ISGEC Heavy Engineering (NSE:ISGEC) Q2 2026 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to ISGEC Heavy Engineering Limited q two FY twenty seven earnings conference call hosted by ICICI Securities 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. Should you need assistance during the conference call, please signal an operator by pressing star, then 0 Please note that this conference is being recorded. This conference call may contain forward looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on date of this call.

0:48 These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. I now hand the conference over to mister Mohit Kumar from ICEC Securities Limited. Thank you and over to you sir. Yeah, thank you. Good afternoon everyone. On behalf of ICICI Securities, I welcome you all to the q two FY twenty seven earnings call of Isgec Heavy Engineering Limited. Today, we have with us from the management, Mr. Adi Kapuri, Managing Director Mr. Kishore Chetnani, Joint Managing Director and CFO and Mr. Sanjay Gulati, joint managing director and head manufacturing unit.

1:35 Now, I would like to hand over the floor to the management for their brief opening remarks. Post this, we'll open the floor for Q and A. Thank you, and over to you, sir. Good afternoon, everyone, and thank you for joining us today. We appreciate your time and your continued interest in our company and the trust you place in us as we continue to build the business for the long term. We welcome the opportunity to speak with you, explain our performance and business strategy, and answer your questions. Before I begin, please note that some of the statements we make today may be forward looking. They are based on our current expectations and are subject to risks and uncertainties, so actual results may differ.

2:28 Q two and H one FY twenty twenty seven performance. Standalone financial highlights. We delivered strong growth this quarter and in the six months. Revenue from operations grew 17% for the quarter and 35% for the six months, and the profit before tax grew 3924% respectively year on year. Resume from operations for the quarter is rupees 1,457 crores and rupees 3,010 crores for this... For six months. Including other income, total income is rupees $15.21 crores for the quarter and rupees 3,106 crores for the six months.

3:18 Order booking for the six months is excellent at rupees 4,844 crores, and stand alone orders in hand as of 09/30/2026 are at an all time high of rupees 8,757 crores. Execution is proceeding well in both the industrial projects and manufacturing segments. Export revenue during the quarter is rupee 72... Sorry, is rupees 172 crores, about 11% of total income compared to rupee 90 crores in the same quarter last year. Export revenue during the first year is rupees 500... First half year is rupees 557 crores, about 18% of total income up from rupees $4.25 crores in h one f y twenty six.

4:15 We export... We expect exports to remain a significant share of our revenue, though the quarterly share will vary with shipping values. Profit before tax for the quarter ended September 2026 was rupees 154 crores, up 39% from rupees 111 crores for the quarter ended September 25. These figures include the effect of transactions with our subsidiary companies, dividends received, interest income on loans given to them, foreign exchange involvement on those loans, and the related expected credit loss provisions.

5:02 In our investor presentation uploaded on this topic changes today, slide number 19 shows profit from business operations, which excludes these subsidiary related items. Accordingly, profits from business operations for the quarter is rupees 124 crores compared to rupees 90 crores in the quarter ended December 2025, an increase of 38%. For the six months ended September 2026, reported profit before tax of rupees $2.77 crores is 24 percent higher than rupees $2.23 crores for the six months ended September 2025. On a similar basis, considering only the profit from business operations and excluding the impact of transactions with subsidiary companies, the profit from business operations for the six months ended September 2026 is rupees $2.44 crores compared to rupees $1.69 crores for the six months ended September 2025.

6:08 That is an increase of 44%. On the margin front, manufacturing EBIT margin for the quarter is 13.7%, better than the 12 to 13% range we guided. EBIT margin for the project business is 5.7%, better than the last two years and close to our target of 6%. The domestic market is strong across all our product lines, and we also have a healthy level of export inquiries from customers in Latin America and Africa. The company's time to loan fund position improved by rupees 175 crores during the six months, and net borrowing fell to rupees 206 crores compared to rupees $3.81 crores as on 03/31/2026.

6:57 You know the company is investing about at least 502 crores to expand capacity for our manufacturing segment. This net borrowing of rupees 206 crores is after accumulated capital expenditure of rupees 199 crores for this capital investment, which has been funded from internal crores. Impact of geopolitical tensions on our business. Current geopolitical developments have not affected order booking or order execution. However, the cost of some materials is driven because of the ongoing conflicts in The Middle East, and this is having a small adverse effect on profitability. During the quarter, commodity prices, particularly steel, copper, aluminum, and nickel showed up to 10% fluctuations, though they have come down slightly in October.

7:51 Shipping and logistics for exports and imports has seen delays, reduced availability of shipping container, and sharply higher freight rates and surcharges. The good news is that there has been no significant supply disruptions. Most of the increased costs are expected to be absorbed to normal contingency fee provisions. Consolidated financial highlights. Consolidated orders in hand as on 09/30/2026 is rupees 10,273 crores. This is an all time high record for us. Total income for the quarter ended September 2026 is rupees $18.60 crores, about 10% higher than rupees $16.96 crores for the quarter ended September 2025.

8:43 Total income for the six months ended September 2026 is rupees 3,853 crores, about 25% higher than rupees 3,071 crores for the six months ended six months ended September 2025. Revenue was higher during the quarter for ISGEC standalone and ISGEC Hitachi Rosson, but much lower for tariff issues. In this, Sarasota Sugar is doing well is doing well with higher revenues and good orders in hand of rupees 1,161 crores. Sarasota Sugar Mills has lower gain availability last year, resulting in lower production. Accordingly, we are getting lower sales quotas, and therefore, revenues are lower.

9:30 Sanjati Sugarman is taking several steps to improve gain availability. Consolidated profit before tax for the quarter ended September 2026 is rupees 102 crores, 100% higher than the rupees 51 crores restated for the quarter ended September 2025. The consolidated profit before tax for the six months ended September 2026 of rupees 155 crores is 62% higher than the rupees 96 crores for the six months ended September 2025. The reported consolidated profit figure for the quarter and six months ended September 2025 have been restated since the accounting of the Philippines business restricted from the earlier classification as assets held for sale and discontinued operations to continuing operations...

10:25 To continuing operations. Let me now explain why consolidated profit before tax is lower than the stand alone profit before tax. The key reason for the reduction in the consolidated profit before tax compared to the stand alone is the loss from the ethanol plant in The Philippines. As you know, the ethanol plant started commercial production for the current sugarcane season on third... On 12/17/2025, using sugarcane as feedstock and included sugarcane crushing on 04/20/2026. Then after the plant has been operating on molasses as feedstock. The plant has been running at about 65%, 70% capacity, and ethanol sales are going smoothly.

11:14 Within the six months, the segment incurred a loss of rupees $1.64 crores, including interest. Most of this loss relates to interest depreciation and ForEx loss. The segment also reported an EBITDA loss during the six months, which would which would have been largely recovered if the balance stock of about 3,000,000 liters of ethanol had been sold during the quarter. The plant is presently under regular seasonal repair and maintenance and will restart when the new sugarcane season starts in December 2026. On a consolidated basis, net borrowing reduced by rupees $3.20 crores during the six months to rupees 156 crores as on thirty nine twenty twenty six from $4.76 crores on 03/31/2026.

12:07 I will now talk about the ongoing expansion of capacity at our manufacturing plants. As informed, we are investing to add manufacturing capacity across most of our manufacturing product lines. This includes testes and machine building at the new... And the new plant is coming up at Batoly in Haryana. The new facility to manufacture skids and modules coming up in our SCZ at the Hedge in Gujarat, and the investment in capacity expansion and machining facilities at both our casting factories, the tubing, piping shops at Suttonville, and the standard mechanical presses factory at. All these are running largely on schedule, and some of the new production facilities will be progressively completed this year. We are expecting the additional production to contribute to this year's manufacturing segment revenue.

12:57 FY twenty twenty seven outlook stand alone. Looking ahead on a stand alone basis, we expect the FY twenty twenty seven revenue to grow by about 15% to 17%. Margins in the business... In the manufacturing business should stay in the range of 12 to 13%, and in the projects business should improve to around 6% by the end of the year. Looking ahead, the inquiry pipeline in the order booking outlook remains strong in both the domestic and export markets. The weaker Indian rupee is supporting our competitiveness in the export markets. We recognize that the broader environment may continue to present both uncertainties and opportunities.

13:43 We are taking steps to mitigate the risk and convert the opportunities into tangible benefits. To sum up, first, tangible profit grew strongly on better margins in both segments. Second, our order book is at an all time high, which gives us good visibility. Third, our balance sheet is stronger with net borrowings nearly half in six months. Thank you again for joining us. Let us now begin with the question and answer session. Thank you very much, sir. Will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch tone telephone. If you wish to remove yourself from the question queue, you may press star and 2.

14:33 Participants are requested to use answers while asking your question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Manish Goel from Thinkwise Wealth Managers LLC. Please go ahead. Thank you so much. Sir, very hearty congratulations on the strong performance and excellent cash flows and historical high order book, costing 10,000 rupees. Very heartening to see sir. Sir, I have few questions. First, just on the last comment on the guidance, what you said of 15% growth for stand alone.

15:19 Sir, if you look at our first six months performance, the incremental growth what we have achieved already indicate, already we have achieved your 15% growth and assuming that second half, we do not prove much. Sir, again, is it a guidance is on the conservative side? That is what my first question was. Sir, second question is on the consolidated numbers. Sir, we have seen the depreciation decline from 70 odd crores to 37 crores. So, I believe it's pertaining to Cabinet Biofuel because in past call, we have mentioned that we may see decline in depreciation.

16:04 So if you can just indicate us how much depreciation one could factor for entire year for Cabinet Biofuel as compared to last year. And Cabinet biofuel, again, sir, we had seen that you did a note that there were challenges on operations, this PBIT is also 60 crores. How should we see a quarterly loss of 60 crores at PBIT level? How should we see going forward in Q3 and Q4? Sir, on Hitachi daily, the order book seems to be quite strong. We had guided for 10% revenue growth in FY twenty seven. But we're probably seeing some weakness on the margin front So in first maybe if you can provide clarity on the outlook for the DGG for FY twenty seven, both on top line and and margins front?

17:03 And last question, sir, on the stand alone, coming back to stand alone, the other income continues to be high. So, like, how much is interest from carrier biofuel and any other items like for anything? Because I understand that large part of foreign gain exporting institution deals are captured in other operating income. So what is leading to such high other income has seen in last year as well, and we are seeing in the current stock also. And what could be the number for FY '27? Thank you so much. Thank you,. I think we should really appreciate your detailed analysis of the results. On the on the guidance, 15 to 17%.

17:54 Now if you notice last year, the first half and second half. So last year, first half revenue was 2,200 crores. Second half revenue was 3,000 crores. So this year, the first half has already done 3,000 crores. Right, sir. And and the second... And and if I am paying 15 to 17%, then the second half was in $3,233,100 crores. Right. So there is a small growth in the second half, but the base was already already high. For sure. So I hope I... I've been able to explain that. Obviously, we have moved very large orders. I suppose you mentioned 4,400 of orders in the in the first half.

18:40 These orders, execution revenue from these orders will start coming but most of the revenue will come in the following following following year. So Okay. To to say it in in round numbers, from a scale of run rate of 5,200 crores a year, it's will... It should be going to about 6,200 crores a year, kind of run rate based on present or what we can see today based on orders in hand. Sure. The second is on CBPI. So the debt restriction method has been changed from... So that that is what really evaluated what is the right thing to do. We've got an external earlier also to look at the the position, the the life of the machinery.

19:31 So the position charge during the quarter is 8 crores. For the next two quarters, also, we expect the deposition to be 8 crores each quarter. So you ask for a cumulative number. I don't have it readily in front of me, but I'm sure we can add it up and and and arrive at that. Sorry to interrupt you, sir. For the quarter, the depreciation only is only 8 crores for. That's right. That's right. For quarter quarter three also, we are expecting 8 crores. Quarter three and quarter four, we are expecting 8 crores each. It will be 8 crores, 9 crores, but but that order of 9 crores. Okay. No. So sorry to interrupt, sir. But so last year, the number was $1.75 crores, which had some previous year depreciation also. Cash of debt... Cash of debt provision for more than a year's time. That was for more... For one and a half years time. I don't have that number number in front of me, but but I can tell you what what is going to happen in the future.

20:34 Okay. Right. Okay. Now in terms of the the 60 crore loss, that loss also takes into account the decision that takes into account large product situation. So how is the third and fourth quarter going to look like? Third quarter, we have, mister Puri mentioned, we have a large stock to sell that that has some profit because value that cost and that it will sell at a higher price. So there is profit in that that 3,000,000 liters of ethanol that's in stock. Real production based on sugarcane will start in December. And so the next quarter maybe a little weak, but the fourth quarter, for us, the fourth quarter, January to March, is going to be almost to go close to 90%.

21:25 I'm hoping 90% kind of capacity is best. So that quarter should be should be looking good. Now in terms of... I'll I'll come to if the Hitachi's open. So your question was how does the year look for them? So you wanted the year or you wanted to know the six six months? Sir, both maybe next second half and for the full year. I... I'll tell you about the full year. The performance will be almost similar to what it was last year. So they have booked large orders. The the order book is more of export now than than optimistic. Recent orders...

22:12 Recent order booking was... Give me a second. I'm just trying to find the page. It has the numbers. So we are expecting this turnover to be higher by about about seven, 8% compared to last year, and profit to be also higher higher, maybe maybe about five, 7% compared to last year. Their order book is is very good at $11.61 crores, which I fully mentioned in opening remarks. They have this large orders. And and, potentially, they seem to be booking a lot of export orders. So out of this 1,161 crores of order books, about 800 crores are export orders.

23:04 During this during this six months, the book orders of 678 crores total. The closing order book is the closing order book as of September 30 is $11.61, and the... This includes 800 crores of export options. Sure. Lastly, I'll come to your your question on other income. So other income, actually, if you you would have noticed, again, mister alluded to it in in... On slide 19 in our presentation we have uploaded today. We have given a breakup of what are the impact the cause of transactions with subsidiary companies.

23:50 Now the transactions with subsidiary companies has three parts. One is the dividend received from subsidiaries. So this quarter, we received dividend from. We also received dividend from. The second is the interest income from loans given to is the investment Singapore and to CBPI and the first situation. On the other side, there is a finance cost because you may have noticed that we had borrowed funds from banks in India, ECB loans to online to CVPI. And also, we have accounted for an expected credit loss of 17 crores. So this is all given on slide 19 of the presentation we have uploaded today.

24:47 Okay. Thank you. Thank you so much, sir. And wish you all a very happy day, sir. Thank you. Thank you. Thank you. Thank you. The next question is from the line of from Green Edgewell. Please go ahead. Yeah., thank you for taking my question. Sir, congratulations on the good performance. My question is to mister Puri. Just, like, two years back, you know, we started this whole journey of taking short, you know, short life cycle orders and, you know, not getting into orders with a lot of civil contracts. And now today, we are seeing that we've reached a margin of around five and a half, you know, percent in the project business as well. Also... And and that too when commodities are so volatile. So I just wanted to, you know, understand from you that, you know, should we take this as normal going ahead?

25:47 So we are continuously trying to improve improve margins, but in the short term, our strategy does remain the same. We are not going to take very long duration projects. We're not going to take projects where it performs a very significant or or major part of the total order value. And we are trying and are are being successful in taking projects which have some technology element linked to it. So it's not, you know, it's it's to move away from large scale sort of take a value sort of projects to projects which are more technology oriented, which have a shorter tie... Cycle time, and...

26:37 Yes. Yes. Okay. Okay. And, sir, and and second thing is that in the order book, we've lost 10,000. Sorry. Can I go ahead? Yeah. Yeah. Sure. Yeah. Yeah. Sorry. So in the order book, we have crossed 10,000 crores, and I see that, you know, the the products division is now 38% of the order book. We have never been so high. We've generally been in the 25, 28%, you know, kind of range for product. But now we are at 38%, and that too before we really... You know, all our CapEx, you know, three CapEx programs come on stream. So you know, like, what what do you... You know, what what is leading to that strong order book? Which areas are we getting these orders? And and, you know, just... Are we... Will we be able to execute those on time? So these are my three questions on the products division.

27:28 After the first one. So the the first question is So 38% is consolidated consolidated. I mean, what you're saying is 38% is consolidated. Okay. Okay. Okay. Okay. And then for... Yeah. So so that includes Yes, sir. For for is the heavy engineering as well as is the. And we just talked a minute... A few minutes ago about is the in order being being good. And on the expansion The the... So the expansions are happening in certain orders are being taken in anticipation of the expansions being completed and the expansions are largely on schedule. So as of now, we don't see any significant delays in our commitment to the customers. So they they will be executing. We will be executing on-site.

28:22 And these orders are coming from a wide range of industries. They're coming from the automobile industry. They're coming from oil and gas, petrochemical, some small amount, some small orders from cement, some small orders from steel. They're they're they're coming from a wide range of industries. Okay. Okay. Okay. I see. Okay. And then and then, mister, like, you know, maybe two or three calls back, sir, you you know, we were discussing that this product division over the next two, three years can reach a revenue of 3,500 crores and all these CapEx is, like, fully utilized. Does that number still hold? That number is actually hold, sir. Okay. Okay. Okay. So because this 500 crores expansion that is in... Ongoing, that it's...

29:12 Impact in terms of revenue, it can... It... We expect it to lead to 1,200 crores of additional revenue. Only some of that revenue will start coming into this year, very small amount, less than 100 crores. But the major part will start coming in from next year and the following year. So that's addition of 1,200. Yeah. Okay. Additional 1,200 crores can happen. And then we are already 2,700 crores plus of revenue. So maybe 4,000 crores would be a better number too. Yes. On a consolidated basis, that's right. Yeah. Yeah. Okay. Okay. And then and last question is on this sugar mills that... See, after a long time, we are seeing that sugar is becoming a profitable business because sugar prices have been quite firm. And then, unfortunately, we had lower yields in the captive area where we are. So so so this year, we also... Not really good for us in terms of volume, but realization, we will still get all the benefit with other sugar companies are getting. Is it right?

30:08 Yeah. So that's that's true. That's that's very true. The the... We will, in terms of realization, get the benefits. Yes. Okay. Okay. And then there will be less diversion to ethanol also this year, right, because of the Yes. Because the government has banned manufacture of ethanol from b heavy and from juice, from syrup. Right. Right. Right. Right. Right. Perfect. Okay, sir. Yeah. Those were my three questions. Thank you so much, and, you know, I wish you all the best. You know, for shareholders, sir, it's been a long wait, but I think that rate is coming to an end, and, you know, we are seeing good days. Thank you so much. Thank you. Thank you. A reminder to all the participants, you can press star and one to ask questions.

30:56 The next question is from the line of from Bank Institutional Equities. Please go ahead. Hello. Am I audible, sir? Yes, sir. Yes. Yeah. Thank you for the opportunity, sir. Sir, on the good set of numbers. Sir, this stand alone business in the product business, so is it possible to give a product wide breakup on how much it is from pressures and boilers and heat exchanger, sir, in terms of percentage? No. We do not give out product wise numbers. Firstly, it it also varies year to year from quarter to quarter. So so using any quarter as a reference doesn't actually make sense.

31:49 It depends on which No. No. I... No. I'm not talking about quarter, sir. In a yearly basis, how how it is going? So, no, we are not giving out workplace numbers, please. Okay. Okay. Okay, sir. Regarding this Philippines operations, we have reduced the depreciation. Your payment today, every quarter, we will be doing 8 crores of depreciation only. Right? Something like that. 8 or 9 crores. Yes. Okay. And the... Actually, if if if the sales has gone down from 59 crores to 56 crores, You said there are some unsold inventory in this. So what would be the guidance for this year, you know, for considering the current realization of this amount?

32:35 For... If at all, we will do... You you think that in the second half, we will be 90% utilization. So what would be the guidance for FY twenty seven for this business? Pardon me. Let me correct that. I did not say second half 90% utilization. I said the third quarter, the ongoing quarter, October to December. The season will start again in this... In December when the sugarcane starts. That's when the reduction will will will restart. In the January to March quarter, we expect to do 90% kind of transaction we hope to do, because that is when the sugarcane will be available also and will also be available again. Okay. So I I I don't think clear the situation to give out the guidance. The number is... The position is clear, interest is clear, ForEx situation is not clear, and... But we do hope to be having some small amounts of positive EBITDA.

33:35 Okay. Okay. Okay. And, sir, this year... This quarter, third quarter would be... We will be doing around, say, 70 to 75% utilization or at least how much it would be? No. At the moment, the plant is is undergoing seasonal maintenance. And and and the and the feedstock will be again available from December. Okay. Okay. Okay. So then the third quarter will be, you know, up to some extent, a similar kind of second quarter in that situation. Right? Yes. You can say that. Okay. Okay. Okay. Okay. And, sir, you mentioned that, you know, the the interest income from the subsidiary, from this Philippine subsidiary, it would be in the range of 42 crores in this quarter from the from the stand alone?

34:25 So we have been put it in the on a 30 slide. In for 2019 on the presentation we have uploaded today. Okay, sir. Okay, sir. Thank you. Thank you. Bye. You. The next question is from the line of Sandeep, an individual investor. Please go ahead. Good afternoon, sir, and congratulations on very good numbers. My question was on the ForEx fluctuation loss in the Philippines unit. How much was the amount? 41 crores, please. 41 crores. Yeah.

35:11 So out of the 60 crores, say 41 crores were due to further situation. That... That's right. Okay. And now with rupee appreciating against the dollar, the existing part, it can get reversed in the... In q three? So you are a better judge of what the dollar rupee is going to do and what the dollar... The Philippine piece is going to do. Sir, you mean that... Okay. Okay. And Yeah. What you are saying, we are also hoping for that. Okay. Second, sir, how much is the interest expense in the Philippines unit every quarter or every year? Which is the income for this kind of loan entity? I can tell you the figures I have in front of me.

35:57 So the interest income for this quarter was 18 crore rupees. Got it. For for this six months was 38 crore rupees. Okay. And lastly, sir, if the Philippines unit works at, say, 80 to 90% of capacity utilization, can it break even at the EBITDA level? It certainly does. At at that capacity utilization, yes, it will. Point is, there should be enough to be available in spite of El Nino and in spite of everything else For that capacity, we are we are hoping January to March, like I said. January to March, we're hoping to do that. Okay.

36:42 Sir, the last thing on the on the sugarcane, when we can sir. So what what... How is this season looking like? Do we have enough supply of sugarcane this year? We are located in Saryana, sir. Yeah. Sorry. Saryana. And distribution supply is not enough to receive it. It's looking like that we will get marginally more came than what we got last week. Thank you. Thank you. That is all from my side. Thank you. The next question is from the line of from from Citi Securities. Please go ahead.

37:28 Congratulations for good set of numbers, sir. So just would like to understand on the CapEx part, we have almost talked about more than INR500 crores sort of CapEx under different segments. So are we topping up this CapEx? Because as the demand is pretty robust in the system and and we are also getting out on the domestic side, but also the international orders also. So are we topping up this CapEx for next maybe two or three years? And then are we seeing all sort of revenue potential this this CapEx can... You know, we can envisage maybe by FY twenty nine? So we've already said that this particular CapEx program will yield incremental revenue of about 500 crores.

38:23 Yeah. So, sir, are we further topping it This is this CapEx of 500 crores that we We are evaluating CapEx all the time, and we... There is a good possibility that we might cap it up, but we have we have not found that anything yet. Okay. And this 1,200 crore, can this materialize by FY '29, or it will stretch to FY '30? FY '29, it will. FY '29, it will be there. It will come. Okay. And, sir, this this 1,200 crore or that will come from product, will it get the similar sort of EBITDA margins from 13, 14% which we are generating right now? I think we have said in the call that we will sort of maintain 12 to 13%.

39:10 Okay. Got it. Got it. And, sir, just I... I'm sorry if I'm repetitive. If you could just broadly see the the demand environment, you know, spending across new sectors also, How do you see... Because I think boilers and oil is is pretty over demand right now. But apart from that, what all segments where you are seeing good surge in terms of demand and and how, you know, we are planning to cater to that? So taking the export and domestic markets together, we have we have robust demand in almost all our product lines or project lines. So we we are seeing robust demand coming from everywhere. So we believe that we will improve our market share, and our products are doing well, and they're well appreciated in the market.

40:03 And therefore, we are seeing a good demand, and we are optimistic with the demand, which could stay in the same way. Okay. Got it. And, sir, just on the last question, the current base of, let's say, close to 3% of total product line. With the existing capacity, what revenue potential we can achieve at the optimum apart from the 500 crore CapEx that we that we are in. So I think we just spoken about it on a consolidated basis, maybe about 4,000 crore. By FY twenty nine? Yeah. Okay. Got it. Got it. Thank you very much, and all the very best. Thank you. A reminder to all participants, you can press star and 1 to ask questions.

40:59 The next question is from the line of from Green Edgewell. Please go ahead. Yeah. I thank for the opportunity again. Just, you know, question this time is on the orders that we have won. Like, you know, the product division does not have price variation clause. Those are all fixed price orders across India and and all the foreign subsidiaries. Is that right? Yes. That's right. Most of them. Yes. Okay. Okay. And then, sir, in this case, like, you know, how have we done our raw material planning? Because, you know, I see that during the last twelve months where there's been lot of volatility, we have still, you know, held our margins quite well. So so so we have changed something about the way we win our order or plan our raw material. Can you just explain us that?

41:47 You know, we work on a number of ways to improve our efficiencies. So there are lots of factors which contribute towards the better margin. So I will not be able to disclose what we need to have on the potato front. But but let us... But let me say in general, you know, how we manage our risks. So you're talking about about the material cost. So what... Our material cost is typically in the manufactured products, depending on which product is. Is this about 55% or so? 55%. 55 or six. 50... Between 5060%. Now when we go out and bid to customers, we typically always have back to back offers discussed with with most of our suppliers.

42:39 We have back to back offers for raw material. We have rate contracts for certain items. So when when we actually bid for an order, we usually know what each item is going to be costing us, and we still keep some contingencies. So that's typically our requirement. It's not the it's not the blind. It's not that on on on on assumptions. It's largely with counterparties. We have some kind of an understanding arrangement for backup based on which we we we book our orders. No. Agreed. You know, that explanation, I agree. But but then, you know, you... After Ukraine war, like, know, in 2022, we had a period of one to two years where, know, our margins really took a hit because of the commodity inflation, but this time, it is not. So I was just trying to see, like, what, you know, what difference is there this time. That's all I was trying to call. I think mister Puri said we keep on improving ourselves all the time.

43:38 Right. Right. Right. Okay. Okay. Okay. And and and in the in the projects business, like, is there price variation clause in our orders or, like, those are also case by case, you know, different case by case, because there are not too many orders that have price variation clauses. Okay. Okay. Okay. Okay. Okay. I see. I see. And and and and and this this whole short cycle orders, you know, so it has helped us in navigating the commodity volatility better, or is it more to do with we get our cash flow on time and, hence, our margins are better? Like, you know, what what can can you summarize as the crux of this shift from long to short sales like orders in the project business? Like, where has it helped us the most? So so first of all, it reduces the uncertainty because the time period is short.

44:32 Secondly, cash flows are better. And thirdly, the risk of the customer having liquidity problems is also reduced because of the short... A shorter duration. And he's putting his project to work, and his cash flows are also improving if the project is of a shorter duration. So basically, these these are the these are the reasons. And he said that we're going for more technology oriented projects, so that means that we are differentiating ourselves from a lot of other people who are who are in competition. Got it, sir. Got it. Alright, sir. All the best, sir. And I hope to see if they can, you know, hugely cash positive company the way we were in two thousand '14 to eighteen days. So so all the best. Thank you.

45:25 A reminder to all the participants, you can press star and 1 to ask questions. That was the last question for today. I now hand the conference over to the management for closing comments. Thank you all for joining us today, and stay safe, stay well, and we'll meet you again next quarter. Thank you. Thank you, sir. On behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.