Arisinfra Solutions Limited (ARIS) Q2 2027 Earnings Call Transcript

Good afternoon, ladies and gentlemen. I am Kathakayan, moderator for the conference call. Welcome to the Q2 analysis call of Ares Infra Ltd. As a reminder, all participants will be in Listen1D 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 and then zero on your touchstone telephone. Please note, this conference is recorded. I would now like to hand over the floor to Ms. Purvangi Jain from Valerium Advisors. Thank you, and over to you now.

Thank you. Good afternoon, everyone, and a very warm welcome to you all. My name is Pravangi Jain from Valorium Advisors. We represent the investor relations of Aris Infra Solutions Limited. On behalf of the company, I would like to thank you all for participating in the company's earnings call for the second quarter and the half year ending of the financial year 2027. Before we begin, a quick cautionary statement. Some of the statements made in today's earnings call may be forward-looking in nature. Said forward-looking statements are subject to risk and uncertainties, which could cause actual results to differ from those anticipated. Said statements are made on management's belief as well as assumptions made by and information currently available to the management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. The purpose of today's conference call is purely to educate and bring awareness about the company's fundamental business and financial performance for the period under review. Let me now introduce you to the management participating with us in today's earnings call and hand it over to them for their opening remarks. We have with us Mr. Ronak Morbiya, Chairman and Managing Director, Mr. Bhave Khara, Whole Time Director and Chief Financial Officer. And Mr. Srinivasan Gopalan, Chief Executive Officer. Without any delay, I request Mr. Rana to start with his opening remarks. Thank you and over to you, sir.

Thank you, Purwangi. Good afternoon, everyone, and welcome to Iris Infra Solution Limited's earnings conference call for the second quarter and half year ended September 13, 2026. The way construction materials are sourced, manufactured, and delivered in India is changing, but the underlying market remains highly fragmented. Customers continue to deal with multiple vendors, uneven supply visibility, credit constraints, and execution challenges across project sites. We believe the opportunity is not merely to participate in the movement of construction materials, but to bring greater coordination, transparency, and accountability to the entire process. That is the platform we are building at ARIS. We bring together materials procurement, contract manufacturing, and real estate project execution through an asset-light, technology-led operating model. Our network now spans over 3,500 customers, more than 2,300 vendors, and 23 partner plants, with operations across 23 states and union territories. The objective is to make this network increasingly valuable with every customer relationship, every delivery, and every project that we execute. Our three business engines have distinct but connected roles. The materials business gives us customer access, procurement relationships, and demand intelligence. Contract manufacturing allows us to secure reliable supply and participate more deeply in the value chain while retaining an asset-like structure through exclusive partnerships with manufacturing plants. DAS, our developer-as-a-service offering, extends our role further into real estate by bringing together project planning, funding coordination, material supply, execution, sales, and collections. The shift in our business mix is becoming increasingly visible. Contract manufacturing and DAS together contribute 66% of our revenue in Q2 FI27, compared with 53% in Q2 FI26. This is an important development because these businesses bring higher returns and deeper customer engagement. At the same time, each segment continues to have its own economic contribution, allowing us to build scale without depending on a single revenue stream. The second quarter is also a meaningful demonstration of the resilience of this operating model. Despite the seasonal moderation, generally associated with the monsoon period, we delivered growth in revenue, profitability, and margins on a sequential as well as year-on-year basis. We also expanded our manufacturing network and significantly increased the DAF execution portfolio during the first half. I will now request Aave Khara, our whole-time director and CFO, to take you through the financial performance for the quarter and half year. Following that, Srinivasan Gopalan, our CEO, will discuss the operational progress across our businesses.

Thank you, Ronak, and good afternoon, everyone. The financial performance for Q2 by 27 reflects continued improvement in the quality of our growth. Revenue from operations for the quarter stood at 308 crores, registering a year-on-year growth of 28% and a sequential increase of 6%. EBITDA increased by 58% year-on-year to 36 crores. While the EBITDA margin expanded by 220 basis points to 11.6%. PAT stood at 23 crores, up 50% compared to the corresponding quarter last year, with PAT margin improving to 7.4%. The improvement was not limited to the reported quarterly performance. For H-127, Revenue from Operations from Okra. Revenue from operations grew 32% year-on-year to 599 crores. EBITDA increased 63% to 66 crores, with margins expanding by 210 basis points to 11.1%. PAT more than doubled to 43 crores from 20 crores in H-126. This performance reflects contributions from a stronger business mix, particularly continued scale-up in contact manufacturing and DAB. An important feature for the quarter was the ability to improve profitability while growing the business. Contract manufacturing and that together accounts for 66% of the Q2 revenue. Within H1, these two segments contributed to 64% of the revenue and approximately 92% of the segmented EBITDA before the non-cash India's adjustments. This demonstrates how the gradual movement towards the higher margin business. It's supporting the expansion in our overall profitability. Cash generation and working capital discipline remains equally important to our growth strategy. Net working capital days improved from further to 54 days from 84 days compared to last September. The operating cash flow for H-127 stood at 60 crores, which is equivalent to 91% of our EBITDA. We are focused on ensuring that the growth translates into sustainable returns and cash transition. The improvement in working capital, combined with the asset-like nature of our manufacturing partnerships, allows us to expand operating active capacity without the need for corresponding investment in own manufacturing assets. With this, I would like to hand over the call to Srinivasan Gopalum, our CEO, to take you guys through the operational developments for the quarter.

Thank you, Bhavik, and good afternoon, everyone. Let me begin with contract manufacturing, which continues to be a key driver of our growth and operating leverage. During H-1-27, revenue from this segment increased 72% year-on-year to 329 crores. Its contribution reached 55% of total revenue in H-1, reflecting the increasing scale of this business within our overall portfolio. A significant development during the half-year was the expansion of our partner manufacturing capacities. It increased from 9.1 million tons to approximately 11.7 million tons covering aggregates, ready-mix, concrete, and asphalt. This capacity is secured through partnerships without requiring us to invest in plant assets. It provides us with a wider supply footprint and headroom to scale volumes as demand builds and the newly added plants ramp up. We are also seeing the benefits of a broader product and supply network. Our contract manufacturing platform now spans across four markets with 11 partners and no single partner accounting for more than a quarter of the total capacity. This diversified network strengthens supply reliability and reduces dependence on individual manufacturing partners. The second area of progress is DAS, developer as a source. Our GDV gross development value under execution increased to 2,750 crore plus as of today compared with 1,839 crores at the end of Q1 and 1,267 crores at the end of financial year 2026. The portfolio now comprises 15 active projects up from 10 projects in the previous quarter. In other words, the GDV under execution has more than doubled during the first half of the year. The DAS model enables us to participate across the project lifecycle from planning and approvals to funding coordination, material procurement, project execution, sales, collections, and so on. Importantly, projects executed under this model also create an opportunity for our materials and contract manufacturing businesses as project requirements are serviced through our own supply network. DAS, therefore, contributes not only through its own revenue and margins, but also strengthens the wider AERIS ecosystem. On the material side, our focus remains on building quality customer relationships and improving the composition of business. We have consciously moved away from lower-value trading activity in select categories and are directing repeat demand towards contract-manufactured supply, wherever feasible. The transition is reflected in the increasing share of contract manufacturing and gas in our revenue mix. Technology continues to be the center to the way we manage the expanding network. Our proprietary platform connects pricing intelligence, customer credit limits, delivery documentation, and management visibility across the transaction lifecycle. The system has read more than 14 lakh delivery notes till today, including handwritten documents. By linking purchase orders, goods receipt notes, chalans and invoices, we are working to reduce manual intervention, improve reconciliation and maintain visibility over margins and credit exposure at the individual delivery level, and all this on a real-time basis. The benefits of this operating discipline are reflected in our working capital performance and cash generation. As transaction volumes increase, we believe the same technology platform and operating processes can support a larger business without a proportionate increase in people or fixed assets. Looking ahead, our priorities remain focused on scaling the DAS portfolio, ramping up the capacity available through our manufacturing partners, and expanding our reach beyond our existing core markets. We will continue to pursue growth with an emphasis on execution quality, customer relationships, operating leverage, and capital efficiency. Overall, due to financial in 2027 has been a quarter of progress across the key building blocks of our business, stronger profitability, a larger manufacturing network, a significantly expanded DAS portfolio, and disciplined cash conversion. We remain focused on developing areas into an integrated technology-led platform serving the construction and real estate ecosystem. Thank you.

Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. If you have a question, please press star and one in a telephone keypad and wait for your turn to ask the question. If you would like to withdraw your request, you may do so by pressing star and one again. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. The first question from the line of Deepak Poddar from Sapphire Capital. Please go ahead.

Yeah, I'm audible, sir. Yeah, hi. First of all, many congratulations for a good set of numbers, and even wanted to appreciate the presentation. I think it's quite a detailed and compact presentation. So thank you very much for that. And now on the capacity, I think this quarter we have added 2.6 metric tons of capacity. So how should we look at further plans, I mean, and what would be the utilization level right now at 11.7 million tons of capacity?

Yeah, so two things there. First, a correction. At quarter 1, we reported 10 partner plants, but that counted partner entities, not plants, and some entities run more than one plant. Counted by, we had about 15 at 30th June. So we added about 8 in quarter 2. Capacity was always measured plant by plant. So 9.1 remains the same and we've increased from there to 11.7 million metric tons. Second, most of the new plants are ready-mixed concrete and asphalt. These plants run at a lower tonnage than aggregates but carry higher value for a ton. So plant count rises faster than capacity. This is what we have increased and our vendor deposits have actually gone down. So while we have increased our capacity, our vendor deposits have gone down by 13 crores. And this is how we want to grow in the next few quarters as well.

Okay. Okay. So from here, 11.7. So what should be the pipeline one should look at over next one, two years?

So, we don't guide on the actual number, but there are a few conversations happening in terms of how we want to increase the capacity. Our capacity increase will always run before demand, and we want to be prepared to actually cater to demand. So, this is how we will kind of grow, and there are many more conversations happening as to how we will increase the capacity in the next few of us.

And also in the current capacity, we are actually between 42 to 45 percent is what our current utilization is. So we have a good headroom for the next at least six to nine months where we don't need to increase any capacity.

Got it, got it, got it. So, yeah, 40-45% utilization, so at least for next one, two years, you have good headroom for growth, right?

Based on the new secure capacity that we have, yes. Great, great.

And just on the DAS side, so what should be the benchmark? I mean, 1800 to 2800 crores is your GDV. So, DAS revenue, what is the benchmark we can take as a percentage of that?

So, typically, we charge between 10 to 14% on the GDV as our gross fees. And the contribution you would have seen in the presentation that last quarter, we were around 59.2% as the EBITDA margin coming out of that.

Okay. And this GDV of 2800 costs, what would be the execution timeline?

So, it depends. Some of them, starting from 6 months to 30 months, is where we will completely exit this pipeline.

Okay, and this revenue booking happens after completion? I mean, what is the revenue booking methodology we follow? So there are two or three milestones.

First milestone is there is a fixed fee, which is just reflects of time. And there is a percentage on the sales achieved, some portion of it, and some portion of it is based on the construction milestones. So it's a combination of all three, that's how the revenue gets recognized.

Got it, got it. And then just my final thing, on your EBITDA margin, I think we are looking at 12-13% kind of EBITDA margin by FY30, as per your vision that we have given. So just wanted to know what would be top 2-3 drivers that will help you achieve that, because as I see, your DAS percentage to revenue is largely, I mean, already we are at 9% and we are expecting only 10% in the next 2-3 years, so largely that DAS mix will remain same. So just wanted to understand next two, three years, what would drive your margin improvement?

Again, as of now, we see these three pillars. Contract manufacturing and DAS both put together will be close to 75% of the anticipated sales. And see, it's a huge market. We have not even scratched the surface. So we will go deeper into the current client and look for a few more geographies, and that's how we will take it to the next level.

Okay, so you are saying the higher margin product mix increasing and your operating leverage advantage as you scale up. Okay, okay. I think that's very helpful. I would like to wish you all the very best. That would be it for my sake.

Thank you so much. Thank you so much.

We have the next question from the line of Giriraz Adaga from Visaria Family Trust. Please go ahead with the question.

Hello. Yes, hi. Yeah, hi. So, any thoughts on the working capital? Like, have we reached to the normalized working capital at 54 days, and probably it will remain between 50 to 55 days, or what can we expect going forward?

Good morning, everyone. Right now, we are trending at about 54 days. That's on the back of having better payables and also our receivables remaining almost flat. At a steady state, we have guided before as well at the end of quarter one that we are looking to maintain a number of between 60 to 70 days as we grow because we are also growing at a faster pace. So we are doing better than that. But at a steady state, we expect the number to be between 60 to 70 days.

Okay. In terms of cash flow, what kind of investment we expect this year and next year?

Well, we do two kinds of investment. One is obviously the growth funding, which happens by funding the receivables, basically the material purchases. And second is security deposits or trade deposits. As we have seen right now at the end of quarter two, we increased our capacity, but we have got the deposits down and that is how we would like to grow. So the primary funding would be actually the material purchases and that is what we will use the working capital for.

Like, I see the number 60 crore investment in subsidies during the year.

Okay, yeah. That was actually the word, sir.

Yes, yes. Sorry, you can complete the question. So, my question is like 60 crore, what will be this line item this year and probably next year, and then you have one more loan given to subsidiaries, probably, sorry, this is part of, so I'm saying the total basis, so the purchase, what we are making, what will be the total investment?

This was the only investment planned this year, and as of now, there are no investments planned in the next financial year as well.

So, what are the cash flow what we are generating will be largely deployed in the working capital and will be that free cash flow available, right? Okay. Thank you. Thank you so much.

We request a participant's tourist request for two questions in the initial round, and join back the queue for more questions. Next question comes from the line of Jatin from Nuwama. Please go ahead.

Hi, sir. Good afternoon. Thank you so much for the opportunity. I had two industry-level questions. First, if you can help me understand how big is the public infrastructure opportunity when we compare it to the real estate opportunity over the medium term?

Yes, the infrastructure opportunity is much, much larger. It's one of the markets that we want to kind of head into because of the product portfolio that we have, specifically the stone, aggregates, concrete, and asphalt contract manufacturing segments that we have in these particular product categories. Real estate is also very strong where we are present across the value chain in terms of materials and services. So I would say infra is going to be the bigger segment for materials and real estate remains for materials and services.

Fair. Secondly, if you can help me understand, how do you see the formalization for the construction materials industry playing out? Which categories do you feel will consolidate first and which one will follow on later?

Well, it's an industry that has been running like this for a very, very long time, and that is what we're trying to do. There were no large vendor partners before, and this has been changing since the last five, six years. It will take some time for the industry to adopt this kind of larger vendor partners, but we feel that categories like stone aggregates or when you see in concrete, you have brands available. In Oswald, also, you have. So, we feel that this is where the larger opportunity lies, and we feel there is a bigger opportunity to convert the stone aggregates market into much of an organized market in the future.

Okay, I think that's all for mine. I'll join the queue. Thank you so much.

Thank you.

Thank you.

We have the next question from the line of Amit Mehendali from Robo Capital. Please go ahead.

Thank you. So, my first question is on the revenue growth. I see that you have given a guidance to FY30. So, we assume that FY28 will also be similar, like 35% on growth, revenue growth?

Yes, we expect to grow around 30% to 35% year-on-year.

And any plan to do equity capital over the next two years?

No. For the guidance that we've given, we expect to, we will need about 290 to 300 crores of money to reach this kind of growth, and that will be largely funded by working capital lines and internal approvals, so we will not need any new equity funders.

Great. Thanks. And the last question is on the dash. Like, how do you see any color? I see that the business is growing very well. How do you see the overall market size? I understand that, you know, you are a pretty unique player in this, but how do you see like a big, like the size of the market and how you're, you know, penetrating the market? Any color on this? I'm not looking for numbers. I'm just saying that when you talk to customers, you know, what is your impression that how large can this business be?

I think the potential for the real estate, apart from you leave the top guys, the top guys would be dominating around 35 to 40% of the market. The balance is actually available for DAS as an opportunity. So, typically, it's not only the developers, right, the landowners. They are also one large segment where DAS really, really helps them. So, I think the market is huge, there is huge potential, there is a huge demand for us right now. We have a team only evaluating projects which we want to take. Currently, we are in a very good position to pick and choose the ones where we can add significant value. So, the market is huge, the demand is huge, and I think we are in a very, very good place for DAS.

Right, sir. And when you pitch, you know, when you're talking to customers, who are you competing with for Dash in particular?

So honestly, there is no direct competition because there are pieces of services that various companies do, but there is not single person who gives all the services. So we manage the money, material, and management, all the three M's which are primarily required for real estate. So there is honestly, there is no competition there. It's just that whether he wants a service like DAX, which is more important question, rather than the services. Real estate, if you look at it, every part of real estate is an outsourced service right from the beginning. Other than land acquisition, which the developer does, the architect is from outside, the sales team used to be inside, now that is given outside, the PMC is given outside, contracts are given outside. So the fundamental theory of outsourcing is already there. Someone consolidating everything and putting it under one roof is what DAS does. So there is no direct competition, but yes, we have elements of it which compete with us.

Great. Thank you. That's it from me.

Thank you. I request the participants to restrict your substitutive questions in the initial round and join back the queue for more questions. Our next question is from the line of Prabhat Agarwal from Finvestors. Please go ahead.

Good afternoon, sir. Am I audible? Yes. So, sir, my question is regarding margin, 11% margin you have been reported. So, is it sustainable or it's one off?

So, the rise in margin comes from a mix. Contract manufacturing and the BAS segment earn more than the B2B supply segment, and they are now 66% of revenue, up from 53% as of quarter two. And quarter two margin, as you said, was at 11.6%. We guide about 11.5% to 12% for FY27, and about 12% to 13% by FY30. So, yes, the margins are improving and will be sustainable.

So, thank you, sir. My next question is regarding how much debtor is part of revenue. In percentage time, you can say how much debtors is there. Sorry, sir. How much debtors is there of the total revenue?

115 days is what we are currently running on, sir.

Your question is on debtors, right? In percentage terms, it will be somewhere around 33-34%.

Okay, thank you, sir. Thank you, thank you very much.

Thank you. The next question comes from the line of Lau Gupta from Counter-Cyclical Investments. Please go ahead.

Hello, sir. Thank you for your opportunity. So firstly, I wanted to understand what percentage of our materials supply to projects, where we are like supplying 100% of the product portfolio that we have to the project, apart from the DAS customers.

So there are no contractors or project sites where we are supplying 100% of the materials.

Other than the gas projects?

And going forward, the capacity addition, do we plan to expand the current product portfolio, or do we have plans to, you know, add any other materials to a portfolio like we added asphalt this year?

I think yes for both. More likely that we will add capacity in materials from the current product portfolio, but we are always on the lookout to add, you know, something like an asphalt or maybe other key raw material that is widely being used in construction materials.

All right. And, you know, we see our DAS revenue moving to about 10% of the 3,000 crore revenue target that we set by FI30. So what sort of investments would be required in DAS particularly to, you know, reach that target?

I don't think there are any investments. If you look at DAS, it is something where there are no investments required. It is a pure service fees that comes. We arrange finance for these people from various sources. So, we do not invest any capital on DAS.

All right. Because in an earlier presentation, I read somewhere that you would finance some working capital for these projects.

No, no, no. We have not done that, and I don't know, maybe it's a miscommunication, but we have never done that, nor the model has any scope for that.

All right. Thank you, sir. Thank you.

The next question comes from the line of Ishid Desai from 4th Family Office. Please go ahead.

Yeah, thank you for the opportunity, and congratulations to the team on a very good set of numbers, not just the P&L numbers, but net debt and working capital part as well. Sir, my first question is on the FY30 guidance which you have given. So, the contract manufacturing business on an absolute number basis will grow from about 500 crore to about 2,000 crore in the next four years. So, firstly, sir, both on demand and supply side, what gives us this kind of visibility and what Steps are we preparing ourselves because it's almost a 4x jump on the top line. So, what gives us this kind of confidence and visibility? And is it, I mean, some pathway, some details around, is it going to come from existing customers, new customers, if you could give some flavor around that?

Yes, yes. So the capacity that we have secured today in value terms, because we have added a lot more of asphalt and concrete, which are high in value, the total inventory value would be more than about 14, 1500 crore as of date. The demand for these materials is huge. Even if you look at metro cities where we are present, for example, Mumbai or Chennai or Bangalore, the demand for each of these material categories is humongous. And we are still at a very, very low number, not even capturing 1% of that market share. So that is what gives us confidence that the infra projects that are lined up not only for this year, but what we'll come across in the next three to four years, the demand is only going to be rising because infrastructure development is the backbone of this country and the demand for materials is only going to improve. And, you know, that is the backing that we have. So the 1900 or 2000 crore number for these materials in our view is much less. It's only the question is about execution and about sourcing and fulfilling the high-value orders. Demand is not going to be a problem.

The answer is, I mean, just to clarify on that, is it how is the contribution going to come more from existing customers? Are we likely to add more customers to referrals? So where is this growth likely to come more from?

It is likely to come from both the areas where we will increase our wallet share with existing customers. That is exactly what we have done in the last two years as well, as we have been improving our revenue from contract manufacturing. We will also add new customers. That is what we are doing every quarter as well. So it's probably going to be a mix of both.

And then my second question is on the DAS front, given the kind of GDB traction we are getting, right? And Srinya, I think also over the call mentioned that we are now in a position to better pick and choose the projects. So, again, there's a revenue from about 80-90 crore to 300 crore. We probably, at least in terms of GDB run rate, are already moving there. So, what kind of manpower infrastructure setup? I think the way our contract manufacturing or the construction supply, material supply business, this would not be that technologically heavy, right? We need some more manpower as in when the project sizes and number of projects grow. So, how do we plan to really cope up with that and really build our team around that?

So, let us do a simple math on it, right? Currently, we are at around 2,800 close, and this will have to probably move to around 6,000 close as the GDV for us to be somewhere at 300 close of the top line. So, there are two models in which we use. As far as the employees are concerned, which is one of the significant talent requirements in this industry, most of the lower level people are all employed by the projects and by the developers. It's only the supervisory role that we need to take. So it's only the skilled manpower that we need to increase. So it is not going to increase exactly in the same proportion. But yes, as compared to contract manufacturing, yes, there will be a lot more reliance on talent to be acquired in this. On the other hand, we are currently already working on technology that will help us. In real estate, the technology required is not more on the processes. What is required is on red flagging. At what point in time do you feel that the project is actually going into a yellow zone or an orange zone or a red zone? We are currently working on that, and we have got initial success. We have deployed it as a beta version in a few of our customers, and that is the significant value addition that DAS will have, which nobody else will have. We call it as a PHI, which looks at project health index, wherein it preempts a particular position and compares it with the budgets to see whether we will reach the target on time, whether the cost will be under control, and whether we will reach the required profitability. So, we are working on adding value, not on the mundane stuff through the technology, but something like a predictive tool, which is currently just not there, even in the thought process of most of the real estate companies.

I understand. That's very helpful. And I'll join back the queue in case of additional questions and all the best for the next one. Thank you. Thank you.

I request the participants to restrict you as of the two questions in the initial round and join by the queue for more questions. Next question comes from the line of Nikhil Gupta from VAYU Capital. Please go ahead.

Thank you for the opportunity and congratulations on the great set of numbers. I just had one question. So, let's say in a scenario where the real estate cycle turns down and we have less demand than the supply and the real estate prices also, let's say, peak out and fallen maybe 30-40% in an event, which part of a business do you think is the most impacted in that particular event? In my own understanding, I think that will be the most impacted segment, but can please expand on that thought. It would be great to know. Thank you. Yeah.

So, I mean, you are asking for a doomsday. On the doomsday, obviously, everything gets impacted, but let me handle this a little objectively. So, it is also very important to understand which part of the real estate that currently our concentration is on. We do a lot of horizontal development, that is plotted development, which is very, very common, and it is treated like gold in South, especially Chennai, Bangalore, Hyderabad. So, and even during the 2007-8 and 2018, 2015-20, there was a slump. Even the largest developers came into plotted development because that's a completely different category, plots and villas. These are the two categories where we have around 60-65% exposure. So, even if there is a slowdown, there will be around 40 to 45% of our business where the movement will be normal. On the balance, 50-55% where we are doing a little bit of apartments and commercial real estate, there will definitely be an impact in line with what is the industry seeing. Even there, you need to appreciate that we don't do towers which are like 100 storeys or 30 storeys. We do towers which are like 10 to 14 storeys, wherein the turnaround time are between 18 months to 30 months. So we do not take projects which are likely to be a 5-year or a 6-year project where you will definitely see two cycles. So we are being very cautious on that. As I told you earlier also, we have an opportunity right now to pick and choose at least till the turnover of DAS goes up to 1000 crores. We have a long leeway until we will be very, very cautious and careful to take short term projects, which will really help obviate these cycles or at least minimize the impact on our company.

Thank you, Srini. This was quite helpful. So, just a follow-up on that. So, even, is it a right understanding, it's a right statement to say that in our dash segment, we are not fully exposed to the towers, the, let's say, the living residential towers. Are you saying that we are also exposed to the plotted segment?

Plotted segment is significant in our portfolio, and there are two advantages of that. One is quick execution, and you don't really see the cycle. A 10-acre parcel can be completed six months end-to-end. Right from the approval time till the entire last sale is done and handing over is done. So currently, we have significant portfolio around 45 to 50% on that segment. And on the balance 50%, we have around 30%, which are like apartments and around 20%, that would be like commercial real estate. And these commercial real estates are also something which we have picked up halfway. So there is something which is already done. And we are here to complete speed up and complete the project and get liquidity to the developer. So we are honestly in a very, very good position right now for completion because entering into a real estate is very easy. Exiting is what you need to see when you really enter into it. And we have been extremely careful as far as these are concerned.

Thank you. This was quite helpful. Best of luck.

Thank you. Thank you. We have the next question from the line of Saurabh Rathor from SR Capitals. Please go ahead.

Your line is unmuted. Please go ahead with your question. So, there seems to be no response. We will move on to the next question.

Next question comes from the line of Ashish from Infinity Capital. Please call it.

Am I audible?

Yes.

Congratulations on great set of numbers and the presentation is very well framed. So, congratulations on that as well. Sir, we have outlined the guidance for 2030. So, given the current operating environment and inflation concerns, how do you say the supply time impacting and our guidance being realistic? So, I just want to know your thoughts on that, the current operating environment and how confident are we in achieving our guidance, given the inflation and these concerns around it?

Yes, so the FY30 guidance is mainly built on the business that we are currently in. It's mainly an account of how we've been increasing or improving our business in the last few quarters and how we feel that the business model right now is, you know, enough to sustain the growth rate and the kind of demand that we are going to see in the coming years and the capacity that we have secured to meet that demand. Because we built capacity before the demand, since quarter one, we've delivered on net debt capacity, the asphalt run rate, and the DAS order book. The revenue growth is 32% so far against the 35-40% for the year, and H2 is where the rest comes in. FY30, again, is built on the business we run today, and we've still not considered any inorganic growth opportunities or acquisitions. So that is why we're very confident of achieving the FY30 guidance numbers.

And we are talking about a CAGR of 29% and which we are very confident of achieving.

Very well put, sir. Thank you so much.

That was only my question.

Thank you. Thank you, Ashish. The next question comes from the line of Meet Mehta from Integrative Ventures. Please go over with your question.

Yeah, hi, team. Very congratulations on great set of results. I just want to understand what kind of products or materials we are supplying in the B2B segment, which contributes a major portion of the B2B supply.

A B2B is still a mix of all the materials that we do, which include the key raw materials of contract manufacturing segmental as well, which are stone aggregates, ready-mix concrete, asphalt and vitamins, steel, cement, and then there is a full bunch of other materials which include electricals, plumbing, sanitary wear, tile, flammes, all of those things.

So the major contributors we have in our contract manufacturing site, right? Yes, yes.

So, there are three product categories in contract manufacturing, stone aggregates, ready-mix concrete, and asphalt and bitumen.

Any new products that we are targeting to add in the same site?

As of now, there are no discussions around adding any particular product in this particular category. Right now, we are focusing our, you know, all the conversations are around increasing our capacity in the existing three group categories that we have.

Got it. And another thing on the, you know, DAS segment or the entire three segments that we are in, what kind of contribution we are getting from the top five and top ten players, if you can quantify that?

Overall, the top 10 contribution remains the same as before around, I would say 45 to 47%, and this as well is spread across multiple projects at a customer level. So at ledger level, at maybe customer level, it would be 10, but it is spread across multiple projects and multiple reasons as well.

Yeah, and last thing on the long-term contracts that we discussed in the last call, have you got any long-term contracts in the contract manufacturing side with the contractors or developers?

You're talking from on the demand side or the supply side?

No, on the demand side.

On the demand side, the last we announced was the one with a large EPC contractor, which was about 800 crores. There is another one which we have right now, which is to the tune of around 500 to 600 crores in the next five years. These are the two contracts that we have.

Got it, got it. Yeah, that was my question. All the very best for the coming future.

Thank you so much.

Thank you.

The next question comes from the line of Flaibow KR, from Aurelius Asset Managers. Please go ahead.

Hi, congrats on the good straight up number. I have just one question. Last month, so the exchange filing company stated that it is providing COT against credit facilities sanctioned by banks in favor of strategic business partners.

So this will create contagion liability for the company. So can you put some light on that? What was this regarding about?

Yes, so, yes, hello.

Yes, please go ahead.

Yes, so, in the cash and bank balance, you see about 114 crore in fixed deposits, which is held as security against our own borrowing facilities and against bank guarantees and against the corporate guarantee that we've given to a third party. This is because. It is basically our first step in moving our deposits from cash to non-fund-based support. Instead of placing more cash deposits, we back a facility that a partner or a subsidiary draws from its own bank, secured on our fixed deposit. The cash stays on our balance sheet and earns interest, and we don't have to extend any new deposits. So it's already working since March. Our long-term deposits are down about 13 crore, while reserve capacity grew from 9.1 to 11.7 million metric tons.

Okay, okay, I got it. Thank you. Thank you.

Thank you. We have the next question from the line of Gaurav Shukla from Finvestis. Please go ahead.

Am I audible, sir? Yes.

Am I audible?

Sir, I joined late, so, So, congratulations, I'm going to check my number. I am asking about contract manufacturing revenue grew 72% in S1FI27, beta margin of approximately 10.5%. Can you sustain these margins as volume increases?

Yes, we will be able to sustain these margins and we will look to improve the margins as well because, as mentioned earlier, we are improving our utilization as we move forward and there is significant headroom for growth in the capacity that we have already reserved. So as we improve our utilization and because of economies of scale, we will be able to sustain and possibly improve our margins as we move forward.

Okay, sir. And second question is, are the exclusive manufacturing arrangements long in terms of what protection that Eric Sintra has engaged manufacturing partners directly approaching its customers?

Yes, these are long-term contracts, mostly for a duration of five years. So, these partnerships, based on these partnerships, the relationship with customer is only of ARIS. There is a one-to-one relationship between ARIS and all of these customers, and all of these materials are procured from the manufacturing facilities or entities and sold to the customer. Because they are bound by long-term contracts, they are not legally allowed to actually reach out to the same set of customers and deal independently. So, yes, there are legally, there are formal contracts in place to not allow them to actually reach out to them directly.

Oh, Krishna. Thank you, sir. And sir, how much additional reserve capacity do you plan to add over the next two years? And do this require any financial commitment or minimum off-take guarantee?

No, we don't work on minimum uptake guarantee. That's not what we have done in the past also, and we will, you know, look to maintain that. We don't guide on actual increase in absolute number of capacity that we will increase. But from March to about Q2, we've increased from 9.1 to 11.7 without making an additional investment. In fact, reducing our overall deposits by about 13 crore. So that is the plan going forward, and that is how we would like to move.

Okay, thank you, sir. All the best thought to you, sir. Thank you.

Thank you. We have the next question from the line of Manish and Rijuzun Nuscha. Please go ahead.

Hello, sir. Thank you for the opportunity and congratulations on the good set of numbers. So, my question is essentially on the raw materials. So, under all the three segments that we operate, is it fair to say that any increase in raw material prices has passed on immediately to the customers or does it happen with some timeline?

It's almost real-time because of the model that we operate in. We actually source from manufacturers and sell to customers, and it is for a limited time period and of limited quantity. So whatever changes happen in the industry, for example, the raw material prices increase, we build that increase in the price and sell it to the customers. Sometimes it may not be like-to-like, and we may take a price cut, but that's basically a part of the ongoing business.

All right. And in case of any downward revision and the prices, again, do we pass it immediately or do we hold back prices? So how does that work?

So usually our commitment is of a limited quantity, and these quantities run from, let's say, a couple of weeks to maybe a month or so. The chances of something serious happening in that period is relatively less. So it's because of the kind of purchase orders or the orders that we have and for a limited quantity that we are indirectly protected against such kind of an event.

And my second question is, sir, you got listed just last year, so there's very little history as far as the company is concerned, and also this being a new industry, we are still kind of trying to get, what do you say, learning from our competitors, your company, and so on. So, according to you, what are those areas wherein you think things did not turn out the way you thought? Oh, it to happen. So if I can have any update on that story.

Yeah. So, it's from our own learnings. I think, you know, the management together has, you know, decades of experience, at least coming from this industry, which is a combination of infrastructure and real estate. The number one thing that, you know, can be uncertain and that needs to be planned for is the working capital and the cash flow. This is what we have mentioned in our previous earnings call as well, and this is something that we focus on, and we have ways to do that where we have our credit structuring process, the technology that gives us access This is to real-time data and the industry experience, and also the selection of customers. All of this put together, you know, this is the foundation on which we actually manage our working capital and cash flows. So that's the only area, I would say, which can be a little uncertain, and that's what needs to be planned for.

Thank you. Thank you so much.

Thank you.

Thank you.

Next, we have a follow-up question from Ishit Desai from Fort's Family Office. Please go ahead.

Thank you for the follow-up. Just one more question on my side. Regarding the contact manufacturing capacity, I think the current capacity increase was with one of the existing partners. So given that we are already kind of covered in 1400 crore. Do we see the scope of incremental capacities also coming from existing partner or then we need to look at a new partner, newer geography for the additional data?

No, we definitely see increasing capacity with existing partners, not just one, but all of them.

Thank you so much. Thank you.

Next, we have a follow-up question from Meet Mehta from Integrative Ventures. Please go ahead.

Yeah, thanks for the follow-up. Just wanted to understand, what is the current vendor deposit that we have? Last quarter, it was around 200 crores.

Yes, that was a combination of long-term and short-term. Currently, the long-term deposits have gone down and it is about 149 crores. And the short term is about 12. So, we are at about 162 crores, down from about 200 crores.

So, what is leading to this reduction in deposit? You were mentioning that you are now giving FDs as a deposit. So, if you can put some more light on that thing.

Yes. So the first step was obviously to extend these deposits to secure the capacity. This model worked, and what we wanted to kind of evolve into is place FDs with banks and give them an option to borrow against those FDs and reduce the open risk of deposits that we have directly with these partners. So that's the next step that we want to get into. We've just started that process and we look to actually increase, increasingly convert our fund-based to non-fund-based deposits as we move into the next few quarters.

So, you are basically helping them with the arrangement of working capital on your deposits, right? Correct.

And we convert the deposits, we convert the open-risk deposits into earning assets, because now we earn interest on the FDs as well.

Yeah, got it. And last thing on the, you know, margins on the contribution, contact manufacturing side. So, are we charging a fixed percentage on the volume that we are selling, or how does the, you know, margins and volumes work together?

It's not a fixed percentage. It really depends because the market is not very transparent in terms of prices. It depends on the kind of price.

Sorry, can you hear me?

Yeah, you are audibly.

Yes, yes. So, when it comes to prices, it's not fixed. It's not a fixed percentage. It depends on the kind of customers, the size of the customer, the demand, the recurring demand, the credit periods. It's very, very dynamic, and it's never a fixed percent that we charge. It really depends on, you know, the title.

You can answer.

Hello? Hello? Yeah, you are not audible.

Okay, yeah. Can you hear me now?

Yeah.

Yes, sir. Yes, yes. It's not a fixed return that we charge. It really depends on the kind of customer and the demand, and it's mostly dynamic in nature. So, market dynamics also come into play.

Sure, thanks, and, you know, congratulations on great set of results and very Congratulations for the coming quarters.

Thank you. Thank you so much.

Thank you. Due to time constraints, that was the last question for the day. Now, I hand over the floor to the management for closing comments.

Thank you all for participating in this earnings phone call.

I hope you were able to answer all your questions satisfactorily at the same time offer insights into our business. If you have any further questions or would like to know anything more about the company, please reach out to our Investor Relations Managers at Wathram Advisors. Thank you, everyone, and wishing all of you a very happy New Year and happy Diwali.

Thank you, sir. Ladies and gentlemen, this concludes your conference for today. Thank you for your participation and for using Doosabha's conference call service. May I disconnect your lines now? Thank you and have a pleasant day.