Mold-Tek Technologies Limited (MOLDTECH) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to the MOLTECH Technologies Ltd. 4Q F526 Conference Call, hosted by MK Global Financial Services Ltd. As a reminder, all participant lines will be on the listen-only mode, and there will be an opportunity for you to ask questions. After the presentation concludes, should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Abhishek Saparya from MK Global Financial Services Limited. Thank you, and over to you, sir.

Good evening, everyone. I would like to welcome Mr. Lakshman Rao, Chairman and Managing Director, and thank him for this opportunity. I shall now hand over the call to him for the opening remarks. Over to you, sir.

Welcome all to the Q4 and annual results of multi-technologies. Thank you very much for taking your time. I'm very glad to inform you that there's a good turnaround in the Q4. While last year, Q4, we made a loss of about 1.6 crores. This year, we ended up with a profit of 2.28 in spite of a huge MTM loss of 4 crores on rupee depreciation. Profits are up from minus 1.62 plus 2.3 crores in this quarter. The overall year has ended up at 10 crores total profitability, at 12 crores, 12.16 last year, a drop of 17%, but the fourth quarter results have improved our overall performance. Compared to Q4 of last year, main contributors for growth are burial numbers in top line for the last five months have been added. And apart from that, there is a wonderful improvement in civil work on hand and the exhibition of quantum of work which has been done in the civil structural division. A couple of major reforms what we have taken up during this last six months I would like to highlight before we go for the question-answer session is that we have taken a call on the direction of MES mainly in BAW auto sector, where the company has been bleeding for the last at least one and a half, two years due to reduced workflow in BAW automobile, Well, especially due to the electrical vehicles and new models have not been up to the mark in the automobile industry. So, having seen the trend continuing, in the month of Jan, we have taken a call to reduce the... The team has downsized the team from 160 to 60 people gradually, and by end of March, the team has been downsized from 160 to 60. Whereas the good news in MESC's poles and towers and electrical substation work is ramping up rapidly in the United States, and the team from 45 to 50 people last year are currently around 80 people and growing. So... The line of BAW Automobile has been curtailed considerably starting from end of March, that is, starting from this new financial year, 26-27, which in fact caused more than a 7 crore loss during the last financial year. So that will not be there for the going forward in future. I'm coming to the next positive development is the vodka hand for... Civil work has increased substantially over the last quarter. While the last year, beginning of the month, it was about 4 million, it's gone up to 5 million at the end of this quarter. So there's a substantial increase in the work on hand for the civil, which is forcing us to improve the productivity, enhance the team size, and ramp up the systems to improve the productivity. Going forward, I am positive that these initiatives will improve the overall performance of the company to a great extent. Now I let question and answer session to start, wherein we can share more information.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchtone phone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The fourth question is from the line of Pranit from SJ Investments. Please go ahead.

Hi, management. Thank you for the opportunity. So, I want to ask some basic questions before I'm new to talking the company. I wanted to understand the evolution of how the service has changed over the last 15 years. Because in the past commentary, the management has mentioned that after the acquisition of RMM and Crossroads, we have gotten into the steel structure business, MSC structure service business. So, I was wondering, what did we do before exactly? And how have we changed our service in terms of value addition or whatever it might be from the last 15 years? That's from 2010. What did we do before that, and after 2010, how have we been changing our service after that, like as a product and all of that?

That's a big question, but I'll definitely answer in detail. Until 2010, we were providing mainly the engineering services for pre-engineering metal buildings, that is industrial sheds and commercial sheds. That was the much lower end of the spectrum of engineering services. And from acquisition, after acquisition of RMM and Crossroads in 2008 and 2011, I think, respectively, we have started getting into structural steel detailing. That is basically high-rise buildings, commercial or residential buildings of high-rise, that means multi-study buildings, and industrial plants. So that is mainly using steel as a basic raw material. And of course, panels and other things come as a closer of the steel structure. So that steel structure, this detailing was what our main forte from 2000 to 2000. Even today, that continues to be our main. And slowly the PEMB has shrunk to hardly 5-10% of our revenue. I would say 5% of our revenue. And MES, mechanical engineering services, we started about 10 years ago by entering into poles and towers and electrical structures in the beginning. And later on, we diversified into automobiles, that is B-I-W, body in white. That is basically the assembling of the body of an automobile. So this we worked for several companies, including Tesla, BMW, Mercedes, you can name Skoda. All these companies in Europe, we have worked through their TN1 vendors. So then we provide robotic manufacturing support in the sense how to place the robots and what is the movement of the robotics. We simulate the whole thing in both 3D and 2D and all. To the tier 1 suppliers who provide these internal robots to the automobile companies. So this is a very involved and I would say high value added service using engineers and software which is running into millions of rupees cost. So that projects were initially in the year up to 2023, I would say, were running and growing rapidly. But since the last two years, there is a tremendous drop in the demand as the EV, that's the electrical vehicles, have not really taken off well in the world in general. And even if they had taken over, the new models were not introduced as rapidly as it was till 2023-2024. So for the last two years, MES, especially due to the big team of 160 to 200 people who are in the automobile sector, was leading our profitability. So a call was taken recently in January to scuttle that team to 60. And just handling the projects that are coming in once in a while. But the fixed rate will be good enough number to handle the work that is coming our way. Meanwhile, in the other areas, we have started structural designing. That is, apart from just doing detailing, we provide the correction designs for the fabricators and builders. And we also slowly taken a few areas where number design is also done. So, recent acquisition of Beryl in Tampa has added us services in the residential building design site, both residential building inspections, designs, and expert services in which Beryl is having expertise and a 40-member team. This company we acquired recently in November 25, and that company has started contributing to the company's performance this year for the last five months. In the last five months, they have sizable revenues, but of course, the profitability is marginal because their last quarter is always typically a low quarter, where in November, December, January, typically workload comes down. And it picks up from end of winter, that is from March onwards. So, this one time... Acquisition cost. Acquisition cost and interest there upon is also charged in the current quarter, which has resulted in lowering output, I mean, number as a... The PBT has gone up from minus 42 lakhs last year, EBITDA has gone up from minus 42 to 552 lakhs, and PBT minus 2 close last quarter, last year, quarter Q42, 379 lakhs in this. Q4. This is also impacted, in fact, otherwise it would have been a very healthy bottom line. By almost a 4 crores MTM loss, we suffered due to the stunning depreciation of rupee to the tune of almost 4 to 5 rupees in the last quarter of the financial year. So, this is briefly the history, and now currently the company has structural designing, structural detailing, and... I would say poles and towers and substation design and detailing as the main lines of activity and very much added residential part of the structural spectrum.

Understood, sir. There's a follow-up regarding this. I'm not from a mechanical broker. I don't understand the difference between designing and design. Let's say detailing and design. Could you explain how the structural design is different from detailing? Because in the past concourse, you mentioned that detailing is around 2% and structural design is around 2%. So by adding this, are we expanding the overall contract value with the customer? And how are they exactly different in terms of skill set and the execution of the contract?

The structure of designing means the moment an architect decides the building size and dimensions. Spectral designer steps in to design the building for the safety. Safety of construction, wind loads, air loads, the soil loads, soil bearing capacity based upon the land use and the land strength, they design the members. The members means columns and beams and purlins are the other members of the main structure. So once these structures are designed and they are all being tested for connection design, that means the connections at different joints of these members have to be tested by a structural designer. So we graduated from detailing to connection design, but not completely providing the member design. We have done a few projects in member design with a couple of PEs. We already have PE, means a professional engineer, certified in America, USA. And he has to certify in each state of USA, so that particular PE can only stamp the drawings. So we have a couple of PEs in our roles who are authorized to certify in more than 20 states in the United States. And these two people have contributed towards structural designing area. Structural designing is a very high end compared to detailing. What is detailing? Detailing means once the designer gives the entire member details, how do you fabricate it in the shop floor? How do you manufacture what is the dimension of each column and beam or the connection members, plates, gusset plates? All these details are given in... Very detailed way so that the shop floor in the fab shop can manufacture those items and put them together in the site. That is called erection. So the erection drawings also will be given so that they know which part has to be kept in the ground floor and what is the ground floor beams, ground floor columns, gussets, purlins, and then over that, the second floor. Like that, we will provide a complete set of drawings in a coded manner so that the erection team also knows how to put these things to make a dead building. So, this is called design detailing. A detailed way of providing dimensions for fabrication, for erection, and then complete assembly of the building is called detailing. Providing the member designing means what member, that means 5 inch, 4 inch, 3 inch, web thickness, whatever, that will withstand the... Load up the building, expected people who may walk on the building or the live loads, dead loads, self-load. All these parameters of safety are taken care of by structural design. And this has to be certified by a professional engineer. So these structural designing services attract very high rates. Something like 100 to, even if it's outloaded to India, 70 to 80 dollars an hour, compared to 25 to 30 dollars an hour, you can charge in a detailing service. I hope I'm very clear now.

Yes, sir. That's very clear. I understood that part of it. So right now when we are pitching in terms of our sales, would we be approaching an architecture firm or who do we exactly approach? Would we be a client or would we be a fabricator? Because in the past you mentioned that we used to go to the fabricator in terms of getting our detailing orders. So how has the pitching and sales team changed to a different customer? How did that change?

Yes, only for detailing services, fabricators are good enough. They are the people generally given the power to assign the detailing and get it done, because they are responsible to erect the building structure in place, given the site. So, fabricator is our primary contact for detailing services. But when it comes to designing services, builders and architects become our primary contact. But generally, while doing detailing also, we get in touch with the EOR that we need on record and architect for various doubts and various clarifications. So, we are in touch with architects and builders also in general. The EOR generally is appointed by builder. So, he clarifies the doubts while detailing. So, this is the same set of people who deal in general, but our service range is increased when you go for designing. So, our focus has to move from fabricator to builders and architects in case we provide designing services. So, that is where the initiative has been taken now for the last couple of years. And now we have a team of 40-45 structural designers in India and two or three in USA who are front-ending the design team. And this 40-member team in India is supporting their So, slowly we are building up the design team and even we are in the lookout to acquire a design company in USA. In the process, we acquired Beryl, which is a designing company, come inspections company, in residential zone. They are not into high-range buildings. They make only one plus one, one plus two maximum, that is three-storey buildings for small malls or small shopping areas and for schools and residences. So, our portfolio of high-rise building design is still not fully occupied, that is where we are still looking for an acquisition. However, we are slowly building up our own team, but that would take a little longer time.

Understood, sir. And in terms of civil revenues, how are the split between structural design versus detailing today?

Structural design today is hardly 8-10% of the overall civil services. That means detailing constitutes 90%, design constitutes about 10% as of time. It used to be 100% detailing 3-4 years ago.

Understood, sir. But, so, ideally, where do you want the split to go in the next three to four years?

Because you've mentioned that there's a much higher value. Ideally, you'd like to have, yeah, design services to grow up rapidly because they have high value added in nature. It generally takes time to prove yourself and become a designer. So, now, I think we passed the phase of proving ourselves at least in the last three, four years because there are quite a few buildings wherein our people have contributed to the design, if not fully, partially. So those references are helping us to pitch for full projects also. We are at the verge of breaking into some full project design work, which can run into good numbers in terms of revenues, in terms of hourly rates. But an acquisition will be a faster way. We are in talks with one company, which is closely located to Atlanta, our office in Atlanta. So, like that, we are looking at both organic and inorganic ways to grow in that. And I wish to see in three, four years, at least 30 to 40 percent of our revenues coming from design.

Understood, sir. You mentioned in commentary also, people are a huge part of this entire industry. So, if you acquire these companies, how are you able to retain them? Is it usually through contracts that they stay with you, or how does it work in terms of retaining the employees?

Our returning employees in India is like any other IT engineering services companies face the challenges. The attrition rate is in double digits, but not very high. And we also have an in-house training job manager with a big team, an reasonably big team of recruitment and training. In fact, we have even an almanac, this one portal which we provide for the students in the final year, and we encourage them to take the almanac. Completing the course while in their final year. So that from those colleges, we pick up at least 60 to 75 engineers every year, which constitutes almost 8 to 10 percent of our employee strength. So they will be ready to take over the positions as and when we find attrition. So we build up our own engineers because they need to be trained in American standards. 95 percent of our projects are American. In civil, in mechanical, more than 50% are from Europe, because automobile companies are mainly in Europe. But now, as we are concentrating more on poles and towers and substations, the 80 to 90% of that work comes from USA. So this is how we handle the attrition.

And in the U.S. also, because I'm pretty sure you have a huge team. With Beryl also, you have a large team in the U.S. How are you planning on detailing them? Because, again, they might leave with change in management and all of that, right?

Actually, I'm glad to say that now we have completed five months of Beryl acquisition, not even a single person resigned from the 40-member team. So that's the proof that our HR practices and the way we give freedom to the engineers and marketing team over there is really, I mean, traumatized to our culture, and we ourselves also know. That they are motivated to perform. So, actually, Beryl... It's now getting slowly integrated. Two of our engineers are currently in Tampa, and four people have been trained here in India. So this six-member team has joined the 40-member Beryl team to enhance their abilities, mainly in designing, because their main focus was in inspection. There, hardly six out of the 40 people are in design. So now that six is becoming 12. So their designing services can enhance, which is more revenue generating than inspection or other services they provide. So, like this, we have our own way of handling people and managing them to stay with us, and our U.S. team is only, other than very early seven-member team, and they have been there with us for more than seven, eight years now.

Sorry to interrupt. Please rejoin the queue for more questions. The next question is from the line of Madhur Rati from Counter Cyclical Investments. Please go ahead.

So this year our EBITDA fell to the level last seen 11 years back in 2015, which is 10 crores. Sir, so I hope, sir, we were hoping that last year itself was the bottom, and this year was a year of recovery, but unfortunately, this year, last year, our EBITDA halved, and this year, again, it halved. Sir, so I hope in effort 27, it will not become 5 crore EBITDA.

No, no, you are wrong. You are not seeing the correct figure. The EBITDA is 20 crores now, down from 23 crores last year. There is a downfall, but it is not to an extent of 10 crores. The EBITDA is 20 crores. PBT for the full year is 13.5, and PAT is 10.57 crores. We are looking at PAT. EBITDA is 20 crores. Consolidated also, EBITDA is 19.64 crores, and PAT is 10.09.

Sir, I am looking at your consolidated cash flow statement with the operating profit before working capital changes. It is showing 13.79 crore, and then the lease liabilities are 3.17 crore. So, basically, it is 10.5 crore, or thereabouts is the EBITDA for the year. I will ask our CFO surveys to answer to you later,

but EBITDA in the financials is 19.64 consolidated.

The point being that whether it is 10 or 11 or 12, the point is that, I mean, the performance of the company is really quite disappointing, to put it mildly. Now, sir, also now 2.9 lakh preference share sector issue has won 64 rupees. That has also been cancelled, sir. So that also is a huge vote of no confidence in the company.

See, what happens is the investor's call. See, when the price was issued, it was given on the six-month average and two-weeks average, which is higher, which should be taken. So it was $164, but the price was hovering around $130 at the time of approvals that have come from BSE. So the investor has taken a call not to invest in that half million dollars which he committed. So we cannot get his, you know. Because we can't influence anybody to make a forcible investment. So, that is why the issue of the preference issue was cancelled.

Understood, sir. So, now our receivables also have jumped a lot on a year-on-year basis. They have basically doubled, whereas our revenues have hardly increased by 40%. So, I hope this is temporary answer. I hope it is not out of desperation that we are just going out and doing acquisitions because the standalone business is going nowhere. So, I hope that's not the case.

Mr. Doherty, you need not have such apprehensions. Actually, if you see the Q4 to Q4, the jump in turnover is 81 percent. From 32.6 crores last Q4 to in absolute rupees, it is 59 crores, 81 percent. Obviously, data will increase. So, that is one reason. And acquisitions are strategic in nature. It is not desperation. There is no need for desperation. The company is sitting in a pile of 25 to 30 floors of deposits. It has zero debt on the books. There is not even a working capital debt on the company's books. And there is no desperation in the company. The company has strategically acquired a residential side business with Americans who are handling with PEs and, you know, very qualified people. The addition of residential will enhance our service range, not only industrial and high-rise, we will now be able to handle residential. One plus two kind of office and other shops and schools and other buildings. So this is a strategic wave forward, and any acquisition would take a couple of quarters at least to combine together. And the last, whatever you are seeing in the consolidation, is also because of the one-time provision we have to put the acquisition costs also. As per the recent Company Act, the acquisition costs, that means due diligence costs. Fees paid to the auditors, fees paid to the due diligence lawyers. All these costs also have to be taken in the first quarter. So this is why the number looks negative. Otherwise, it is neutral, I would say, and the contributions will start falling in from the next few quarters. So, there is no desperation in acquisition, and there is no need to hide the current performance also, because the current performance is very healthy. Even at 19.64 course EBITDA, it's an 11% decent EBITDA margin, given the general engineering services EBITDA. It shot up two years ago in 24% to 28%. And I foresee similar kind of performance coming up in next one or two years because of the tightening of the BAW team, which has been bleeding the company for the last two years to the tune of about 7-8 crores every year. And now it has been tightened to almost 60 people from 160 people, and also this improved... A flow of what policy is.

Sir, now going forward for FY27, what is the outlook? Can we do something like 250 crore kind of top line which you indicated in the EGM recently that due to barrel itself, we can touch around 25 crore and then 10-15% organic growth in the business. So that leads us to around 250 crore top line. Do you think it's a realistic number?

Yeah, Mr. Adi, this quarter itself, we have done 59 crores. So, multiplying by 4 USD, 240 is easily feasible. So, given some growth here and there, hitting 250 crores, I think, is certainly possible.

Sir, and what is the EBITDA margin? That is the main question, because the revenue does not matter. What matters is the profit. Yeah, I think EBITDA margin should move from 11 to at least 15 percent,

is our projection.

Sir, and also, sir, what is the threat that you see from AI now? You see, sir, the IT index itself is at three-year lows and all the big giants are at multi-year lows. So then where does it leave a small company like ours?

AIA has no role as far as designing and detailing is concerned because it is not easy to just make AIA-based construction. Nobody would take a risk, at least for next 5, 10 years, in my opinion, nobody would take the risk of constructing a building based on AIA data. It may be done in manufacturing. It may be done on any other field of general manufacturing side or commercial side. But buildings as such are something which have to be literally designed by engineers and checked by detailers and fabricated by people in the plants. So AI role in this is limited. Even if AI comes, it might help us in reducing some of the basic staff. And AI-based software would be coming to the field. And we, being there for the last 20 years in this field, will be in the forefront of that software, you know, control or improving our services with such improved software. We are not software builders. First of all, I want you to understand, we are service providers in engineering space. And we use this software provided by FES and Tecla and other Pro-E and SolidWorks like that. So they provide any AI-based solution, probably we'll use it. And probably it may bring down our number of people from, let's say, 1,000 to 800 or 900. It won't bring it down like in a software company. And being in the forefront of the business with 20 years of field experience in U.S. construction industry, we will derive the benefits of AI, if any. So, AI, disrupting the business is a misnomer. What you have to understand is we are not a software company. We don't write code. We don't develop any code for anybody. We use the code and software developed by somebody else. To produce engineering designs and 3D models. From there, we derive 2D and 3D output and check the correctness and correct it thoroughly with a checker, modeler, QA, three levels of checking. So, this area of checking is where AA can help. If that help comes in, the overall number of people might come down by 5-10 percent, and we continue to do the job, maybe with more accuracy. Even today, our back charges are zero. That is a proof that our quality has reached almost 100%. So, not much of help from AI or threat also.

Thank you. Sorry for interrupting, Mr. Rathi. Please rejoin the queue for more questions. The next question is from the line of Ashutosh Shukla from Kingstone Capital Management, LLP. Please go ahead.

Hello. Yes. Hello. Yeah. If you could provide an update on acquisition of structural engineering company.

As I told you, one acquisition we did is only Beryl, which is structural designing and inspections and allied services in the residential space. So that acquisition was completed in November 25, and that team is getting integrated, and a small team has been created in India to handle the design work. Coming to the other structural, that is high-rise building structural side, we are in touch with a couple of companies, but not yet concluded anything.

Okay, and one more. Is there any progress on the revenue generation from Moltech, Interarch, and Affordable Robotic Partnership?

See, right from the days when we started, unfortunately, the trade talks between U.S. and India are in a kind of limbo, and buildings which are supposed to be made by Intraarch and provided other services by Moltec are all come under uncertainty. Nobody knows what is the kind of duties that will be levied. So, in this uncertainty, The people in U.S. who are very keen to use the Indian entrance buildings and save their cars are not in a position to take a decision. That is why nothing much is happening in that direction.

Okay, and one more. What is our current CES and NES order in hand?

CES orders have shot up from – actually, it was $2.5 million when we started the year. In June 24 last year, the work on hand was $2.84 million. Today, the work on hand is close to $5 million. So, there's a jump of almost 60-70%. Coming to mechanical side, that is not a great jump. It is rather a decline. In Q1, it was around 0.5 million, and it's currently at a quarter million. So, that is one of the reasons why we cut-tiled our MAS automobile team in the month of Jan-Fib.

Okay.

And our main line is growing at a rapid pace of 70%.

Okay. Okay. And for full year 26, what are the revenues and EBITDA for Beryl project engineering?

Beryl alone, stand alone, they have done a turnover of 11 crores in rupees in the Q3. So, total is 22 crores?

Yeah, 22.9.

So, almost 23 crores.

Okay, thank you.

Thank you. The next question is from the line of Samar Singh from TPFF. TPF Capital, please go ahead.

Yeah, good afternoon. Thank you for the opportunity. First question was, you know, I think our revenue is our and our majority of our costs are wages. So I could not understand why appreciation would have a negative effect on our PNR.

The 5 rupees per dollar, it amounts to almost 4.9 crores for the quarter forwards which were done in the past, because at 85 level, 89 level, 92 level, various levels, we have done the forwards in the past, and those forwards are to be taken as a MDM, that is mark-to-mark market valuation. It is not a... It is an optional loss, which has to be taken. It is not a loss, in fact, but it has to be taken as per the accounting standards. So that is why the operation profits have nipped.

So what is our heading policy exactly?

That's why we have also decided to stop the forwards and limit the forwards only to 25% to 50% of companies' turnover. Earlier, it used to be 100%, and there were years where companies made 2 to 3 crore's profits. But this year, it has fully gone adverse because premiums are lesser than… The rupee was somewhere around 83, 84 when we started the current financial year and ended at 95 at the end of the year, which was not anticipated, and the premium was hardly 3 rupees. So net effect, it was 83.42 when we started in the Q1 of 24-25, which was 85 to 95 now. So almost 10 rupees depreciation in the full year.

Okay. I mean, you know, just from an outside perspective, I think if you're making profits on hedging in the past, I think we've included that in our EBITDA, though it's not really operational income. So, you know, either we should not continue with that policy or, you know, not let investors know that the operational EBITDA is not including any income from hedging.

No, I think your point is well taken. Yes, that's what we discussed in the board meeting also, that operational EBITDA should be considered and these, what you call the M-to-M losses or gains should be shown separately. So the company is planning to adopt the same from this current financial year.

Okay, great.

So that you will be able to get a clear picture of the operation margins and operation EBITDA.

And on the NAS business, you said, I think we had 7 crores of losses here. Could you also tell us what was the loss?

Now, in this quarter, what is a means loss? 1.7, 1.8 crores. 185, $200,000. That's about 1.9 crores.

Okay, so we're still running at about an 8 crore loss even at the end.

No, that is now stopped. The team has been closed from April 1st. March 31st was the last date.

And just some details on Beryl. You said the revenue was 23 crores. That was for the full year of integration or for quarter four?

No, no. This was for the five months.

For the five months. And for the quarter four, what was the revenue and what was the margin for Beryl?

The quarter four turnover was 11 crores. As I said, it's the beginning of the year. Generally, the workflow is less for them. So we had a loss of about 70 lakhs. $70,000.

Okay, and was there any, quarter three had some, you know, acquisition expenses, were there acquisition expenses also?

Yeah, quarter three had taken acquisition expenses of close to $90,000. In spite of that, that quarter we had a profit.

But there were no acquisition expenses in quarter four, right?

In Quadra 4, of our Indian Quadra 4, we have not taken any acquisition. It was taken in Q3 itself.

You know, one of the issues of the preferential allotment was that it was not just any investor, right? It was Mr. Richard Leon, who was the promoter of Bell. So his, you know... So, I would like to understand, the spicing did not work out anymore, but how are we going to make sure that, is there a retention agreement or sort of a lockup to make sure that him and his team do not leave the organization?

You guessed it very correctly. Yes, we have put that money in the lock-in as a standby guarantee, so that about 30% of the acquisition monies were kept aside for a minimum working time of three years of continued service with the company.

And can you just talk a little bit about how the integration is coming along in terms of, I think we plan to outsource about 50% of those costs to India.

As I said, I was telling you, there are 40 people there in the United States, and hardly four, five members, six-member team has been now created in India, and one person has returned back, so only one more person is now currently in Tampa, and once the training is over, those engineers, including the American engineers, will come here and train a team of 15 to 20 people, which will take at least a couple of quarters, so hopefully by Q4, We will have a team ready in India, and we will be working and supporting Beryl's expansion. Once they expand their abilities in design, definitely they will become very reasonably profitable.

Thank you. Mr. Singh, please rejoin the queue for more questions. The next question is from the line of Manish Kela as an individual investor. Please go ahead.

Hello. Thank you. Sir, I have a couple of questions. One is, we are halfway through bottom one.

So, just wanted to understand if we see similar MPM losses like what we saw in Q4.

No, you didn't. Yeah, let me answer this. The rupee stayed somewhere around 95.5 now, up from 95.15 at the end of March 31st. So, there will be a little bit, few lakhs of MTM losses, but not like 4 crores which we suffered in...

Okay. And can you give us some flavor on the new MSA agreement that

we've entered into in terms of the revenue potential, the contract payers, and so on? With whom?

No. So, the research that you published today, it talks about some new MSA agreement that you've entered with one of the leading engineering companies. MSA agreement?

This one? That is with Daniel Koresh in Delhi for providing them manpower support in mechanical engineering services. So now they have given a mandate for 20 people and we have fulfilled three and some more manpower provisions are being made and selections are underway.

So, what is the exact terms of agreement as in the revenue potential, the contract period?

The revenue potential would be, the contract period is one to three years, and revenue potential is considerably decent. I wouldn't say it's huge, but compared to MES numbers, it is considerable. It can reach a level of about half million dollars in the next one year's time, per annum. All right. Thank you, sir.

Thank you. The next question is from the line of Pranee from SJ Investment. Please go ahead.

Thank you so much for the follow-up. Again, so in terms of Veral, Magma has mentioned that it's mostly permitting and a little bit of design at this point of time. So out of the 5.6 million last year, how was it split between permitting revenue versus structural design revenue?

The permitting, inspections, and other services contribute around 80%. Design services are around 20%.

Understood. So, the outsourcing can only be done for the structural design part of it, right? So, possibly a million dollars.

No, permitting also. A part of permitting work can also be done from detailers and support staff in India, but not the inspection, which contributes almost 50%. So, the remaining 50% of the works can be gradually outsourced to India.

So, about 20% is design, 30% is permitting, and 50% is inspection, is it?

Yes, I'm good understanding. Broadly, yes, broadly.

Understood. So, right now, when we are, in terms of scaling up, so, in terms of India business also, where do you say, I understand mechanical, there have been advance in terms of the auto industry. But, towers have been doing good. So, what have you done, the towers revenue for this year, and where do you think it will scale up to? And civil engineering, what kind of new type?

Poles and Towers revenue for last year must have been anywhere around 800 to 100, 1,000, 1 million. That's less than a million, around 800K. But this year it should cross 1.5 million to 2 million dollars.

And in terms of a team in the US, so I understand Beryl is 40, so how many of our engineers, like beyond Beryl, what is our team size in the US? And will there be any licensing in terms of the size there?

No need to. There are hardly seven people. They are mainly in business development, and three people out of seven are project management. That is, the engineers who can converse with the clients and clarify the question answers between the client and our team in India. So, that team's downsizing is not there on Anvil. Rather, the downsizing has become essential only in the automobile part of our MES team.

I understood so. And in terms of, let's say, sales, so how are we planning on growing a sales team? Because I understand we're growing an engineering team and all of that. But in terms of sales, how are we planning on work?

The reason and context is that we ask people because... The main strategic alliance with Beryl, one of our ideas was to use their sales team to work for our bread and butter detailing and designing. So they have a four-member, a pretty strong sales team, having 10 to 15 years of experience in U.S. structural designing and drafting and inspection services. So they have a very deep connect which can be utilized to improve our line of steel detailing and designing also, because all said and done, they are civil engineers, and this also falls in the civil domain. In fact, I am really excited to see how their sales team can add value, because an American salesperson with knowledge of structural designing can do wonders in steel detailing outsourcing. We are really looking forward to their contribution. They are just picking up the fundamentals of steel detailing and steel designing, and they are able to now understand our services better. And in fact, we are calling a couple of them here to India to understand the operations better, and they are also moving to Atlanta. Our office is in Atlanta, from Tampa, to go there and understand from our BD team how to pitch for our projects. So, the synergy, while it may come through essential design in the long term, immediate short-term gain, what I'm looking at is their marketing services, which the team can really push our services in the other domains.

Understood. So, you expect them also to be selling your services? Obviously.

They are our employees, so they can also do our services.

Got it. But, like, in terms of scaling up our business, I understand that we have been scaling up very consistently over time. The thing is, there have been much other players, like Ovation, that came in much later than you in the business, but they are able to scale us substantially to at least half your revenue, say, in the double-digit crores. But we were not able to do it that fast. Like, could you explain?

See, on a smaller base, the growth numbers can be higher. Ovation numbers are half our size even today, though they are almost 8-9 years old. So, that team has also gone through the route of acquisition. They acquired a company in nearby Atlanta, that's a detailing company with about 8 to 10 members, and then they started building up their Indian team. So, that's how they grew, and because of the smaller members, the percentage growth looks higher.

Got it, sir. Understood. So next year, let's say, what do you think the barrel margins would be next year? And in terms of how will the domestic business margins change for the next year?

We hope that next year, barrel margins would stay there, because they were having around 9 to 10 percent profitability. I don't think it will change beyond 10 percent, because it will take at least a couple of quarters for us more to add real value from India and take substantial work in design from, executed from India. So, this year, I would conservatively take it at around 8 to 10 percent. Margin for burial. But our engineering service from India, now that we have curtailed the excess staff in MES, both the MES and civil from India, that's our core business, standalone business, will certainly go up by at least 15 to 20 percent, and EBITDA in the region of 15 to 16 percent.

Got it, sir. So, but, so right now, in terms of barrel, so you're expecting from 5 to the 7 million mark. So, but what exactly is driving that? Because you, like, just what valuation are we exactly doing to get them from 5.6 to 7? Just that they already have orders in hand, or are they also deploying new resources from India that are helping them scale to that level?

Yeah, your second part is correct, sir, that we will be scaling up the Indian team, which will enhance the design services, is the line we are trying to... So that makes sense because design is where they are lacking, but they have ample opportunities to pick up the design. As an inspector, as an estimator, as a permit provider, the builders and individuals who associate in their own building construction would love to have the same person as a design engineer. But unfortunately, they don't have a strong team. That is where we are pitching in, and our PEs and our structural engineers will be able to take up that line.

So, in terms of the overall project, let's say the costing, so in the overall project, let's say it's 100, so what percentage would be inspection cost, what would be detailing, and what would be structural design in terms of the overall cost for the overall project?

Oh, cost for project inspection will be hardly 2 to 3 percent, and detailing will be another 2 to 3 percent, design can be 3 to 4 percent. Overall put together, it will be 8 to 9 percent, all put together in United States.

Permitting would be 2 percent, I would say.

Detailing, I mean, inspection may be 3 percent, 4 percent could be design. So, 8 to 9 percent.

Got it. So as I see, all of these can be bundled in terms of one service, in terms of expanding our revenues, right, sir? So, so far in terms of our Indian over the last two years, were you able to notice these combo sales in terms of the structural design, the detailing? Have they played out or are they essentially different customers that we have been catering to in terms of design and detailing services?

Yes. In designing and detailing services, we moved up a notch to connection design. That means, apart from just providing the fab drawings and shop drawings and erection drawings, which was a simple detailing company's job, we moved up a notch into connection design, which again involves structural designers to calculate the loads and the forces and accordingly suggests the size of the numbers for connections. Step forward is the full design, and that is where we have done partial work through our PEs and the team here. Items like staircases and miscellaneous structures like podiums and pergolas and stuff like that, we have done structural design also, but a main structure design for the complete body, we require PE support. So, we have a couple of PAs, but... In America, most of the companies still depend on design companies in the United States, and they don't mind member design and connection design being off-sourced, which is the work we are now currently doing. By acquiring a structural designing company in steel, we will be in a position to complete the entire range of service.

Sorry for interrupting. Please rejoin the queue for more questions. The next question is from the line of Madhurradi from Counter-Cyclical Investments. Please go ahead.

Sir, thank you for the opportunity once again. Sir, there are 5 million order books that we have currently. Sir, how is it split between Moltec and Beryl right now?

Sorry, your voice is a little muffled.

Sir, there are 5 million order books that we have currently. How is this split between Beryl and Moltec?

No, this is completely Maltec order book. Whatever $5 million currently, what I have shown in the press note, it's completely for Maltec Inc. alone, Maltec Technologies.

Oh, okay, got it. And so there is no other book with Beryl right now?

No, see, Beryl order book will be there. Maybe we didn't mention that. We'll check up on that. It will not be as high as this because there is more of inspection services and detailing services. Hopefully, it will be somewhere around 0.2, 0.3 million dollars. A month's work will be there for them at any given time. So, maximum half million, I guess.

Got it. Sir, also, our other expenses have increased quite a lot. So, even if I consider the 4 crore Fx loss as a large, some kind of like 90 lakh rupees of expenses associated with acquisition, then I shall increase the 15 versions around 22 crores to 33 crores on a YOL basis. So, why is that so much increase?

This could be mainly due to, I am guessing, its software cost.

Thank you.

And MTM loss here is removed. MTM loss is almost 7 crores. Even if you remove the 7 crores from 38, the other expenses would be 31 as well as 22. That's mainly because of increased burial acquisition costs also. Oh, burial other expenses also are included in this. So that's one of the reasons. So a detailed breakup if you want, you can write to surveys at maltechindia.com. CFO. It is there in the public domain. You can write to our CFO. We will provide the details.

And, sir, also, where do we see our employee expenses going forward? And if 12 to 13 is not added now for the business of this business acquisition, and for FY20, where should I look at the employee cost for the whole year?

Again, your voice is a little muffled.

I said I wanted to understand the employee cost. So where should I look at the employee cost number for FY27? And is 12, 13 per hour on a quarterly basis added through this burial acquisition? Is that understanding correct?

Employee cost is 73% as of this financial year. This includes burial five months numbers. So if you want full details of burial, probably you can...

Sir, now I wanted to understand that our clients pay us on a per hour basis?

No, we don't work on a per hour basis. Typically, we take projects on a quotation basis. That means, based on the number of hours what we... Estimate to execute the project, we charge around $30 per hour and quote. And once the quotation is finalized, probably there may be a little bit, 2-3% of negotiation, and then the orders are awarded. So, this is based on project to project, not on manoverly date.

Okay, okay. And sir, now that this preferential allotment that we are making worth 4.75 crore, it has been cancelled, so this preferential allotment we were making in lieu for purchasing the stake of this gentleman, or it has nothing to do, it was an independent transaction?

No, it was an independent transaction wherein he showed interest to invest that money, but later on, because of the price differential and market conditions, he couldn't... Make it possible. So, then we have time limits like up to 31st of May. That is the time BSC and NFC has given us. So, because we didn't transfer the monies before that, we have to cancel on 1st of May. 31st of April, 30th of April.

Understood, sir. And, sir, if you see our receibles, in September, there were 30 crores, and so, and same, it increased to 41 crores in March. So, I think September numbers are very inclusive of this new acquisition that we did.

September numbers are not inclusive. Only the December numbers are inclusive of two months of burial. November and December. November 1st was the effective date of acquisition. So, November and December are included.

And it includes acquisition costs.

But they include the acquisition costs. That's in the Q4.

Sir, so this year, what is the salary hike that in the whole organization we are expecting, including Beryl?

Including Beryl, I can't comment because Beryl has not yet come for that discussion. But for the local Indian teams, we have settled it to around 8.5 to 9 percent.

Sir, it is affecting in Q4 numbers or in Q1 it will start to...

It is already affected in Q4. Provision has...

Okay, so going forward, at least the stand-alone employee expense will not change significantly on a quarterly basis going forward.

Yes.

You can seek any further data from

Sarvesh, CFO. He will provide necessary information.

Thank you. The next question is from the line of Samar Singh. Please go ahead.

Thank you for the follow-up. So, the inspection revenue that we did, is this, what part of that is related to the SB4D requirements?

Sorry?

Is part of this revenue related to the SB4D mandate in Florida regarding inspections? SG40, what is that? I think Florida had required a mandate where there was some sort of accident in 2022, so they're required to do all residential condominiums were supposed to do an inspection by the end of FF5. I'm not sure if that's been completed or not. So it was like a regulatory mandate for homeowners to complete the inspection.

Okay, I am not aware of the SD40, but there is a FEMA and what is the other project?

FDEM.

FDEM, EM.

That is the Florida Emergency State Department.

Yes, that's the government project.

Government project. And FEMA is? So, there are two entities for which both our company is authorized and one of the service providers, for FEMA and FDEM, these two.

I'll email you about the SB440 as well. I'll be curious to know if it was a mandate that came out in 2022, so that said that all condominiums of Florida...

Yes, yes, yes. Now I understand what Mr. Leo Kennan was also mentioning this. It's been there in their books for the last three years, and now also they have pending projects, which are now turning more into design, actually. So now their inspections are completed, and wherever the inspections are completed and defects are found, their project will be converted into design now. So that's one of the reasons why he was also keen to join with us to increase his design strength. Yes, sir.

That was my question, sir. Is there any way to figure out where we are in that timeline? Because if we are still in the middle, middle or beginning of... This tailwind of revenues, that would be great, but if we are sort of at the end of it, then, you know, maybe better revenues would, say, decline going forward.

No, they are in the middle, actually. I would say the first phase of inspections are all completed. Yes, the payments also were received in these last couple of months. So the second phase of design, thanks to that government closure for a few months, nothing much happened in the last five, six months, and now it's against restarting.

Got it. Okay, and two more questions. One was, we were supposed to, you know, move into a Nashek office, and I think we were supposed to be saving the 1-2 crores a year during that. So, could you just...

Yeah, the building site has been acquired a couple of years ago, and we have applied for municipal clearances. Already, plans are initially approved. Final approval is expected by end of this month. So, ground clearance is already done. Hopefully, in June, we will be breaking the ground, and by next, this end of financial year, the building should be up and ready. So, probably, the cost savings of around 2-2.5 crores per annum can accrue in the next financial year, 27-28.

And the last question from my head, you know, if we compare our suite of products to, you know, Pinnacle, where do we stand and, you know, compare to them and, you know, where are some spaces that we still need to catch up on?

In fact, it's a good question. When compared to Beryl, we have noticed that a lot of areas where we can improve upon, especially our internal eye support, the tool which we use to monitor the productivity of people. And already we have started implementing some of the techniques here to improve the productivity. And a strict vigilance on shifts and monitoring the productivity on a weekly basis instead of monthly basis has already started, and that is showing good results in April. Again, we could clock at least 10 to 15 percent better productivity in April. And going forward, an incentive-based mechanism also designed along with the weekly review of work done. And we hope that the productivity should enhance considerably in the financial year 26-27. These are some inputs from... Beryl practices and their tools which they use to monitor their inspection and other design services.

Sir, I was asking you to compare our suite of products to Pinnacle InfoTech.

Pinnacle?

Yes.

No, no, there is a company called Pinnacle InfoTech. What do they are into?

Sir, there have been solutions for EEC. They are based out of... And Mr. Padwari is the promoter.

They are mainly into BIM solutions, that's what I see here.

That's right, that's right.

Yeah, BIM is, again, you know, building information modeling, wherein you provide the services of electrical lines, plumbing lines, mechanical, electrical, auxiliary equipment like lifts. Power connections, switches, and stuff like that. It has nothing to do with structural detailing and designing. It's more of building information model.

But would this also not be, you know, sort of another...

In fact, we have a small team of BIM people, around 5 to 10 people in our team. Wherever the client insists on us to do some little BIM work, we do it, because BIM one way is good, other way it is crowded, and BIM is a low-end software like CAD is used. There are many players in that particular domain. So, BIM, as it is, as a standout service, is not very lucrative, in my opinion.

Thank you, sir. Thank you for the line.

Thank you. In the interest of time, that was the last question for the day. I now hand the conference over to the management for closing comments.

I am really thankful for very insightful questions today, especially a couple of questioners or investors who are online. I really have in-depth knowledge, it looks like, and I am really happy to hear the questions. Some of the inquisitive questions, but let me reassure you, the company is all set for a... Much better performance going forward, thanks to the two major things. One is barrel acquisition, which is going to start add value from coming quarters. Second is our decision to curtail the slab in the MES division, which itself can add about 7 to 8 crores back to the profitability. And improved productivity systems, which I just explained, Which we have adopted from April onwards are showing results in increasing the productivity with the same number of people to the extent of 10 to 15 percent now. And our target is to improve the productivity by at least 20 percent in this financial year, which can substantially improve the bottom line. So we hope to see, show you a better performance in the coming quarters, and if our plans to expand into structural engineering also happen in a day like what it happened with Beryl, we'll be certainly seeing a different segment or level of performance from Maltec technologies in the coming future. Thank you very much for all of your interest, and we wish you a great evening. And thank you, M.K., for arranging this meeting. Thanks, Ashit.

On behalf of M.K. Global Financial Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.