Ador Welding (NSE:ADOR) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to Ador Welding Limited Q2 FY 'twenty seven 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. Please note that this conference is being recorded. I now hand the conference call over to mister Aditi Malkani, managing director and CEO of ADOR Welding Limited. Thank you, and over to you, sir. Thanks. You can hear me? I can carry on. Yes, sir. Okay. Perfect. Thank you for attending the call. I apologize for the slight delay. We had a technical issue on our side. Good morning and a very warm welcome to everyone present.

0:52 With me today are Mr. Sudhana Narayan, our CFO and Head of Strategy and Mr. Bide, our Company Secretary and Chief Compliance Officer as well as SGA, our Investor Relations Advisors. I hope you have received our investor deck. This year has been special for ADOR. In fact, yesterday, we completed seventy five years. In 1951, we became the first India's first welding manufacturer. And today, we have five manufacturing units, more than eight fifty people, a presence in over 1,500 companies 15 countries and the government recognized R and D center. To reward our shareholders for their trust, the Board has declared an interim dividend of INR 7.5 per equity share. Let me start with the headline. Revenue for the quarter grew about 23% year on year to INR $3.45 crores and H1 revenue was also up 3% at INR $6.54 crores.

1:46 Growth was supported by healthy demand across core end markets, including infrastructure, power, oil and gas, railways, shipbuilding, defense and heavy fabrication. Strong capital goods activity in India provided a favorable operating environment during quarter. We also want to address the margin issue directly. Gross margins for the quarter was 34.2%, input cost inflation particularly higher. Steel and other raw material prices being one of the key pressures. We have taken calibrated price increases and we'll continue to do so in a measured manner. Despite this pressure, EBITDA grew 9% in the quarter and H1 EBITDA margin was 11.2%, slightly higher than last year. Our objective of steadily improving EBITDA margins remains unchanged, although input cost cycles may affect pace of progress in individual quarters.

2:36 Three drivers underpin this growth, expanding our international reach, in the market. We are also a opportunities in Europe the to create a lot broader and more diversified international presence. Product mix, supported by collaborations, our partnerships enable us to offer higher end welding power solutions as well as mixed solutions. As hyperthermous master distributor in India, we provide advanced plasma cutting systems. In consumers, we continue to introduce specialized high performance product for demanding applications. Third is customer engagement. We are strengthening direct relations with key customers while continuing to support and expand our distribution network.

3:28 Our technical support training and application teams connect these channels by helping customers select, deploy and optimize the right solutions. Automation remains a strategic priority as rising labor costs and shortages of skilled welders drive customers large, midsized and small to invest in productivity. Our partnership with Liberty brings Orbital Welding technology to the power nuclear oil and gas shipbuilding sectors, helping customers improve consistency, efficiency and well quality. On operations, we are investing in new consumables line, in line with the CapEx plan we had shared earlier. These investments will modernize our manufacturing base, support future demand and improve our ability to scale efficiently. With that, I now open the floor for questions and answers.

4:18 Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch tone 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. A reminder to all the participants, First question is from the line of Ador Welding from iThought Financial Consulting. Please go ahead. Yes. Thank you for the opportunity, sir. I hope I'm audible. Yes. Go ahead.

5:04 Yes. Sir, I wanted to get more clarity on the gross margin side. I think you highlighted in your opening commentary as well that raw material pricing pressure was there, but and we have taken some price hikes. So how are we thinking on the gross margins line? Because we seem a bit on the lower side. So because of the price side, should we expect more recovery in the second half? Yes. So let's analyze Q2 for Q2. And if you ask me, approximately 80% of the reason that you're seeing a gross margin dip has to do with quite severe inflation in costs across the board. And I think this is a lot of people are feeling it across the board in many ways. I'd say 80% of it stems from there. About 15%, 20% stems from an aggressive strategy in terms of the growth plan that we have, which is okay, which does not impact margins very, very heavily at all.

6:02 I think going forward, you will definitely see the recovery. We are very confident. As far as our long term goal goals for the three, four years that we laid out as far as our plan goes for this year that we laid out, we don't see Q2 is hurting us too badly from that perspective. We would have liked it to have been a little bit better. But look, the supply chain inflationary and cost input pressures are quite severe. And we've been able now to settle it down, and we're quite confident we'll be able to recover that as we go forward. Makes sense, sir. Sir, but what would be the sustainable number? I'm assuming there will be some quarterly dips here and there. And once we will bounce back and we'll be on the higher side as well. But on a sustainable level, what we could pencil in It has to be between going the 13 level. I keep saying that. I have no problem in saying that it has to be between the 12, 13 level. Our job is to get it to between that 12 to 13 level and then push upwards from there. And there's it's possible. We just have to be a little patient through the quarterly global issues that are there a little bit. But between that level, it's very possible.

7:12 Makes sense. Sir, I mean, the gross margins, 1213% would be our EBITDA level, right? EBITDA level on the 12%, 13 gross margin level and being approximately in the region of at least INR 36 crores to INR $3,837.38 is what we're looking at ideally is what we should be in a position to do, and we see that recovery possible. Little Understood, sir. Understood. And sir, this 20% -plus growth that we are witnessing, is there a visibility on this going forward? There's a certain amount of it. I would say, just to break it down, there's a certain amount of it that's obviously inflationary, but we are seeing growth to be in the plus 10% double digit region, we are seeing as far as volumes go as well. So we're kind of happy with that.

8:02 We're seeing the international market provide even north of that sorry, opportunity. I think it's sustainable. It seems to be a lot of things clicking that seem to be okay. And I hope that remains in there. It's a little bit better than we expected it to be in terms of demand. And like you said, the margins are what we have to prioritize and meet that demand accordingly. But yes, it seems to be okay. Understood, sir. Sir, what was our export share in H1 FY 'twenty seven? And what's the visibility here? The region of 15% to 20% with it in HY1 being slightly north of being slightly in the higher part of that. Okay. And going forward, sir, are we expecting some major delta here? Or should we... You spelled it out in our long term strategy where ADOR wants to be as a brand, where ADOR wants to be placed globally.

8:57 EXPORTS is a very, very important part of that. So we are going to continue to be aggressive over there. That does mean at times, the product mix is slightly different to an ideal margin mix, but that's okay. I think that's part of the strategy of where we want to be in three, four years as a brand. So we keep taking that on. And that's all right. It's still margin accretive and beneficial to our own. So I'm okay with that. But we intend to try to grow that. Got it. Got it, sir. And sir, any EBITDA losses on the flare segment in H1? Any EBITDA sorry, say that again? Did we make any losses at EBITDA levels in the flare segment? No, no, no. The flare segment is pretty much done for now. There's nothing major that's there. We have a few product lines that are not massive at all that are small and there's no losses over there. No, nothing.

9:52 So what was the revenue contribution from that segment in H1? It's insignificant. It's insignificant. It has no it has literally no bearing at all or anything anymore. It's insignificant. Don't worry. And sir, apart from the raw material cost pressure, are we seeing any other one offs in H1 numbers? You have I wouldn't say one offs, but I think if you talk to a lot of companies, which you guys will have done the research, there's a lot of increasing inflationary costs of incoming logistics. There's a lot of stuff that we've been dealing with. So I think just a bit of that and then sort of sorting that out as you pass it forward. Like I've said, product mix is something that has played a role in Q2, a little more heavier than we would have thought.

10:38 But that's okay. I think that we're kind of okay with that. That's it. Got it, sir. Got it. And, sir, I think in the last call, you have mentioned that we are still I'm really sorry to interrupt, mister. Can you please rejoin the queue? Yeah. Thank you. Thank you. Next question is from the line of Suraj Malu from Caterpillar Ventures. Please go ahead. Thank you for this opportunity. Yes. First question is like what was the volume growth in this quarter? It's in the approximate high, I would say, EBITDA team somewhere there. I'll just put it there because I don't want to get into too much more on that, but approximately in the teens mid teen levels.

11:28 Right. Got it, sir. And sir, in terms of raw material, you addressed the point, but can you give a like understanding of like what would be the breakup of raw materials? Like if INR 100 is the raw material required, like 50%, 60% would be mild steel, what would be those components? And which of them have increased so much that has increased the raw material cost for us? I'm going to detail on it. I can tell you that, I mean, these are things that now are publicly available if you were to read about it. But steel plays a very, very large segment. There are a lot of chemicals that come into play as well as for our consumable business. On the equipment side, there's a lot of electronics. There's a lot of PCBs, there's a lot of other stuff like that, which is also which has an import factor as well that goes into. So there's a mix of all of those things that go into from that as core metals.

12:19 So all of these have increased, like be it steel or those powders or electronics, I understand. I think everything across the board, everywhere is going up. I don't think it's only particular to us. But I think everywhere across the board, copper, we've seen fluctuating quite a bit. I think that's the reality that we're all dealing with, right, right now. So you're managing that supply chain process and you're managing how passing it forward accordingly. I think we just have to be a little bit patient that when it's very rapid, like it suddenly happens in June, July, August, blah, you have to manage it through. But I think it's okay. Market is readjusted. So I'm not stressed about will the market now readjust. No, the market is readjusted already. And like how do you see this mid like the teens volume growth continue like going forward? Is that possible? We see it fairly decent going forward. We expect it to be good going ahead.

13:14 I think we are very aggressive. We continue to be aggressive going forward into HY2. We continue giving our sales teams quite aggressive targets on that. So we'll remain aggressive on that. Next question is from the line of Bhavya Gandhi from Bijaj Alternate Investment Management Limited. Please go ahead. Yeah. Hi. Thanks for the opportunity. Hope I'm audible. Yeah. Go ahead. Yeah. Yeah. Hi. This was regard... My first question is regarding ADOR Welding. What exactly are we doing over there? Also, the digital welding management initiative that you've taken, what is the vision for that? You're looking out for some acquisition as well.

13:59 So if you can throw some light on that as well. So Welding is a Welding is a a a is a technical add on product that gives welder data back to the customer to see efficiency of welding. It's step by step to be accepted in the field. It's not going to be a game changer in any way, part of a technology upgradation and more data available to the user customer. So that's what Welding does. But that's one part of the puzzle of exactly the digitization and automation kind of pie that ADOR is looking at. So automation is a lot of drive for that. We are looking at more high end, strategic machines that give more information as well. We have tie ups accordingly. We're looking at and we are trying to fund the market a little bit more aggressively with that.

14:49 So that plays into that story. Does the impact come in a quarter? No, these impacts will come in a quarter. Take a little bit longer to come, but it's very much a part of moving up the value chain. Okay. Fair enough. And on the acquisition front, are we looking for acquisition on the robotics side? Or I mean, if you can provide some clarity on that, the one that you mentioned in the SEC? Restoring options that would be I think it's very early that nothing is going to happen because the ecosystem you're dealing in is very tiny. So it's not like a very large industry. So it's a tiny ecosystem. So I don't want to jump the gun on anything. We're exploring what options are there that add value from an automation perspective from that Got it. And without even specifying the margins, if you can at least give the pecking order with... Within the segments, which gives us the highest margins because we have industrial M and R, welding, automation, Equipment and Consumer. So if you can just quickly... If you look back historically, then you'll be able to get a lot of that data out simply by looking with premerger days, you'll get a lot of that data segment.

16:01 So I think if you look at the trend, it follows a lot of that. So M and R tends to be smaller as the size of industry with slightly higher margins. Consumables tend to have returns, can be more depends on the product mix. That's exactly where product mix plays a role. Equipment can be fairly in line with that. It depends upon how you're sourcing and manufacturing. We tend to be slightly heavier simply because of our India heavy manufacturing versus sourcing from other countries, but that's part of it. And the automation is will take time to build up to that similar level as the equipment as it consumes. Thank you. Next question is from the line of Dhrumil Wani from Guinea Capital. Please go ahead.

16:53 Yes, Thank you for the opportunity. I just wanted to ask on the inventory part. Is there any one off this time? Or is it on the buildup on the back of full visibility that we have? No, it's on the back of it's a mix, I'd say, again, the slightly higher inventory levels, slightly higher payables or payables being down from that perspective, I would say, two parts. One is order back. That's, I would say, 75%, 80% of the reason. Another 15%, 20% of the reason is availability of steel in the market was a concern. So we had to be a little bit aggressive in terms of what we needed to do. And that sometimes doesn't make a number on September 30 look as good as it should, but it will even out through the year.

17:41 Okay. And just drop in payables, you said, is on back of due to this all macro instability? Or is it that we are able to pay quickly and get full discounts? No, it's mix of availability. It's a mix of what the conditions are demanding. It's a mix of our growth reasons that we have in certain segments and product mix. So I think it's from that perspective, it will stabilize. I don't think you need to over analyze it at all. I'm not stressed about it over the coming months in terms of how it plays out. Think you have to look at it as what the situation macroeconomic situation was at moment in time. I don't think it's a trend from that We will take the next question from the line of Prasinjit Paul from Palliser.

18:50 So my question is, last year you had shared an aspiration of reaching INR 2,000 crore of revenue by FY 'twenty nine. So can you tell me like are we on track? And second, does the existing capacity can do up to INR 2,000 crore revenue? So we are we're not very far off track. We're fairly on track, I would say. This year, this last six, eight, nine months have shown that opportunities are there and the market is moving in a certain direction. If it continues, the underlying continues to provide that opportunity, think we're on track. We obviously have a lot of ifs and buts along the way in terms of global strategy, in terms of automation, all of that, but we're on a certain path that's encouraging. CapEx, no, there is a certain amount of CapEx that we will have. I think there is a certain amount of CapEx in the next two, three years. I discussed this in previous meetings.

19:44 Over the next two, three years, we will have to lay out a little bit of CapEx, but it's nothing extraordinary. If you look at it, our normal average CapEx is anywhere in region of INR 35 crores to 40 crores a year. I think there'll be one or two years, we might pick that up a little bit, take it up to INR $60.75 crores for one, two years. Beyond that, nothing very is quite strong to be able to take take that that on. On. So I I don't think think that's that's part part of of the the plan plan at at the the moment at least. Okay. And sir, last question is you have already addressed the commodity inflation, some sort of price hike. So can we assume that the gross margin that you witnessed in Q2 that will be on the lowest level or the pressure or the pain will continue in Q3, Q4? Or can we assume that? I can only tell you exactly what we've discussed internally, which is very hard that Q2 was a bigger dip than we are okay with.

20:47 And it was done due to certain market pressures, and we're not okay with that. And we will push back accordingly, and we do not want that to be the norm at all. That will not be the norm. So we have to recover from that and get back to Okay. The trend that we are okay So I can expect Q3 onwards, the gross margin will be recovered? We see that right now. It's early days in Q3, but we see that, and we're only we're working towards that very hard, yes. Okay. And how much like whatever the growth we are planning, let's say INR 2,000 crores, so how much you are thinking about the changing product mix, higher realization or like how much will come from the volume growth? So which you are preferring? Whether you are preferring purely volume growth or like more on to the higher realization, led growth, product mix change growth?

21:35 If I had to estimate, I'd say 60%, 70% of that growth will come from product mix, which doesn't necessarily mean that it can't be at the right margin level. It's a question of the right product mix going into the right customers across India as well as international markets. But I'd say 60%, 70% of it has to come from product mix, such as the nature of the industry and onethree of it can come out of the innovations we might do in welding equipment, the partnerships we might do, the automation we might do, all of those things can help drive quite a lot of the, I'd say, 20%, 25% of it maybe. Okay. So one last question. I was checking many of our peers, like one of the smaller peers like diffusion engineer, they are saying that welding consumable market is not expanding that big. So they are moving towards engineering service, project management type of service, the same division that you have exited.

22:36 So if we talk about your segment, Welding, Consumables, do you think that the industry is growing? I mean, whatever the growth you are planning, INR 2,000 crores revenue, so do you think there is enough scope to grow within the market? Or like you must need to venture internationally to reach that growth? Or the domestic market is big enough for that? So I won't comment on anyone else. I will tell you that definitely, the welding consumer market does provide adequate growth opportunities. That's what we do. That's where we are placed. And there is adequate growth. And the growth you're seeing in this H5 one is a lot driven by that. And it's simply related to steel consumption. So it's about steel consumption data. If you see growth happening there, you believe that steel will continue to be consumed at good levels in various industries, and there's no reason welding consumables should not.

23:41 Next question is from the line of Dharmind Agarwal from Hilloy's Capital. Just a couple of questions. One, on the raw material side, has the prices been increasing primarily because of the freight? Or is it other reasons? And finally... It's a lot to do with input cost that that stem from steel and other raw material components. Freight is a small part of it, but it's definitely a relevant part of it, especially in imports. But no, I'd say, Steve, if you guys are watching Steve, you'll see what's happening that are tremendous increases. So that's a large, very significant part of it. But do you think this is temporary? And is this something that will settle down? I can't comment on steel prices. I can only say I hope they I hope they... The the more flattened out and even they are, they help everyone in the industry, but I can't comment on on that. I don't see I don't see them softening anytime soon. I don't think they're gonna be as rapidly increased either, but but that's my perspective on it right now. I mean, we're not big enough.

24:46 The steel guys are the big guys who decide that. So we have to follow a little bit of that. And there are many global factors that we can. And your purchase agreements are primarily on a spot basis, is it? We do a little bit of strategic as well, which is what you're seeing in the balance sheet, the September 30. We do a little bit of strategic as well, but I think the nature of the type of steel that we buy, you can't do excessive strategic. It doesn't work like that. And in terms of on the final finished product side, how much of it has got passed through? And what do you think All of it has got passed through a bit later than I would have liked. In Q2, it happened a bit later. It's all getting done now. It's all coming through. Because that's the nature of the market. And if you're growing as aggressively as we are trying to grow, you take on certain things in a certain way. So but most of it gets passed through very, very quickly. Think in Q2, we feel a little bit slow on a few things, which is okay. As I said, it's a temporary blip in the journey. So I think it's okay.

25:44 I'm not Yes. I can understand because consumables will not be so much of the price as it would be in terms of demand will not be so high compared to the other products. It varies, right? Very sector is sector, varies as you have India's growth story play out, you have very large customers, large commitments, stuff like that. You have to do it step by step. You can't be Welding is a more competitive field than some other industries. Can't do everything tomorrow morning. It takes a little bit of a journey, but it's getting there. And I think we've been most of the time been able to pass through we have to keep in mind, the last three months has been very unprecedentedly sporadic in terms of the rise. So you have to manage that process. But concerned I'm about it from a long term basis at all.

26:33 Yes. So I can understand. So which means that in the medium term, we'll come back to the same kind of margin trail that we have been? Like I said, very openly, I've got to get to between the twelve percent and thirteen level is what I have to get to. So we have to make that happen. Next question is from the line of Mahesh Atal from Dheri Investment Advisors. Sir, we see that demand in this electrode segment has actually, you know, kind of going up. Actually, it's going up because of the manufacturing thing happening on a lower MSM scale.

27:27 So how exactly are we catering to that market, consumable market? Because when we see... As we go on to the ground, there's a lot of unorganized payers who are actually taking up the shelf over there. So how is the management looking at that? So welding consumable at the end of day is an engineering product and an engineering product that has different approval structures and stuff like that. So let's so just to give a very quick overview, Welding Consumables consists of we have probably a couple of thousand SKUs in it. In those couple of thousand SKUs, you have Tier one, Tier two, Tier three types of companies that compete against those SKUs as well. Then you have customers who have Tier one, Tier two, Tier three types of approvals and requirements that they have for their process.

28:14 So an organized product is never really a customer of an unorganized product is not really my customer at all. Ours is very engineering centric. We work with oil and gas. We work on shipbuilding. We work in all of these specialized sectors where quality of an engineered product matters a great deal. So I think everything has a place in the market. And I don't get stressed about the unorganized sector too much. I care about within the organized competitive sector that we play in, how is our market share being from that angle. And that's what we track. And sir, on the margin front, our gross margins have gone down because of, as you explained to the previous part, spend that the steel prices rose to a level which even the management did not anticipate.

28:59 And so when do you see like this tapering off? I mean It's already tapering off. Are there any When you say tapering off, you mean in terms of the margin, the steel prices? Or you mean in terms of the market through? No. I'm I'm talking about the steel prices because Steel prices, I can't comment. Like I told someone, unfortunately can't comment. It does not seem like they are softening. It does not seem like they are softening. But I don't think I have much more reading than that. They seem to be okay. But my pass through is happening much better now than it was in for a little brief period in time in Q2. Let's put that in. And sir, what was the price increase you have taken compared to the price increase in the steel? If you can just quantify that? No, line with it. No. But basically, it's about the time lag that sometimes kicks in or it's about certain contracts that you're tied into. It's about all of those different, different factors that blame. We kept to factor in. We can't absorb anything on that front, right? So we played accordingly.

29:56 So do you think that the pass on in the next quarter or so would suffice our raw material increase or inflation there? Yes. Sure. That's how we can get back to that our targeted margin levels. That's the only way. There is no other answer. If I may ask, sir, what was the percentage increase in the steel quarter on quarter? Percentage increase in steel Q2 versus Q1 must be anywhere in the region of 7%, eight percent. Okay. And steel constitutes what percentage of our raw material? Sorry? Steel constitutes what percentage of the raw material cost? I can't go into excess detail on that. Varies. Are things that you can find out online. I'd rather not get into excess detail. Please understand the reason I don't is simply because at the end of the day, you have to manage a competitor profile as well. So I think these things online, you'll find, All right. All right, sir. All right. And sir, when you say that you are trying to move to the high value segment, and what areas are you looking at when you say that? I mean...

31:01 Within Welding Space, there's two, three high value segments that you look at. So in consumables, you talk of moving to more highly specialized steels. That's part one. Two is better and stronger approvals. For example, we might work on an approval in the shipbuilding sector, in oil and gas sector that puts us in a higher playing sphere with a Tier one sort of place. The third thing is better technology, welding equipments, the newer generation technology, stuff like that. And the last is on automation questions have a a of questions. A lot Exploring.

31:49 Exploring. I said, the ecosystem is very large. I can't really get into excess detail, unfortunately, until we have more clarity. It's going on. It's part of our job to keep looking at it. All right, sir. All the best. Thank you. Thank you very much. Thank you. Next question is from the line of Rohit from iThought PMS. Please go ahead. Go ahead. Yes. Hi. Good afternoon. So I think in in the opening remarks, you alluded to three things, which is sort of your focus area. One was exports, the other was product mix, and the other was going deeper with your customers. So can you talk a bit about last two product mix and going deeper with your existing customer in terms of gaining wallet share?

32:37 So if you can maybe talk a bit about that in more detail, like we've been, as you said, we we... Yeah. So I'll talk about the latter first. I'll talk a little bit about that. Ador has a benefit of being very thankful for having a very strong distribution network across the country. And but one of the things that we find that we are not strong enough at is being in front of some very, very large customers directly who want to deal directly. We have a few very good relationships, but there are many more that can be done and developed accordingly that we may not be supplying to or if we are supplying to, we aren't supplying a large enough share of wallet. So if you look at if you go and research about us, you would have seen certain hiring you would have done, you would have seen certain strategies you would have done, which is basically gearing ourselves and look, there is larger growth opportunity sitting over there or we are less represented over there. So we talk of the top 50, top 100 consumers in the country, we feel we should be more aggressive sitting in front of them. That takes time. It doesn't happen overnight, but the entire organization is working hard towards that.

33:47 And that's basically where that stems from. Now the second part leads into that a little bit because what happens is the product mix sitting with these top 50, top 100 customers tends to be a little more on products like continuous products and stuff like that, where you need to be a little more aggressive in terms of making an entry. So it leads into that a little bit. Right. And to an earlier question, you said that 60%, 70% of the growth will be driven by product mix. And then the incremental growth factor. Yeah. Incremental growth. Yeah. Yeah. Yes. Yes. So so what do you mean by that in the sense that...

34:35 I mean, is it like there were some products which we were... There were gaps in our. Yes. We were not at the it's not only product gaps. It's like product gaps is one part. It's about sales gaps. It's about being part of a customer gap, right? It's stuff like that, that you may be selling. Like I said, welding world is 1,005 SKUs. You may be selling some, you're not selling the others. So we have several products that are now we have plugged a lot of those gas. We have plugged many, many gas over the last two, three years. Now we have to be aggressive in positioning that in front of the customers and doing all of that. So I'm not stressed about do we have a product gap? No. I'm not really worried about that anymore. I was more worried about that two, three years ago. Now it's about seeing the benefit of playing that out in revenue and margins with customers. Got it. Just a couple of more questions.

35:21 So one was also, of course, we merged Fontech. And back of the envelope, seems Fontech has been around that $222.30 crores for the time... For... Since the time... Even prior to the merger, they were around that time, plus minus, and they're still around there. So is it fair? Or... I mean, are we trying to also grow that segment? Or there were some gaps there as well earlier? We're trying to grow that. So one is look, what happens with the merger is, Fontech also had products that were related to, what I would call, fabrication industry. So we have now taken those out and put it into the larger welding atmosphere. So we are seeing better growth opportunities come for that. So you go down to contact being very M and R core.

36:08 And in the M and R core, there are definitely opportunities. You won't see a natural growth rate in at the levels you will see in the other markets. But there is products that can be added on, complementary products that can be added, transplant or services can be done. So you can see that. You can't get I mean, you can't suddenly say I'm going to grow 20% over there tomorrow morning, but you can grow 8%, 10%, 12%. But there's a lot of work that we have to keep doing step by step to get there. That's going on. We have very much it's a very important part of the business. It's a very important part of our margins. It matters a lot. Got it. Last question. I think you've hired a lot of people in the last probably twelve to eighteen months or probably twenty four months. Yeah. Yeah. In terms of incentivizing them or in terms of the whole plan, maybe there's an ESOP plan, etcetera. If you can maybe articulate that as well. Yes, have ESOP plan for approximately 50 people in the company are part of our ESOP plan with the senior management, obviously, having a larger chunk of that. We introduced the soft plan probably a year and just a little bit over a year ago.

37:14 So that's part of it. We have incentive plans that are laid out. We are very, very incentivized relating to profitability across the company, and we keep enhancing that. So yes, we do that a lot. And we've got a lot of good bunch of good senior talent now, and they have a lot of responsibilities in front of them, but they're moving in the right path. It's going well. Thank you. Thank you. Next question is from the line of from the. Please go ahead. Thank you for the opportunity. Hope I'm audible. Yeah. Go ahead, please. Sorry. So the short term bank borrowing, those were on 98 per hour. From 90, it was around 2.27 per hour. Yeah. 26.

38:07 This time, there is leverage to fund the capital cycle or in the short term, what I'm getting to at $5.27. So most of it... So just to explain, a lot of it is gotta do with LCs and VCs and stuff like that as we do. So a fair amount of it is from that angle. We have a little bit of the working capital perspective, very controllable levels. And it's just a question of managing it. Like I said, due to some strategic purchases, strategic stock due to a few decisions we take as we grow 20. I would not read too much into HxY1 data from that perspective at all as far as the trend goes. Got it. On the CapEx front, will be 30 to 35 rupees sufficient to support the company's growth aspirations for all the additional investment we need to get in as This year will be approximately $30.35 crores, which if you see the trend for the last few years, But we do have CapEx planned, which will be in the for the next two financial crores years, this will be in the region of INR 60,000,000 INR 65,000,000 to INR 70 because we do have to invest towards where we want to go each year.

39:15 So for two years, FY 'twenty seven, 'twenty eight, you will see a slight jump up in that, and then we'll kind of reduce to this normal level. There's nothing exceptionally large. That's what I meant. Okay. Just last question. So how big is the opportunity in shipbuilding? And what is the current order book you can shipbuilding in Japan and if there are wind down? Look, sir, I don't want to give you the data on what our current order book is. I'm sorry, but that's kind of confidential data. But I will tell you that shipbuilding, as you can see, has a lot of opportunity. There's lot of work going in India and shipbuilding. There's a lot of opportunity that's there. We are seeing some benefit to it, but there's a lot more that can be done continuously. We definitely believe it can be an incremental growth a very significant incremental growth for welding industry.

40:06 Are you getting orders or any inquiry regarding building for Sorry. Sorry. Say that again, sir. Are you getting any orders or getting any inquiries regarding? Oh, yeah. Oh, yeah. That was definitely most definitely. Yeah. You. No worries. Thank you. Next question is from the line of Nirsar Parikh from Native Invest. Please go ahead. Yes. Hi. Thanks for taking the question. I think you spoke about it earlier, but if you can just touch a bit in terms of you mentioned on tapping the top 40, 50 consumers of steel and how do we do that.

40:55 But from a revenue perspective, we are obviously not seeing that kind of a movement. So how are you looking at it? Because it's been around a year since we have been kind of talking about that and hiring people. So any... In my opinion, you're seeing it. I mean we've grown 25% for HY1. So you're seeing parts of it. I don't think that's the average growth rate of the industry at all. We are definitely outperforming that. It's a part of that, that's being exported. As part of that, we've seen generated. So seeing it incrementally play out. If you keep having a larger and larger role. But I think in the last six, eight months, the data I see, I think I am seeing some benefit to that definitely. Okay. And secondly, on the export side, other than Middle East, is there any other geography that we have?

41:53 We are present in parts of Africa, we are present in parts of now in two different markets in Europe, entering a third one as well. So yes, we do. But The Middle East is about 85%, 80%, 85% of the export sales. But we expect that the other markets will grow and the FTAs and all of that that are coming in, we're seeing greater push, greater pull, not push, we're seeing greater pull. So we're trying to market is getting a little bit faster. But yes, we expect these other markets to play a good role as well. Thank you. Ladies and gentlemen, due to time constraint, we take that as the last question for today. I would now like to hand it back to the management for closing comments.

42:40 Okay. Thank you, everyone, for joining us. I hope we've been able to answer the queries. We look forward to such interactions in the future and hope to meet your expectations in the future as well. In case you require any further details, you may contact us or SGA, our Investor Relations partner. Thank you very much. Thank you. On behalf of Ador Welding Limited, that concludes this conference. Thank you all for joining us today, and you may now disconnect your lines.