Menon Bearings Limited (MENONBE) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, on behalf of Captify Consulting Investor Relations team, I welcome you all to the Q1F527 post earnings conference call of Menon Bearings Limited. Today on the call from the management team, we have with us Mr. Arun Aradhir, Managing Director, and Mr. Aditya Menon, part of the Promoter Group. As a disclaimer, I would like to inform all of you that this call may contain forward-looking statements, which may involve risks and uncertainties. Also, a reminder that this call is being recorded. I would now request the management to quickly brief us about the business and performance highlights for the quarter-ended Q1 FY27, the growth plan and vision for the coming year, post which we will open the floor for Q&A. Over to you, sir. Good afternoon, everyone.

On behalf of Menend Bering Limited, I extend a very warm welcome to all our shareholders, investors, analysts, and members of the investment community to our conference call to discuss the financial performance of the company for the first quarter ended 30 June 2026. Thank you for taking the time to join us today for your continued trust and confidence in Menend Bering Limited. The first quarter of FY26-27 has been a strong and encouraging one for the company, and I am glad to tell you that we are recorded highest ever sales, highest ever EBITDA, highest ever profit before tax and PAT in the history of the company for this quarter. Despite a dynamic business environment, we delivered robust growth in revenue and profitability. Supported by HD demand across our business segments, improved operational efficiencies, and continued focus on cost optimization and customer satisfaction. Now, coming to the standalone performance of Biometal Menendering. During the quarter, sales increased to 67.06%. From 47.76 crores as compared to the corresponding quarter of the last year, that is year on year increase of 40.41% and total increase by about 41%. EBITDA is up by 60%. Our continued emphasis on operational excellence resulted in profit before tax of 14.85 crores as compared to 9 crore 3 lakhs last year, reflecting a growth of 64.32%. Consequently, profit after tax has also gone up by 63.53%, which is now 11.23 crores. Now, coming back to the consolidated performance of the company. On a consolidated basis, the sales increased to 91.79 crores as compared to 67.21 crores last year, same quarter, registering a growth of 36.57 percent, and total income increased by 37.05 percent. And EBITDA on a consolidated basis is up by 57%. Profit before tax reached to 18.51 crores as compared to 11.06 crores last year, corresponding quarter, representing a growth of 67.36%. And of course, profit after tax also increased by 67.35%. Our earnings per share also improved significantly to 2.52 compared to 1.50%. So, coming to the outlook now, we remain focused on strengthening our relationship and leadership position through technological advancement, continuous improvement in manufacturing processes, product innovation, and customer-centric solutions. Our efforts continue to be directed towards sustainable growth, operational excellence, and creating long-term value for all our stakeholders. While the global business environment continues to present certain uncertainties, the underlying demand outlook for the automotive and engineering sector remains encouraging. With our strong customer relationship, diversify product portfolio. And discipline education. We are confident of sustaining our growth momentum in the coming quarters also. That is because more particularly due to our last month's visit to Canada and USA is expected to yield substantial volumes in a coming period of a year. Also number of parts for various customers have been already developed and after testing and validation. Those all will be productionized over a period of time now. The total potential of additional business for the current and net financial year is expected to be around 65 to 75 crores, subject to good monsoon and geopolitical situation doesn't worsen further. Before I conclude, I would like to express my sincere gratitude. To our customers, employees, suppliers, business partners, shareholders, and all other stakeholders for their continued support and confidence in Main and Barriers Limited. With this opening remarks, I now invite our management team to provide further insights into the operational performance of the company. Mr. Aditya.

Good morning.

Good afternoon, everyone. Hopefully, everyone has seen the results. So, all three fronts, Men & Bearings, Men & Alcops and Men & Breaks for this quarter, we have been working extremely hard during these difficult times. And we have achieved these outstanding results. What I would say, I would like to thank the Men & Bearing team, the management to get the results. And I would like to open the floor to question and answers so we can discuss our questions. We'll discuss further about our growth and what numbers we're going to achieve and what's the future of men and bearings, the bright future of men and bearings, how it's going to look. Thank you.

Thank you, sir. We'll now begin the question and answer session. All those who wish to ask a question, please use the option of raise hand and we'll invite you to ask a question. If you are unable to raise hand, then please you can put your question in the question and answer box, Q&A box. We'll take the first question from Arnav Safuja. Please go ahead.

Hi, thanks for answering my, sorry, congrats on a good set of results. So my first question is that I was reading in your presentation that, you know, the breaks, in the break segment, the dinanometer seems to have arrived. So what is the revenue that we can expect from the break segment in FY27?

You see, basically, that is under construction now and is expected by the end of August. Thereafter, the railway people will come and visit our shop. They will have a thorough audit and after that, they will approve our company Menon Breaks for a registration with railways. And thereafter, testing, validation, etc., it will start and it will take another one year. Thank you very much. With this, in the first year itself, we expect that to start with, we will have a business of around 5 to 6 crores to start with, and eventually it will go up to 25 to 30 crores within next two years.

And just to give a more deeper explanation, by next month, August end, the machine is supposed to be commissioned at our end. So maybe one more month, by September end, you know, the technical team, it's a very difficult testing rig. So by September end, it should be all running. So like Mr. Aradhyay said, one way is we are already in touch with the railway, Indian railway RDSO, where our vendor code has been registered. So, at the same time, back-end, till the dynamometer is coming, we have already made dice for all railway, like the bogeys, the transport bogeys, Vande, Bharat, Metros. So, technically, we are developing dice for all the railway applications. So, in September, we will get a better idea how the business starts, where we get, like, first, for example, for Delhi Mirat or Mumbai Kolapur. They will take a sample from us and test it for around three months, you know, then they will be putting on the testing rig, checking the quality of the product, and then they will start like business from a small piece of business. So, like Mr. Arabe said, it could be anywhere from 4-5 crore to 25 crore. So, but as management, we are trying to, we are aiming at all different parts of the railway department, like cargo boogies, passenger boogies, then Vande Bharat, fast trains, then metros. So, we are developing from our own technology where we can do applications at all railway applications. So, that's one avenue after Dynometer comes. The second avenue after the Dynometer comes is OEMs. If you see this quarter the brakes also is doing pretty well. So once the nanometer comes, we will have access to different OEMs also, original equipment manufacturers in India. So that also will give a boost, a lot of boost for men in brakes. So 2027 should be a very good, bright future for men in brakes also. A good, good year. Numbers I can't tell you or you know, we can't want, I don't want to give you a... Any concrete numbers, because after the nanometer comes, the numbers should significantly increase also.

So this is what is a conservative estimate that we have already told to you, that is regarding the railways. Apart from that, OEM business is also coming up, and we are very sure having relations with all the OEMs. Men in Bering is already having relations with them for the last so many years. We are 100% sure that we will get additional business from them and maybe there will be substantial and significant increase in the volumes of men and brakes in the next year.

And currently also because of the, like if all follow us for the last couple of years, dynamometer has been delayed. But as management, as men and brakes, we have not been stuck up on that. We've developed new products for two wheelers, three wheelers. So that's why the growth currently also this quarter also there's been a good growth in. Man in breaks and good margin also, good EBITDA margin also.

But at the same time, I would like here to tell you that right from 12% EBITDA earlier, now we are reached to 25% EBITDA in breaks also. And that is above all other segments.

Yes. So that shows our operation efficiencies and how we run our businesses, how we keep everything very tight and professional. Thank you.

Got it. So my next question is that, you know, so I was reading again in your presentation that you are planning to enter Africa via a distributor network. So which products would this be for? And what could be the possible revenue potential from Africa?

You see, the possible revenue from Africa so far as bearing, bushes, and washes are concerned is around 9 crores, and at the same time, we are working on supplies to Africa. So far as break landings are concerned, and that is expected to be around 6 to 7 crores for the year. So this is what is the estimated figure that we have as of now. Apart from that, a regular business that we are transacting through the distributor in Dubai, which is catering to the African market, which is to the tune of around 7 to 8 crores per year.

So, actually leaving the aluminum parts or other avenues can be the merchant export to Africa. So, before we were doing through Dubai, we still do through Dubai, but now we are looking at different avenues. Because of the war, last three months, we didn't have orders. So, actually, our results could have been even better, but last three months, those merchant export orders were stuck because of backlog, because of the state of Hamas and the war. So, now they have restarted. So, till then, our marketing teams have been putting effort. We are finding direct merchant exporters from Africa who are ready to take our parts. But we have our terms and conditions where we need 100% advance, other things that keep, we're just not running behind sales, but other things that are important. So, we have found identified few suppliers, few merchant export customers who are on our terms and condition. So, that's what Mr. Aradhe said. So, bearings, bushes, washers and breaking system friction material. So, leaving the aluminium segment, everything else can be given to African markets and there's a huge potential. But we are starting slowly, one step at a time. So, already this month we have given small… But we have few terms and conditions for the payment cycle, where we require 100% advance, at least in the initial six months. After there's a relation and a cycle, like a payment cycle, then we can go for something else. But currently, we are very stringent. We don't want to run behind. Just sale or business that is coming. We want to look at sustainable and a secure business. So that has already begun from our side. We have taken a lot of marketing efforts, identifying merchant exporters who are agreeing with our terms and conditions.

Thank you. Got it. Thanks a lot for answering my questions and congrats again on the great results.

Thank you.

Thank you, Arnaud.

Thank you. We'll take the next question from Mr. Bhargav. And before we take the question, I would request the participants to limit the questions to two. Next question from Bhargav.

Good afternoon, team, and congratulations on a very good set of numbers. Yes, thank you. My first question is that you mentioned in your opening remarks that there was a trip made to Canada and U.S. and 50 to 60 crores of additional revenue opportunity can come in the Alcop business from a new customer. So what is the visibility? When can we expect basically this business to start fructifying? Right now, if I'm not mistaken, the quarterly run rate is about 21 odd crores in the Alcov business. So the annualized run rate is about 80 crores. So is it fair to say that for 28, you are expecting another 50 crores on top of this 80 crores?

For this year, we are targeting Alcorp for 100 crores. Next year, on 125. Like I told you, in Alcorp, for new business to get realized, it takes around 9 to 12 months. So Mr. Arade and our marketing head had been in the month of June, around 15 days in the US. They traveled to Canada, they traveled to USA, they were in Detroit, their automobile hub of the world. They were in Cleveland, Atlanta. And for many varying customers, but after they, we were very aggressive with our marketing, showing what's going on. What kind of products we do. So we were specially called for Magna, Lina Mar. I don't want to take many names, but a lot of RQs have already come. NDAs have come. Just to Allison Transmission, Magna, these are all bearing customers. So these guys, we saw the aluminum plants. Magna has nine plants in Canada alone. They buy 1,800 crore per year, where we do engine bearing supply for the last 15 years. So we're getting RFQ, NDA signing, vendor code for Alcop. So even if we start small, it's a big option to take from. So these customers, because of China plus one policy and Merin bearing brand name for the last 20 years, we have Merin Alcop also gotten the entry. So, already RFQs have come, NDA signing has come, technical discussion, it's only been one month. All this has already started. At the same time, looking at so much potential in the US, we have assigned a person there who is based in the US, who will do continuous follow-up and try to make this process realization as short a period of time as possible. Like if it's 9 to 12 months, we are trying as management, how we can get it to 6 months, 7 months. So, So that's what efforts have already been taken and engine bearing and help of a lot of what do you say? So, this visit has been very fruitful for us. So, you will see by the quarter 3, quarter 4 where engine bearings will already be started supplying and maybe by next year Alcop also should be able, samples should be submitted by next year, but in 27 orders for aluminium division also should start coming to surface. So that is of the US trip, like how you have asked about the USA trip, how we as management, we saw a lot of, as we are a household name now for quality and more technical products, we are getting a lot of attention and demand from the USA. Some of these customers got in touch with us. So in September, we have a visit to Europe also. We are there for 15 days. CNH, New Holland, actually, we don't supply to them in India. But we were there in Delhi with them last month. So we got invited from them. To visit their European suppliers. Maybe Indian customers, they have a more price-efficient, I don't know, reasons why we are not in India. But they have invited us personally to Europe to attend their factory visit, their meetings. So we have taken a project in September also to visit few European customers, see a lot more markets there for merchant export and new customers. So we are very aggressive. So this growth, what we are talking about, this US trip and Europe trip, This will be realized in 2027-28. So that will be an addition to our already order book what we have. So what growth you all have seen this quarter is already for the hard work what we have done for the last two, three years. So we are, as management, very happy with the result, but we are taking two steps forward. So by 2028, 2029, what order book we will have. So we are taking those efforts right now. And we already, the guy in the US we have appointed, he's already visiting us for the last 15 days here. So his induction is happening, his planning. Which department he has to coordinate with. So we already hired him on our payroll. So we are aggressively taking this project forward. Thank you.

Secondly, sir, in your presentation, it is written that in the Alcorp business, the share of EV by FY27 end can be in the range of 8 to 10%. So what is the current share of EV if you can highlight and also maybe in the next three years, where do you see this going? Because incrementally, when we are talking to a lot of auto ancillary companies, they are now witnessing a lot of RFQs, especially from Europe after this rupee significant depreciation versus China. So obviously, more and more Indian companies are becoming more and more competitive versus Chinese. So just wanted to hear your thoughts.

Currently, we are at around 4-5% EV. We're only doing around 3-4 main customers. But these customers, like I told you, TACO Prestolite, we started 2 years ago. We were doing just 4 parts for them. Now, I haven't gotten 5 RFQs. Tata Motors is an old company. Like, we're supplying for the last, before I was born, for the last 30 years. But TACO, Alcorp, we entered 2 years ago. Started with 2 products only. We got 4-5 more RFQs. So, Tata Curve, Tata Punch, all Tata and EV cars, we are, what do you say, developing new parts for them. Now, over time, before we are developing smaller parts for them, on 400 ton machine, on a 500 ton machine, they also have got confidence on us. Now, we are getting parts on a 1600 ton machine, 8 kilo part, HPDC part. So, that is showing us confidence also that we can do these high technical parts. And we are taking efforts for eating concentric Also, when a more critical part comes to them, we are a preferred supplier for them also. So we are also targeting. So 8% is for the near future, for the next two years. But as parts come, RFQs come, when it gets samplized, then only I am giving you two figures. So I have RFQs for electric parts, but maybe technically it's not matching or rates are not matching. So once we start the sample production that I am manufacturing, it gets added to our list. So that's what the system we work on.

And did I hear correctly that you said in breaks, you are doing 25% EBITDA margins? Yes. Versus your peers doing 12-13%.

Yes.

Okay. Great, sir.

Thank you very much. Mr. Bhargav, for that, it should not be up next time. It's about product mix. So this quarter, what product mix we had could help us achieve that number.

Maybe next quarter, it may go down to a certain extent, but we will try to maintain that. But it's significantly higher than our competitors. Okay, sir.

Thank you so much and all the very best. Yes. Thank you so much.

Thank you. We'll take the next question from Ruchita Kargay. Please go ahead.

Hello, sir. Good afternoon. My question was, we don't buy metal business, right? So currently, our utilization is at 85%. So incrementally, we can do around 30-40 crores. So beyond that, What is our plan, sir? How do we, you know, like, are we going to increase the capacity? Are we going to acquire somebody? What is the plan?

If we go through the presentation, Ruchita, you will come to know that we are investing about 9 to 10 cross-off rupees this year, this financial year for Increasing the capacity and which is expected to increase the capacity by almost 25 to 30% which may yield the total revenue of more than 25 crores, which can generate revenue of 25 crores. So, steps have been already taken to see that, looking at the 87% actually, which is the capacity utilization at Merendan. We have already taken proactive steps to increase the capacity, so that even if there is a surge in demand, if at any time, did capacity for the third shift is always Spare capacity.

Third shift currently, we are not running full-time. Only bottle-length operations are run. So any sudden surge also is there, we can always run a third shift and reach more capacity. And we can cope up with the new demand. Yes.

So, with whatever capacity we have currently in just the bearing segment, right? How much revenue, peak revenue is possible for us?

Peak revenue from this, it can be about 400 cores.

Only for the bi-metal division.

In the bearing segment.

Yes, yes, bi-metal.

Without any land expansion or factory. And on the...

Please go ahead.

Got it. And the aluminum die casting business, considering you guys have been talking about 750 rupees realization. But when we calculated, like on 60% utilization, it is above 800, right? The realization currently.

Realization actually, it has gone up to 900 plus now.

Because I'll come home with some advice. Right. Otherwise, it's roughly around 250 rupees or 200 rupees of aluminium, it's around 700 rupees, but now average aluminium rates have become 340-370 rupees.

So it has become somewhat volatile.

But in Alcop also, we have actually in engine bearing also, we have done 45,000 square feet to building which is 50% occupied. So that land we have more to utilise. And in aluminium division also, we have done 65,000 square feet new building. A machine shop, which is 50% land land, like what do you say? Whatever new development we are doing in the presentation, you can see that is the cost of machinery getting added now. to increase the capacity. Otherwise, machine land capacity, we have around 7 acres in the aluminium plant, still empty. So, tomorrow in 5 years, we don't have to go and spend there.

Factory building, whatever we have just constructed, which is 65,000 square feet, out of which almost 25 to 30,000 square feet is still available for expansion, where we are going to have The machines installed, which have been already ordered, and we are having the capex up around full cost of rupees for this year in Alcopola.

Okay. Okay. Okay. So, we have everything in place for the additional, whatever 500 crore revenue we are talking about, right?

Yes. For the next two years, we don't have to do any significant increase in capacity to get these values. So that investment in the last two years, we have done it. Looking at the future order book.

Understood. Thank you so much.

Thank you, Ruchita. We'll take the next question from Desha Chamriya. Please go ahead.

Am I audible?

Yes, Disha.

Good afternoon, sir. Really good set of numbers. Congratulations for that. The first question would be that the export target for FI27. Historically, it has been around 24 to 30% of range, and this is a big step in one year. So, is this driven by existing customers? And will there be a new geography wins like you already mentioned Africa, but what about the customer? Is that the same wallet share?

No. Is it because of additional business with the existing customers as well as acquisition of new customers? It is a mix of both. And we expect that by next year, the exports may go up to 37%, after total revenue.

And we are, actually we do export to 42 countries, but majority of our exports goes to the United States. So we are taking new steps, we are taking efforts to do different geographies in the USA. Now we went to Canada, we were doing very less business in Canada, we visited two big giants in Canada. So different geographies, in September we have a visit to Europe. So, looking at different customers in Europe. South America, we are giving to Argentina, Brazil, we were not giving there in a big way before. We were just giving small quantities, but that has increased bigger. So, that's why our growth is actually Indian customers are increasing. But on average, majority of the growth is coming from exports. But we are looking at different geographies where we can supply our products to.

So, it is a mix of existing customers as well as acquisition of new customers.

Okay, sir. And my second question would be more on this, there's 51 new parts that you are developing and under development. So, will there be any... Sorry for that. What will be the revenue contribution that you see from that new developments? And for that, you said that a KPEX requirement would not be that significant for the recent years. But what would be the utilization after this next KPEX cycle just get triggers?

Thank you very much. See, till 500 crore, we are with this current infrastructure, what we have created, it's good enough. But back of the mind, we are looking at new land plots like Menon Alcop, in the aluminum brakes division, we don't need to go for a new land parcel or a new factory because we have seven acres of land available already. Menon bearings as a company, we have invested and kept in that. For Menon bearings, brakes and Menon bushes, washers and engine bearings, we are looking at different opportunities nearby because our synergies work. If the companies are nearby, we share our resources. X, Y, Z. But we are looking for the next two, three years also, we are actually ready. But back of the mind, we are looking at different MIDCs or different places where we can have our, you know, we are doing analysis, risk analysis, different analysis, where we have synergies, where a potential factory could be, could be set up. But we are, we prefer Kolhapur and nearby MIDCs where What has been working for us for the last 30 years, we are with the same mindset, but we are keeping a fresh, open mind and looking at different opportunities for that kind of capex. But currently for the next 2-3 years, we are prepared. So we are not giving too much, like what you say, not focusing on that currently. We are focusing on our operation. Because currently today, because of the war, volatile, we are actually… We have achieved extraordinary numbers because the raw material prices have increased tremendously. Consumables, for example, carbide tools, for all manufacturers, all automobile carbide tools are required. Those carbide tools prices are increased by 300%. So these costs are not given to us by the customer. So even though during this tough time and volatile time, we can achieve these numbers, so if the war and it was a more peaceful environment, a better working environment, we would have achieved even better numbers and it would have been a very great milestone. So during these tough times, before if you had to do 20 things when you come for work, today we have to do 50 things. We have to be proactive about 10 more things because of war and the uncertainty. So during better working environments, we will be doing even better.

Apart from 37 parts that you are mentioning, you know, those have been already approved. Apart from that, we have a considerable list of RFQs that we have received, which are under consideration at various stages, that is commercial feasibility, commercial, then samples, then pre-pair, and then approval, etc., etc. So put together aluminum and biometar, the list of such RFQ list is about 75 crores of rupees apart from the potential business that we may gain. Through our visits to Canada and USA, that is different. But as of now, we are having that list and if we consider 75 crores of rupees, which is the list under consideration at various stages and with a striking rate of almost 75 to 80 percent, we can definitely add within this year and next year to the extent of more than 60 crores of rupees with additional business we will be getting.

Okay, sir. Thank you so much.

Thank you. We'll take the next question from Ankit Mittal. Please go ahead.

Yes, thanks for the opportunity and congratulations on a great set of numbers. My first question is on the demand side. So as we are exposed to the auto side and the commercial vehicles, do you see any kind of risk from a potential slowdown on the auto, on the commercial vehicle side in the second half of the year? Sir, how is the kind of order visibility and demand visibility you have for the rest of the year?

You see, considering the monsoon position, that may, the tractor segment may affect today to some extent, not larger, because in some parts there is a drought-like situation, but it is expected to improve within this month or next month. So we don't have to worry But at the same time, government expenditure. On public projects is going up like anything and because of the scrapping policy of the government, that is scrapping up government vehicles and other vehicles within 15 years, after 15 years, that is going so that... The demand will demand constant. We don't have to worry at all about that.

And if you see the pie chart of our segment-wide sale, we are doing around, with tractor and HCV, LCV segment, we are doing around 50%. For other 50%, we have taken conscious effort to diversify into other applications. And if you see in our business, the cyclic nature is always in the first or second quarter. Third, fourth quarter, if you see, normally are much better. They are not affected by the cyclic nature of this auto industry.

Fourth quarter, and it is always a question.

Yeah, and actually, first and second quarter are cyclic. And if you see a performance, we have beaten our last year quarter by around 60%, 23 crore. So, till now, we are not seeing that demand. And all our customers, what numbers they have released to us, they are looking very positive. And second quarter also looks Similar. And then third, fourth quarter, normally, if you see our 10 years, third, fourth quarter always does better than first, second quarter. So this layer is looking promising. So as management also, we are focusing very hard on this first quarter. And we have achieved our internal benchmark. We didn't achieve, but we've crossed, done a great job, I would say.

And my second question, as you said, the second half of the year is better. And I think in our last fall, we were expecting 360 crore of revenue this year. And given that we have already done around 92 crores in the first quarter. So even if we just analyze the first quarter, it comes to around 370 crores. So do you think that your guidance is kind of conservative and we could achieve a higher number and also on the market front?

I wouldn't want to comment on that. But fourth quarter, definitely you would be on a very happier note than what we are. Because first two quarters, we have done a good job. And we have 12.360 is a conservative number. But I don't want to comment more on the final number. It's just the first quarter. But fourth quarter, similar call, Ankit, it would be a much better scenario, I would say.

And on the margin also, as you mentioned, there are few things which have moved significantly in terms of raw material costs. So, do you think this 21-22% is kind of sustainable?

You see, even after increase in the raw material prices by about 22-25%, Still, not only we have sustained, but our margins have increased further. You can go through the details for the past period also. And you will see that it has further improved and we will expect to improve further.

Basic ship cargo transportation has increased significantly. Indian transport has increased. Like I told you, the oil, gas, compressors, carbide tools, for example, that has increased by 300%. So if all war goes down, it's a more better working environment, we should see better results. I don't want to comment on it too much, but it should be a more better working environment. Because all these are hardship what I'm saying. It's fact. Like we all know that. In that, we have achieved these numbers.

And we have overcome all these problems.

So, like you said, before we came, we had to do 20 things. Today we are doing 80 things to achieve, or making our management, our working system even more leaner, we are working harder, more kaizang applications have been happening. So we are working overtime here at Men and Bearings in Kholapur.

Okay, thank you and all the best for the future. Thank you. Thank you.

Thank you. We'll take the next question from Ashish Oni. Please go ahead.

Yeah, it's a futuristic question, sir. You are working with Tesla. So are you going to develop any products or working or trying to get inroads into humanoid robots?

I'd like to answer the question. We are a tier 2 supplier to Tesla Motors through constant tick. So, we are directly not doing any part, like directly not dealing with them. But currently, we are in, we are not going into robotics, etc. What field we are experts in, we are managing that. We are entering EV, we are looking at different application, defense, railway. So, we are a little bit more in this segment. But if opportunity comes, if it is technically feasible from us, why not? But currently, there is no talks or, you know, we have not, what do you say, explored that. That field. It's a different field, actually. It's a medical field, a lot of high-end robotics, a lot of innovation is required. But if there are some parts which we can do in that, we'll definitely explore it. But that's a different, complete different field from what we are working in.

So we are taking it as a solution and we'll definitely explore all the possibilities.

Okay, second. Second question is on the railways, the defense and aerospace you spoke about, right? Railways, you gave us some commentary that there is an inspection next month and then you can get five carot business. So can you throw some more like how exactly it will work in railways, like how much quantum work you can get in like chunks and defense and aerospace also just give a commentary on that.

So, for a defense aerospace concern, we are not very keen into that. But at the same time, railway business is coming and we don't know exactly how much business they are going to offer to us to start with. But eventually, it may go up what we have verified from the records of the orders issued by railways in the past. Since they are gradually increasing the business of all the customers, so far a break landing is concerned, and slowly, slowly, maybe in the first year, it will be initial period, and we don't expect too much of orders, but after getting the confidence about our quality, we expect that that should include manifold over a period of time.

Defense and aerospace, can you throw some light? What exactly are you trying to do?

Getting into the defense is so critical. You know, we have tried much in the part as well as there were so many people, they have visited, they were having the conferences, but ultimately, we do not get a response that is required from the concerned authorities. So maybe something is short from our side as well. But, Still, we are not entered into the defense.

Aerospace, we are looking at opportunities where we can do critical parts. We have developed some airport lightings. We are looking at some wheel parts for Honeywell. So, those efforts are going on. We have developed few parts for them. Defense was like Mr. Aradeh said. We are not going for defense parts, but like we do defense parts for the U.S. Now when we give to Allison our washers, those go in defense vehicles. So we are looking at exploring opportunities through engine bearings, washers and bushes. Those go in defense vehicle. As a secondary, not as primary making bullets or missiles or that kind of defense. We are looking how our parts can go as secondary auto ancillary parts to defense sector. Because currently when we are doing allison washers, those go in their defense vehicles. So, we are looking at opportunities like Mr. Aradir said, it's quite difficult, not difficult, it's... It's not a lot of either business working with government and what, you know, it's a very stringent process, meeting the authorities, getting it approved. So if today our conversion rate, realization rate from RFQ2 sample is six to nine months, government may be anywhere between two to three years where you have to have licensing officers. I don't want to comment more on that, but it's more complex than getting an OEM or a more. Yes. That is what, but we are looking at from a tier 2 supplier, how our engine bearing bushes can go in, make an India defense sector, because now have you seen how World War 3 talks are there, war is going, so a lot of budget is going through this sector, so we are looking to be a tier 2 vendor, wherever we can help our nation, go ahead.

Thank you, sir. We will take the next question from Neha Garg, please go ahead.

Good afternoon, sir. And congratulations for achieving the milestone.

Thank you.

Yeah, my question is, is the capex funded through internal accruals or through debt?

You see, so far as whatever we are considering, so far as biometal and ARCUP is concerned, it will be through internal accruals only. No fresh loan will be taken.

And sir, I would like to know what differentiates men and wearings from large domestic or the global pairs? What is the differentiating factor with the company?

Differentiating factor is that we are having an integrated facility. Our productivity comparatively is very good. We are accepting only critical components and critical parts where value addition is better. Like other competitors and global competitors, they are into the manufacturing of biometal in bearings of cars and passenger vehicles, etc. We are not into that. We are into heavy duty tractors and other engineering parts and industrial parts where value addition is better. So, our overheads are comparatively minimum, our productivity or OEE that you can study also, though OEE is really better than, that is up to the global standards, and that's why our cost of production is comparatively lesser, and we can... Give the prices and code the prices comparatively reasonable so that more and more people get attracted to us. Apart from that, we are maintaining the quality and time to supply. That is the first priority. Quality is the first priority. And considering these factors, like we have got certificate from many of the OEMs for zero PPM, that is zero percentage of rejection for parts per million. So that is our strength, and that differentiates us from other competitors.

We are also third generation now, I am third generation now, so last 30-40 years of technology in this field. At the right time, we do technological upgradation. Now, if you see all our customers, they are there with us for the last 20 or 30 years. Some customers are older to me also with the company. So we keep trust, we keep our brand name, we try to be a supplier to them. Like for Allison Motors in the USA during tariff time, we didn't stop our supplier. Even if it hit our margins, because our parts are smaller, if our parts don't reach their lines, they have bigger losses. Those times we supported them. So this US visit, we got more RFQs. So there are X number of things we do right at Men and Bearings. Which differentiate us from our customers or our competitors and those in the end that shows on our results. So there are, on different levels we do many different things.

Like Mr. Rajinder told me just now, so we are maintaining the relationship with the existing customers for a longer time. Like the only year we are single source for last more than 20 years. That speaks aloud about our timely delivery, quality and prices. That makes the difference.

Reliability, you know, whatever quality issue or whatever, they know they can rely on us. So that's a very big thing in our industry. And our work talks for us, you know, it's just not a marketing, I have a good website or a marketing team. In the end, what quality you provide, what after sale services you provide, what relation you maintain, that speaks. And that gives you the next RFQ, next business going forward.

Thank you very much, sir. And best wishes for your future.

Thank you.

Thank you. Thank you. We'll take the next question from Nishant Sharma. Please go ahead.

Thank you, sir. Thank you for the opportunity and many congratulations for great set of numbers. This is the first time I'm attending this call. And first of all, congratulations, sir. If you can explain as margin in each of the segment, because in your presentation, you mentioned that within breaks, we are targeting 12% kind of a margin. Well, during the call, if I'm not wrong, we stated that it's about 25% what we have achieved in this quarter. So first question is around margins. How are the margins in each of these segments? If you can help us understand that. Okay.

Okay. So far, bi-metal is concerned the margin. So, EBITDA margins are around 21% plus. Then, ALCOF, it is almost 21%. And now, for this quarter, in breaks, we have achieved 25%. So, overall, it is almost 21.5% to 22% as the margins. But at the same time, 25% we could achieve in breaks because of the product mix has already explained by Mr. Aditya. If the product mix is something different in the coming quarter, it may go down or may increase further also. So we are not very sure, but overall on a consolidated basis, if you see, we will sustain around 20 to 21% of margins over a period of time.

And just as a layman for you to understand, men and bearings, the biometric segment will have higher EBITDA margins. Then aluminum and then brakes. We were actually, if you see our last two years, we were at 14% was very good actually in brakes. But this quarter we have achieved 25. So right product mix, right operational efficiencies, right operations excellency, we can achieve good numbers in brakes also. So that one confidence as management we also got. We also didn't imagine that we could achieve that much EBITDA at brakes also. But this quarter was positive for us and new learnings for us also, but in average. As management says, if someone asks me on a random date, so buy metal will always have higher than aluminum and then brakes. And that is industry standard also. But we are doing, Mr. Aradhe and team are doing an excellent job here. So we are achieving good numbers.

As he explained just now, I will let you know that from 14 or 12 percent it has gone up to 25 percent just because our exposure to African countries to Dubai have halted for last quarter. And since there is a steep competition from China, particularly in Dubai and African countries for break-linings, we have to keep the minimum margin so far as exports are concerned to these countries. Only publics. And because of that, the margins are comparatively lesser when the export to these countries is more. You understood, no?

Yes, sir. So, going forward again, if we see the exports rising to these countries, we may again go back to the similar levels of about 12 to 14 percent.

No, no, it will improve further. We will try and see that it goes to 20 percent, which is our standard level, because we are not only depending upon the export. But as we have seen that our sales have gone up in spite of no exports to these countries. But at the same time, we have entered into two-wheeler, now we are entering into three-wheeler.

But main reason for EBITDA margin is product mix.

Product mix and we will try and see that we retain the same over a period of time.

This quarter has given us an idea, you know, which products to focus on, which are higher margin products. So as management, we have identified those, we are looking at more avenues where these These products can be sold or we can get more customers in this product mix so that efforts have already been started. So, that is the scenario here.

Okay, sir. And in terms of growth, if I have understood well, one, it would be export-led growth primarily as we have recently got orders from or we have worked in Canada and US. Along with that, we are also adding Europe and directly entering Africa. So that's one piece of growth. Are there other avenues from which we can grow?

You see, there is domestic number of opportunities are there, which are under RFQ, I told you just now, that is more than 75 crores of RFQ list is there, which is under discussion at various stages, and with target rate of conversion, maybe around 75-80%, we expect to get around 60 crores of additional business in domestic, alone. In next one and this year and next year.

And when we say export driven, export is hard, only 60%, 60%, I think, out of the whole order book. Domestic also has a good 40-45%. Domestic also, we are looking at different customers, different application, more compressors, maybe air conditioning, industrial fridge, generators, tractors. We are looking at different application also from a traditional HCV, HCV. So, we are looking at a more diverse pie chart, and that's how we are going forward.

Okay, last bit, if I am not wrong, you have alluded, 360 crore kind of a number or a guidance that we are looking for this year. From two to three year perspective, is there a guidance or a target that we have kept for ourselves?

You see, there is always a target. We have set ourselves on a conservative basis of 20% plus year on year. Considering our recent visit to USA, Canada, and then now we are approaching Europe as well. So, Netherlands, they have already invited us to offer us the business. So, considering that. We don't know. It can be 25% also.

We were supposed to reach 500 crore in 2030, but we are trying to do it as soon as possible. So in the next two, three years, two years, it's our internal target, but let's see. Actually, fingers crossed. We expect more. Actually, last year, if you see, like, forward followers, we had given 270 crore, like, three years back. I had given target that we were going to achieve 270. We've broken our own benchmark at least 300. So, hopefully, this year also, we can do that for our shareholders and for our company. So, let's see. We don't want to comment on this because… So, let us hope for the numbers. We still give… I attend other company meetings also. They don't give that much numbers. We still are more liberal with the numbers. So, 360, I would say, is a conservative figure and we'll stick to that. And the coming quarters will give you an indication also how are we going to be close or are we going to exceed it or how it's going to happen.

That's great, sir. And even we will be hopeful of getting that kind of a growth going forward and we'll definitely give you good wishes on that. One bit on, you added capacity on biometal by about 25 odd percent. So, still we have a scope for growth over there, right? Yes, yes, yes.

Tremendous growth. Currently, we have a lot of RFQs. Like I mentioned before, we are looking for a new plot also for biometal division for the next two years. If you start looking now till the land government permissions will be built, it will take two years. So, current investment, what we are doing, we are doing modular. What machines we require, what lines we require, what heat presses we require. So, that is going on. To achieve these numbers for the next two years, we have done the capex. After that, what we require, we have already started the process for that also.

There are N number of customers who are following us for business, maybe domestic, as well for exports, and we expect very good warrants.

Sure, sir. Thank you very much and all the very best. We'll look to follow you. Thank you. Thank you.

Thank you. We'll take the last follow-up question from Ruchita Kadage. Please go ahead.

Good afternoon, sir, again. Sir, just on the utilization part, so this quarter, what was the utilization in each of our segments?

Whenever we reach 80% of the utilization, looking at the RFQ in hand, and the business on the horizon, we go for, we see, when there is a business on the horizon, as you know that in Bering, maybe Bering, Bush or Washer, or as Alcov also, it requires 8, 9 months to almost 9 months, 10 months, etc. To start the actual production because of testing and validation. So, looking at the business on the horizon, whenever we cross 80%, we go for the additional capex for increasing the capacity. Got it?

Understood, but this quarter, what was the utilization?

Roughly, I will tell you bearing around 80%, 80%. But we don't calculate extra land and the land and building space we have. We just calculate it with machinery. That at 80%. Aluminium around 60% to 70%. And brakes also around 60% to 70%. In all this, we are not running our third shift at 100%. So that also we get 8 hours of a whole shift. So that is extra additional capacity which we have. Third shift, we are only running bottleneck operations today. So, for achieving these numbers as management, we are confident what numbers we have for the next two, three years. We don't have to do any big capacity investment what we have done in the past couple of years. We just have to do modular investment to achieve these numbers for the next two years what we have.

To be precise, what he is trying to tell you that we are already invested into the infrastructure and now only machining capacity has to be added.

Right, understood, understood. No, just to understand how much is realization growth and volume. So that when realization does go down, then to understand how much would be led by.

See, whatever, whatever future capex that we are going to do, the additional capex will have asset term of around 2.5.

Thank you. Thank you.

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

I would like all our shareholders, well-wishers, stakeholders to come to Kolapur. There are flights. So, we will arrange a tour for you to see all our plant, what kind of work we do, engineering, what kind of work culture we have. So, you all have a better understanding, a first-time experience of what Merinbearing does. And thank you. Hopefully, see you all soon next quarter. And Merinbearing keeps up with the same result. Thank you, everyone.

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

Thank you. Okay, thank you.