MM Forgings Limited (MMFL) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to MM4GINs Ltd. Q1 FY27 Earnings Conference Call, hosted by 361 Capital Market Private Ltd. As a reminder, all participant lines will be in the lesson only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touch-turn phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Dinesh Kumar from 361 Capital. Thank you and over to you, sir.

Thanks, ma'am. Welcome to MM4G Ltd. 1Q F527 Post-Sales Conference Call. From the management side, we have with us today Mr. Vidyashagar Krishnan, Chairman and Managing Director, and Mr. Raghunadhan, Chief Financial Officer. I will now hand over the call to Mr. Vidyashagar Krishnan for the opening remarks, to be followed by question and answer.

Krishnan, over to sir.

Good morning, everyone. Thank you all for joining us on MM4GX's Q1 FY27 results call. Basically, we've seen considerable improvement in the markets as far as Q1 is concerned, and we see the same optimism going through the rest of calendar of fiscal 27 and going into calendar 27 as well. With strong momentum from both domestic as well as export markets, particularly the USA. We have seen growth in the US market, but also the CV market, the CV tractor and past car market in India are all running pretty hot. As a result, your MM4G just posted a total sales This is a 427 crores, as against 369 crores in the corresponding period in the previous year. EBITDA stands at 82% gross and 75 crores net of other income, 18% net of other income, as against 16%, sorry, 19% EBITDA stands at, growth has been almost 16%, EBITDA has grown by the same 16%. And TBT has grown by 30%. All this is excluding the sale of land in the Oregon area. Of course, net of taxes, 61% naturally, being one-time gains. Domestic sales stands at 63.5% and exports at 36.5% at the gains and 39% in the corresponding period. India accounts of 63.5%, U.S. 18%, South America 4%, Europe 14%, and others about 1%.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may please press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Mumuksh from Anandrathi Institutional Equities. Please proceed with your question.

Thank you, sir, for the opportunity and congrats on a good set of results. Yes. Firstly, sir, we have seen a good growth coming back in Q1 quarter. Just if you can give a view for the full year, what kind of growth we expect in the domestic and exports market, and particularly for the US market. And also, I think very interestingly, this time you mentioned a very good mix of machining in the quarter. So what led to the notable jump in the machining mix?

Hello, sir. Are we there?

Oh, yeah. Sorry, I muted.

I muted the phone. So, we did about 1,600 crores last year. We can expect the same 80-odd percent growth for this year also. So, we should be looking at turnover in the region of around 1,800 to 1,900 crores. With regard to machining mix, a lot of money has been invested by the company in the last three years And just

on the machining mix, should this current run rate of 67% continue for the rest of the year, sir?

Yeah, I think it should hover on the 65 to 68 inch.

Got it. So, sir, also, I think this caught a particularly gross margin has seen a notable So, is it part of the reason being a better machining mix and exports mix, sir?

We've had, yes, we've had overall realization go up this quarter. So, that would definitely result in a better...

Got it. And on the, just on the employee and other expenses, which had increased Q&Q, any reason for the increase, and how do you see the run rate for those expenses?

The increase has been steep in Q1, largely because last quarter, the period in the reference, we had not given an increment, and that was done only in the subsequent quarter. So this quarter effectively, at this time we had given the increment in first quarter itself, so right from 1st of April. So that is one reason why there is a significant increase in personal Plus, we've also added some numbers. But overall, now, numbers and increment increases are stabilized.

So, right through the year, these kind of numbers should hold.

Got it, sir. So, lastly, just on the debt reduction plan with the land sale now, and how do you plan to further register debt? And I guess you can also update us on the interest rent rate expected ahead with the change in the On the interest rate policy, which we had done earlier.

We hold that last year, FY26 opening, the debt was around 750 crores, net debt, term debt at least.

So, graph said, sorry, that will remain at those levels. Let's look at 750 crores.

That will hold at those levels for this year also. Would be repaying about 170 crores this year. And the same would be drawn back as for the future, for investments being made in this year, at least the same levels.

Got it. So broadly, CapEx would be also 170 odd crores, sir?

Yes, approximately 150 odd crores.

Got it, sir. Thank you. Thank you so much for the opportunity, sir. All the best.

Thank you, sir. Thank you, sir. The next question is from the line of Ramesh from SJ Investments. Please proceed with your question.

Hi, sir. Thank you for the opportunity. So, you mentioned that some tailwinds from the U.S. sector. Could you elaborate further on what exactly you mean by those tailwinds and is it in the commercial vehicle sector only or other sectors also?

For us, it's the commercial vehicle sector. CV market, particularly classic trucks, is moving quite strongly. So, we see huge traction there.

Got it, sir. And overall, in terms of, let's say, CapEx, we've done a huge CapEx cycle already, and you're mentioning the CapEx cycle to further continue. Like, could you explain on why are we investing so much, and are we increasing our capabilities? What exactly is happening in terms of our CapEx building?

We are increasing our capabilities across a wide spectrum of machined products. That is where one of the aspects is into machining. Plus, we are also adding a few equipment into our forging. We are adding the 16,500 ton press, which is production by end of this, a 4,000 ton press that has gone into production in the last couple of weeks. Apart from, a little bit of de-bottled necking and replacement capex cycle coming in on the 4th year.

So right now, in terms of machining capacity, where are we at? And with expectations, where do you want to end up in, in terms of capacity at least in machining?

It's a very mixed bag. I didn't get your name.

Ramesh, sir.

Ramesh?

Yes.

Yeah, hi Ramesh. Machining is a mixed bag. It's very difficult to quantify the machining capacity outright in numbers. What happens is that if you look at numbers alone, a small product with huge numbers in machining would overshadow a much bigger product with much less numbers. But the bigger product would be more value-add and probably also more bottom-line accretive. So, it's tough to, you know, give a single number that will quantify the machine side. But one good thing is that April onwards itself, we have, I should have made that in the opening remarks, April onwards itself, we should have run all, I'm happy to say that, running to the full capacity, not capacity. So April and May were down, were hampered by an availability of labour which was prevalent right across the country. We were not new to it, alone to it. The rest of the country was also a part of the shortage of labour. And ours was no different in April and May. June was a lot different. We were able to bounce ball and also a little bit of migrant and ensure that we were up trumps in June. And we see that our capability has gone up considerably. Now, it's hardly for want of manpower. Few cells have technical issues here and there. Not much, but a little bit, let's say the last 7 to 10 percent here and there. So, we are now working on harnessing those and demotronically. I would say 10 to 20 percent, not just 7 percent. I would say it would go over between 15 to 20 percent. So, there is a good growth potential further ahead, and we are pushing those numbers from July onwards.

Got it, sir. Sir, in terms of automation, I understand that we are building capacities in machining and forging. So, automation also are we investing in, and how much have we invested so far in the last four years?

Automation has been largely in the last couple of three quarters only. We would estimate that our investment in automation is about 7.5 to 10 crores.

Sir, so going forward, do we expect a lot more going towards this instead of rest of capacities? You mentioned that 150 crores are investing this year. So when do you think we will start?

Sorry to interrupt, Pramesh, sir. May we request that you return to question Q follow?

Yes, sir. Thank you.

I'll answer this question, and so that, you know, it will benefit everybody else. We would expect this to result in increase in turnover in about two years.

Thank you, sir. The next question is from the line of Nepoon from CD Research. Please proceed with your question.

Hi, sir. So, are you facing any pressure from the government to boost our exports?

Sorry?

Yeah. Are you facing any pressure from the government to boost your exports?

No, nothing specific. No, because there is a lot of... We're also exporting and our export ratio, export numbers have been reasonable right across time. Though in percentage terms, exports are up. That's because domestic has grown. You know all that.

Yeah, yeah, yeah. Okay. Thank you, sir.

Thank you, sir. Ladies and gentlemen, the line for the management seems to have disconnect. Please hold while we reconnect. Ladies and gentlemen, the line for the management has been reconnected. The next question is from the line of Navin Vijay from NS Capital. Please proceed with your question.

Hi, sir. My first question is, where are you currently seeing momentum or new avenues for growth in the order book? We recently had a power backup company secure a large order from hyperscalers. Just wanted to know if you are positioned to supply crankshafts for such OEMs.

Naveen, yes, the basic forging market, and there is a strong...

Thank you, sir. My second question is on the power and fuel cost still being elevated despite the addition of green power. Could you please quantify what has led to this?

Sir, there has been a huge increase in fuel costs in Q1 on account of the West Asian conflict. That has been, of course, over, after Q1, it has, that is the reason why power and fuel has gone.

Got it, got it, got it.

Plus, rising EB power costs due to the policy of the Tamil Nadu government, but that has not come in Q1 of this year. Got it, got it. To government then, annual increase in TMEB costs.

Got it, sir. Got it. Another small bookkeeping question on the depreciation. It has gone up 20% year on year. Just wanted to know which facilities or product lines are seeing bulk of these capital additions.

Largely forging and machining capex.

Okay, sir. We could see the machining share go up very nicely. My last question before I join.

That is an intent.

Yeah, yeah. My last question before I join back in the queue is on Abhinavar Isil, sir. We had customers getting added on. Just wanted to get an update on how many customers that we are building and the pipeline and an overview on that, sir.

Thank you, sir. I'll join back in the queue.

Thank you, sir. The next question is from the line of Manas Jain from Sanjay Jain Family Office. Please proceed with your question.

Hello, sir. Good set of numbers. Actually, we are shareholders of a company for the last 30 years continuously. So, it's been a very privilege to be a part of this company for the last 30 years. So, I had just two questions, sir. I remember seeing two, three conference calls back, and you also alluded to it, saying that the trailer tractor is reducing the front axle demand. So I just wanted to understand is MM Forging looking at entering the trailer axle suspension assembly. I understand the process might be different, and the customer segment is also different. But some of the forging companies have started doing this in order to negate that business loss. So, I wanted to understand if we are considering in that direction. Okay. Any particular reason, sir? Is it margin dilutive to our existing business? Is that one of the reasons?

One would be, yes, it's margin dilutive. And second, we have enough on our hands in terms of growth, managing debottlenecking, And ensuring that, you know, there is further missing of improvement on EBITDA and costs. So, this quarter has been struggling to just keep supplies going. We have to now organize ourselves on cost reduction. There is a lot to do in the current business.

Okay. Thank you, sir. Second question, sir, I think I saw.

So, without getting stuck here, we have to ensure that we are moving along in this line of business first.

Okay, fair enough.

If we have now, so the traction is there very clearly, and we need to carry this to its logical conclusion across the spectrum of the business itself.

Okay. Second question, sir, I remember seeing some interview of two months back on one of the media channels, Where you said, subject to any QIP, you might want to do a 400 crores growth capex. So, I just wanted to understand, I know it's very far stretched, but I just wanted to understand where are we targeting, like existing products, existing business, or we are looking at non-auto industrial, or we are also evaluating non-ferrous products such as aluminum, titanium for aerospace. I'm just trying to understand where our existing machining and engineering capabilities can be leveraged. So, where are we looking at for that 400 crores of growth capex?

In primary, we would be looking at our own business.

Okay.

In hot primary zone. The second would be anything else in the metal working space.

In the?

In the metal working space, means metal machining. Okay.

But so non-auto would be industrial, may be one of the applications we might be looking at.

Definitely.

Got it, sir. Thank you.

Thank you, sir. The next question is from the line of Suraj from Catamaran. Please proceed with your question.

Hello, sir. Thank you for this opportunity. First question is, of the capex of 150 crores, what percentage or what amount would be replacement capex and what percentage would be new capex?

Suraj, can you repeat?

Sir, of the 150 crore capex that we plan to do, what amount would be the replacement capex and what amount would be for new machineries and equipment, growth capex?

Roughly about 30 to 50 crores will be, up to 50 crores will be the replacement capex.

And then on the current gross block of roughly 2100 crores, what is the peak revenue that we can generate?

So that number?

And then one last question. What was our revenue from the U.S. market in the base quarter, like last year, same quarter?

Percentage terms, 18% in this quarter.

Now, 16% in the previous reference quarter.

Thank you very much.

Thank you, sir. The next question is from the line of Shubratra Sarkar from Mountain Infra Company Limited. Please proceed with your question.

Hello. Am I audible?

Yes, sir.

Yes, can you share like what is the in terms of volume, like what we have done and what is our expectation in terms of volume, last year, last year, last year, what kind of volume we are doing and sir, one, two, I understand that I also follow your company for a long time. So, we are operating at a relatively much lower capacity utilization, but still so we are continuing to do our tactics. So, in this case, so can you guide us like what can be the top level, like what can be the key tactics that we can do or what is the next one or two years in which direction we want to make the tactics and why basically.

Okay, can I get your name, please?

My name is Shubyoso Sarkar from Mount Intra Finances. So, we also follow your company for a very long time, and we have Your

first name, Shubrata, was it? Shubrata, yes, Shubrata. Sarkar. Sarkar. We see the capacity utilization is going up considerably, Shubrata. So, last year, we did about 78,000 tons. Now, we have done about 20,000 tons in Q1. We expect Q2 and beyond to be much better. It should hover at around 24,000 tons for each quarter, 23,000 to 25,000 tons minimum in Q2 and beyond. So, we should, as discussed or as we have been, we would expect to cross the 90,000 ton mark in this year, and next year challenge the 1,10,000 ton mark. So, the momentum is on and we see traction in moving our outputs. Currently from Q2 and onwards, we should be almost at a 1 lakh ton per annum. So, capacity utilization is going up. I am happy to say that. From 80,000 tons, this year we should be 90 plus, with a run rate definitely of 1 lakh tons. End the year with much more than 1 lakh tons. Things hold, we should be able to push the run rate beyond 1 lakh tons. Our internal target continues, and then 30,000 tons per quarter.

Small clarification indexes whatever we usually are expecting almost entirely from volume growth itself.

The consequence of that is the next part of your questions is where are we investing in? So, we are largely investing in the machining side and a little bit on, not a little bit, this year about 50 crores on debottlenecking, mostly on the forging side. So, and a little bit of that 40 crores will be forging, 10 crores will be debottlenecking on the machining side. So, this debottlenecking will result in greater utilization and more machine products going to customers.

And, sir, most of the captives for next 2-3 years will be from our internal actual, sir, or we will take some additional debt, sir?

No, we do not plan to increase debt beyond these levels, reasonably, and EBITDA along with it. At that point alone, we could consider raising gross debt levels. Otherwise, I would like to see it capped around these levels. Give or take 50 crore. Give or take, give or take. At this point, we will reduce the borrowings, but we want to maintain it as we have announced.

Whatever funds we will be receiving because of this land bill, what will be the utilization of that, sir? This quarter, we have sold our land and we have realized some money, sir. So what we will do with this, sir?

That will be used to reduce our working capital and our capital borrowings.

Thank you, sir.

The next question is from the line of Nishan from Shridev Abrasif. Please proceed with your question.

Hello, sir. I have a question about the current capacity utilization. Yes. And how do you plan to increase it, sir? Like, do you have any kinds of capacity expansion of energy, sir?

I just answered that now, Nishant, when I answered Subharto. So, last year we did 78,000 tons, 20,200 tons. Due to onwards, we expect a strike somewhere between 23 and end the year at about 25,000 plus tons.

And one more question, sir. Are you catering to any EV business?

One second. It should mean a run rate of 1 lakh tons a year, and that should set the tone for FY27 to reach 1 lakh to 1 lakh 10,000 tons. Hopefully, the thing is behind us.

Okay. And one more thing, sir. Are we catering to the EV business, sir, two-wheeler, two-wheelers or EV?

We are catering from, you say from the EV sub or you are talking from the parent company?

No, sir. From the parent company, sir.

Ah, oh, fine. That's an easier question to answer. Yes, we are serving products to EV customers or that go, not EV customers, that go into electric vehicles across several...

Thank you, sir.

Thank you, sir.

The next question is from the line of Prajesh Maru from Money Curve Analytics. Please proceed with your question.

Yes. Good evening, sir. Thank you for the opportunity and great set of numbers. One of my questions has already been answered. I have one more clarification. I'm sorry if you think this is a particular question. We are setting up our large base of 16,500 tons, and you have already said that its revenue will creep in in the next two years. Do we have plans to move towards hyperscaler or any other segment like defense or anything which you are looking to explore the opportunity with this kind of capacity, sir?

We are definitely moving into businesses that are safer scalers. No doubt. We see that right in front of us. And a lot of business is coming our way. With regards to defense, it's a mixed bag. Mixed bag because once we get into, you know, the business of defense, it won't stop with just serving the Indian market. We will start looking at capacity utilization. We may not fill up entirely with the business from Indian defense. So, immediately we look at, you know, what we can do outside of the country. And that's something which, at a personal level, I am not so inclined to do.

Thank you, sir. So, the line for the current participant has dropped. Should we move to the next?

Yeah, yeah, of course. He will join back if it is required.

Okay, sir. The next question is from the line of Ramesh from SJ Investments. Please proceed with your question. Mr. Ramesh, your line has been unmuted. Please proceed with your question. As there is no response, we'll move to the next question. The next question is from the line of Suraj Malou from Catamaran. Please proceed with your question.

Thank you very much. Sir, can you help us understand why did other expenses increase by 35% year on year?

You'll give me a few minutes, I'll come back to you on that.

Sure, sir.

I don't have the... My team is throwing... Combination of a couple of things. One is fixed, you know, what is attributable to the regular other expenses coming in the P&L. And it also expenses relating to freight. Freight has risen sharply. What we call as, you know, the traditional other expenses, the overheads of running an organization like starting from rent up to fax and paper and computer IT, blah, blah, that runs at an increase of around 10%. From 8 crores, it has gone up to 9 crores. Biggest jump in other expenses of around 4 crores, 4.2 crores is increased in the published expenses itself.

The domestic business has grown.

Europe has grown, de-grown volumized. Surprise for me. I don't think so.

At the last four quarters, in Q2 or 526, we were 82 crores from Europe, which became 89, then dropped to 68, and now 59.

Europe is a stable market and goes reasonably up and down in tune with demand. Nothing noteworthy from Europe in terms of, you know, no business has been lost, I can say very clearly. It's just customer demand that's going up or down.

Because we hear that European forging shops are shutting down. So that should be a large opportunity for us, right, and it should reflect in the growth. In terms of machining, what percentage of our gross block would be the CNC machines?

Ladies and gentlemen, the line for the management seems to have dropped. Please hold while we reconnect them. Ladies and gentlemen, the line for the management has been reconnected. Thank you and over to you, sir. Suraj sir, your question is answered.

No, my question was, how many CNC machines do we have, and how much does that amount to of the 2100 crore gross block?

A tough question, Suraj. I don't have that number across the board. It'll run into hundreds that I can tell you. I'll note it down, we'll note it down and we'll come back to you on this. Sure sir, thank you. But I can tell you what it constitutes. One sec. I can tell you what our investments in machine shop constitutes out of the 2100. If you will give me a minute, if you will give me this thing, I can locate that sheet for you.

That is possible. One second, hold on. I will get back to that answer. We have the data, just fishing it out.

Two quarters ago, you had mentioned about reaching 3000 crores in revenue by F530. Do we still look to that number?

Thank you very much.

Thank you, sir. The next question is from the line of Gautam Kishan, B. Mehra, from 361. Please proceed with your question.

Thank you for the opportunity. Good afternoon, sir. Trust you well. Congratulations on a great set of numbers. Sir, as we move... Very well, sir. Thank you. Thank you. Sir, as we move, you know, from 20,000 tons per quarter to 25,000 and eventually to 27,000, 30,000, where do you think or believe your maximum growth could come from? Is it the Indian markets or the European markets or the American markets or a combination of all? Combination of all.

First answer will be combination of all. India today being 63% of our sales, naturally will carry a lot of the tailwind. We are also getting a lot of order wins on the export side. So that also augurs well. And overall, I would say numbers should go. See, the point is, Gautam, many customers are also setting shop in India. Yeah. So, global customers or some amount of global business is becoming Indian business.

Right, sir.

And just a small follow-up. Sir, of, you know, the last, say, three, four cycles, do you think the combination of all three regions of yours, this is the highest growth you could see? The current cycle?

Please repeat, Gautam.

Sir, you know, we've had multiple cycles over the last 20 years. The current combination of, you know, business being raised from India, Europe, and America, do you feel the current scenario is the best in the last three or four cycles that we've seen? I think so.

Perfect. Thank you. There is a huge level of, what shall I say, strength in demand across all customers. At some point of time, some customer, some reason or the other has been moribund. But this time around, as I told a few minutes back, every cell, every machining line is running to the fullest of its capability. We have tons to go in terms of productivity improvement, at least from my vision. So, we are working, and my team is working really hard on that. We have a lot to do on the productivity side, even at these levels. So, that's the headroom that we have. And having said that, today, every line is virtually running at its, but that can be put it by another person easily. In some cases, it takes a lot of work, but that work is a must. It's unavoidable and it must be done to improve the overall asset utilization of the organization. And wherever, during such quests, we find that we have to de-bottleneck or replace,

we are also considering that. Thank you, sir.

Thank you, and we look forward to fantastic numbers in F27 and F28. Congratulations once again. Thank you.

Thank you, sir. Thank you, sir. The next question is from the line of Prajish Maru from Money Curve Analytics. Please proceed with your question.

Thank you for this opportunity again, sir. In last two, three calls, you had consistently said that we have taken some cost-saving measures in terms of saving the power and fuel cost in terms of interest cost as well as labor cost by putting robotics. And if I am right, in one of the institutional calls, you had said that you are also incrementally trying to use AI to become more efficient on the ancillary functions of the company. So, given all these things, sir, and with the volume going up, do you see any headroom for EBITDA margin to expand from current 18% level, sir? And if yes, then what kind of margin we can see, sir? Thank you.

Can I get your name, please, again?

My name is Prajesh Maru, sir.

Oh, Prajesh, you were there a few rounds earlier, or just before Gautam, actually. Yes, Prajesh, there is a scope for EBITDA improvement. I would be naïve to say that there is no scope or that we have reached peak EBITDA. There is a scope, and we have to work on it to get to... Here's the thing. Our target would remain a 20 plus.

Thank you, sir.

1% is, I can, I have the clear visibility for 1 to 2%, but I would say 2 to 3% should, that should be our goal for the team.

Thank you, sir. Thank you so much.

Thank you, sir. The next question is from the line of C.A. Garvit Goyal from Sireni Alpha Analytics LLP. Please proceed with your question.

Sir, my question on working capital side, like in last two years, we see the working capital around 30% of the revenue. And in FI24, this is about 23%. So, in given stand-alone revenue, any operational contract around 409, of course. So, have we able to convert this cash in trade issuable and other in quarter 1 per 24, 27, and is there any working capital in that city still there, or we can come with the 23% as the past performance?

Very good question, Garvik.

We are working on this increase in working capital, and it is our endeavor to bring it down, no doubt about it, by cutting down on investment. And to answer a previous question about AI?

No, sir. My question on working capital...

Ah, Anish Maru asked it. Yeah. Oh, I didn't answer it again. I'm sorry. Wait, one sec. Using the two together, we are using now AI tools to identify entry is getting stuck. And last, believe me, in the last 7 to 10 days, it's become a real, it's become a revelation on stuck inventory. So many teams are now, a rapid action force has been formed, dissolved. First is inventory, if I can use the word, literally. Push it out from us, which customers want, and second is to get down our money that is stuck in goods. So, point well taken. That is one of our goals for the months to come. Answering this, I also would say that Jayesh's question on started using at least to const the data and see the insights are amazing, really amazing. It's able to map down and say this is the data, these are the parts, these are the particular part numbers which are required and in-stop and we need to push these. So, it's giving a lot of insights to the management team, and then I hope in the next few weeks we should see, not I hope, I expect over the next few weeks, this to start yield results. And what we want to do as a result of this is to convert our WIP to the barest minimum, say a week's time, and move everything else as finished goods. There would be a reduction in inventory numbers to insanely low levels, but at some point, I would focus on getting that inventory to a bare minimum in WIP terms, the numbers on, convert all that into what we call as RFD or ready for dispatch.

Thank you, sir. The next question is on the line of Priyankar Sarkar from Square 64 Capital Advisors, LLP. Please proceed with your question.

Hi, sir. Good evening. Congratulations on a good set of numbers.

Sir, just one basic question. Is there any update on the enabling QIP resolution that the board had passed a few months back?

After a few rounds back, the QIP is largely centered around the opportunity that we might see in. Generally, it's all we would definitely consider.

Sure, sir. Thank you very much, and wish you all the best.

Thank you. Thank you, sir. The next question is from the line of Nitya from KK. Please proceed with your question.

Oh, yeah. Hi. My question has been answered already. Thank you. Oh, okay.

Thank you, sir. The next question.

Yeah, please go on. Before, you could identify the next caller, please. One of the data that was required was, what is our capex in the machining side, and where have we put the money in? 625 crores and last 10 years, the number is about 1000 crores. 625 crores has been invested in the last 5 years. Repeating the numbers, all on the machining side, 10 years. 1000 crores is for the last 10 years. I am giving approximate numbers, okay. All rounded off, last 10, 5, 10, 20 crores. So, 1000 crores for the last 10 years, 625 crores in the last 5 years.

So, should we take next question? The next question is on the line of Ramesh from SJ Investments. Please proceed with your question.

Hi, sir. Thank you for the follow-up. So, as you already alluded to, you spent around 1,000,000 crores over the last 10 years, right, sir? So, just trying to understand, how did the capacity develop? About 10 years ago, how much was the capacity? What is it today, in machining today?

The pasty is extremely difficult to pin down in terms of numbers or in terms of, because I can tell you there's one part that is very heavy and requires relatively less machining. Very popular. Today accounts are about, our sales is heavy and requires extensive machining. Then there are light parts that require, you know, less. We'll try to quantify this over a period of time. Give us a couple of months. I noted it down from the first question that Mumuksh himself has asked. So, right from there, this question is persisting. We have a number tracker, but that number tracker is of no use to you guys. So, we need to quantify machining capacity. We will work on it and come back to you with a method of, you know, we are answering such an important question with such a vague manner, but that is the way things stand. And we will apply our mind and bring some method to that madness, if ever we can.

Understood, sir. Got it, sir. That will be helpful. So, just, and one more thing, sir. Coming to the American opportunity, right now, contribution is around 10% or 15%, right? Where do you think contribution from U.S. is going to expand to in the next U.S.? Because you are very bullish about it, right?

It is around 16% now, if I'm not mistaken. And the U.S. should increase by around, should hold these levels, 18% now. It should maybe increase by a percent or two. The rest of the world is also growing. This time around, it's not just one zone that is growing in regards to the others. Every zone is reasonably growing, barring a little bit of a blip from Europe.

So, just understanding, just one more thing, sir. Trying to understand the market. So, most of our exports go to Europe, right? Just trying to understand, are forged products more used in Europe than US? Is that the fact or is it just that we have a longer relationship with European customers than US customers? Could you explain, trying to get the new answer?

Forged parts are used in any economy. In any economy, forged parts are used. Without forgings, you don't have motion, as we know it today. And today, forgings are at the center of where motion is, where transportation is. So, we know how both are so critical to any economy, right? But what happens is that where these get consumed is the original equipment manufacturers or the tier 1s. Now, where are they located? And therefore, where does it get, it gets sent to those geographies. Obviously, it will be unwise to say that, you know, the rest of Asia is, it will be downright foolishness to say, rest of Asia is not at all into the transportation or the forging market. Rest of Asia is huge. Japan, China, Korea, but these are all traditionally closed markets, as India So that is the reason why everybody looks at forgings, cashings and all into Europe and this kind of metalworking is Asian economies.

It is declining in the other economies.

Got it sir. So basically US and Europe is where these capacities are reducing and our opportunity also lies this. So I was just trying to understand the little bit nuance in that talk.

It's also at South America's interest.

South America's interest is declining.

Not a tough question to answer that. Now Brazil is fighting back. There are a lot of indigenous forgers now coming up in Brazil. Quick to write off and say South America is a declining market. South America is another market where there is scope. That much I can very clearly say.

Understood, sir. That's right. So, I was just trying to understand the roots of why European customers are much bigger contribution in terms of our revenues. I was just trying to understand what exactly, why are, because usually it is other way around, the US is higher proportion compared to Europe.

There are high cost economies, high labour cost economies. So, labour and cost pressures ensure that such businesses go out of those geographies.

But for us, how was it possible?

Forging capacity is difficult. Setting up a forging capacity, getting hold of people to operate forging process and processing the parts, not easy, damn difficult. Even in India, forgings will be a sector that will be difficult to man in the next few years. Currently, we do have a significant portion of women coming into our workforce. Ultimately, the point of the matter is that these economies will find it difficult and also those skills get lost over a generation. For 20 years, you haven't forged. Then getting back is difficult. But you can also jump the skill game for quick glancing and glances. India jumping the GSM bandwagon. We didn't go through the CDMA route and struggle on the mobile phone side, connectivity side. We straight away jumped into GSM and we left forward by about 20 years. Like that, in the forging side, it is possible to somehow gain, but that will have to come in very restricted circumstances, where there is huge level of automation, and you will have to pour in capital, which means that you need to have customers who are backing you through the hilt. All these are, you know, strategic, seismic shifts in the costing landscape, which will take, which will be very difficult to unravel.

So, just one last question. Just trying to understand. So, you mentioned that because of declining capacity, we are getting orders. So, probably our main competition is China. So, where do you think we are getting most of our orders? Is it because of declining capacity or China resourcing?

We are getting new orders also because customers there are growing their business. We want to source from BCC or LCC, best cost countries or low cost countries. Those markets are in clear decline alone. For all that, you know, the US market may be growing also in 4G. Our way across the global landscape, because customers want, see, ultimately, the N2 at an entrepreneur or at an organization level to service a business at 18% EBITDA will be a lot higher than servicing a same business at 5% EBITDA.

Yes, sir, fair enough.

Right. So, that N2 makes for customer satisfaction.

Got it, sir.

This is my question over the last 15-20 years.

How much more expensive would it be compared to training? Sorry, sir.

We'll take this as a last question from you due to time constraints, sir.

That's fine. Thank you.

Thank you. Thank you, sir. Ladies and gentlemen, that was the last question for today due to time constraints. I would now like to hand the conference over to management for closing comments.

Thank you all for participating with your time and, as usual, with your intrusive questions, insight into our own business. And I expect that MM4 Winnings would do strong in the quarters to come, with about targeting 25,000 tons of sales at a bare minimum in the coming two to three quarters. Reach that, and then look beyond to touch 27,000, and then 30,000 tons every quarter, thereby quickly galloping to a capacity utilization of around 1,20,000 tons. Step by strong machining exposure. As we see, most of the orders that we are getting now are all machined, and very few are, as well. Which means that capital requirements are more. We see challenges in the cost side, and we also need to do some trimming internally in terms of last few months, internally, as well as in this meeting. So, thank you all for your wonderful participation, and looking forward to...

Thank you, sir. 61 Capital Market Private Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines. Thank you.