Standard Engineering Technology Limited (SETL) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to the Standard Engineering Technology Limited Q1 FY27 earnings conference call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask the questions after the opening remarks from Mr. Nagesh concludes. Should you need any assistance during the conference call, please use the hand raise function. Please note that this conference has been recorded. I now hand over the conference call to Mr. Ashish Poddar from Motilal Oswal. Thank you, and over to you, Ashish.

Thank you, Avesh. Good evening, everyone, and welcome to Q1 FY27 on this conference call of Standard Engineering Technology Limited. We have on the call Mr. Nageshwara Kandula, the managing director, and he is joined by his esteemed senior management team. We must remind you that the discussion on today's call may include certain forward-looking statements and must be therefore viewed in the conjunction with the risks that the company faces. I will now request MD, sir, to please take us through the financials and the business update, subsequent to which we will open the floor for the question and answer. Thank you, and over to you, sir.

Thank you, Ashish. Good evening, everyone. Thank you for joining us today. A warm welcome to all our shareholders, investors, analysts, banking partners, customers, and every member of the Standard Engineering Technology family. This has been another record quarter for us. And I want to say this clearly. This is not a one-time achievement. Every quarter, we are setting a new number. That is the standard we have set ourselves and that is the standard we intend to keep. This quarter, we took two big steps that will shape our future for many years. Let's do this. Fast. We became India's high-precision engineering powerhouse. Our core business, pharma and chemical engineering, grow strongly this quarter. But we did not stop there. We also entered a completely new market. AI data center's infrastructure. We are acquiring up to 51% stake in G-scale energy. Every AI data center needs power systems, cooling, and strong engineering. And that is exactly what we are good at. We are building this infrastructure very fast. Our teams are already onboarded, machines ordered, designs are ready, and our large manufacturing facility is coming up in schedule. This response from data center clients has been very encouraging. Clients are showing strong interest and this use is full confidence on this business. Second, we depend on our partnership with GLHACO Japan. We have worked with GLHACO for almost 10 years. Now, we have invested approximately 71 crore for approximately 19% state. With the right to grow, this is up to 51% in the next two to three years. This gives us access to 70 years of Japanese glass diving technology and new products. Including conductivity glass technology and semiconductor-grade equipment, this will strengthen our products and open new global markets. Our growth story is two engines. Now let me explain our simple growth story. We run two engines. Our first engine is our core engineering business. This is already strong and proven. It is expected to grow 40-50% this year, reaching around 1200 crore revenue. Our second engineer, G-Scale, is our new AI data center business. This is expected to bring in around 250 crore in this year. Two engines, one company, running at double speed. This is SETL today. Our numbers this quarter. Total income 250 crore, 41% year on year growth. EBITDA is 44 crores. 27% year-on-year growth. Profit before tax 36 crore, 26% year-on-year growth. And profit after tax 26 crore up to 26% year-on-year growth. EBITDA margin 17.5%. We achieved this growth while also investing on our new business for the future. That shows the strength of our core operations. Our priorities going forward, one, keep leading our core engineering business with better technology and stronger customer relationships. Two, build G-Scale into a world-class AI data center manufacturing platform as fast as we can. Three, grow the GL-Hacko partnership, bring new technology in India, and expand into a global market. Our goal is simple and clear to become India's leading high-precision engineering company with two strong engines, driving us to forward quarter after quarter, record after record. Before I close, I want to thank you our customers, employees, shareholders, banking partners, and technology partners for their continued trust. This quarter's results are the results of the hard work of our entire team and the confidence of all of you on us. We remain committed to working with discipline, investing wisely. And creating long-term value for every shareholder. Thank you for your continued trust and support. With that, I am happy to take your questions. Thank you.

We now open the floor for question and answers. Participants are requested to use the raise hand function to ask their questions. The first question is from Mr. Raman KV. Damankemi, request you to please unmute yourself and ask a question. Hello, sir.

Can you hear me? Yes. Yes, I have some questions. One starting with the G scale business, can you elaborate what kind of business we will be doing in terms of like data center wise? What are we planning to do under this segment? And what kind of margins can we expect? And also a bit further on to this question is with respect to the have you have there been any order inquiry and we have and when can we expect We expect this to be converted into revenue.

Good. Thank you for the question. Along with me, Mr. Brahmarendi is the G-Scale Energy Managing Director. He is the right person to answer this question.

Hello. Hi. Hi, Mr. Raman. Hi, sir. Thanks for the question. Yeah, see, G-Scale is all about gigawatt scale. Today, the overall data center market is seeing a surge in capacity. Now, by 2030, India data center market is seeing almost a 6x growth. From today's 1.8 gigawatt, it is expected to grow up to 10.5 gigawatt. So, part of that, we have seen significant challenge with the supply chain of the product manufacturing and supply chain, including data center expertise to deliver. These are the major two cavities in the data center market has triggered us to enable these products. So, that's where the market potential for data center products that include power products, cooling products, and modular systems, and design and turnkey design and build solutions. That's where the larger potential, the market size, is multifold. That's where the company's position. As far as the market access and the customers in the market, so we have very active inquiries. We are working very closely with the five data center customers, three of them global MNCs and the two of them India-based data center companies. And we got inquiries, and a few of them are in a very advanced stage of LOS, and a few of them are about to convert them into an order. So, as Mr. Nagy sort of referred, by the end of the year, we are aiming to get 250 pros' worth of revenue booking.

So, just a clarification, you are saying you will get 250 crores of revenue or revenue booking, like order book, revenue, revenue. Understood, sir. And my second question is with respect to the recent acquisition of GL Halpo, can you be specific with respect to what kind of product we will be delivering under this business and how is that product different from what we are doing in the standard glass engineering?

Thank you. And JLACO, last 10 years we are working with JLACO partially, and last three years we are majorly working with JLACO, particularly conductivity glass, and we launched in India, and semiconductor-related glass learning reactors we are going to manufacture. This is already we got one big order, not very big order from one of top clients in India. And also they have unique order, many types of advancements about the glass and heat exchanger. That is, we have already licensed, we have 20 years licensed with GeoLACO. And same time, GeoLACO is handling the pilot plant to plant product. And AGI group is the only, they are operating labs and R&D. That's the reason GLR4, we acquired, that is going to fit into the SETL basket. And sell it to glass and heat exchangers, already we started manufacturing. And the majority, future also 80% product we are going to manufacture in Japan and we are bringing to India. After 20% we will manufacture, we have started selling. Almost every client is accepted. Many, many top pharma companies are looking for this product because of due to graphite heat exchanger particle issues. This is one of the exit mint products and market TAM also, India House, tooth and pros globally, 2 billion and maybe export 28 financially we are going to start, export in shell and tooth glass, direct heat exchanger. So same time, connectivity glass also, Europe and US markets we are going to launch, we have big wave plans. That's the reason GLFO we acquired first phase 19.19% change. And coming two to three years, we are going to acquire another 32%. Our target is currently GLFO revenue, 200 pros revenue is there. Our target next coming two to three years, we are going to support them, our product basket and fabrication facilities going to support Japanese reactor sales. And then our target is 200 host become a 400 host revenue GLFO. We are targeting. Once that revenue is reached, we are going to acquire another 32%. Along with me, Mr. Eshiki Akana is with me and he is our Executive Director, Global Operations. Eshul, do you want to add anything further?

Thank you, Nagesh. Yes, so now India, the semiconductor market is growing in India. And in the semiconductor industry, the customers require high pure chemicals, electronic grade chemicals. And using a normal glass lining glass, because of the leaching level, We won't be able to meet the customers' required high pure chemicals, the impurity level, so JL Hakko owns low leaching. High-corrosion-resistant glass. So the plan is JL Hakko provides a glass from Japan to standard engineering, and standard engineering does the assembling in India so that the Indian customer can get the Japanese quality at the affordable price. So, I'm very excited about this area, too, not only about the conductive glass. Conductive glass, as Nagashi said, this increases the safety of the customer, and it's very commonly used in Japan, especially in the pharma industry. So, I'm very excited to introduce this. Now, slowly, we have started. Installing a conductive glass line reactor from ACTL. Thank you.

And just to follow up on this, what kind of margins can we expect from the semiconductor grade glass line? Is it like, will it be standard like at a consolidated margin of 16% or will it be in excess of that?

Slowly, our margins are going to increase. Even data center area and this unique for semiconductor, glass selling reactors and shell and tube glass selling, one more growth engine we are adding, already added and partially we are now we are selling maybe September onwards we are going to full bridge we are going to sell in the shell and tube v-tech sector. Our margin is going to slightly increase.

So can you just give a ballpark figure, like how much margin expansion are you expecting from one?

We are working on that. We are going to indicate margins.

Okay, sir. And my last question is with respect to exports, can you quantify how much revenue was from exports during the quarter? And was there any impact on the exports growth? Because I have heard that the shipping costs have increased by almost 4x.

This quarter, I think 2-3% only in export is happened due to uncertainty of the things in the global markets. See, this quarter is very, export point of view, very less, 2-3%. Maybe second quarter, yes, they are going to, another 5-6% going to happen in the second quarter.

Okay, thank you.

Thank you, Mr. Rahman. Next question is from Mr. Vijay Mahadevia. Please unmute yourself and you may ask a question.

Mr. Viraj, Mr. Nageshwara, congratulations. A couple of questions. One is you mentioned, Mr. Ikeda as well, that with GL we get this glass line technology that we're bringing through the partnership or acquisition from Japan to India. Is there any technology barrier in making these? Are other players global products? Is anyone else in India making these products? Is there low-cost competition in these products in the global market? If you can give us a flavor for, you know, what stands out in terms of the uniqueness. Clearly, there's Japanese technology and Indian cost of manufacturing coming together, and that's a big advantage. But how does that fare versus other alternatives out there in the market?

Coming to, I can quantify three types of parts. One is shell and tube heat exchanger, known in India, and Europe or US markets. This is launched, I think, 15 years back, JLACO in Japan, and they are not patented. They don't want to technology copy someone. And now, we are going to manufacturing only 20% because we don't want to lose our technology, our intellectual to others. So, 80% of the last time, we are going to manufacturing in Japan and bringing here balanced components, we are going to finish selling one product. That is one of the unique products. Earlier, this is going to actually, we are doing B2B business. Whatever way we are doing, this is going to client going to get benefit or business going to be very strong. Earlier, one heat exchanger cost is 30 lakhs. Now, that heat exchanger we are going to sell in India almost 1 to 40, 15 lakhs. Almost more than, we are reducing price more than 50%. And that is going to client advantage. And also, The company going to grow glass lining area and also our margins also going to improve because we are changing the manufacturing cost and everything. That one is. Second thing is conductivity glass. This glass, others conductivity glass manufacturing, but that conductivity glass can't do spark test. Glass is intact or not, people don't know. But whatever GLR for manufacturing conductivity glass, that glass can be do spark test and And corrosion resistance, all aspects, that type of glass, no one manfred, India, this is also not patented due to technology, should not be, after 20 years, should not be loose. That is, that is one of unique products. And Europe, we are, our glass is some one company, purchasing and selling reactors, not exclusively, they said, and we are going to launch through our dealer, conductivity glass dynamic reactors. Recently, we had a lot of discussions with U.S. clients and Europe clients. They are very exciting. Every reactor, GL Airco technology inside, we are going to announce in Europe and U.S. markets. And Japanese technology, Indian manufacturing. And price and deliveries, we are going to launch in these parts in Europe and U.S. markets. And third one is the low-leaching, high-corrosive glass. Some companies are manufacturing in Europe and U.S. glass company companies. But whatever way, PPT level, part per trillion leaching level glass, others manufacture, I am not aware of that. But recently, we got one big order from one client in India. They are going to produce LED chemicals and electronic chemicals. That is, pilot plant, we got big order. Maybe once that pilot plant is success, then they are going to... That is the main manufacturing plant. These are three partial unique technologies GLF Go have. The technologies we are bringing to, glasses we are bringing to India, and this is going to advantage to Indian clients and same time global clients.

Understood. So there are no global manufacturers or competitors for this kind of lined glass exchangers? No, sir. No. No. Till date, no. Interesting. And secondly, regarding the G-scale acquisition, how are we building this capability to make these products? Like, how did we get the technology, the IP, the experience to actually go ahead and make these cooling solutions? How are the data center people reacting to the fact that, you know, it's the first time for these products from India? Have you met their quality and all kinds of specification requirements? Or would they rather import these from Europe, et cetera?

Rambha can be answered, right? Hi, Mr. Viraj. So, it's a nice meeting. So, today's India's data center market major challenge is supply chain. Again, I'm reiterating. It is not the technology availability or innovation. Now, because India is growing at 6 percent, 6 times the present market capacity, so supply chain is the biggest problem. To address the supply chain of gigawatt scale, so we have taken a strategy of getting the partnerships with the global products, the products that are being used by global hyperscale customers like Amazon, Microsoft, Google, Meta, Oracle, or all hyperscale customers. So, whatever products they use in Europe, US, or anywhere in Southeast Asia and the least market, same product, we are partnering with all global companies like Schneider, ABB, those kind of people, all kind of global players, and that's where the partnership comes into the picture, and we are producing those products. So, that means product validation, product approval is not the question here.

Understood. But why would, just being devil's advocate, why would an idea or an ABB or these specialist European manufacturers part with their technology when they already have local manufacturing in India and they can make it themselves and part it to another Indian player? And are you then restricted to use this technology for the Indian market and nowhere else?

This is the model they are already practicing in India as well, but the scale that they did not build so far, and what Schneider or ABB or Etona or any company for that matter, whichever thing, those guys make the product of component level, not as a system integrated solution. The products that we are going to deliver here is the way SCTL are doing for decades of their expertise. Integrated, so bring all the products together, integrated, sell as a integrated solution. That's where we bring G-scale expertise. We bring all these components as part of the partnership and integrate in line with the hyperscalers and the AI factories requirement, and we deliver as a solution.

I understand. So in that case, you're not a manufacturer of these products. You're actually an assembler of a kit. And then you see at the project site. Am I clear?

No, this is all sorts of manufacturing. Suppose if we are purchasing steel and making reactants, we are manufactured. Like that, say SFN is secondary fluid network, going to school, cooling skids, and produce, and a lot of skids we are going to skids manufacturing, integration, and a complete solution we are going to provide to data center. Yeah, this is company, any material, any manufacturer, they want raw material. Like that raw material, we are going to buy and we are not assembly, but this is different concept. And also data center, what is the uniqueness, more I will elaborate, and why I impressed with Brahma concept and technology. And whenever the building starts, data center construction, we can make it in our manufacturing sites, everything in skit mountain. That is unique technology they have. Once the building is ready, we can install the all integration, solution, skids, every pooling skids, power, everything we can install very quick, fast way. That's the reason data center construction time also going to reduce and price also going to save. This is, we are hoping global clients recently, we explained, they are very, very impressive. Any of the coming days, you will understand the G-scale, SCTL capabilities only. Thank you very much, everyone, and welcome to the call.

I'll just add. Yeah. So, as he rightly mentioned, it's not just the products that we source from all the global OEMs. There are certain few components that we source from them, and we fabricate, and we manufacture the product like PDUs, switch gate panels, or secondary fluid network, and all of them. So, those are all designs that we developed and product. We are bringing from those OEMs, and integrating together and delivering. As he rightly mentioned, most of the products that we will be delivering in the shape of skids, and in the shape of e-pods, in the shape of the DFME, design, manufacture for assembly, those components will be mapped by the moment data center customers start constructing their building at footings level. Let us say the seal work starts at the plinth level. So where in the relevant all the components start manufacturing at our factory, by the moment they reach to the relevant floor or the rooftop of the building, the most of their data center products are already made available. So we can bring them and assemble it, fix them at the data center location, and they can go to the market much earlier than the traditional working.

Right. I guess what we're struggling with is given that this is such a new market and we've not seen this product, it would be helpful to, you know, maybe include in your deck the kinds of products you are importing and then what your finished product after the value add looks like, right? And I guess maybe if you can work that into it, it'll give investors a greater flavor of your level of value add in the management process.

All the best.

But yeah, exciting pivots, lots of growth. Thank you. With GLChack in Japan, as well as the data center pivot with G-Scale. So all the best. Thank you.

Thank you, Viraj. Our next question is from the line of Mr. Shiva. Mr. Shiva, go ahead.

Hello, Nages, sir. Hello. Sir, you mentioned that a glass lining technology that you are importing from Japan to make semiconductor-grade chemicals. So, is this product manufactured in-house at SCTL Hyderabad or is it manufactured in Japan and you are just bringing the products and assembling here and selling to the customers, sir? Just I want to know that one.

Glass, glass manufacturing in Japan, and glass will bring India, and we will fabricate the reactors here, and we will spray the glass here, and we will make the reactors, and assemble it, and glass going to manufacture in Japan.

And to manufacture that in-house, sir, is that technology possible to manufacture in future, sir?

No, currently, we don't have any agreement, technology going to transfer to India. We are also, we want to protect that technology in secrecy, so that's the reason we are going to maintain Japan, the technology.

Thank you. Thank you, sir.

Thank you, Shiva. Next question is from the line of Rahul. Rahul, you may go ahead.

Hi, sir. Can you hear me? Hello. Yeah, sir, after this Q1 revenue, what is the current unexecuted order book that we have in our core business?

Core business, we have up to 1,400 cores today, after some billing hours we have in the second quarter.

Okay. Okay. And, sir, regarding G-Scale, can you elaborate the infrastructure that we are building right now, the capacity after this, the plant when we start in November, what will be the total capacity of the plant and what are the products that we are going to manufacture?

Yeah. Hey. So, at this moment, we acquired almost 4 lakh square feet of factory space. Out of them, 2 lakh square feet already went in full-fledged execution, I mean, including ordering of all the robotic equipment in the different countries of the world, and a few of the equipment already in the shipping, and a few of them delivered, a few of them had to dispatch. So, all of them arriving by, I think, mid of September. And we are planning to go for operations by November. So, the first phase of the product lines in the factory, and the next phase is coming up. And we are also adding additional Love. The capacity of factory three and four also coming up, you know, for next few quarters will be adding that capacity.

And the products that we are going to manufacture or we are going to supply for data center business?

Yeah, power products and cooling products and the more of prefabricated and skeet mounted technology, which will significantly reduce project timelines of all the data centers. It brings a lot of energy efficiency.

Sir, one more question. Somewhere I have read in presentation that you as a company are going to propose complete solution to the data center companies. Does it mean that you are planning to take complete turnkey project from them and then commission the project for them, complete data center, because the cost of each one gigawatt data center seems to be very high. So what percentage of that can we cater?

We are exactly right. So the overall, the business objective of G-Scale Energy Private Limited is the turnkey and design and build solutions. So that includes products for what we manufacture. And we were talking about repeatedly integrated solution. The integrated solution goes through the design and build requirements for the data sets. That's where we are actually working with the five customers on design and build projects where we design the complete data center and we take up the The complete contracting along by supplying our products and also prefabricated skids and our DFMA solutions. So that's where we are going to bring a lot of value proposition to the customer.

Our object to, actually, whatever SCTL is now today, 80% equipment manufacturing for pharma and chemical, and we are executing also projects. Same way, G-Scale is going to a manufacturing 60-70% equipment in-house, and a balance going to source, and going to take a public key project. One is G-scale model of the same whatever way as CTL doing business in pharma, chemical, process industries. G-scale going to handle data center business, independent equipment also they will supply to data centers, other client, competitors, everybody. And same time, if you client want solution, because they are giving part and piece, bit and pieces to suppliers and project is going to three years, four years. Now, we are targeting 18 to 20 months. We are going to finish data center that we are going to time-vale fixing and customer also going to convert because how we are going to create that much strength? We are going to manufacture in-house equipment. Everything we are going to under our control. So that we are going to offer. This is unique company offering in G-Scale.

This is the first of its kind in India, having product manufacturing in-house, total integration capability in-house, and designing the data center and installing there, integrating all together with our own products and delivering. For customers, it has become a one-stop solution. So far, Indian data center customers are greatly struggling to get this kind of value proposition. That's where we see, though we are still establishing the fact in everything, the inquiries are coming every day after, and we are They are quite actively engaged with the customers and they are showing a lot of agonist to control this.

So, sir, your initial focus is Indian market, right? Or you are parallelly exploring the market?

No, my initial focus is definitely on India, and we are already establishing teams to focus on Middle East and Southeast Asia. So, soon after we establish rightly here, we start exporting to these regions.

And sir, for our core business, we historically have been growing 35-40% year-on-year. Can we assume the similar growth for next couple of years also in our pharma chemical space?

Yes, yes. Today, you see, this is also one of the exact midpoints. Today, any pharma company can consider their brass block versus their revenue sale. Any pharma company wants to grow, they must invest capital. So today, almost 70-80,000 post-market cap is there, and we are doing only 1% . That is very, the sky is not a limit. In the coming years, we have very bright visibility.

Okay. And the last question for G scale, we are suggesting 250 crore revenue for four months. So for next year, can we extrapolate that into three for as a minimum revenue guidance for FI 28 or we will guide soon. Okay. Thank you. Thank you. Best of luck, sir. Thanks a lot.

Thank you.

Thank you Rahul Potari. Our next question is from Mr. Rahul Maheshwari. Please go ahead.

Yes. Am I audible? So, a couple of questions. First of all, thanks for the time and insights and congratulations on good execution. First thing, as you mentioned that once you get the capabilities, you would be looking at the other vectors also like heavy engineering, nuclear. Are that aspects on or it is a distant journey? Currently, many things are on the pallet, so you don't want to focus on that.

The SETL name also, why we changed the name is engineering company. Wherever engineering opportunities are there, we are interested to enter. That is also good business and low competition area. We are looking for the opportunities. And not heavy engineering or not a semiconductor area. That is also we are not going to manage. We are going to provide the engineering services. Engineering parts we are going to offer. Engineering solutions we are going to offer. That is our future plan also.

Okay.

And on data center, can you just give us this highlight that suppose per megawatt $7 million is the data center capex cost, how much is our addressable market into that? And how big this business can become, at least for next two, three years perspective?

Our capability is the almost 60-70% improvement to whatever data center required. We are manufacturing. We are going to manufacturing. Maybe coming March, we are going to full-fledged manufacturing setup is going to happen. And we can do Tarnaki also. This is a complete time we can do, but we can't do everything because of very big time. A lot of supplies are, Mr. Brahmach mentioned, supplies are very short and supplies are not available in the India market today. Whatever growth is there, one supplier is ready to supply and the other 10 suppliers are not fully booked. Today, that's the reason we, day one, we decided we are going to, whatever, our client, we are going to provide complete foundation. But the total, whatever data center required, we are underpercented, we are manufactured.

Just to add, your question of what is the addressable market, given 7 million per megawatt is the investment, typically happens in the data center market. India, of course, operates anywhere between 5 million to 7 million per megawatt. So, if you look at India, total data center growth story, today we are at 1.8 gigawatt and is expected to grow up to 10.2 gigawatt next five years. It is almost a 6x growth. So, every 1 gigawatt, I think you can look at the kind of market available. I'm talking about the market, whatever the cost that you referred, 7 million per megawatt, almost 65% of 7 million is, that is, the cost goes into the products, primarily, and also a ton-key solutions. That itself is a very, very sizable market, and we are expecting almost a lakh crore in INR for 1 gigawatt capacity. So out of that 65% goes to products it's alone. So that's where we entered into the G-scale as a company, manufacturing products relevant to those areas. So, the program is very big.

Yeah, just to add your current existing business already has the extended working capital cycle of 220-240 days. Can you give us how much more stretch can happen once this data center business revenue starts flowing into? Or it would, the working capital cycle will be much better in the data center business?

So, working capital days, a CGL manufacturing is 180 parts. So, that's the reason, working capital days, I think, last year, 320 days. And this year, that is going to be coming down to below 200 days. And this year ending, we are expecting more. And this is enough, our top line is very high growth is there. And stocks are same. We have a lot of parts, maybe 180 variety of parts. That's the reason last year our working capital is very high. Now this year we are controlling and at the same time and this is G scale also and that is also maybe below 150 days or maybe 100 days below only. There are a lot of advances and project also very quick deliveries. Exactly, that is the right idea. Data-centric parts.

But, sir, what can be driving force or what can be driving the lower working capital days for this year and next year? I mean, whether your inventory will go down or your receivables will be going down, what is the driving factor for that?

I mean, the stock will not going to increase, the revenue will increase, same level the stock we are maintaining, and also customer advances are increasing now, and receivants also we are collecting, so many areas. I think this September result will be coming down to below 200 days. This is for 200 days, this is for FI27, you are saying? FI27, yes.

September, 6,000, I am talking about. Right, right. And sir, you also mentioned the 3 years target of a 1600 crore revenue. Any revision, sir? Which was there. Just last meeting when we met, you mentioned about a three-year, two, three to four-year target of 1600 crore revenue at the top line.

Now, this year we are already guided at 40-50. We have 1200 cross SCTL business and 250 cross G scale and total consolidation is going to happen 40-50. That is, earlier growth is different. Now, we recently changed our guiding figures.

Thank you. Next question is from the line of Sandhya. Sandhya, you may go ahead. And then you're not audible, request you to please unmute yourself and go ahead. Yes.

So first of all, congratulations, sir, for such a great number. So I had a couple of questions to ask.

Thank you. Thank you.

So my first question is on to achieve the guided revenue of approximately 250 crore from GSK in FY27. So, what capacity utilization has management assumed for the new Corlec Square Pit manufacturing facility? And additionally, what would be the utilization ramp-up trajectory over FI28 and FI29?

Yeah, so the out of four lakhs square feet, almost two lakhs square feet of the factory will come in the full action to support this 250 crores revenue realization. And on top of the product manufacturing, we have a great trajectory for turnkey design and build solution. So that's where the major chunk also coming together as turnkey design and build solution along with the products. First is we have sufficient the capacity of the production and also the resources utilized to achieve to grow revenue. And we are expecting to add additional 2,000,000 square feet by December in terms of the factory. So, it goes into the, yeah, next, you know, couple of partners will love, you know, the company guiding and advising on the next year numbers.

Okay, and so my next question is on, like, as you can see, in terms of EBITDA margin outlook, like, employee and other operating expenses has impacted the EBITDA margin discount. Despite, like, a strong revenue growth, as the business continues to scale, should investors, like, expect margins to recover through operating leverage, or is it the current margin profile likely to remain normal?

It is in combination of both operating leverage and financial leverage.

Okay, so coming forward, can we see it to improve?

Yes.

Can you just quantify how much we can expect from the EBITDA margins?

Further, we will continue to maintain the EBITDA margins 17-18% in future as well.

And on G-Scale basis or as OneSup is commercialized, how much we can expect the EBITDA margin from this profile?

He is expecting around 23-25% in EBITDA margin for G-Scale products and services.

Okay, sir. That's it from myself, and thank you so much.

Thank you, Sandhya. Next question is from the line of Rohetori. Please go ahead.

Hi, sir. Couple of questions. Coming back to this margin question which the earlier participant was asking, sir, do you think that this is temporary or it's a structural change, the decline?

The main reason for decline is that we have done some mechanization in two units. As a result, the consumption of the consumable items have been reduced because of which there is a decline.

Okay. Nages, sir, if you could just share that, what exactly was the rationale for going into this AI data center kind of a business with G-Scale? How does it fit into our basket, sir?

Many times I mentioned pharma also required cooling ports and electrical and lot of ports, similar ports are there. That's the reason G-Scale also. Why we invested in G-Scale? Because of whatever pharma, pharma, whatever we are producing ports, same way, a lot of similar ports are required in data centers. And also, they understand our manufacturing, high precision manufacturing capabilities. And that's the reason we choose. Otherwise, Starbucks, coffee, I will definitely not choose. In the future also, I am not interested in that of our business. But engineering, but this is SETL recently also, many times also, the standard glass lining. It's a glass lining for India, TAM is only 1,500. That's the reason our name also changes. It's SETL, standard engineering technology. We are going to more focus on engineering opportunities.

Okay.

That's the reason these parts also going to fit into our basket. Mr. Drama can elaborate more.

Yeah. Hi, Mr. Rohit. So if you look historically, data center as a market, data center as a technology evolved from, there are two world-based markets. One is from the telecom industry, from the ICT perspective, and the pharmaceutical clean room, clean room applications and the telecom together is a data center. Because the data center required telecom connectivity and ICT enablement, at the same time, data center required a lot of precision controls inside the data center is similar to the clean room that are predominantly being executed by SCTL, and there are a lot of products goes into the clean room, similar kind of environment is in the data center. That's where the most of the product, what SCTL does, heat exchangers and the boilers and the SCITS, SS SCITS and power situate control systems, many of the products is already used in data center, whatever that they are using in the pharma sector. So that's where it is very relevant. And also many of the data set players use a lot of technologies from the pharmaceutical industry because there, whatever kind of precision engineering and the operations that are required, similar kind of ambience is required in the data set for reliability and precision of air conditioning and the power.

Makes sense. So we're investing around 500 crores. So what sort of return on capital employed we should expect? Okay, sir, you think that this is going to make it a subsidiary going forward G scale, is it?

Yes, yes, 51% growing to us today.

Okay, sir. So, last question, you did mention that we can grow at like 40 to 50% growth rate. So, from where does this growth come in the traditional business? Is it that you are gaining market share or is the industry growing at that pace?

Industry growing and industry also growing and we are guided for existing business. This is 40-50% growth. G-Scale is also coming. In the coming months, we are going to guide what is the hardware loop, how we are going to get into it. But existing business, customer, CDMO area is growing very fast. And also every big customer is investing on Catex.

You see some group?

Particularly from Pharma.

So, you see pharma industry grow in Hyderabad region, is it?

It's not Hyderabad. All of India. All of India.

Okay, sir. Thank you for answering my question. Thank you.

Thanks, Rohit. The next question is from the line of Manishankar. Please go away.

Money, please go ahead. Sir, I'm audible, sir.

Yes, yes, please.

Good evening, sir. Kandula, sir. Good evening. Sir, for FI 27, the poor business guidance will be around 120 crores, 100 crores.

Yes.

And the similar growth will come in FI 28 and around 40 to 50 percent and it will be 1680 crores.

We will tell you, we will tell you, that we will guide you, that minimum 25 to 30% growth is we guided earlier also. But this year, customers are we received, then we changed our guideline 40 to 50%. Then that's the reason I compulsory, I must exclude this whatever order book we have currently.

Sir, combining the revenue of the core business and the G scale energy company can generate 3000 crore revenue in FI 28. Can we expect?

We will see. We will see. Our fundamentals, our opportunities are very high. We will see. Currently exact figure I can't comment. And we will see. Growth is very high and opportunities also verified.

Okay, sir. Thank you, sir.

Hey, next question is from line of Arvind. Please go ahead. I will request you to unmute yourself and go ahead. Hello, am I audible?

Oh, sorry. Thank you. Thank you so much for the opportunity. So, is there any, uh, like royalty transaction that we have, uh, like entered to pay on this, like, on these transactions? G scale or the technology that we are, uh, importing, like.

No royalty, it's more of a licensing model and taking the technology license and producing the products. So, there is no royalty as such.

And we are discussing some areas in joint range. But at the moment, future, maybe, future, any opportunities, any man who wants to royalty, that may be.

Currently, no. Sir, you mentioned like you want to manufacture this glass outside India, not in India. So you are trying to point out some concern. So can you please elaborate a little bit in detail?

So, technology secrecy purpose, we have some parts, we have, core part, we are going to, we are decided to manufacturing in Japan. And whatever normal required parts, that we are going to manufacturing in India. That's the, manufacturing, we are divided two parts. Critical, we are going to do in Japan. Non-critical, we are going to manufacture in India. That is also, whether our competitors should not copy our parts, that is our objective.

Okay, but we do have the capability to manufacture in India, correct? The critical one?

Yes, technology, if they transfer, we can. We are not getting any technology from here currently. Only critical parts we are going to get from Japan.

Understood. Okay. And sir, how much tentative time we will take to complete a data center project? Thank you. Complete data center project from end to end.

In terms of data center, customer projects, you mean? Customer projects. Customer projects in typical timelines anywhere between 24 months to 36 months, starting from greenfield to total final test of the data center. That is a typical market. That's where G-Scale came up with the innovative idea of integrating the total solution, starting from design, then construction, and integrating with our products. That's where now the customers are super excited to work with the G-Scale to reduce the timelines anywhere from 24 months to 36 months down by up to 15 to 18 months. Because most of the products, the data center And the internal or the data center construction related elements all will be manufactured over the factory and we deliver them by the moment the steel construction comes up, our products are ready outside. So we just bring them, you know, attach them with the series of their installations and they have to go faster.

Very nice. 15 to 18 months, you mentioned, correct?

Yes. There is a significance today. Data centers all need everything tomorrow. So that's where we got a lot of traction and momentum from the customer and discussions are very active now.

And sir, this procurement of the product that we will be like acquiring from outsider, so there like we will procure or the customer will procure those components.

Sometimes customers will pre-issue some equipment, but whatever we are manufacturing equipment, that we will supply. 60% of the information, Brahma management, 60% of the area we are producing. That is, other than balance, sometimes customer can pre-issue. Otherwise, that response also will take and will offer the target.

Part of end-to-end solution, our products by default goes into the solution, but some locations customers will have their pre-engagements or sometimes they have a choice of buying long lead items directly. They buy and, you know, free issue for us.

Okay. So this 60% wallet that you are mentioning is the maximum wallet or this can also be increased?

This can also very much can be increased too.

Okay. Understood, sir. Thank you. Thank you so much. And it is always interesting to connect with you guys. Thank you. Thank you so much. Thank you.

Thank you, Arvind. Next question is from the line of Chandresh. Please go ahead. Chandresh, request you to please unmute yourself.

Sir, am I audible? Yes. Sir, good evening. Congratulations for the good set of numbers. Sir, I have just one question. Last quarter, you mentioned in the PPT that there is a lot of recruitment going on for the manpower. So, I just wanted to take a follow-up that, is it still, we are recruiting more manpower or that process has been like almost complete? Thank you.

Yes, we are recruiting, sir. We have a lot of manpower. You know, suddenly our roots are increased, opportunities are increased, we are recruiting. We are not reducing, we are recruiting, continue.

Okay, thank you, sir. Thank you.

Thank you Chandresh. In the interest of time, we will take last two questions. Next, we have Mr. Praveen. Praveen, please go ahead.

Sir, good evening. Am I audible?

Yes, good evening, Mr. Brady.

Yes, sir. Thanks for taking my question. Sir, the numbers which you guided for this year is 1,200 crores of existing business. So, sir, in this, do we have any split on what would be a direct product versus turnkey on our existing business that is not on G-scale?

Now, currently, we are guided, we need to, this is, we are, we, we, company is, they can a solution sales. We are going to drive solution, reactor solution, or company solution like that. That is, we are not much, not divided currently.

Sir, okay. So if we go to the previous year, FY26, how would the product versus turnkey split would be? That is historically for us.

Now we are changing the segment. Now you can see here on our presentation that people understand what all the change. There are a lot of confusion happening. That's the reason the segment is changed.

Okay, sir. Sir, so I heard that we have an executed order book of around 1400 crores for the existing business. So how would the end markets here bifurcated like pharma, CDMO? So what would be the contributions coming out if we split the order book?

CDMO a majority. CDMO I think almost 50% business coming from CDMO. Balance, the rest of other pharma it can come.

So, so 50% CDMO and remaining would be pharma and chemicals.

Yes.

Okay. Okay. So thanks for answering my set. Thank you.

Thank you. Thank you, Mr. Parikh.

Thank you, Praveen. Our last question is from the line of Darshan. Darshan, please unmute yourself and go ahead.

Bye, sir.

Darshan, please unmute.

Hi, sir. Congratulations on good side of the world and also for GScale. Can I get to know what are the clients which we are dealing with in GScale, some of the customers?

We cannot name them at this moment, but as I earlier referred, we are working with three of hyperscalers, global clients, and two of Indian data center players. So all the five customers that we are working with, actually, as I mentioned earlier, there are a lot of excitement in looking at our product and the total integrated solution. So looking at the NIDA PR. Hi, Dashin, you went on mute, close by.

No, I said trying to change. That's the only question.

Thank you. Thank you. Thank you, Mr. Dathan. Thank you all. I would now request Mr. Naviswara Rao for his closing remarks.

Thank you. Thank you all for creating and showing interest on our company.

Thank you, participants. We may conclude the conference call. Thank you for your time.

Thank you, everyone.