Steelcast Limited (STEELCAS) Q1 2027 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to Steelcast Ltd. Q1-F527 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing start and zero on your touch-down phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Arpit Mundra from EY team. Thank you, and over to you, Mr. Mundra.

Thank you, Renju. Good morning, everyone. We welcome you all to Steelcast Limited earnings call to discuss the Q1 API 27 financial results. Today, from the management side, we have with us Mr. Chitin Tamboli, Chairman and Managing Director, Mr. Rushin Tamboli, Full-Time Director, Mr. Shubhas Sharma, Executive Director and CFO, and Mr. Umesh Bhatt, Company Secretary. Please note a copy of all the disclosures is available in the investor section of the website as well as on the stock exchanges. Further, a detailed safe harbor statement is given on phase number 27 of the investor presentation of the company. Please note that anything shared on this call which reflect the outlook for the future or which could be constructed as a forward reading statement. Must be reviewed in conjunction with the risk that the company faces. Now, I shall hand over the call to Mr. Tripant Tripant Amoli for his opening remarks. Over to you, sir. Thank you.

Thank you, Arpit Bhai, and very good morning to everyone. We welcome you to Silka's earnings conference call to discuss the company's performance for the first quarter ended 30th June 26th. Our vote meeting concluded yesterday and the financial results along with investor presentation have been uploaded on the stock excel and the company's website. We trust you have had an opportunity to review the same. Now let me begin by sharing an overview of the global and Indian economic environment. The global economy remained resilient despite geopolitical tensions, trade policy shifts, and supply chain realignments. Global GDP growth was estimated at 3.3% for the calendar year 2026. India continued to be the fastest-growing major economy, supported by robust domestic consumption, sustained government-led infrastructure spending, and strong policy focus on manufacturing and localization. GDP growth is estimated at 6.5% to 7% for the calendar year 2026. Industrial activities remain strong across manufacturing, infrastructure, and mining, creating a favorable demand environment for key industrial sectors. Government initiatives such as MEC in India, PLI schemes, and infrastructure investments continue to support India's long-term manufacturing and industrial growth story. Let me now briefly touch upon industry trends before moving on to our financial performance. The casting and forging industry continues to benefit from strong demand across mining, earth moving, construction, railways, defense, and other industrial sectors, supported by increased infrastructure investments, manufacturing, localization, and global supply chain diversification. Demand fundamentals remain robust, driven by strong equipment utilization in the mining and construction sectors. Continued expansion in infrastructure projects and growing requirements for ground-engaging tools, wear parts, and high-performance steel castings used in excavators, loaders, and heavy earth marine machinery. The Indian country industry is projected to grow at a healthy pace, supported by investments in transportation, energy, mining, industry development, while the forging industry continues to benefit from opportunities across automotive, defense, railways, and heavy engineering sectors. Let me now briefly highlight our quarterly financial performance for Q1 FY27. During Q1 F527, the revenue from operation was at 124.82 crores, a growth of 17% from 106.69 crore in Q1 F526. EBITDA during the quarter was at Rs. 35.24 crore, a growth of 17.37% from Rs. 30.02 crore in Q1 F526. The EBITDA margin was at 28.23%. From 28.14% in Q1 FI 26. Paid during the quarter was at 23.71 crore, a growth of 19.26% from 19.88 crore in Q1 FI 26. Paid margin was at 19% from 18.64% in Q1 FI 26. Ladies and gentlemen, as we look ahead, the company remains firmly committed to sustainable and capacity-led growth. In line with our increasing production requirements and our focus on reducing carbon emissions, we are significantly strengthening our renewable energy footprint. Currently, two renewable power projects are under implementation, a 2.4 megawatt hybrid power plant comprising of wind and solar. And 1.4 megawatt solar power plant. Both projects are progressing and are expected to be commissioned before 31st December 26. Simultaneously to cater to growing market demand and enhance our manufacturing capabilities, the board has approved the establishment of Greenfield Foundry with a capacity of 8,500 tons. This facility will manufacture steel castings across a wide range of applications from 5 kg to 1,000 kg and involve a planned investment of approximately Rs. 120 crore over the next two years. While energy costs have remained elevated due to the impact of global geoparticle development and sustained pressure on fuel prices, we have successfully ensured adequate fuel availability to support uninterrupted production. Backed by this strategic investments and operational preparedness, the company is fully geared to meet the growing demand of the market and capitalize on emerging growth opportunities in the years ahead. With increasing input cost of various raw materials and natural gas, we would be having price correction on an upward basis, and this will be effective 1st July 27. In the end, I would like to say that As communicated to you in the previous quarter, we remain confident in our ability to sustain growth momentum, maintain healthy profitability, and deliver long-term value creation, targeting a growth trajectory of approximately 20% CH year over the coming years, and for FY27, we expect a growth of 25% compared to last financial year. There will be sequential improvement in top line from year on for several quarters. Margins will remain in guided range and focus is to drive top line. Operating leverage benefits should kick in with scale increasing. Increasing capacity should give you a sense of how the demand scenario is playing out and how our existing clients are looking at increasing sourcing from us. With this remark, I would like to thank all of our stakeholders for their continued trust and support. I now invite your questions and look forward to an engaging discussion. Thank you.

Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on touchstone telephone. If you wish to remove self 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 comes from the line of Shubhi Kupta with Trinetra Asset Managers. Please comment.

Good morning, sir. So my first question is that we are seeing, as you mentioned, that we are seeing hike in fuel prices and other raw materials. So how much do we plan to pass on of that to the customers? And I think we started from July. So how much has already been done and how much will be done in the coming quarters?

You know, as you all know, we have the sales price variation formula with all of our customers. The input prices have increased from March onwards, so the price correction effective 1st April was very minimal, and most of it will come from effective 1st July. And all the major raw materials are part of the formula, and we will be able to pass on everything, all increases.

Okay, and so this ground engaging tools, how much of the revenue contribution is coming from that segment?

As of now, it's less than 1%, but by FY29, we expect this to reach 4.5% to 5%.

And, sir, how much was it last year for FY26?

I think more or less same as the current year, but we are in the midst of developing new parts. So, once they are approved, we will go into serial supplies, and gradually, year on year, we will see an increase with FY29 numbers at maybe about 4.5% to 5%.

Okay, sir, thank you.

Thank you.

Thank you. A reminder to all the participants, I do not press star and want to ask a question. Next question comes from the line of Ankur Kumar with Alpha Capital. Please go ahead.

Hello, sir. Thanks for taking my question. Sir, you said this year there will be a 25% growth. So that will be like volume or volume plus this price increase that you are talking about?

It will be, see, effect of price increase, you know, it will happen, whatever it has to happen, but we will have a volume growth of 25%.

And, sir, as in, even in this quarter, our margins are quite good, and it's 22, 20, 26, 27 percent types, and we have not got any price increase. So, you think margins will also go up in the coming quarters?

Yeah, margins are likely to go up because of increase in input costs, which will be compensated to us. And the operating leverage will also kick in as volumes increase.

So, this increasing co-pricing, what is the rough numbers?

You see, it varies from component to component, it varies from customer to customer, but whatever increase we may have in all the input prices, we will be able to pass on everything.

So, would you like to comment any reference, 5%, 10% rates? Thank you very much.

I think it would be difficult to project, but one can assume that all the increases in all major raw materials will be passed on, and this is part of the standard formula with our customers from many, many years.

Got it, sir. And, sir, on the U.S. railroad side, we were expecting things to start flowing. When can we expect that?

Lately, you know, last several months, we have changed our track, we have changed our strategy. We are not pursuing the U.S. railroad for the time being because there are many opportunities in better markets, better products, better pricing. So we will address this railroad maybe a little later, and And cash from the opportunity is available for the other industrial sector.

And, sir, on this new CapEx, when can we expect things to start in terms of CapEx expansion, and when can we expect revenues to start?

Our internal target date to commission the plant is 31st March, FY28. And as we speak, we are quite confident of achieving this. So we will have some additional volumes for FY29 also.

So this current utilization will go to around 100% by FY28 is our expectation.

I think we already uploaded on the stock exchange. We plan to reach 90% by FY29. And planning about 90% is not advisable because you will have many, many bottlenecks when the utilization goes about 90%. So when we have this 90% utilization, the additional, the new projects will also start kicking in and giving us higher volumes.

Sure, sir. Thank you and all the rest.

Thank you.

Thank you. A reminder to all the participants that you have a star and want to ask a question. Next question comes from the line of Harshal Solangi with Equitry Capital, please go ahead.

Hi, good morning, team. I had two questions, I'll list them all together. In the annual report, our number of employees have gone up by 52 employees, which is only 3% increase. So, I wanted to understand whether this strength will be able to help us achieve a 25% volume growth or do we need more employees to train them and then get ready? This is my first question. The second is as you mentioned, you have not got any price size, but if you see a gross margins have improved in this quarter. So, I wanted to understand what has driven this. Improvement in the gross margins, whether this is due to the lower cost inventory which we had or is there a product mix change which has helped us achieve this. And one is what could be the peak revenue potential that is possible from the new capex of 120 These are my three questions.

So, as far as people are concerned, we are adequately stacked for all levels. For the current year targets and our budgeted production, we have people available. Going forward, somewhere towards the middle of this year, we will start recruiting people and train them and so they are ready for FY28. And then if there is any more requirements, we will again recruit sometime in FY28 or FY29. Now, so that takes care of your question on the people requirement. On the margins, there is a very minimal increase we have got effective 1st April. The measure will come now effective 1st of July. But probably the improvement in Matthews is because of scale, which was higher volumes. So as I said earlier, the operating leverage will kick in once volumes grow. And to answer this big question of the revenue potential, in the new facility, it will be about 300 crores.

Okay, okay, I understood so. I have more questions, I will fall back in the queue. Thank you.

Thank you. The next question comes from the line of Dharal Shah with Philip, PCG. Please go ahead.

Yeah, good morning, sir. Thanks for the opportunity. Sir, wanted to understand your order book is on, you know, current date.

On what? On 40 crores.

And if you compare it with, let's say, last year, same time, what kind of growth it is there on the order book side? Thank you, everybody.

We are generally booked for about, you know, forward four months, and every month the orders are replenished. But I don't have the numbers now, but there will be increase this year compared to last year, you know.

Okay. Okay. And sir, when you are planning to incur a capex of 120 crore in next two years, so which segment you are seeing an incremental growth or which customers is giving you confidence to put up a new plant?

So, as you know, we cater to nine different sectors. Which is, of course, part of the investor presentation, and so this will be coming from these nine sectors only. I'm sorry, we will not be able to give names of the customers, but it will be from these end-user industries, which we are catering now. Okay.

And, sir, as you mentioned about the ground engagement tool that will contribute almost 5% of the revenue. How about in case of defense, since you are also actively engaging, you know, focusing on the defense side also?

Defense side, we are pursuing, but we are giving that lately, you know, past one year a low priority because the opportunities, the pricing is far better than defense in what we are doing. So, we have shifted the focus to, you know, sectors other than defense.

Thank you so much, sir. That's it for me.

Thank you, sir. Thank you.

Thank you. Next question comes from the line of Krishna with Eleptom PMS. Please go ahead.

Yeah. Thank you for the opportunity. A couple of questions. First, if you could elaborate more on the growth drivers in terms of segment that we are focusing on, you know, in order to drive this 25% growth, 50% growth over the next three years. And secondly, some more color on the new parts that we're developing, maybe in which segment, or is it, you know, more export-focused or domestic. Thirdly, the new capex that we're doing, so are we focusing more on exports? Because what I see that in Q1-27, although the tariffs and everything was there in the last one year, one, one and a half year, we have seemed to increase our export mix. So, what are the reasons for the same and, you know, if our exports is more focused towards Europe and other regions rather than the U.S., so an export makes possible help.

Historically, if you see our exports have been anywhere from, you know, 45 to 50 percent. In the current year, we will do exports of about, say, 49-50 percent. Next year, the domestic should be slightly better, maybe 53% and export 47%. So this has been the range several years, and the demand is coming from all the sectors which we are catering now and from customers from each of these sectors. Sometimes, you know, the export mix increases. It goes as high as 60%, 62% also here. But if you see over a longer term, it's 45% to 50% exports and balance is domestic.

So, in terms of new parts, any color on what we are developing for this segment?

See, I think if you've been attending our investor calls before, there is a continuous drive for, you know, new parts development. In last about 18 to 24 months, we would have developed more than 100 parts. So, all these parts, we will now be going into serial supply. Plus, in addition to that, the overall demand is also on an increasing trend. So, the increase in volumes will be coming from new parts as well as increase in the demand from the customer. It's a composite effect.

All right, sir. Thank you. Thank you.

Thank you. Next question comes from the line of Mausam Shah with the Wealth Guardian. Please go back.

Hello. Congratulations on the consistent margin generation, and I have few questions. So basically, I just wanted to know this 90% capacity utilization for FY29 that we are targeting. Is it post-commissioning of the new capacity that we are building, or is it only on the existing 29,000 tons?

No, no, this 90% what we plan to achieve by FY29 is on the existing capacities.

Because, as you said, this would be commissioned in FY20, 31st March of FY28. So, for FY29, this would be already...

See, being the first year of operations, you know, we are not yet, you know, fully adding that capacity, but somewhere along the line, we will start seeing revenues from that facility also. So, the reason of doing this is because we are reaching 90%. So, we need to create additional capacities.

Okay, and we just wanted to confirm this FY26 capacity utilization was 48% and this quarter 1 capacity utilization is 63%.

Yeah, but for the whole year, we plan to do about 63%.

Okay. Okay. And also wanted to confirm on the order book number is 140 crores, right?

Yeah, 140 crores.

Okay. And any update on the Israel defense component that we had supplied? Right?

I think the trials are going on, and we should hear. Something in the coming few months.

Okay, thank you. Thank you, and I'll join the queue if I have any further updates. Thank you.

Thank you.

Next question comes from the line of Amanj Vivasar with Bellwether Capital, Private Limited. Please go ahead.

Hi, sir.

Thanks for taking my question. So, I just wanted to know over the next 12 to 18 months, what would be our new part contribution to business from existing customers, which is currently not in the existing business? So, yeah, I just wanted to feel in the next two, three years how big it can be.

Um, You know, roughly, we can assume about 20% of revenues coming from the new parts, you know, on a, this is a very ballpark number, but we'll have to, you know, really deep dive and go and see component wise. But over the next two, three years, 20% of the business will come from new parts. And 80% should come from the existing parts because of increase in demand.

Oh, okay, okay, sir. So, sir, we have guided like 25% growth for 27 and 20% over next few years. So, qualitatively, can you tell us, sir, what is driving this demand?

So, as I said earlier, this is a combination of the new parts going into serial supplies and also increasing the demand from customers. It's a composite effect. And all our nine sectors have been requesting us for improvement in supplies, increase in orders. So, overall, the engineering industry in general is doing good in India.

Okay, sir.

Thank you. Thank you. Thank you.

Thank you. Next question comes from the line of Amitabh Batshia with Southern Ventures, LLP. Please go ahead.

Thanks for the opportunity, sir. I have a question with respect to the new CapEx. Whether the land is available for the new one and whether the raw material sourcing would differ from this greenfield expansion or we are tapping to the alarm ecosystem again?

See, the government of Gujarat has given this 100,000 square meters of land some months back. So we already had this land parcel available. Secondly, the new facility is exactly 12 kilometers from the existing facility. So the raw metal procurement will have the same strategy as what we are doing now for our existing facility. Have I answered your question, two questions, or was there a third one?

The third one is just on if you can spray some light on the development in the ship-breaking industry and whether the outlook looks positive from a raw material sourcing perspective, because lots of budgets are ongoing in the market.

A steel cast does not use any raw material from the ship breaking because what we need is we make, you know, high-strength, low-royed steels, carbon steels, and we need a much cleaner scrap with very low sulfur, phosphorus, and carbon. So we source our raw materials from elsewhere.

Okay. But your industrial presentation has been mentioning Alang ecosystem or the feed of the supplier.

So there are a lot of downstream industries which have come up because of this, and we do buy from those downstream industries, not from Alang, but, you know, rolling mills and some other industries which are downstream to ship breaking. So, it's from the locational advantage point of view.

Okay. So, you are using this ecosystem as a supply base, but not strictly from ship breaking? Yes. Absolutely.

Yes, it is.

Okay. Thanks for the clarity. Thank you.

Thank you. Next question comes from the line of Asaket Saurabh with Sagri Capital. Please comment.

Am I audible? Yes, please. Yeah, thanks for the opportunity and for the detailed presentation, sir. So, you have talked about nine segments that you cater to, which is six plus three, six existing and new three. So, what would be, say, contribution of, say, different segments, like how much Earth's moving segment would contribute and so on, sir? I just wanted to get a sense of segmental contribution and how has it trended, say, over the last five years if there is data around that. Just to get a sense how we have, because one of the major, I think, the turnaround thing that we have managed is reduced dependence on specific sectors and specific clients. So can you just help me with this data, sir?

Thank you. See, the major contributing industry sectors are mining, oil, tooling, and construction. All these we account for around 70%. And for the other six, it's about 30%. But over the last several years, we have added these new industry sectors to, you know, de-discover sales. So, say, 10 years back, our sales to mining equipment industry was about 84%, which has dropped to about 54% now. Earth moving was, you know, near zero, which is now about 36%. Construction, we were at 15%, 16%. We are now at about 20%, 21%. And other sectors, as I said, so. We have broadened ourselves, you know, by adding customers or addition of new parts, and even the export geographies are, earlier there were two which are now, we are now doing with about 16 countries. So, net-net, we have substantially decreased ourselves, of course. This is not the end of the story. We will continue working on this for the next several years. So this is what it is.

No, sir, I think this is fantastic. This underpins the long-term mindset that the management has not just displayed but executed upon as well. Now, the second question would be, sir, how does that geographical split look like currently? So, when I'm looking at geographical splits, North America, Europe, or, say, Japan, how do you segregate and what would be the specific contribution within exports?

So the major exports, of course, they are U.S. and Germany. I think both constituting about 70 percent. And in the balance, 30 percent, we have other, you know, 14 countries here. So the idea is to keep driving this and make sure that the dependence on U.S. and Germany reduces over time.

Got it, sir. And what was their share, say, 5 to 10 years ago, U.S. and Germany? Were they still 70 odd percent or much higher?

I think 10 years ago, we used to sell only to U.S. and Germany.

Okay, okay. Again, sir, great progress on that as well. Thank you very much.

Thank you. Next question comes from the line of Manish Kowell with Thinkwise, Wealth Managers, LLP. Please, Kowell.

Thank you so much, sir. Sir, first question, sir, you said in FY27, we expect 63% capacity utilization. So, that actually implies more than 18,000 tons. I'm going to talk to you about the call. I'm going to talk to you about the call.

Yes, you are right. I did say 25, I should have said 30, because indications from most of our customers are very strong. So, you know, I was just trying to be conservative and saying a number of 25%, but yes, 30% is also a distinct possibility. And as I said earlier, the export and domestic mix will be, you know, one can assume 50-50 days.

Okay, so in volume term, no sir?

Yes, please.

Okay, okay. And what was the volume in quarter 1 for export, sir, in tonnage, sir, export tonnage?

I think about 51% was, was 64% was export. 64,000.

That is the value-wise, sir. That is value-wise. I was just asking for that.

Sorry. Yeah, yeah, the total tons we produced was 4,700. 4,700 tons and 60% was exports.

And, sir, on margin front, the presentation says we will maintain margin, but as you were mentioning in your opening remarks, that margins would see benefit of operating liberate, and also now with price high. So, last for the full year, EBITDA margin was 27%. So, can we expect at least 150 to 200 bits higher margin, around 28.5-29% margin?

Yes, theoretically, that should happen, and this is what we are going to strive to achieve. Okay. Okay.

Thank you. Thank you. Just sorry, last question. The revenue share, what you mentioned for, say, mining was 54%, earth moving 36%. Can you please clarify that again? Last question.

I'll just repeat those numbers. For the current year, our sales to mining will be about 27%, earth swimming will be 43%, construction will be 15%. And defense, sir, how do you see that revenue share? Defense will be about 1%. You know, as I said, we have shifted our focus from defense to other sectors because in terms of demand, in terms of pricing, by all respect, the opportunities are better.

So, but the focus is left on defense. But overseas customs, can it become a meaningful volume in probably the next 2-3 years?

We don't have any firm plan, you know. Maybe currently we are doing about 1% that might go up to maybe 1-2%. But we don't have that focus over the 3-year period more than this. Okay.

And GETV now from current year, because presentation also says that FY27 will see growth. So now have we started getting traction approvals for our product from the customer?

Yes. That's a continuous process. Just to give you an example, in FY26, we did about 1% GETV. In the current year, we'll do about 3.5% of the sales. And gradually we go up to about 6% in FY29.

Okay. Thank you so much. Thank you. Thank you.

Thank you. The next question comes from the line of Shubham Kamrakar, CFA, from Alturas Investment Management, Private Limited. Please go ahead.

Hi, am I audible? Yes, please.

Yeah.

Hi, sir. Thank you for this opportunity. Sir, I have one question with respect to inventory. So, I was looking at your financials, and it seems like there is a rise in inventory, which has not converted in sales. So, is there any specific reason for this dispatch is not happening?

See, for our kind of industries, you know, first, when the increase in production happens, there is a pileup of inventory. And with a time lag of one to two months, you will see again inventory is going down. So, and then month on month, we then work on elevated levels here. But when the ramp starts, for short term, maybe one to two months, we will have additional WIP, which has not been converted to sale. Okay, get it.

And with respect to our capacity utilization here, what is the capacity utilization of this quarter and what we are expecting by the end of this year?

By the end of this year, we will do about 63%. And for the quarter, April, May, June, we did 66%. Thank you.

Yeah, thank you, sir.

Thank you.

Thank you.

Thank you. A reminder to all the participants that you may press star and want to ask a question. Next question comes from the line of Harshal Solanke with Equitry Capital. Please go.

Yes, sir, I have only one question. So, in the annual reports, we have mentioned that you are transitioning some manufacturing process to electricity-based systems because there is a shortage of natural gas, LN, LPG, etc. So, I wanted to understand whether you will be looking to add more of solar and whether in the longer run this will lead to more savings for us. Have you thought of anything of this sort?

On which page are you referring to? I'll have to go back, but I have noted down in the notes. Maybe if you want, we can take it offline. Yeah, I just want to read that statement again, just trying to understand. So if you know the page number, we can refer and respond to you.

One second, just let me pull it out.

So, page number 30, page number 30 of the annual report, the heading is proactive energy transition.

See you later.

See, one is, of course, as you know, we have got two power plants under commissioning now. One is hybrid, which is solar and wind, which is 2.4 megawatt, and 1.4 megawatt exclusively is solar. Second is, we are considering to transition ourselves from, instead of using natural gas, we use electricity. So, this is a thought process, which is an ongoing thing. So maybe over time, over two, three years, instead of using natural gases, we will use electricity.

Okay, so I was just trying to understand whether this will lead to further cost savings for us, and that is the whole idea in the next 2-3 years.

Yes. The only thing is we are not able to predict the natural gas prices, whether they go up, whether they go down, because compared to February end prices, natural gas is about 50-55% expensive. At the current gas prices, they will be saving when you use electricity. But, you know, over a longer term, we don't know what would be the natural gas pricing.

Okay. Okay. And one more question that what are we planning to do with the incremental cash that we generate over the current year and the next few years?

So, as we have said, we are a debt-free company. We want to continue to maintain this debt-free status. So, whatever cash accrues we will have, we will generate from now onwards in the coming two years. We will use to, you know, increase this capacity.

Okay. Okay.

Got it. Thank you for answering.

Thank you, sir.

Thank you. Next question comes from the line of Ankur Kumar with Alpha Capital. Please go ahead.

Hello, sir. Thank you for the follow. Sir, I wanted to understand what this 18,000 ton of guidance, but we have done 4,000, about 4,000 in Q1. And you said that we're seeing very good demand from all of our customers. So can you comment which all are going to contribute much and when? Is it like linearly growth over the next three quarters or how should we think about it?

See, as I said in my, you know, welcome remarks that sequentially for coming few quarters, there will be increase in top line growth, quarter on quarter. A, B, the demand is from all the nine sectors we have been catering to. So...

So, have I answered your question? Sorry, sir. I think I couldn't understand. You couldn't hear fully, sir. Can you please repeat?

As I said earlier in my, you know, that welcome speech, that there will be increase in top line, and that's the drive we are having to drive towards increase in top line. So, automatically, the bottom line is taken care of here. So, quarter and quarter, you will see improved sales. So, Ajit, improve volume as well as improving realization. Absolutely. And the composite effect of that will be, we will expect minimum 25% growth over the last financial years.

And to a previous participant, you also said margin can also go to 28.5, 29 types.

Yeah, the question was, can you get additional 1 to 2 percent, which I said, yes, it's a distinct possibility, and with the operating leverage kicking in, this should happen.

Sure, sir.

Thank you, NK and all that.

Thank you.

A reminder to all the participants that you might press star and one to ask a question. Next question comes from the line of K. Manunath, an individual minister of discovery.

Hello, sir. Chetan, congratulations and the consistent good of the goodness of the numbers. My question is, now you are planning an expansion, and you want to finance it by internal accruals only. My suggestion is, why don't you go for a right issue for about 60% of the project cost, so that the efficiency and economics will work out substantially. Because, for example, if you price issue at around 200 or 300, the bulk of the project cost can be financed by premium itself, which need not be serviced. And it gives more flexibility and it will be less vulnerable. The resource can be used elsewhere also. My second question is, now you have been earning more than double the equity every quarter by your consistent hardware, perseverance, foresight. Why don't we consider a bonus issue? It gives more visibility, it will improve our brand equity, and it will improve the shareholding health also. And the third is, with the consistent improvement in quality, why are we not focusing on certain specific defense components so that we can improve our share productivity in the long run?

So, thank you. So, your first question was about the right issue. Now, company already has 120 crores of reserve. If you see March 26 balance sheet, money is there. Now, we are investing 120 crores over the next two years. So, that we will be using the internal cash accrual to fund this investment. So, with funds, with enough of funds already with the company, would it be prudent to do a right issue and take more money from shareholders? So, this is something... But you are taking it at a substantial premium, sir. True, true, but at this point of time, sir...

Sir, wait a minute. My only submission is, if the project cost is 100 crores, if you take a premium of even 200 rupees, the project cost for the company will come to just 10 crores.

Okay, I'll take your suggestion to our board of directors, but please understand, the company does not need any more resources from the shareholders. In fact, if the equity goes up, then the earnings per share will go down. So, these are some factors, marginally, but it will go down. Second, on your suggestion of bonus issue, yes, surely, I will take up in the forthcoming board meeting, and your third question is about defense. Now, at this point of time, we have a lot of opportunities from other areas other than defense. According to us, these are better than, you know, defense supplies, and I always tell people that one of the most riskiest business is defense business, because you're selling only to one customer. So, risky defense is very, very high. Of course, it's lately in India and the stock market. Defense is a big fancy word. But I see a lot of risk in the defense business. However, your suggestion is well taken. And if there are any opportunities which comes along the way, we will surely cater this. Thank you. Thank you. And thank you for your compliment also.

Thanks a lot.

Thank you.

Next question comes from the line of Saket Saurabh with Sagari Capital. Please comment.

Hi, thanks for the follow-up. Sir, I have two quick questions. One, so is our exports slightly under-reported when I say that maybe the domestic, we might be a tier 2 supplier and then domestic supplies can further be used by, say, a tier 1 supplier or the OEM to use at export locations. So that is one point. Second question is that usually it happens is that, you know, the pass-through, cost pass-through varies from export clients to domestic clients or other auto-ank. So usually for domestic players, the pass-through could be on a monthly basis, but for export, it could be even quarterly. In our case, it seems the major pass-through has happened almost with a quarter lag. So any specific inputs on that and how does lag between cost pass-through? So these are the two questions.

So, you know, generally when there is an increase, we get an increase with a lack of one quarter. And whenever there are reduction in input costs, the pricing is dropped with a lack of one quarter. So, this time the costs are increasing. So, we will get compensation and they are effective 1st of July, as I said earlier. What was the other question? I'm sorry, I forgot.

So, first question regarding exports, right now, say, if our exports revenue is 50-50, but is there a, say, exports is 50 and domestic is 50, so is there a possibility then that, you know, we supply to, say, we are tier 2 suppliers to some of our accounts and they further export our component later on. So, which might mean that, you know, yeah.

Yeah, I can answer your question. First of all, Steelcast is tier 1 supplier everywhere. I think more than 98% or 99% of sales are, as tier one supplier, we give directly to the OEMs. Now, the OEMs in India might be exporting, you know, some portion of what we supply. So, if you consider that, then the export numbers with direct exports and indirect exports will be slightly higher. But we really don't know which customer exports how much, you know.

Okay, sir. Okay, got it. And sir, is currency fluctuation also a pass-through? Some companies have contracted it in a similar manner that any currency dip or upside is also passed through. What is in our case? Do we hedge or do we retain?

In our case, we share the rupee depreciation or we share the rupee appreciation. He shared with the customer.

Okay. Okay. Thank you. Thanks for the opportunity and best of luck for the time.

Thank you, sir. Thank you. Thank you.

Thank you.

A reminder to all the participants starting by Star and want to ask a question. Next question comes in the line of Manish Gowell with Thinkwise, Wealth Managers, LLP. Please go ahead.

Thank you so much for the opportunity again, sir. Just on the order book, sir, you mentioned it is 140 crores, sir, which is probably the next quarter revenue. So, like on visibility side, sir, what is driving the confidence for such strong volume growth in such a challenging geopolitical situation?

See, there are several factors. One is, of course, indications from our... Domestic and export customers of increased volumes, commodity prices are at elevated levels, infrastructure spending in India as well as abroad is on an increasing trend,

and other sectors like railways, there's a lot of investments happening.

So, of course, all industry sectors, there is an increase in demand. Industries like casting and forging will do well. If you see, say, automobile, that too is growing at 10-15%. So, in spite of all the geopolitical issues, India is slightly insulated. We have a large domestic consumption. However, there will be some cost pressure here and there, but overall, India as a country and the engineering industry in general should do well.

Okay, so ideally this 140 crore execution would be like 3 to 4 months or how should we understand that?

See, this is the value of orders. Now, as I've said before, we have this firm business for 3 months and every month, an additional month is added. So at any point of time, we generally have 3-4 months of order booking.

Thank you, sir. Thank you. Thank you so much. Thank you.

Ladies and gentlemen, that was the last question for today. We have reached the end of question and answer session. I now hand the conference over to the management for closing comments.

Thank you to each one of you for being part of our news call and participating in this call. We appreciate your support and trust in us. We hope we've been able to address most of your queries in case of further queries. You may reach out to our Investor Relations Advisor, Ernst & Young, and they will help you to connect with us. And once again, thank you very much for being part of on this call. And also thank you to Ernst & Young team for organizing this call. And thank you again to everybody. Thank you.

Thank you. On behalf of Steelcast Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.