Technocraft Industries (India) Limited (TIIL) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Technograph Industries India Limited Q1FY27 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 questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your trust on phone. Please note that this conference is being recorded. I now hand the contents over to Ms. Purva Zavar from 361 Capital. Thank you, and over to you, ma'am.

Thank you. On behalf of 361 Capital Markets, we welcome you all to 12S527 Conference Call of Opencraft Industries, India Limited. From the management side, we have Mr. Namit Kumar Saraf, Director and CEO, Mr. Ashish Kumar Saraf, Director and CFO, and Mr. Anil Gadodia, Group CFO. I will now hand over the call to management for their opening remarks, followed by the Q&A session. Over to you, sir.

Yes, thank you, and good morning to everybody, and welcome to the Q1 2627 quarterly earnings call. On behalf of the management team here at Technocraft, we extend a warm welcome to all the participants and look forward to an engaging Q&A. Thank you, and I think we are ready to start.

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 their touchtone telephone. 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 first question is from the line of Prateek Bhandari from Art Ventures. Please proceed with your question.

Yeah, hi sir. Thanks for the opportunity. If you could just provide a split between the star holding and the form of revenue for the quarter.

Anandji, would you like to give it, since it's a direct financial question? Sure.

Yeah, one second. Yeah, we will give that.

For the quarter on the line?

Yeah, for the quarter on the line.

So, for the quarter, on a consolidated basis,

step holding, which is steel step holding is 240 crores, and the Mach 1, that is aluminum is 165 crores.

You have alluded to the growth for the scaffolding and foam work division. I wanted to understand how much of the growth would have come from the aluminium extrusion plant during the quarter.

So, the aluminium extrusion plant is now running at 100% capacity, and this has been happening since the March quarter, so, you know, no increase in volume from that, But there has been a notable contribution to the EBIT results because of having the aluminum extrusion plant. There's been a large increase in the price of aluminum during the quarter, and so having the aluminum extrusion plant has helped the company navigate that. So, yes, that has resulted to an improvement in the bottom line of the segment.

And just one last question. If I see on a Y-O-Y basis, there has been a decline in the volume growth for MAC-1. So, how do you see the competitive intensity for MAC-1 at the moment?

On a Y-O-Y basis, yes, there is a decline, and this is not really so much due to the competitive intensity or demand. And, you know, on a quarter-on-quarter basis, the volume is dependent on a lot of external factors like site readiness, project readiness, etc. I have mentioned this in the past, so, you know, that is, you know, that can obviously be deferred from quarter to quarter. I think a more relevant comparison would be not the quarter-on-quarter YOY basis, but the image preceding quarter. If you compare with that, then there has been actually a small increase. Having said that, you know, our focus is not rapid expansion of volume, but more sensible expansion. And, you know, we are very conscious about the kind, the quality of the customers that we serve with and we deal with. And also the profitability. So, taking all that into consideration, you know, we are quite comfortable with the current volume of the Q1 for Mac 1.

Okay, thanks. I'll join back in the queue for follow-up questions. Thanks, sir.

Thank you. The next question is from the line of Siva from iThought PMS. Please proceed.

Hi, sir. Thank you for taking my question. So, firstly, on our margin with the drum closure segment, it has reached around 43% the EBIT margin. And I think this is the highest that we've ever been at. Could you explain, like, what helped us reach this margin, sir?

So, you know, volumes is the main thing. I mean, this has been our highest revenue as well as highest EBIT margin and absolute EBIT ever for the segment. And, you know, the sales, the quantity that has been sold has, you know, has been higher. The rupee depreciation has also contributed because, you know, drum closures, majority, almost 100% of our revenue is export. And so, obviously, the decline in the rupee vis-a-vis dollar has directly contributed to increase in absolute sales realization. So, I think those two are the main driving factors that has led to these issues.

Understood. But do you think the margin is sustainable, sir, 43% that you're doing right now?

I always have given guidance earlier also that a sustainable margin is upwards of 30%. We have consistently been doing higher than that. You know, we continue to have turbulent geopolitical situation worldwide, you know, with the war and disruptions in freight, freight costs, tariffs, etc. None of that has gone away. Fortunately for us, we've been able to navigate all that pretty well and see consistently strong quarters. So, I think, you know, I don't think we can say that 43% is a new normal going forward. I think we continue to target upwards of 30% and manage the business as best as we can.

Understood, sir. That helps. And my second question is with regards to the defense vertical. So, have we already started selling our JT Kohler products, sir, if you can give any update on that?

Yeah, we have already started receiving orders from Israel. And yes, we are looking forward to exports in JT coolers. Yeah, it's a small order, not much, you know, to the tune of, you know, around 20 crores. But let's see how it goes. Defense generally is very, very slow in this matter.

All right. And any margin outlook you could give on that product, sir?

Margin would be, you know, a different product. So, could be around 15% or so.

Right. So, this one is for the JT cooler, 15%.

Yeah. Distance JT cooler is one part of it. The major part is JT cooler. Let's say like this. Yeah.

Right. And do we have any other product in R&D pipeline, sir, like JT cooler? Are we working on something right now?

It all depends on the order. Basically, see, let us understand the defense division. It is not that we produce something and go and market. So, it is basically the order comes from defense, DRD, etc. We produce it, give it. It could be fabrication. It could be some canister. It could be some, you know, a lot of other products that go into defense.

All right. Understood, understood. One last question. So, we had received a B certification for selling in Europe, I believe. So, have we already started selling scaffoldings in Europe?

Yes, we have been selling now for the last two quarters, and it's not a meaningful part of our sales. It's still very, very slow. Europe market is still reeling from the impact of Russia-Ukraine war, and Germany is under slowdown. So, construction has really not picked up the way we want it to, but we are selling. We are selling, which we want. So, the certification has helped.

Got it, sir. Yeah, that's it from my say. Thank you.

Thank you. The next question is from the line of Abhinav from Equitas Investments. Please proceed.

Hello. Firstly, congratulations for great results. My first question was regarding your TPEX guidance for the year.

What TPEX guidance? Do we have some TPEX plan?

Right. So, there is no significant TPEX plan in terms of new capacity additions this year. We will be basically doing our, you know, regular maintenance CAPEX across all the divisions. So, no significant CAPEX this year. We've just completed our last CAPEX in 24-25, which was the CSN plant, and now that is fully operational. Sometime next year is when we would ideally be looking at phase two of that. So, this year, there is nothing significant.

Okay. Next question was regarding the engineering services division. So, that has been growing quite fast. So, what has been driving that?

You know, the overall engineering outsourcing segment has been quite buoyant. The U.S. market has been quite strong across all the verticals that the segment deals in. Machinery, transportation, plant engineering have been some of the verticals that, you know, have particularly been doing well. And so I think that's, you know, also the AI transformation has helped the vertical. We have continuously upgraded our services, moving into more high-tech technology enabled, even deep tech services like AI-based vision systems, embedded systems, industrial automation, and manufacturing automation. So, those services have also helped us win large orders there, and hence that segment has grown, and we see good prospects. And what is the sustainable margin for this division? So, we have said before also about 15% is what we target as a sustainable. Okay.

We'll join back in a little bit.

Thank you. The next question is from the line of Purva Zawar from 361 Capital. Please do see.

Yeah, hi, sir. Thank you for the opportunity. So, my question was on the scaffolding side. How have you seen the demand alignment for scaffolding currently? Was the recent improvement driven by any one-off pick-up and orders, or are you seeing sustained demand momentum in the scaffolding segment?

No, the scaffolding segment has mainly been doing well on the back of strong demand in the US. We've been seeing that since January of this year. Last year was a little difficult year for us in the US and for the overall scaffolding segment. But the impact of tariffs and all that have been absorbed well into the economy, and there is a good boost in construction activity driven by AI chip manufacturing plants, semi-con plants, and also conventional energy installation. So, as a result of that, the scaffolding demand has been very strong. We have an active subsidiary in the U.S. and have strong penetration across the country. So, we've been able to take advantage of that through our distribution, and that's basically what's contributed to increase in the sales quantity, which can be seen both on year-on-year and quarter-on-quarter basis and improve realizations. And this, at the moment, looks quite sustainable because these are not some one-off short-term projects. These are pretty significant long-term CAPEX projects, and so we do see a good pipeline ahead.

Got it. And on, secondly, on the margins, so the 16-17% is sustainable or we plan, or it can have, it can increase a little bit further also?

So, again, we have given guidance in the past that 15% is a sustainable margin, upwards of 15%. And so, therefore, we are doing a little better than that, and no change in our guidance on sustainable margins. Remains of that.

Got it. And the last question was, what would be our current raw material mix in aluminum form of division between virgin aluminum and extrusion-based materials?

No, so firstly, your question is, just to clarify, what is the difference between virgin aluminum and aluminum extrusion? I didn't quite understand what you mean by that.

So, what portion would be our backward integration? It's fully 100% backward integrated currently or?

100% backward integrated. So, aluminium is only for our MAC1 business, where we make aluminium extrusions, and all our aluminium extrusions requirement is 100% produced in-house.

Got it, sir. Thank you. That's it for myself.

Thank you. The next question is from the line of Darsha Zaveri from Crown Capital. Please proceed with your question.

Hello. Good morning, sir. Thank you so much for taking my question. Firstly, congratulations on a really great set of results, sir. So, I'm just a bit new to the company, so pardon any naive questions from my end, sir. I just wanted to know, we've done really great margins right now, right? We've had a very good uptick in margins. On a consolidated basis, you said 15% plus is just, you know, that was for consolidated or what is margin guidance, you know, you could have for this year, sir?

For every segment, it is different. So, for the scaffolding segment, 15% on consolidated basis is sustainable.

So, for overall company, 15% is sustainable, and then segment-wise…

No, no. So, you know, we can't look at overall company. We have, you know, 15% is a sustainable margin for the scaffolding and the engineering services segment, and for the drum closure segment, it's 30%.

Okay, okay. But currently, you're doing significantly better than that, right? So, in general, has something changed or are we being just a bit conservative in guiding? Because I think drums, you're saying, you know, we've done 43% and right now it's around 30%. That's the reason I just wanted to ask, right? Like, is there a change in the business or? Yeah, sorry. Yeah.

No, sir, you know, look, as far as there is a lot of volatility, as you know, in the external environment. And this volatility is what is leading to these big deviations between actual and sustainable. And, you know, right now, it just so happens that the volatility is benefiting us. Tomorrow, the volatility could go against us as well. So, I don't think we are at a situation where we are comfortable, you know, taking a bet on a higher sustainable margin just based on a few good quarters. Yes, the business and, you know, we've been doing well because of good execution and we'll continue to do that.

Correct, correct, sir. So, okay, fair enough for margin, sir. But in terms of overall revenue growth, you know, any outlook that we have, sir, because even this Q1, we performed really well. I think some part of it could be related to aluminum prices increasing. So, could you just help me out with that, sir?

You know, as far as drum closure is concerned, there has been increase in the quantity and increase in realization, which has led to higher numbers. As far as the scaffolding and formwork segment is going, there has been a good increase in volumes in the scaffolding segment. And as far as the realization is concerned, it's been more or less stable. There hasn't been a remarkable increase in the sales realization because steel prices have not increased drastically. So the main reason for the increase has been the volume. As far as the aluminum formwork segment is concerned, the volumes are relatively flat. Preceding quarter basis, there's a marginal increase. And yes, there is some increase on account of aluminum. Thank you. So, that's where it is.

Yeah.

Yeah.

Yeah, I understood. That is the overall, sir, for our business, we could see, you know, sustained growth of 20% plus because if you think volumes have also increased and some boost from realization. So, if I would have to, you know, estimate, I think we could, what could we, you know, do over the next few years if some kind of range you could be, you know, guide us on, sir?

It is very, very difficult for us to give any guidance on any long-term growth range. Like I said, you know, we are in different businesses, different products. Take the, you know, in scaffolding and formwork segment, it is a capital item that goes in construction site. So, it is very, very difficult to give a projection on the future. Our focus is that, you know, we are focused on execution, and we'll keep doing that.

Okay, okay, fair enough. And if I mention one more question from my end, so in our type of business, we have order book back in your project, as you said, you know, CAPEX projects. So if there is a, you know, firm order book and the execution period for, like, the divisions, that could be helpful, sir.

It's, again, a mix. Drum closure segment is not order book based. It's a B2B product linked with the direct sale to drum plants. Scaffolding and formwork segment, again, scaffolding segment is not order book based. Most of the sales are made through our own distribution centers to end customers, order to order. Somewhat order book based is the formwork segment where there is, you know, an order book of anywhere between three to five months. So that's how it is.

Okay, okay. Fair enough. That's it from Michael. Thank you so much, sir.

Thank you. The next question is from the line of Rahul Kumar from Vekaria Fund. Please proceed with the question.

Say hi. Congratulations on a great quarter. On this drum closers, you know, profitability, have we received any tax refund or tariff refund this quarter? Not yet. Not in this quarter. Okay. Okay. And approximately how much tariff refund we have supposed to get?

So, the majority of the tariff refund is going to be in the scaffolding quarter, and it's about close to $3 million.

Okay. Okay. Okay. So, the margins which we are seeing in the drum close-up business, is this delta increase which you see? Is it entirely because of the SOPI depreciation? So, at current, you know, whatever the IRR USD, we should expect these kind of margins to sustain, or do you see any further response to this?

Well, we are, you know, we are hoping for the best. I mean, yes, the INR depreciation has obviously helped and contributed meaningfully to these margins. You know, we are in no hurry to reduce our prices. The customers don't expect us to reduce our prices competitively. We are well poised, being the second largest in the world. So, from that perspective, you know, we are quite comfortable and hopeful that we'll be able to maintain or even better these margins.

Okay. I understand. I understand. Second question is on the Mac 1 business. I think we have seen some sort of recovery in the volumes. And as you mentioned that this is more the site, you know, site readiness, et cetera, which has helped this quarter. So two questions on that. How is the demand environment for you, you know, what are the discussions with your customers happening right now? And two, how do we see this, you know, capacity utilization scaling up, let's say, over the next year or so?

Right. The demand environment is very strong. India, the overall project launches, which is what we track, which directly correlates to our demand, is quite strong across all the seven major cities across the country. Okay. So, as a result of that, we see a strong demand and strong inquiry pipeline. Other than residential, there is also a strong demand in commercial and GCCs, and now even data centers, which are starting to come up. So, yeah, so the demand environment is actually quite strong, and we are well poised to take advantage of that. Okay. Your second question was regarding capacity expansion. So, you know, we just did that in Aurangabad to, you know, take advantage of this, and that's helped us. At some, you know, sometime next year, we are looking to launch phase two of our capacity expansion in Aurangabad. So, that will also happen and that will enable us to sell more.

Okay. Okay. So, currently, I think we are at 60% capacity utilization. Am I correct in that?

No, no. We are almost at 100%. We are at over 95% capacity utilization as far as our formwork, as far as our extrusion plant is concerned. As far as just MAC1 is concerned, we are currently at about 75% to 80% capacity utilization. And as far as the scaffolding segment is concerned, we are running at about 95% capacity utilization.

Okay. Okay. So, just on the scaffolding business, I think as you mentioned that, you know, the demand environment is US is pretty strong and you do sustainable volumes going forward. So basis your discussion at this point of time and the visibility which you have caught from the company, what kind of volumes do you expect, let's say over the next three, four quarters, which you will do? And, you know, as you're already operating at 95% capacity utilization, do you plan to add more capacity or how much time typically that will take, you know, for you to expand that?

Yeah. So, you know, we are quite comfortable that at least the foreseeable next two quarters, we should be able to maintain or even better the kind of volumes of scaffolding that we have seen in the first quarter. Difficult to give a projection beyond the foreseeable two quarters because of, you know, the volatile circumstances that we are operating under and dealing in. As far as increasing capacity is concerned, yes, we are closely studying that. Since we are operating at 95% utilization, we are looking at various options to increase capacity. Luckily for us, the lead time required is not very high because we have good infrastructure already available. And the long lead times, like setting up a plant, etc., is not required. We have space available in our plants in Mumbai as well as our plant in China. And so we are studying that. And if required, we should be able to add capacity within three months.

Okay. I understand. I understand. Okay. Just last question to Anilji. I think you mentioned the, you know, the scaffolding and the MAC1 revenues for this quarter. Can you give us the same data for, let's say, last quarter and Q1 of April 26th as well?

Yeah, Rahul, I'll give you offline, you know. Let us get in there. We'll take out from the earlier period.

Understood.

Thank you. The next question is from the line of Vishal Mehta from Oak Lane Capital. Please proceed.

Hi, sir. Am I audible? Hello. Am I audible? Just, sir, one question. The textile division, you know, we've planned to sell the fabric division. Now, what is the outlook for this, and how do you see numbers, I mean, profitability in that division going forward with the loss-making fabric part of it?

Now, there are only two segments left now in the textile division. One is the yarn business and one is the garment business because the fabric business we have shut down and all the equipment has been sold. So, the yarn business is profitable. We are doing about, last quarter was about 13% of EBITDA. The loss-making business currently now is the garment business. So, we are trying to restructure it and try to break even in the next four quarters. The yarn business will continue to be profitable.

Generally speaking, this is a non-core business. Are we looking at maybe even selling these segments which we are currently there?

We have not actively thought of that at the moment. Thank you so much. Thank you.

Thank you. The next question is from the line of Prateek Bhandari from ArtVenture. Please proceed.

Yeah, thank you for the opportunity. I wanted to get a sense on the drum closure business. So, have you seen any higher sales of plastic drum closures during the quarter? The reason I'm asking is because of the margins. So, if you can quantify what was the quantum of sales for plastic drum closures during the quarter?

Nothing meaningfully. I mean, we would have let Anil Jihas answer when it comes to the quantity, please.

So, last quarter, the plastic sales was around 14.5 crores, and the margin is always better than the metal one, but that does not change the entire margin profile of drum closure as such. Yes, 14.5 crores in one quarter is a little better than the earlier quarter, But, yes, it is growing consistently.

On the scaffolding business, how do you see the scaffolding business in the Middle East? And what was the quantum of sales during the quarter in the Middle East scaffolding business?

So, we have actually seen a decline in the sales in the Middle East, which is, you know, attributable for obvious reasons. The current war and difficulties in shipping product there. So, the Middle East segment is challenging at the moment. Fortunately for us, the Middle East segment contributes less than 5%, 2-3% of our total sales. As a result of that, overall, the segment is not seeing much of a pressure because of that. It's going to remain volatile, I think, for the next one or two quarters at least.

Is it purely scaffolding or does it include formwork as well?

No, purely scaffolding.

Okay. And just one last question. On the formwork side, how has the demand environment in South America? Have you seen any updates?

Yes, the South America segment is growing. In fact, our contribution of that to formwork sales is steadily increasing.

Thank you. Thank you. A reminder to all participants, anyone who wishes to ask a question, may they start and run on their touchtone telephone. The next question is from the line of Gaurav Tandak from First Principal. Please proceed with the question.

Mr. Gaurav, can you hear me?

Mr. Gaurav, as there is no response, I am taking the next question from the line of Prashant Jain from 3P Investment Managers. Please proceed.

Thank you, Prashantji. Very good morning to you too. Yes, Prashantji, I think the drum closure segment, we do expect to be able to do similar kind of volumes, at least in the immediate quarter that we are in. Beyond that, it's a little difficult to project because of the, you know, overall volatile environment, but I think in the near term, should be able to continue with similar kind of volumes. The demand environment is quite strong.

Is there any seasonality across quarters in this business, or it just varies from year to year?

No, no reason. In drum closure business, there is no seasonality, Prashant.

And what percentage of drum closures would be used by the oil industry? And I don't know if you answered this earlier. I joined slightly later. I was on one more call. What is your CAPEX plan for the current year and next year?

This year, there is no significant new CAPEX, only maintenance CAPEX across all the divisions. Next year is when we would be looking to commission our Phase 2 in our CSN plant, where we would probably be looking to add some more capacity to the extrusion plant and forward integration. But nothing significant this year.

Thank you so much, Nathalie.

Thank you.

Thank you. A reminder to all participants, anyone who wishes to ask a question, may press star and 1 on their touchstone telephone. The next question is from the line of Ajay from Nivishay. Please proceed.

Thanks for the opportunity. My question is on the defense sector. So, like on the JT Cooler can you help us understand like where exactly this development sets today, like is it fully developed or and validated for complete performance or is it still under a development stage item and when we say that the trials are successful, so are we referring like our internal or in-house validation is completed or is it like also cleared at the DRDO level.

Yeah, if you are specifically asking for JT coolers, it has been fully developed. It's not just trial. It has been approved by DRDO. It has been approved by Israel Sensor Making Company, which uses the JT coolers. So, we have crossed all the approval levels.

Great, sir. And so, building on that, so, like, when we say, like, it is qualified, so, what's the import substitution opportunity that we are actually addressing? Like, today, the students may be imported from foreign aliens or missile seekers and UAE payloads. So, like, can you give us some sense of the annual value of the import market in India and how much of it is addressable for you, given the platform you are qualified on? And, for example, like, what realistically you see for us this business can shape up in maybe three, five years?

Yes, very difficult because ultimately it goes in defense. Defense does not take directly, you know, JT Cooler has to be fixed into a sensor. The sensor is being presently imported from France or maybe Israel, and how much the defense division of Government of India will take, it's very difficult to estimate. But yes, the product, we can say, is totally 100% operationally, you know, successful, approved by DRDO, and also approved by Israel Company. And quantum, it's very difficult to, you know, even estimate at this level.

I understand one last question. For example, like, let me say maybe we have, like, got approval on this product. So similarly, there will be other several products where we would have been working and will be on maybe different stages of approval. So how should one look at this defense vertical of technocraft going forward? Like how much capabilities are we building and currently, like because one product has got approval and there will be, I am sure, a couple of other products where we will be working to get the approval. So, maybe some idea on how should one look at this vertical from now onwards. That will give a good idea on how to look at this. Here we are expecting that.

So, yeah, let us understand the defense sector. As I said in this conference some time back, it cannot be the case that we manufacture certain things and go to the market or go to the defense department. Like we manufacture drum closure, we manufacture scaffolding, and we go to the customer. Look, we are manufacturing this, buy from us. It doesn't happen that way in defense. Defense typically works that whatever product they need, they give to the potential vendors or developers, and then that product has to be developed by us. So, JT Cooler is one of them, and apart from that, there are other products which are technically, you know, very difficult products, but we are manufacturing that. So, it's not that we have another product like JT Cooler, we go and tell the Defense Department, DRDO, that look, we have the capability, please buy from us.

It doesn't happen that way.

The next question is from the line of Proline Nandu from Edelweiss. Please proceed.

Yeah, hi. Thank you for taking my question. I just have one question on the scaffolding business, especially the opportunity in US. Could you just help us understand, is the tariff headwind largely settled? And what are the tariff rates that we are paying right now? And what is the differential versus some of the competitors, right, in terms of tariff? And how are we competitive with the existing tariff rate as well? So, could you just help me understand whether, I mean, you know, a few details about the scaffolding, especially the tariff in US?

Sure. So, the tariff is currently at 50%. We are paying 50%. This is not country specific. So, scaffolding falls under the steel and aluminium section 232. So, it's 50% and that's applicable on every country, including India, with the exception of China, where there is an additional 25% tariff under Section 301. So, 75% is a tariff on China and 50% on all other countries, and that's what we are paying. So, we have our biggest competitor from a manufacturing standpoint is China, and we do have a 25% advantage over there.

Okay. And what about, you know, Chinese companies? I think you have in the past also alluded that they have a lower steel cost advantage, right? So, on a net-net basis, even after tariffs for a customer, how is the differential between the price of our stockholding versus those of Chinese stockholding?

They have a significant steel price advantage of at least 20%. In some parts of China, northern parts, it's even more than 20%. So, actually, we are close. We are still maximum about 5% lower cost compared to them. But the Chinese are very aggressive from a pricing perspective. They are willing to sell at very, very low margins as well. So, we are not surprised when we even see in many cases prices lower than us in spite of the tariff being more from China.

Okay. So, in those cases, you know, what do we match the prices? And typically, if we have a customer for a scaffolding in US, is it easy for a customer to switch from our product to the Chinese competition product?

So, we don't sell on price at all. So, we certainly don't match the prices, you know, and the positioning that we have, it's not a price positioning, you know, that is not the main criteria based on which customers buy from us. The relationships, the availability of inventory, and the presence is the key factor. The scaffolding that is bought and consumed in the U.S. by the end-user segment is largely purchased from inventories. The product mix is essential. The number of components that are there in the scaffolding system is over 150. Having knowledge of the right mix of components to stock and have it available for installation needs is one of the key factors. So that's where our sales intelligence comes in. We have a strong team locally in the US that is working closely with the customer and knowing what the requirements are and having the right mix of products available. So that is the key and that is what drives our demand. And there are only a handful of companies who play like that. So they are our competitors. You know, we don't consider the Chinese manufacturers who just sell as our competitors.

That's it from my side. Thank you so much for this.

Thank you.

Thank you. The next question is from the line of Anurag Patel from Quest Investments. Please proceed.

Thank you for the opportunity. Sir, your engineering and design segment has been consistently growing for the last three, four quarters. So, can you explain what is driving this growth and what kind of growth rate you can sustain in this segment?

Yeah, it is growing because of the demand environment mainly coming from the U.S., you know, and the demand for outsourcing of product development and technology-based engineering services is quite strong. We have also upscaled and, you know, increased capabilities in areas like AI, manufacturing, automation, industrial, Internet of Things, etc. So those are driving growth, and the outlook is strong. You know, I think the U.S. is particularly moving very, very fast towards automating their manufacturing. To some extent, even the new administration's policies of bringing manufacturing back into the U.S. has helped us because we are seeing some expansion happening in existing U.S. plants and some new plants, which is, again, leading to increased demand of our plant engineering services and so on. So the outlook is quite positive for this.

Okay, so AI will be an enabler for your business, is it right? Oh, absolutely. Yeah, absolutely. And sir, you also mentioned that you will be investing in technology for next few quarters, and that can impact the margin. So, considering this current growth and this investing, this 14-15% margins, do you think will sustain at annual level or near term it can be impacted?

No, so that is, so when we give guidance of 14-15%, that is considering the investment that we will continuously be making. In this business, it's not possible to not do investments. You have to because, you know, the technology has changed so fast. So you have to be at the forefront. So we have to constantly invest in new platforms, new solutions, and also new markets and also new verticals in the same markets. So, given that, we consider 14-15%.

Okay, sir. That's it for my session. Thank you very much.

Thank you. A reminder to all participants, anyone who wishes to ask a question, may press star and run on their restaurant telephone. I repeat, anyone who wishes to ask a question, may press star and run on their restaurant telephone. The next question is from the line of Rahul Kumar from Vekarya Fund. Please proceed.

Yeah, hi. Thanks. This question is to Anilji. I think there is some unallocated income in the segmental of 25 crores. How much is the MTM gained again in this quarter?

One second, I will pull out that detail.

In this quarter, it is around 27 crores.

Thank you. The next question is from the line of Vikas Gupta from Wealth Guardian. Please proceed.

Thanks for the opportunity and a great performance for the whole team, sir. My query is on the textile. So by shutting down the fabric operation, how much working capital has got released? And how much have we sold those assets for?

Are we going to have to disclose the...

Rough range, sir.

Yeah, so the working capital release is, I think, Anilji, maybe you can tell, I don't have the figure off my head. I also don't have exact figure, but it could be around 75 crores. And the second question is, the deal we have sold on the machinery for between 25 and 30 crores.

Okay, and do we have any plan for the usage of the land which has got vacated? Any plan on that?

We are working on some opportunities at the moment. A little bit premature right now to speak about, but we are working on some areas. Okay, okay.

And my last question on the defense side, has we supplied missile canisters till now, or is it on a prototype stage?

No, no, no. We have supplied and we have got repeat orders.

So how much is it, the order book right now?

I think it's about 10 crores. Yeah, but total order for the canister.

For the canister would be around 10 crores, yeah.

So 10 crores for canister and 20 crores for GT coolers, right?

No, no. GT coolers is included in the defense. So around 20, 21 crores is our order book as of now. Confirm order in hand. And few orders are in pipeline, in the sense, the discussions are going on.

Okay, so out of 20 crores, canister is 10 crores, right?

Yes, approximately. Okay, thank you so much.

And the working capital which will be released on account of fabric division shutting down is about 15 to 20 crores.

15 to 20. Okay.

Thank you so much, sir. Thank you.

Thank you. A reminder to all participants, anyone who wishes to ask a question, may press star and one on their touchtone telephone. I repeat, anyone who wishes to ask a question, may press star and one on their touchtone telephone. As there are no further questions from the participants, I now hand the conference over to the management for closing comments. Over to you, sir.

Thank you once again to all the participants in this call for their questions and detailed review and analysis of our results. Again, on behalf of the management team at TechnoCraft, we are available to answer any further follow-up questions, and we look forward to continued interaction. Thank you.

Thank you.

Thank you.

On behalf of 361 Capital Market Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your eyes. Thank you, everyone.