent. Maybe some dent can be there, but it will not have major impact due to passing of the burden on the customers as well as reduction in the raw material consumption and process improvements.

And like you said, prices are volatile. With some customers, we have three months period of rate increases. As management, we are also sending them every month now. Because now it's very volatile. Before it used to be like from 900 rupees to 950. But now it's from 900 rupees to 1200 rupees a kilo. So that's the cost which we are bearing. So as management, we are also talking to our customers and we have relation for 20 years. So customers also, you know, they are also dependent on us. We are also their suppliers. So they are also friendly with us. They have good relation. So they are also, what do you say, they also try to help us, pass the burden for, like, you know, take the burden from us.

As you said, we are in the process of contacting all the customers to see that instead of... Looking at whatever contracts we have for three months or six months of revision, it cannot be like that in future. Considering the volatility in the prices, we cannot avoid by the contract that we have already entered with them. We are already talking with them that it will be on a monthly basis instead of 3 months or 6 months.

Because now even the Iran situation, Venezuela situation, it could be more volatile. So the customers also are understanding because you do high engineering, it's big business, you know, they are also understanding, we have a good relation with them. So, so far the talks are positive, but we still have to finalize it. Maybe by next quarter we get a better picture on this. But customers are helpful. They are ready to, you know, help us on this, pass on the burden. Because for three to six months, we can't bear the burden of price increase. So they are like, we have sent them the emails last month, had calls with them in December. Some of them are agreed for in January to pass on the burden. Some are still in chats, but they are reasonable. It's not like, it's not an unreasonable thing that goes on here.

And lastly, sir, on the Breaks business, is there any development? Because that business can actually become a large business maybe in the next two to three years. So if there are any updates over there, then that would be my final question.

Yes, actually, now we are almost reaching a crore every month in Breaks. We are continuously working on our marketing. There are two OEMs, I won't take the names now, but we have gone and had very positive discussions with them. Maybe by next meeting, we can give you more, maybe business also might start, or we'll give you more positive news on that. And regarding railway, we're still in the dynamometer process, like already ordered the dynamometer, maybe three to four months for the dynamometer. So maybe by next one year, we'll see a more huge growth in brakes business. Because brakes, because we had some, what do you say, some challenges with the dynamometer, we have already entered the two wheeler segment market. Where we are doing a big pie chart there already. And after our product quality and everything is going smoothly, we got in a big open order, which we currently are not even doing every month. So we are getting a new line for two-wheeler segment also. So we are not just waiting for HCV, LGV. Because there is a little bit break on the railway segment, we are going on looking at other avenues where we can, you know, in the friction material where else we can go. So two-wheeler also has picked up well. Other customers in two-wheeler also are now approaching us. But our main focus is railway and HCV, LCV. So, as management and team, we are focusing on that also currently.

Apart from that, one of the auto giants have already contacted us. We had a detailed meeting with them. And probably they will visit to our establishment in the next month by 15th of February. Wherein we expect, we are not very sure, but we are... We may expect that an additional business of at least one crore we start with there.

And even for the export question you asked for bearings and bush. Now as management, we have taken a policy, not policy, like we have taken a decision. We don't do DDP, you know, where we do the delivery to US. We are trying to get everything X works India. Because tomorrow, some other war happens or any other external factor should not affect our business. Maybe like, you know, we might lose some top line here and there because it won't be billing in dollar, it will be in rupees. But as management, we are trying to do everything ex-work. So in the long term, we are not, you know, tomorrow Trump puts 100% tariff or some other issues happen in the world which are not in our control, should not affect our supplier. So that also we are doing because you asked how export is increasing. Now we are like, you know, with some customers, we don't do XWorks India. We do DDP or their delivery terms. So, we are trying to get it changed to our convenience. Maybe a top line might come down a little bit, but in the long run, this is a much more sustainable way, a safer way for us to carry on our business ahead.

And your payment cycle will also improve, right? If you do X1, X2.

For 180 days, it will come down to 30 days. There is a great amount of saving on account of interest, as well as the total turnover of inventory.

So as management, we are taking big decisions, but in our industry, how it is, our suppliers are bigger than us, and our customers are bigger than us. So it's a challenge to get it done. So Mr. Aradi is on his best to get this done.

And probably that we are going to conclude in the next week only.

Thank you very much and all the very blessings.

Yeah, thank you. Thank you, Bhargo. We'll take the next question from Raghav Maheshwari. Please go ahead.

Hello, sir. Congratulations on a great set of numbers. Sir, my first question would be around the capacity utilization this quarter.

In marine bearings, bushing and washers, we are at around 90%. And in aluminium castings, we are at around 65%. And brakes, we are at around 60-65%. There is still a lot of room for future expansion. Like, we can, like, you know, what numbers we are given over 2027, we don't have to go for a major new investment capacity.

Right. Okay. And, sir, building up a question that the last participant had about the tariff on Menin bearing, like, on the tariff in India. Right. So, sir, Manit Bionics products are. I'm subjected to the 50% tariff rate.

Some products are, most now, the new law has come for HCV and LCV. That is like trucks, they are waived of the tariff. So, a lot of places we are not, like where the tariff doesn't apply to us. Wherever the other areas the tariff apply to us, majority of the tariff is burned by our customers.

We also pay a smart account, our customer also helps us with that. So, I will little clarify about that little more. So far as our new business, we have started additional business with Allison. Earlier, the tariff was 50%. Now it has reduced to 25%.

And on that 25% also because of good relation and we have supported them during tough times, they share the burden with us.

Understood, understood. And, sir, margin expansion that we have seen, now we are standing at around 20.5% for this quarter. Sir, I wanted to know what drove this margin expansion this quarter?

You see, benefited from strong execution, healthy OM demand and stable export orders, while we may not see the same growth rate every quarter, we believe the current run rate is sustainable. Over the medium term, we expect growth to be in line with industry trends supported by exports, new customer additions and gradual improvement in the replacement market. While we could maintain and will be maintaining the similar growth in future as well in terms of volumes as well as in the margins, we have taken proactive steps to see how we can counter. Volatility in the prices of raw material. Number of actions have been already taken by the management, which will definitely result in reduction in the raw material caused by above 60 to 70 lakhs per month. Actually, the burden of raw material prices per month will be around 70 lakhs, but this month, we will be able to reduce it due to process improvement by about 55 to 60 lakh of rupees, and from the next month, it will be around 75 to 80 lakhs. All actions have been already taken, and with this, we are sure that we will maintain the same margins which are sustainable in future.

And Raghav, to add to this, like if you're following our company or these calls for the last one, two years, we've been telling about a strong order book. And we always said like it will be coming in third and fourth quarter and next year also. So what all parts we developed for the last two years, we are benefiting those fruits now. Those new orders are coming in now and the SOBs are starting. So from the next quarter, you'll see a similar growth for the next. One year, one and a half years.

Do we have a number, sir, on order book?

It is for this, for this year, what we project that whatever order book position, if we consider that, we may reach up to 295 crores and next year maybe around 350 and next year 425.

That is the order book size, right? Yeah. And what is the execution timeline for this?

Like next two years, see, this year, this, this year we're going to finish around 290. Next year we're going to do around 340. 350. Little bit conservative. So when the results come, you guys are a little bit more happy.

Okay, sir. Thank you so much. Thank you all for my side and all the best.

Thank you. Thank you. We'll take the next question from Arnav Sakhouja. Please go ahead.

Hi, congrats on a strong set of results. So my first question is, in the PPT, we've mentioned that we're planning to double the Alcorp capacity from around 1440 to 2880 in the next two years. So, I just wanted to understand, you know, would we fulfill these orders in the future by potentially increasing wallet share from existing customers, or would we try onboarding new customers, you know, to fulfill this demand?

Yeah, actually, a lot of, we've already developed around 60 parts. Currently, wallet share from one customer, but it's not like one customer, there are two customers actually, but we are not only doing India, we are doing their plants in Germany, their plants in USA, their plants in South America. So you can, it's like a new customer, but the main brand is like John Deere. So we are doing John Deere USA, John Deere Europe, John Deere South America. So that's one place. At the same time, we are doing continuous efforts to get new customers also. So there are new customers that are coming in because of quality of our product, the criticality which we are able to achieve. So we are doing both at the same time. But this current growth is from current customers. But when I say current customer, it means John Deere India has a completely different group with a certain turnover. John Deere Europe is a certain group with like 10,000 croat turnover. John Deere U.S. is a huge company, again, separate. So it's like new customers for us. You can treat it as a new customer. Because we get vendor code different for John Deere Europe, John Deere U.S.A., John Deere in South America, in Brazil. It's like a new customer, but the brand name is same. But we get a vendor code different for all locations. So it's a mix of both. I don't know how to explain that, but yeah.

Okay, thanks. I kind of got your point. So my next question is, you know, in the PPT, you mentioned a couple of strategic investments that the company is undertaking for cost saving, one of which you mentioned in the opening statement as well, which is a 2.55 crore cost saving because of the solar installation. So, you know, what would be the total cost saving if you add all the various ventures that you are undertaking?

You see, one thing is electricity charges or power charges. For one year, we are 100% sure that we should be able to curtail the expenditure on electricity by 2.25 crore per year. Apart from that, due to the process improvements, Improved yield in the raw material, we should be able to save at least 8 crores of rupees per year.

And at the same time, we're doing a lot of technical innovation and investments where we are not dependent on that much manpower. But as going forward, manpower is going to get scarce. Like, you know, also the PIF, all the like the salaries are getting increased like month by month, which is not past. Which is not given to us by the customers. So we are doing a lot of technical innovations to try to reduce manpower in the future, which benefits will come by next year, next to next year, you know. So that's all the different things which we are doing, like technological innovations where we are not dependent on manpower too much.

Wherever automation is possible to avoid rejection as well as improve the productivity. That is definitely going to help us so far as productivity is concerned and which in turn will result in the reduced cost per item or per component in the long run.

Okay. Thanks a lot for answering my questions. And congrats again on strong service.

Thank you, Arunav. Thank you. Thank you. We'll take the next question from Disha. Please go ahead.

Hello.

Hello. Hello.

Yeah. Am I audible, sir?

Yes.

Yeah. So just a couple of questions. Firstly, what is the total amount of capex we've incurred till now for this year and what are we planning for the Q4 and for FY27?

You see, for so far as this year is concerned, we have already completed capex up around 15 crores of rupees and additionally for next year, so what we have envisaged is around 20 crores.

Next two years, you're saying 20 crore, right?

20 crore, yes. And last two years, we have done around 15. Mr. Radha said last year 15, before that we did 15. So the major capex of building, land acquisition, all that has been completed. This 20 crore is just more technology, machine, you know, more value ideas, what we can do to our products.

What we have to know, what we have to do now is to switch the assets.

So, the main investment has been, like, we have done it. Yeah, Submet, yeah.

All right. And you mentioned, like, so, like, for the break segment, we're seeing a lot of growth potential. So, I think the current revenue mix is around biometrics is around 74%, 22% from Alcoop, and 3% from the breaking system, right, for this quarter. So, how do you see this product mix or the revenue mix changing going ahead?

You see, it's in the... Across all the segments, what we foresee that for this year, it will remain more or less constant, but next year, it will change. Maybe it can be about 65 to 68% in Bimetal, about 25 to 28% in Alcop and remaining in Brakes.

See, Bimetal is a parent company. It's been there from 1993. Menin Alcop is from 2008-2010. And Breaks is a baby company, two years old. So that's why the pie also looks similar. So, but we are doing efforts where Menin Breaks and Alcop will contribute more to the total pie chart.

Alright, and what's the margin split between all these three sectors?

See, margins so far, a bit of margins are similar in aluminum as well as it is similar. So far as Brexit is concerned, it is less because we have just started an overhead recovery that is in process as soon as we increase the volumes. What we foresee, what we have given for the next year is comparatively a conservative figure. But from about 12 to 13 percent, it may go up to 18 percent next year.

For the break segment?

Yeah.

And what's the overall margin guidance for the next year?

Next year, the margin is around 21% to 22%. Maybe next year it is 21%, and next to next year in 28%, it should be 22%.

And where do we see the, for this year, on a console basis?

It is 20%.

20% margins for an overall console basis? Okay. All right. Okay. That's it from my side. Thank you.

Thank you.

Thank you. We'll take the next question from Sukrit Patil. Please go ahead.

Good afternoon to the team. My name is Sukrut Patil from iSight Finted Private Limited. Am I audible?

Yes. Yes.

Yeah. So I have two questions. My first question is, as global auto and industrial demands shift towards electrification and lightweight components, how do you see Menon Bering evolving its product portfolio to stay ahead of the competition? Could you share your vision for how the company plans to integrate new technologies and expand into emerging markets over the next, say, one to two years? This is my first question. I'll ask him the second question after this. Thank you.

Okay, basically, so far as bi-metal bearing is concerned, you know, sorry, bi-metal division is concerned. EV will not have any impact on this industry, our industry because we are not into car segment and whatever EV is coming that is in the segment of passenger vehicles more, not in heavy vehicles or off-road vehicles, where we are very strong and we don't have any state here so far as passenger vehicles are concerned. So it will not have any impact on us. So far as EV is concerned and emerging market. So, we are concentrating more on that. Through Menon Alcorp, our subsidiary company, which will be explained better by Mr. Aditya Tui.

So, like Mr. Aradhe said, in engine bearing also, we are not in passenger cars. We are in HCV, LCV, tractors, transmission, earth-moving equipment, these kind of, our parts go to these kind of vehicles, where electrification won't come in the next 5-10 years because it's high power, high HP required. So, in that way, we are very good. Also, like we make bushes. So we are trying to get PTFE bushes, not only for engine application, but other applications also like air conditioning, fridges, other areas. And like Mr. Araway said, even because electrification is coming and electric vehicles are coming, through a Merin Alcop division, we are already developing parts for different electric companies. We are tier two suppliers to Tesla through concentric pumps. We do some parts for Porsche e-mobility through E-turn transmission. We even do electric parts for tachoprestrolyte. It's a Tata Motors company, subsidiary company. So that goes to Tata Punch and Curve. We do electric motor covers for them. So we are also, through Mariana Alcorp, joining the electrification.

So that's our answer. Apart from that, we are in the process of... We are engaging one of the major customers for PTFE boosters, which are required for EVs, which are to the, and the business volumes are to the tune of almost 1.25 crore a month. We are not yet finalized. The samples are under process, and we'll see what happens. That will be in the interest of the company as well, and we are very sure that we should get that business, which will come in from the next year.

Thank you. My second question is, is regards to, uh, uh, finance and margins, uh, with, uh, rising raw material cost and currency. Fluctuations impacting exports. What forward-looking steps are you taking to sustain margin expansion while continuing to invest in capacity and R&D? Specifically, how do you see operating leverage and cost efficiency playing out in the next coming quarters?

You see, as I already told you that so far as electricity charges are concerned, we should be able to bring it down by 2.25 crores per year. Apart from that, whatever initiative that we have taken, proactive measures that we have taken so far as process improvement and ROMA trade yield is concerned, which again will save us around Rs. 8 to 9 crores per year. Apart from that, whatever automation that we are going to do, that will definitely help us in reducing rejection further, so that more and more quantity is available for sale. That will again help in reduction in the total cost of the company. With this, and with the increased volume, so far the exports are likely to grow further. As I already told you that we are in the meeting with one of the major customers for business of which the volumes are likely to grow up, which will definitely help in recovering the overhead. So more and more overheads will be absorbed by taking the measures to curtail the expenditure on raw material, electricity, and to curb the expenditures which are wasteful. The steps have been already taken, and with this, we are very sure that we should be able to not only sustain the margins, but we are looking forward to see how we can improve the margins further.

I think that's good guidance from your part. And I wish the team best of luck for the next quarter. Thank you.

Thank you. Thank you. We'll take the next question from Himanshu Upazhyay. Please go ahead.

Yeah. Hi. Good afternoon. Congrats on good numbers. I had two questions. In the previous quarter, we had spoken about potential business from a competitor for US aftermarket. Where they had sent some 800 parts, if I am not mistaken, said that management will take some time to decide on that business, whether we will go forward or not. Any thoughts have we made on that business, and what are your thoughts now being posed this quarter?

Okay, we are in the process of verifying the feasibility of all these parts. We cannot go ahead with 800 parts at the same time, but at the same time, we are verifying which are having the more volumes with better pricing and which will add better. Number to our total numbers. We are selecting those items only, but at the same time, we have to understand that we can develop not more than four to five items or parts per month. So considering that, we are concentrating on the parts which are having more value addition with more volumes. And one by one, we are going to... How is this productionized over a period of time?

And there is a constant, like when they have given 800 parts, some parts are lucrative with high volumes and good margins. At the same time, some parts are more critical, less volume. So there's a back and forth discussion with the customer also. They want us to take some bad parts also. At the same time, we only want the good parts, which are high profitable. So it's still going in, what do you say? We are still in discussion. So, it's not gone forward ahead. Like, you know, we are waiting for a ride.

What do you say? Partly, we have gone forward and probably after having report from them, so far as the testing is concerned, we may start a business so far as out of 800 parts. Some of the parts have been already developed and samples have been approved. And we are likely to get another business of Rs. 1 crore per month from April or May onwards.

Okay. And second was, if we look at Elcorp's numbers for the quarter and nine month, it seems domestic business has fallen. Okay. So for last nine months, it was domestic. It's from 69 has come down to 62% of the revenue for Elcorp. Any specific reason for that? Why would it have? Because we are seeing automotive, which has done pretty well, even engineering is doing well. So, what would be the reason for domestic business coming down in Elko?

You see, in some of the components where we were not having a good amount of value addition, we have taken a conscious decision to part away with those components. And at the same time, we are in the process of developing almost eight parts for domestic companies. And that business is likely to grow further. And the mix-up of the business of export and domestic will remain same. The pie will remain same over a period of time.

And any new customers we would have added, means on the domestic L-Corp side?

As Aditya already told, you know, that so the joiner is a one customer as such, maybe domestic, but they are having different, different divisions. Maybe in USA, like Germany, USA, and then South America, North America, some of the establishment in India as well. So we are developing that for... John Deere, as well as we are increasing the wallet share, so far as consent reforms and return is also concerned.

We are exploring new customers also, but it takes, I told you, it takes 3 months, 6 months. New customers, they have to have belief in our technology, that our audits are happening. So in continuous process of that, and also Mr. Aradhe said, we are looking more at export. We have a lot of export stuff because we are getting better margins and better rates for export. That's why a little bit focus is on that side. Like what he meant by saying why domestic has fallen a little bit. Some parts where, you know… While doing the casting, fettling, doing so much value addition, the margin is not that high. So as management, we are taking decision. Should we do this? It's not donkey work. Should we do this for such low margin? Just because we are having a relation for 10-15 years or should we go for a more lucrative or more attractive business? So we are taking some of those calls also now. So that will be over by this quarter. By next quarter, next two quarters, you will see a better pie chart between export and domestic.

Further, we are in discussion with other four customers, very big customers. So that is in pipeline and it will be successful. What I feel is that it will take another five to six months.

We have not lost any customer on Elkop. It is just we are restructuring the business. Correct.

Absolutely. Just making the product mix better so we get better value, you know. Making the product mix more efficient so our margins are better.

Okay, thank you. I'll join back in the queue.

Thank you. We'll take the next question from Shubham Zaijai. Please go ahead.

Hi. Am I audible? Yes. Pretty much all of my questions are answered, but I have some specific questions. On the railway front, what's exactly the issue with dynamometer? Why it's getting delayed and such?

You see, we have already given the order for dynamometers and Another took, when we ordered last time to one of the manufacturers of dynamometers, but unfortunately, since he had to leave the country and go to USA, he could not complete that. Because of that, it is delayed. We are now given to another manufacturer, and he has given the assurance that it will be completed within a period of four months from now, since the registration with railways is always already completed. And we are likely to get that along with quality checking for not only railway, for OEMs as well. So, fingers crossed, that is the key for railway business as well as OEMS.

Yeah, and its dynamics are very, like, it just sounds simple, but it's a very critical equipment. So we have gone and like, you know, done our audits and see who is capable of doing it and all. Finally found this party in Pune who's ready to do it. And you know, according to our specs, we want to do it in a higher capacity and also next 5-10 years, we don't have to invest in another dynamometer. So the old guy couldn't do it. And there were other XYZ reasons, which we had to pull out also. We didn't want to get stuck there. So this is a new person we have after a lot of inspection and final We finalized him. So after this, Dynometer comes in the next 4-5 months. We should be good to go for railway. We finished all the other paperwork, other registration for railway. But the main thing is that you should have a dynometer in-house. So, we had a few discussions with them if we could do third party for the first few months and all, but they were very persistent on having an in-house dynamometer. So, as management, we finally found a right candidate to get a dynamometer done according to our special specifications. So, for the next couple of years, we don't have to go for another dynamometer or another changes in that.

Right. And on the CAPEX side, we have 20 crores of CAPEX left to be incurred, right?

Yeah. So yeah, that is over a period of two years. Yeah.

Right. So 10 each, I guess. Yeah. Next two years. Okay.

Roughly. Depending on how order book comes. Maybe in the remaining period in the this quarter, we may be incurring expenditure to the tune of around three crores of rupees and raise 17 crores consolidated basis. We have to incur during next two years.

And it is like how we have already submitted all our samples and all. As soon as the samples are after production have started, We just have to order the required sales, required machinery. We don't want to do it too early or too late, you know, to have a good cash flow or not use our funds in a wrong way.

So, I can give you the... Tentative details. So for Alcop is concerned, we will have to incur capex of around 7 crores of rupees in next two years. In bearing about 7 crores and in breaks around 6 crores.

This is a roughly break up.

And on the Alcop side, as you have mentioned, John Deere, right? It should be based, I mean, analyzed as if it's five different companies as such. So where is the major growth coming in from a geographical point of view?

I would say more of exports.

No, I mean, from which geography of the world?

Germany, export, Europe and USA. Those of them were two driving more big exports.

Right. Yes. That's it.

At the same time, John Deere also is there. At the same time, talking to Breaks India, GPP, Ghaziabad Precision, then there's Allison, Maya Kava. So there are different, but in this meeting, I want to tell you 100% concrete. The other ones are 70-80% done. They will get converted. So when they get converted, I'll take those names also. I don't want to give you a false hope or wrong names. So maybe next meeting, when their order is confirmed, when I have PO in my hand, I can give you those names.

So those are in the pipeline.

Thank you, sir. Thank you.

We'll take the next question from Raghav Maheshwari. Please go ahead.

Yes, sir. Thank you for the opportunity. Just a follow-up question, the things that we were talking about, sir, if you can just give a detail on what portion of your revenue will be booked as, like, you know, XWorks, and then what impact will it be?

Sorry, Raghav, your voice is not clear.

Yeah, is it better now? Yeah. So, sir, I just wanted to understand more on the ex-work revenue booking that you were talking about with the previous participant. So, what impact will it get us on our cash conversion cycle on a consolidated basis?

On a consolidated basis, the cash conversion, whatever you are telling, you know, it will drop down from 180 days to almost 30 days. That is amazing. We can save much so far as interest is concerned on working capital. At the same time, while we will be saving huge costs on account of interest, because of X works, we will have to sell with some of the margins so far as transit, shipment costs are concerned, tariff is concerned, then interest is concerned. So, So, maybe around some of the business will be impacted by 15%, probably. But at the same time, margins will remain same because we will be reducing the cost by about 20%. On the contrary, 5% margin will be increased.

As management, we have safety, you know, like we are doing X works. There is no pressure of third external factors affecting us. So, maybe margin here and there might be affected marginally. But at the same time, we have a peace of mind and you know, everything's in our hand. We have less external factors affecting our business.

Okay. And are we planning to do this for the entire business or just the export or like what? This only happens for exports.

So we are trying to get it done for all our US exports. Okay, all are U.S. exports. But I can't promise you it will happen for all. It's in customers' hands also. It's a negotiation, it's a dialogue to have with the customers. So, where all it can happen, it's good for us. Where all not, we'll try to minimize the risk as much as possible.

But we're sure that about 90% of the exports will be covered under exports.

That gives us a peace of mind in the long run.

So this 130 days to 30 days, this will happen once the 90% of exports are converted into Xworks, right?

Already actually 60 to 70% of exports are Xworks, not even currently. Okay. Okay. Got it. Thank you.

Thank you. We'll take the next question from Keshav Kumar. Please go ahead.

Hi, sir, on the biometal front, would you be able to tell how much of our exports come from EU and US if you could give a split between the two?

See, majority of the exports are to the USA. Almost 60 to 65% export is to USA.

Okay, and sir, if this EU FTA happens, then how difficult or easy would it be to scale the EU business, considering the business is sticky, and therefore it's difficult to dislodge the competitors?

We don't see any issues. So far as you see, recently, in the last week only, one of the major customers, John Deere, they have visited our factory, Biometal. For global sourcing for all the plants across the globe.

And especially for Europe.

Especially for Europe. And specifically for Germany.

I think if quality and technology, if your delivery is on time, other factors are workable. There are not loopholes, you can work around. If your product is strong, if your communication with them is strong, technologically you are achieving the quality, delivery is on time. The other factors are 10-20% in the challenge of the 100% business, you know.

And what we learned from the discussion we had with them, that China plus one policy is getting further momentum now.

Yeah, they are implementing that even more.

They are looking at India as a major source.

So, sir, say this FTA happens, is the EU opportunity size equally big or would the US be the bigger focus for us, say, for the next five to seven years?

USA will be the major focus.

Yeah, yeah. USA still are, we've been exporting there for the last 30 years. So we have a good base there, good customer relation also. And if the EU gets better, there is no harm in exploring the EU also. We can't say which is focused, whichever is more lucrative. And if EU also grows at that rate, both will have equal priorities, not like one has less priority or another has less priority.

So far tariffs have not impacted our business.

I was asking about the opportunity size. Not the, I mean, priority, but just like, arithmetically, if I can get some sense.

Currently, US is bigger size wise for us. But if EU comes, we are making good size of business there. Why not? I don't know what to give you answer here. But currently, US is our big export goes there. We have a warehouse there, team there.

Then again, we have tapped the South African market as well. That is a business of around 6 to 7 crores per year that we are already backed. Then we are next food. And we are already catering to the African market through distributor in Dubai.

Understood, sir. Thank you. That's all for my side. All the best.

Thank you, Keshav. We'll take the next question from Darshan Gala. Please go ahead.

Hi, sir. Good afternoon. I would just like to know, you know, when you say that now we have to sweat our assets, so what is the asset terms, you know, in peak level we can achieve from the capacity which we have currently and the KPEX which we might do in the next year?

It will be almost 2.5. Yeah, 2.5.

All right. All right. That's it for me.

Thank you, Darshan. We'll take the last question from Madhur Rathi. Please go ahead.

So thank you for the opportunity. Sir, I wanted to understand you mentioned that in the break segment, our margins are currently in the 12-13% range and that could go to 17-18%. So what would lead to this such huge margin increase? Is it that the dynamometer, when it caters to railway, our margin profile will increase significantly or is something else other than this? Actually, like you said, that also is one point.

Currently, we are only 60% utilization. So, 40% utilization currently we are not doing. So, automatically when you go out to 80-90% utilization, your margins get better. So, currently we are only at 60% utilization at the whole plant. So, the second shift is half running, third shift is not running.

So, you are in the finance, you also know how we can recover and absorb the overheads.

Yeah.

So, when the volumes grow, you know, the margins.

Sir, so I'm just looking at our competitors, Rane Break and Sundaram Break Lining. Sir, these guys do very little margins versus what we are targeting. Sir, so is our product profile different from them or I'm not trying to understand how can a big large OEM give us margins when our competitors are making so little margin?

You see, they are concentrating more on aftermarket, where... The value addition is definitely very less because we have to have a total network throughout India, and the cost of establishment and selling and distribution is always higher. But at the same time, when a big giant, automotive giant is coming and visiting our factory in the next month, and we are absolutely sure that we may get additional business of 1 to 1.5 crores a month, where The cost involved is definitely almost zero, so far as marketing is concerned. That is definitely going to add to the margins.

And I don't want to compare with competitors, then for BiMetal also, you check all our competitors, BiMetal Bearing, Federal Mughal, KSPG, you check the margin 6-7%, and then you'll ask, how can I do 18-20%? That's why we are doing well for the last 20 years.

Right. Sir, so that's very good to hear. Sir, just a final question from mine. Sir, if I look at our aluminum casting business, just based on the 60-65% utilization that we are doing currently, I am getting that we do close to 2 lakh to 2 lakh 20,000 rupees per metric ton realization, whereas some of the larger players do 4, 4.5 lakh. So how do we plan to bridge this gap by either doing more complex products or doing the 38 products that you mentioned that are in the pipeline? So how do we plan to bridge this gap?

You see, when we look at the total part we have developed for exports and for domestic, so the total is 51 parts, and the total volume that we are looking at is almost 30 crores over a period of one and a half years the items which are already developed, which have been approved, since for one or the other reason, In European countries, some of the projects have been postponed by that customer, and that's why we were looking at this business to start our productionize by the end of this quarter, by end of this year, last quarter. It is postponed to some extent, and maybe that will be productionized during the entire next year. So, all those items will be productionized one by one, one by one, so that per year impact, maybe, if we consider half of the year for the next year, 15 more cross-up new business will be added during the next year, and another 15 cross-up business in the next year. This is confirmed numbers. Confirmed.

Got it. Answer this. In your investor presentation, you have given that we expect to generate 50 to 60 crore incremental revenue within two years. So, where will this rest 45 crores come in from?

You see, we have already increased our wallet share with the existing customers as well. Then addition of new customers, what we discussed just now, that is in the pipeline. And we are sure that we will be able to grab that business as well as, so that there will be addition of 50-60 crores during next few years. 100%.

Got it. Sir, that was from the mention. Thank you so much on all the questions.

Thank you. Thank you Madhup. Sir, since that was the last question, would you like to give any closing comments?

So we are very much thankful for the investor community as well as to our all stakeholders and our customers, bankers, everybody, including Menon Captify, you see, Captify, our P&IR. They are excellently doing well. They are having very well coordination with all the investor community. And I look forward for more and more investors to come here and see the facilities. So that they can appreciate and spread a word of appreciation amongst all the community across the country. So I will be very thankful if they come and visit the factories, I request Captify to arrange such visits in future as well as during this quarter as well. So that will be very happy to welcome all of you. Thank you very much again and wish you again a very happy and prosperous new year.

Thank you, sir. Thank you to the management team. And thank you to all the participants for joining on this call. This brings us to the end of this conference call. Thank you. Thank you.