Gala Precision Engineering (NSE:GALAPREC) Q1 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to Q1 FY 'twenty seven Earnings Conference Call of Gala Precision Engineering Limited. 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 over to Mr. Rohan Varanwal from Arihant Capital. Thank you, and over to you, sir. Hello, and good afternoon to everyone. On behalf of Capital Markets Limited, I thank you all for joining the call, for joining into the q one FY twenty seven earnings conference call of Gala Precision Engineering Limited. Today, from the management, we have mister, the whole time director of the company. Mister, the whole time director of the company. Mister, the CFO of the company. So without further...

1:08 Without any further delay, I'll hand over the call to the management for their opening remarks. Over to you, sir. Yeah. Thank you, everyone. Good evening, everyone, and welcome to our earning call to discuss the performance of the first quarter of financial year twenty twenty seven. In the interest of some of the people who are new to the company, let me give a brief overview of the company. Gala Precision is a preferred manufacturer of the high quality precision components. We serve various sectors like renewable energy, industrial and mobility. Geographically, we are diversified across sales in India, Europe and US market. We supply to tier one OEM and channel partners. We manufacture customized product of over 800 SKUs to serve almost 175 active global customers across 25 countries.

2:01 Our facilities are fully equipped with the advanced technologies and integrated capabilities for designing, developing and manufacturing a diverse portfolio. To further strengthen our manufacturing footprint and expand our product offering, we established a few fastener a new fastener manufacturing facility in Qinran with installed capacity of 4,600 metric tons. The plant is focused on manufacturing high tensile fasteners including bolts, complementing our existing product portfolio and enhancing our ability to cater to the growing customer requirements. The quarter marked as a strong start for the financial year with healthy progress across our business manufacturing capabilities and strategic initiatives. We delivered robust order booking growth of approximately 40% year on year, providing greater visibility for the quarters ahead.

2:54 We also secured our first bulk commercial order from one of the India's leading electrolyzer manufacturer, representing an important milestone in our clean energy journey and validating what we thought to diversify into high growth emerging sectors. Coming to our segmental performance, our Disparing DSS business continued to perform well with sales growing 31% year on year with the 4554% contribution in Q1 FY 'twenty seven. DSS continued to be our largest segment. SFS contributed 29% of our revenue amounting to 22,000,000 to 3,000,000 continue to be the benefit for increasing the customer adoption and new businesses wins.

3:39 CSO account for remaining 17% with a revenue of $125,000,000 reflecting steady demand across industrial and mobility application. Our diversified portfolio continues to provide resilience while positioning us to capture growth opportunity across multiple end user segments. We successfully commissioned and productionized our new hot deep galvanized plant at our Chennai facility. We will strengthen our manufacturing capability and enhance our ability to serve the customer more efficiently. We also successfully completed the development of the board for the industrial construction equipment applications, further expanding our product portfolio and opening up new business opportunities.

4:25 From this strategic perspective, we appointed KPMG to undertake a comprehensive working capital optimization study, reflecting our continued focus on improving operational efficiency and capital productivity. Additionally, we signed an MOU for the acquisition of ten point one five acres of land at Wara adjacent to our existing facility, which will support our long term capacity expansion and future growth plans. Overall, we remain focused on executing our growth strategy, strengthening our operational excellence and creating sustainable long term value for all our stakeholders. With all, I will now hand over to our CFO, Mr. S. Grijalar, who will take through the financial highlights of the quarter under review. Yes, Mr. Grijalar.

5:16 Thank you, Mr. Gang. Good evening, everyone, and welcome to the earnings call today. Let me provide a brief overview of the financial performance for the quarter of financial year twenty twenty seven. For the quarter under review, consolidated revenue from operations stood at around INR75 crores, reflecting the growth of 20% year on year. EBITDA for the quarter stood at around INR12 crores up to 28% year on year with EBITDA margins of 16.31%. Net profit stood at INR 8 crores representing a growth of 29% year on year with part margins of 11.44%. With this, we can open the floor for question and answer session. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the telephone.

6:09 If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handset 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, an individual investor. Please proceed. Am I audible? Yes. Yes, please. Yeah. So my question is, what is what is the FY twenty seven margin bridge from sixteen point five one percent to your 17% to 19% guide and split across ForEx normalization, channel channel leverage and mix?

6:59 Yes. The 5.7 margins would likely be in the range of 17% to 19%. I don't think there should be any impact because also foreign exchange business as we are already covering through hedges. So it will be between something or 19%. Yes. So, I will just add two points. One point is about the Chennai facility, where still we are not optimum utilizing that facility. And that will be we are seeing quarter on quarter, third quarter and fourth quarter, we will be seeing the optimum utilization of Chennai facility, which will again and second, more important is quarter one revenue is approximately 20%, 22% of the overall year revenue. So quarter on quarter, we will see the revenue growth, which again will help us in better inflation of the fixed order and improving the margin. So as of now, we are quite reasonably confident and we'll be achieving 17% to 19%.

8:05 Okay. Sir, I had another question, which was regarding the ForEx that what rupee you drove the cutting forward cover from 70% to 40%? And at what INR... EUR or INR USD level does the lighter cover start hurting? Yeah. It seems the purpose of us, you know, normally, we take forward covers on the euro as well as the domestic export being in euro.

8:51 Here, we used to cover about 70% of the estimated total export collection. Now we have reduced to the 40% of the total collection, primarily because of the new volatility in the foreign currency, especially as the new is concerned. These stock market normally will be deferred, but I think we covered under the course of our seven, twelve months period and we are clear premium that we get is around 4% of that. I will just add, basically, appointed one consultant who associate with the good companies, and we discussed with the other companies to whom we know they have good export.

9:36 To what we see, because of the war situation, there is a quite high volatility. And considering that, a, b, prediction is slightly on the side, there will be rupee will be weakening. Then with all this input from the company's consultant and over study, we thought, as of now, we can reduce from 70% to 40%. And as of now, we see that whatever strategy we adopt, that is working well. Hello? Okay, sir. That's all from my end. Thank you so much. Thank you. A reminder to all participants, anyone who wishes to ask a question, may press star and one on their touch tone telephone. I repeat, anyone who wishes to ask a question, may press star and one on your touch tone telephone.

10:33 The next question is from the line of from G. S. Holding. Please proceed. Yeah. Hello, sir. So just wanted to understand, like, the growth Mister, can you please be a little louder? We can't hear you. Hello? Yeah. Yeah. Much better. If you look at the growth rate, what we have been doing in the last three, four quarters and compared to what we have done this year? Sorry, I joined a little late. So if I missed some commentary, but how should we look at the growth rate year over year for us? And as you said, well, the first quarter normally 2020%, 22%. But for the full year, even as the ramp up, how will the growth rate of the revenue stack up for the full year? Okay. I'm Gala. I will reply this. So basically, the order booking for as I mentioned in the opening stock, order booking is 40% higher as compared to last quarter year on year.

11:34 Second input, we are continuously developing the new market, new customer and new product. That also is going to bring the new additional order. Third important thing is, in this quarter, we specifically hold the one dispatch of almost INR 3 crore plus to one specific customer because there was a delay in releasing the payment. Otherwise, my growth rate would have been 25 percentage. And core, we are very much pretty sure as of now, whatever the guidance we've given for 20% to 25% growth rate, we are on that. Sorry, 30% to 35%. 20% to 25% guidance we always maintain and we try to achieve that. So we are as of now quite sure we'll be achieving across.

12:20 Some of this growth will be down driven from the Chennai facility or from the existing Wada facility? From Chennai and Wada from both the facility. Chennai also ramping up as per our plan. Traditional deliveries are taking place from that. So, where we predominantly do the disk print and coil screen, there also we've seen the growth. So, in my opening speech, again, I mentioned that this print grown by 30%, which primarily coming from Vara plants and partner divisions growth is coming from Chennai plant. Okay. Okay. So my second question is on the working capital. How we should like it's about in FY 2026, it was about 180 all put together. How we should what is where do we target to take it over the next two years?

13:09 Yes. Again, Sonny, in my opening meeting remark I mentioned. So as of now, we are advising you we will be seeing similar in going forward. But at the same time, we are very much on it to improve this. And for the same, we appointed KPMG to do a detailed study. They started this study in July and we are expecting report by other time this quarter. And based on that report, we will be planning the actions and our targets in quarter three. So after that only I will be able to give you more better guidance. But as of now, if you can assume, it will be similar level.

13:55 Okay. Fair, sir. Yep. Thanks. Thanks,. Thank you. A reminder to all participants, anyone who wishes to ask a question may press on their restaurant telephone. The next question is from the line of from Latent PMF. Please proceed. Hi, sir. Couple of questions. So I'm I'm very new to the company, so it might be basic also. You mentioned that we have a 15 to 18% cost advantage in the product that we manufacture against the Europeans, and we don't compete with the Chinese. Right? So even though we have such a big cost advantage, why are... And you mentioned that it is difficult to replace existing vendors. So even if it's the... At the customer end. So even with such a big cost advantage, why is it that the the, let's say, cost arbitrage is not done by the customer and giving orders to you given that quality? I'm assuming that we match that quality.

15:09 Yeah. So I will answer this question. Think as you see, we have grown more than 30% last year. And this growth is driven by two factors. One, of course, getting the additional wallet share from the existing customer and adding new customers. Since you are new to the company, I would like to highlight that you rightly mentioned we are competing with European producers and which has very long legacy. And every new customer, the entry time and getting to a certain level of sales business takes between twelve to twenty four months. And that is the reason it takes very long time to get approval because this starts with approving the plan, doing the audit, sample approval, followed by some share of business, and then slowly increasing the share of business.

16:02 So there have been multiple customers where we started business with 5% share of business and we are today between 50 to 75% share of business. So I think we are at the growth journey state, but still even some customers where they even have a cost advantage, they don't want to shift immediately because of certain reasons in their organization, and that is not the priority for them. In general, I can say that good part is that whenever we are entering the customer, we are able to grow the share of business with these customers. And in last twenty five years, we never lost the customer also because of either quality or delivery reasons. So business is consistent, growing once we enter to the customer. But, of course, there's lots of entry barriers to get into the business.

16:52 And once you get into them, growth is really happening very well. Got it. And the next question is that, let's say, o... Let's say, OEM approves our product, but who who do we bill to? Do we bill to the OEM directly, or we bill to some EPC player who is using our product? No. No. In most of the cases, are directly billing to the OEM. So customers which are in our presentation like Vista, ABB, Siemens, Sheffler, John Deere, all these customers we are billing directly and products are directly delivered to their factories or warehouses of these customers. Understood. Understood. The second question... The third question was that in the initial transcripts, we had mentioned that there is some seat belt retractor spring that we are working on. We had given for testing and everything.

17:48 Any update on this? And So, basically, we have submitted the samples to customer, and they completed all the testing initially in India. And subsequently, they have completed the product testing in their European facility as well. And we were waiting for their visit because after approval, they released the pilot order of about thousand spring, and we are waiting for their visit. This visit happened in July, and they approved Gala as the source for the spring because they've completed all the formal process, audit, sample approval. And now we will start with small batches of supplying to them, which they will get approval through the OEM, and slowly this business will ramp up. The ramp up will be very slow in this case because it is safety critical item.

18:40 And first time, they are moving away slowly from a German producer to a Indian manufacturer. But after the audit and visit, they are very positive to increase the share of business with Gala in mid to long term. Understood. And other thing is like this customer, we already started now approaching other customers as well who are using this this detector screen and buying from the same German competitor. Got it. Understood. The next question is that if you can share some views on the land that we have acquired because the existing capacity is already... I'm I'm... My understanding is already running at an optimum utilization. Right? So how do we think... How should we think about the CapEx there, timelines, which products?

19:32 Yeah. Yeah. So basically, as of now, we signed the MOU for this 10 acre land in Wahra adjoining to the current Wahra facility. As of now, this is under the due diligence, legal due diligence that's going on. And very soon, we will release the press release for as a notice. And then subsequently then, there will be a final agreement and all, which will again take two, three months oral time to sort out all this procedure part. Finally, we started working on the broadly design and all. As of now, we plan to have approximately 50,000 square foot of building there factory shell for mainly for fastener and partly for the spring.

20:21 CapEx plan, as of now, we broadly what we again prepare, which need to fine tune, which will come into next year, Broadly, up INR 40 crores something, 40 crores to 45 crores something will be there as a CapEx plan, which we will plan in the next year once we have a complete hold or ownership of this particular land parcel. So basically next financial year is when the CapEx will happen. Then Majority part of that because in case suppose in next two months, three months we get the land, then initially, a lot of work will be there towards the land labeling, both different design approval, government approval. So earlier, earlier, may start in the last quarter or the next year. So that's why we are thinking major CapEx will happen in next year.

21:12 Got it. And the last question was, we mentioned that our effective tax rate guidance is around 22.5%. Right? So why is it not 25 as what the government requires or is it sustainable and what's driving this lower rate? Hello? Can you repeat the question? So my question is that in one of the con calls, we had mentioned that the effective tax rate is going to be 22.5. So the question is why not 25 that, let's say, generally exists? So... And how sustainable is this? No. No. Because we have... We have been able to take advantage of certain deductions eligible and to the income tax side, you know, if the new product development expenditure, we get 100% reduction under section 30 five-one-one.

22:11 And also we are able to take advantage of the purchase value of ESOP, which is allotted to the employees and that you get 100% reduction under the income tax act. Apart from the higher deposition under the income tax act, it's also we get an advantage in that. And because of that, the tax rate generally comes at a lower. Yes. So, for last year, the effective tax rate was almost 18.5% or 19%, less than 20% in fact. And currently also we are seeing it can be around 20% or less than 20% mainly because we have initiated these solar project under the CapEx open access project, which should get commissioned in the quarter three.

23:03 So that happens, we will be getting the tax benefit of that solar program apart from the cost benefit in power saving. Understood. Understood. I'll join back the queue for subsequent questions. Thank you. Thank you, Gupta. Thank you. The next question is from the line of Omkar Kadam, an individual investor. Please proceed. Hello. Am I audible? Yes. Yes. Hello. Yeah. So my first question is regarding the kitting. Has that been incorporated in the guidance that you have provided? Or will that start contributing for some time later? Hello? Sorry. I was not clear about the question.

23:51 Okay. So regarding the kitting. Kitting? Regarding the kit. Yeah. Yeah. Kitting. Kitting of the... All the components together. Okay. Okay. Yeah. Yeah, Satish. Yeah. Yeah. Yeah. Okay. So I think we already doing kitting depending on the customer requirement, particularly in partners. So basically, some of the parts which are very critical, like, third boards, we are manufacturing in house and nuts and washer, which are to be supplied as a kit to this customer and assembled on this fasteners are the outsourcing. And depending on the customer requirement, we assemble these kits and supply to them. And in some cases, we just bundle these multiple items and supply them in a package to them.

24:43 So kitting is an integral part of our partner business and contributing about 15%, 17% of our sales as a kitting solution to this system. So will your guidance increase due to fitting? I think it depends on the customer demand for the particular models where they need fitting. But in general, we are seeing depending on the requirement, this can be 15% to 20% of our total sales. Including our parts manufactured in that also. Okay. And my second question is regarding the concern into aerospace defense with Tier 1s. Have you not considered that? We are not able to hear well. Am I audible?

25:29 Yes. Now better. Okay. So my second question is regarding the has Gala has any plans to venture into aerospace defense segments with Tier 1s to reduce the long gestation period? So basically, we are still studying this segment and our mid to long term plan is definitely going to the market. Maybe in future, once we have some clarity how to enter and which product we need to work on this product and segment, then we will come up with the plan. So short term, we don't see any impact of these segments in our sales. Too long term, it is in our radar to enter these markets going forward. Okay.

26:15 And my third question is regarding the Palladium capacity. Will that be will the transition be very smooth after the Chennai capacity maximum? Or will there be a little lag between? Okay. So Farzad or Chennai facility, they are quite independent. And Chennai facility Phase two, we already started. The mezzanine of the floor, almost 10,000 construction will get complete in quarter two. And by quarter three, we will have more space and more machine for Phase two capacity, which will require in quarter four. While we have water facility capacity we have, we keep on adding the bottleneck machine to debottle and increase the production and that is going on. And we don't see any challenges in achieving the current year's top number.

27:12 I'm talking about the Palgr, the new Palgar is actually basically Palgar is Jalakar, Vada is the Taluka. So that we can see Palgar, the Vada comes into Palgar only. I'm sorry, it's a brownfield. Yes, yes. That's Yes, yes. So currently, the factories are in Varna, which is within the Palgar, Chillah. And there the incremental CapEx we are incurring for to achieve the current year number. For new land, as I mentioned in my earlier question that that will plan will start in quarter four and maybe major CapEx will happen in quarter next year and we don't see any major issue or challenges in setting up that plant.

27:59 Okay. Thank you. Thank you. That's all. Thank you. Thank you. The next question is from the line of Yashvi, an individual investor. Please proceed. Hi. So I would like to ask, have you gained market share from global competitors during the quarter? Yeah. Actually, we could gain some good market share for Europe region, and this was supplied by European manufacturer. And the order booking, which reflects 40% growth in quarter one for all our products, I think we could acquire good share of business from the European competitors.

28:48 And we have a strong pipeline to get more share of business from the European competitor in next coming months as well. Okay. So next question is how is the pricing evolving across your key product category? I think pricing is stable, and we are still able to offer between 10% to 20% saving to our customers, maintaining our margin. And for the price increases, which are happening on account of raw materials particularly and some other heads. We are also getting the pass through with some leg effect from the customer. Mhmm. Where do you see the biggest opportunity to increase wallet share with existing customers?

29:37 I think particularly as we discussed in the past, spring is very niche category product where each customer buying is between 5 crores to 10 crores. But in partners, I think each customer buying is between 50 crores to 500 crores, the segment what we are targeting. So I think in terms of growth, we are seeing partners will definitely contribute to the higher growth. But in the spring and in GALAPREC, also, we are aggressively targeting global OEMs as our customer. And of course, it takes time to enter these customer, but we are once we are entering, we are also seeing coming from this segment as well. Okay.

30:23 When should benefits from the KPMG working capital study start reflecting in cash flow? As I mentioned, we just initiated the study, and we are expecting the report the study report in quarter two. And based on that, we internally will form a team, go through the whole study and plan decide the action plan and target. I will give a more clarity in quarter two and in quarter three. Okay. And how much of recent order inflow is from newly launched products versus legacy products? Sorry. Come again. Can you repeat? How much is? How much of recent order inflow is from a newly launched product versus legacy product?

31:18 I think it is combination of both. So I think totally newly launched product contribute about 30 to 35% of the order book, which includes gold, which we have started manufacturing in Kinnai. And this also includes smart partners, again, which we entered into the global market in offshore wind tech and the product like drop washer into the growth. So these are all new. But parallelly also we see good growth in the regular search business of partners which we have been doing for last ten years and also in legacy business of the spring where we are focusing on the existing customer as well as new customer. So I think totally new product will be about 2% within this family of the company and 70% will be from the legacy product including the partner.

32:10 Okay. And are you also seeing the cross selling opportunities across both starts and springs? Yes, ma'am. This is really help us to... Partly, we have very wide base of customer for this spring, which goes mainly in industrial, renewable and mobility. So we see lot of cross selling opportunity of our partner and GALAPREC washers in industrial and renewable sector. So because Gala has already visited with them as a vendor and very good track record, this is helping us to enter and grow the partner business with these customers at global level. Okay. Okay. Thank you so much for answering my question. Thank you. The next question is from the line of Divyansh Gupta from Latent Advisors.

33:00 Please proceed. Hi, sir. Thanks for the follow-up. In one of the con calls, had mentioned that, let's say let's say, for the fast mail, we have a 15 to 18% margin edge. But for SFS, let's say, cost spread is only three to 4%. Right? So my question... Two part question. Is SFS a more commodity product or it's more specialized product? Because if there is a design and then given that we are based out of India, we still only have three to 4% cost. Right? So what is the driver for... Well, what... Why is it so less? Can you repeat in between what you say?

33:46 Three to 4% what? We mentioned that there is a cost spread of only three to 4% in SFS products. Exactly. I don't recall mentioning this, but just to answer, but then definitely we are not in commodity even for partner business. So allow whatever partners we are producing, we are producing all these partners are customized and with special requirement. So let me rephrase. So like in fasteners, have a 15% to 18% cost advantage. What will be the cost advantage in the SFS category? Depending on the segment and market where we are focusing. So for example, if we are exporting to Europe, we are able to offer between 10 to 15% or 18% cost savings compared to the European competition.

34:36 If we are competing with Indian producers in, for example, India market, then definitely for entry, we may reduce the price by a couple of percentage, maybe 2%, 3%. But over a period, we come to the normal market price because that is prevailing in the market. So this depends on the market and competition what we are focusing and working in the customer base. Understood. Understood. And maybe because SFS is still a relatively new category. You mentioned that most of the products we launch in India and then we take it outside. So then is there a scope of margin expansion as this product becomes more international driven or export driven? Yes. So I think in general, of course, in India also we have customers who offer good margin, but some customers in export offer better margin. For example, in a special category where we supply in offshore wind or now we are entering into industrial marketing of SFF, which we already started in India and now taking it to the global level.

35:42 This will help us in overall expansion of the market. Understood. Understood. The second question was that the products that we manufacture, right, are they all branded as Gala products or is there an element of white labeling and manufacturing it for someone else? No. No. No. Everything else 100% is manufactured and sold as a Gala brand or whatever GALAPREC in case of. But we are not doing any contract manufacturing or white labeling. Understood. And then what would be our overall sales mix? Like, initially, I have, right, when we manufacture these fasteners, it gets built to the OEM directly. So then is there a wholesale distributor and auto ancillary OEM? Is there a broad mix that you can tell?

36:32 So very broad level, if you think company level, we do almost 85% product customized as per the customer drawing or as per the customer specific requirement. And about 15% of the products we sell to partner distributors who buy standard disk springs, which we make as per BIN two zero nine three or HDAW washer or even some partner. If you come specific to product category, so coil springs, we 100% supply to either OEMs or Tier one companies who are directly the user. In the spring and Gala category, we have about 75%, 80% sold to OEMs and 20, 25% sold to partner distributors. And as far as the SFS is concerned, more than 95% is sold directly to OEM or actual user, and less than 5% goes to this partner distributor.

37:26 So company level, it is about 10 to 15%, but product wise, as I mentioned, it depends on the sector. Got it. And two more questions, sir. So when... Like, in our transcript, we said that whenever we launch a new product, typically, let's say, the TAM is $1,000,000,000. Right? But given that we are doing a specific or a niche product, right, within the whole bigger category of that product, so is that 1,000,000,000 actually the demand for the product that we have launched, or is this the category? And then if it is for the category, what is the market for the product that we have launched? Because that only is effectively our revenue pool. So basically, just to give you a broader perspective, for example, when we say partner market, it is approximately $100,000,000,000 at the global level, 100,000,000,000, which includes all commodity, metal, nonmetal, plastic, all type of partners and all segments like automotive, renewable, industrial, Gala initially started this manufacturing mainly used in wind industry and hydro turbines and very little in industrial.

38:31 So addressable market was 1,000,000,000. So we could service 1,000,000,000 market. And with the new product, which is gold standard, which we have started manufacturing in Chennai. So we are able to address additional one to one point five billion of the market. So today, if you see overall fast ener market is 100,000,000,000, Gala is able to address 2,500,000,000 of the total market. So there are customers who buy this 2,500,000,000 product, which is offered by Gala. It's a global leader. Understood. Understood. And the last question is, sir, let's say I'm setting up a wind mill or a wind turbine. Right? The cost of the fasteners or the products that we provide, both, let's say, are also providing that fasteners of the blades and, let's say, rather, let me put it, for the products that we can provide to a customer for them while they are setting up their whole infrastructure for the windmill, what would be the cost of our product?

39:36 And the second associated question is that if, let's say, it is... My understanding is it's less than... It's about one or 2%. Then on that one or 2%, 15 to 18% cost advantage is about point 3%. So does it actually become a very big differentiator to say that shift to India for for an OEM? Yeah. So I'll answer both the questions. So cost of partners in wind turbine depends on the wind turbine and technology and the companies what they are offering. It is between 3% to 4%. And secondly, to answer your question, as a wind turbine, definitely the 18% saving on 3%, 4% will be, say, less than 1%, as you rightly mentioned. But each wind turbine company has commodity wise purchasing, like, are companies that people are commodities of buying partner, and there are commodities who are buying bearing commodities who are buying plastic bearing...

40:36 Sorry, blade. So each commodity has a target to reduce the cost between five to 10% or 20%. So if you see that commodity levels and partners become very critical for the partner commodity manager to reduce the cost because at the end of the day, every year they will reduce the cost by three, 5% to sustain in the marketplace. So I think this will become very, very important for them. Of course, partners come into very critical category. So this has to go through lot of testing audits at the customer end... Sorry, vendor end like Gala before taking the decision. So, commercially, it is attractive, but technically, in system point of view, it takes time to enter the OEM, what we are discussing.

41:23 Got it. Understood. And, what would be the order book absolute number? You had mentioned 40% increase. But if we can just Finally... So as we discussed in the last time, we have multiple type of orders. There are some fixed orders which come from the customer we need to deliver in two, three months. And then we are scheduled from the every month and next two, three months we have tentative schedule. But as of now, on the July 1, we had order book of approximately INR110 crores, which used to be INR80 crores, INR85 crores if you see the last year's answer. So I think all all models 110 plus additional schedule, which we get every month for this type to these customers. Got it. And what would be the wind turbine fastener products revenue contribution in this quarter? Or how should we think about the ramp up of this product?

42:18 I think in totality, wind turbine partner contribution in total sales of quarter one will be approximately 25, 26% approximately. I was saying wind turbine fastener product that we launched, right, where we said that will become 10% of our fastener sales. To that specific product that we had launched. You're talking about offshore wind or you're talking in general? Offshore with the European OEM that we had started. Okay. Yes, yes, yes. So in quarter one, that sales has just... So in quarter four last year and nothing is ramping up. Currently, it will be very less, but I think by end of this year, we should release the 10% for total partner sale we do in FY twenty seven.

43:09 We still maintain the same guidance of 10% for this year. Got it. So that goodness is yet to reflect in our numbers. There's nothing big face effect of that product. Yeah. Yeah. Yeah. Understood. Understood. That is from my side, sir. Thank you. Thank you. The next question is from the line of Vishya Singhal, an individual investor. Please proceed. Good afternoon, sir. Am I audible? Yes. First of all, congratulations for good set of number y o y. Sir, I'm a new investor in your company. And can you give me two guidance? First is what will be our EBITDA margin for FY 'twenty six, 'twenty seven and 'twenty seven, 'twenty eight?

44:00 Greeta? Hello? Yes, I will reply this. We have given the guidance of EBITDA margin of 17% to 19% year on year and which we're maintaining for current year and for even for the next year. Thank you, sir. And second, can we expect three digit revenue for this next quarter onwards? I don't want to comment. I cannot use for that type of forecast. But again, year on year, we maintain the growth of 20% to 25%, and we are very much on that. And it's not I cannot give you the exact number, but you can apply this year on year growth on quarter on quarter.

44:52 Okay, sir. Thank you. Thank you. The next question is from the line of Aditya Banerjee, an individual investor. Please proceed. Yes. Hi. Thank you for the opportunity. So my first question to you, sir, is that utilization was guided to reach around 70% in FY twenty seven. Where do you stand after Q1? Yeah. Q1, phase one capacity inflation is almost 70%, 80%, and we are thinking Q2, we should be touching 80%, 90% of Phase one. By the time we are working on the Phase two capacity, we should be there partly in Q3 and Q4. So by year end, we are saying we should be able to utilize the capacity Phase one to 70% in Q4.

45:48 Okay. Understood. Great. So my second question is that has the HDRG plant commissioning reduced outsourcing cost for improved margins? Yes. So there are two points. One, basically, margin, but second was even to improve the delivery. And most important, there were few customer who were expecting or not expecting. They were insisting if we have the HDD facility in house, then only they will start the business. So that was one of the important driver and we decided to put this plant in house. And due to this now we are thinking we will be seeing some additional order flow from that new particular customer. Okay.

46:35 So my third question is that what is the current monthly revenue run rate from the Chennai facility? Approximately 4 crore plus minus depend upon the clearance what we get from the customer. The manufacturing is INR 4 crores to 5 crores, dispatches plus minus in that range. So for example, in in June month, we produced more than 4 crore or approximately 4.5 crore, but the dispatch was less because we kept one item on hold. So there can be some time lag in dispatches. Our manufacturing is happening approximately 4 to 5 crore. Okay. Okay. And I have two questions.

47:21 One is has gold production not done in line with your expectation? Yes. We are getting very good response. And in last month, only one customer gave the go ahead and we are seeing a regular order flow from that customer apart from other three, four customer. And as I mentioned, GALAPREC is one product where one customer was expecting in house that order also we are expecting then in quarter three or quarter four. So we are thinking the more product ramp up is happening as per our plan. Okay. Got it. Got it. And I have this last question. Like, when do you expect to reach EBITDA comparable with the next phase?. Once we complete the phase two and start utilizing approximately 70% to 80%, which should happen in Q4, maybe in Q4 or next year, Q1.

48:27 Thank you. As there are no further questions from the participants, I now hand the conference over to the management for closing comments. Over to you, sir. Thank you for all the participating in this earning call. I hope we have been able to answer your questions satisfactorily. If you have any further questions or would like to know more about the company, please reach out to our IR managers at Validram Advisors. Thank you, all of you. Thank you. On behalf of Aihan Capital, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines. Thank you. Thank you. Thank you.