Mold-Tek Technologies (NSE:MOLDTECH) Q1 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the Mold-Tek Technologies Limited Q1 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 over to Mr. Abhishek Taparia from MK Global Financial Services Limited. Thank you, and over to you, sir. Good afternoon, everyone. I would like to welcome Mr. Lakshmana Rao, Chairman and Managing Director, and thank him for this opportunity.

0:47 I shall now hand over the call to him for his opening remarks. Over to you, sir. Thank you, M. K, for attending this call. Thank you all for participating in our Q1 performance review. I'm very glad to inform you that the company has come out with a stellar performance by increasing the revenues, improving the operational efficiencies and controlling the cost, thereby giving almost four times jump over the Q4 profitability and 12 times compared to the Q1 last year. And this is another very important point to note here is, this is without Brazil really contributing anything to the bottom line.

1:36 Maybe on the top line there was some addition, but the process of integration has started because the design team has to be created in India. That is what we are doing in the last six, seven months. And now the design team is able to contribute started executing projects for Florida clients. And that will become positive from maybe Q3 onwards. Q2, Q3 will be timeframes when they will start contributing to the bottom line also. So I think the future is going to be bright for the company with more automation being used to enhance the productivity, thereby reducing the employee costs or increasing the per employee revenues.

2:22 Either ways, it is beneficial to the company. And another positive note is in MES, power and distribution due to the data centers happening all over the world. There's a lot of demand for power transmission distribution work. And there we are getting we got into a contract with the number one power distribution company in USA and the team is being formed for them. About 10 people have already started working and the team may grow up to 20, 30 people center for that company in the coming months. So in all areas, there is a significant increase in the demand for our services and I hope the future will be much brighter.

3:08 We can share more information through question and answers. Over to the operator, please. 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 the 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 The first question is from the line of Kiran Gaj from Knightstone Capital Management LLP. Please go ahead. Hi. Good afternoon, congratulations on good set of numbers.

3:54 Thank What is the I have two questions. What is the work on hand for MES? MES work on hand is just like last year, it's about INR 1,150,000, whereas the civil work on hand is 4,400,000 as against 2.7 last year. So civil continues to have strong traction on demand. Okay. Does the incremental annual revenue of $2,000,000 for Berel includes the $1,000,000 purchase order from Pittsburgh County? Yes. That is where we anticipate going forward in the next twelve months, their run rate revenue rate will increase because of this master purchase order they received from that county. And also they are entering into Georgia now because earlier they have restricted themselves to only Florida.

4:49 Now with our Atlanta office is being in Georgia, we have initiated the registration in Georgia also. So thereby they will be able to get the inspection and permits work from Georgia also. So this is the second step we have taken. And the team creation here also has come to eight members now. That team might grow has to grow up to another 15 to 20 people by at least October, November. And then most of the design work can be handled from India. Thereby, you can see the revenue improvement I mean profitability improvement from Q3. Hello?

5:37 Mr. Kiran, can you hear Yes, yes. Sorry. And what was the EBITDA for Beryl in Q1? Beryl is just around breakeven now. So EBITDA margin, have to for very little, I'll let you know later. We'll work out. Okay. Thank you and all the best. Any other questions? Thank you. The next question is from the line of Sanit from Investments. Thank you for the opportunity and congratulations on the great results. So I wanted to start with one of the remarks. You mentioned that we have reduced all our other expenses costs. As a result, we were able to grow our profitability. Could you give some insight into what costs should we reduce and how many of them are sustainable?

6:29 Yes. As mentioned in the previous quarters, we have taken a call on MES division downsizing of the automobile. That is one of the major reasons for the reduction in employee costs and also other expenses like the very expensive software costs and other costs have been now reduced in MES. So that is one of the reasons why the other expenses dropped. And there were some MTM losses last quarter. This quarter there is no loss. So that is another reason for the reduction in the other expenses. Understood, sir. And you also mentioned a long large pipeline as a result of data in the build out. So do you are the orders already in place with other design firms? Or do we expect the next one year to also get more orders in this space?

7:17 Because there's a lot of CapEx that already has been done in the country. So I'm wondering how many more how much more CapEx is going to be there? No, I'm talking about power distribution for the data centers is happening across USA. So there will be huge investments on power poles, laying of lines, distribution, transformers and substations. So where we are the expertise for the last seven, eight years, have a team of about 50, 60 people. We are doubling that team now in the last couple of months. We are aggressively shifting some of our automobile people into poles and towers design, also substation design. So all these changes are going to contribute in the coming quarters.

8:03 Already some changes have been done in the last two quarters and some more teams are being added for a couple of big distribution companies in USA. Understood, sir. And could you also give you mentioned that Beryl is expanding to other counties. So to the extent synergies, think you had U. S. Offices also, right? So how are they exactly helping with Beryl or are mixing offices together and employees together? How is it working there? No. Vedul has limited its operations to only Florida all these years. They never gone beyond Florida. Now we introduced them in Georgia in Atlanta City and they have already introduced and getting their name listed as approved engineering service provider for the county.

8:50 So that will start giving them work because any citizen anywhere in the in that particular county or state can approach Veril for various works they require for their residential buildings, additions, annexures, hard permits, insurance claims, anything to do with their residences, they can make use of Beril also one of the listed entity. So it is listed only in Florida, now it is recently getting listed in Georgia. So one more state work also can start coming in. Probably it will start as a trickle now, but will pick up speed by end of this year. So there is a number of contracts they received now can double in some from one state, they can get from other state. So these benefits will accrue in the coming quarters, maybe from the Q3, Q4 onwards.

9:45 Got it, sir. And what kind of growth do you expect from these other states because you might have some assumption on this, that's how you're building the team, right? So what kind of experience? Yes. We are assuming that till Q2, it may breakeven in Q2, Beryl may breakeven in Q2. And from Q3 and Q4 onwards, the numbers should be positive quarter on quarter. So hopefully, if not this year, next financial year, Beryl will be in a position to add at least 500,000 to $750,000 to the bottom line. Got it, sir. And in terms of onboarding more professional engineers, where are we at today? Because we had plans of expanding the number of people we have in PEs, right? So where are we? Yes. We have only a couple of PEs as of now on our Board who are U. S. Certified PEs.

10:31 And we are now in talks to acquire another structural engineering company with mainly PEs on board because Beryl is more into residential permitting and government work. It is not much into design. So a good design company can make this total team well integrated because today MOLDTECH is very strong in detailing and connection design. Berry is very strong in government permits and residential work, but not in design. So we are now talking to a design firm, which has both structural steel and residential background with about seven, eight PEs. And if the deal gets through, this combination can be really what makes us a complete civil engineering service provider.

11:22 Understood. What is the size of the probably from the acquiring sir in terms of revenue and the cost base? Yes, we are discussing with them. Today it may be too early to give the details, please. Got it. But have you seen any inflation in these prices because the CapEx side, they also must be getting more work. Did you see are you noticing any people asking for higher premiums than they used in the last few months? You mean asking for higher people, Not really. You really. It is similar. There's not much change in the valuations. Got it, sir. And one more question regarding MES, like just to understand the trajectory of what happened over the last few years, because in your website you mentioned that in 2022 or 2023, we finally reached profitability in MES, the mechanical division. So till then, were we accusing any losses in this division till 2023?

12:12 Yes. In the last couple of years, MES has been bleeding, especially last financial year, MES work was very low. It's almost INR 7 crores, 8 crores overall year loss in MAS last year, because we are holding the people and software hoping that the EV market will revive, but there seems to be no real turnaround for the EV market as of today. So instead of keeping those people idle, are shifting some of them into poles and towers design, substation design and some people will let go. So the expensive software for automobile, those costs have come down and some of the expensive resources were only suitable for automobile design, I mean, EV robotic design, they have been let go. So these are the drains.

13:10 It was happening last two years, especially last year. The workflow in EV section was very low. So starting this year, we have started with a small team. We want to continue in EV because once it comes back maybe after two, three years, we should not be lagging in knowledge. So we have kept a team of 50, 60 people who are relatively busy now. But the team was 125,130 people a year ago. So at that time, they were mostly idling. So that some people were shifted to electrical poles and towers and some people were let go. So now the team is 50 and reasonably occupied. Okay, sir. So usually, when do these people give you orders, is it usually the direction phase of the plant or is it time to time after direction also you guys get orders in terms of design? Because Just trying to understand the life cycle of design while you're doing this mechanical division. Could you explain that?

14:09 In mechanical, see, right now currently majority of our mechanical work is coming from poles and towers and substations. Right when they start laying off the line, they decide the route, then they start using our services until the lines are laid. If it is a substation, right, they give the substation locations and then we design the structural frames, structural dimensions and detailed drawings to them. So the process will go on from the beginning of the project execution till the end. We'll be working with them. The initial contract will be after the design is completed. Generally, some part of the design, they let Indian teams do. The basic design is generally done based on-site conditions.

14:57 Hence, the design team in America will be doing this of base design. Then detailed design and detailing will be done from India. Got it. The American team is also our team based in The U. S. It's not someone else subcontractor? Not really our team. We don't have team in mechanical design there. We have team in structural side. We don't have a team in mechanical design. Today mechanical design or even structural design, base design is not done by us. That is why we are still looking for a structural designing company acquisition. Once we make that acquisition, then the team in U. S. Itself will be able to take right from the general contractor the work rather than taking the work from the erectors and fabricators.

15:43 Today, our main clients are still erectors and fabricators. The real general contractor is where we have to target. There we require subtle designing capabilities. We have the capabilities, but we need a bigger team in U. S, which can bring the general contractors into the future and then that work can be outsourced from India. So that benefit is yet to accrue, but our next step will be in that direction, next acquisition. Sorry to interrupt you, Mr. Praneet. I would request you to rejoin the queue for a follow-up question. The next question is from the line of Dhruv Bajaj from Growth Peer Ventures. Please go ahead. Sir, thank you so much for being with this opportunity.

16:28 Sir, firstly, we did mention in our previous call regarding this master service agreement wherein we would be working with this power plant there. So has that execution started from this particular quarter, or will it start coming from... We might should have been at some master service arrangement with a client in USA for next two, three years. And Yes. Is where we started. We started with the team of 10 people now. Five people are already being billed from July. And from August, September 10 and by October, November 20 people will be working. Is outcome of that agreement. Okay. And then how big can this be that be on an annualized basis considering this was a very first At quarter this for the next twelve months that is starting let's say from August, it can be $1,000,000 per annum activity with a very good margins.

17:26 And with them taking us into other lines of activity, it can even go in the coming years. Currently, you can factor about $1,000,000 from this contract. Fair enough, sir. And sir, like you did mention, like because of this data center implementation, there is a lot of requirement of this power transition and power relation projects. So that we are working already on The US. I think this particular order was on that. Incrementally, what type of demand scenario are you seeing on that? Because the bottleneck is used on that side. So that should give you multi year visibility. So can that The opportunity is big. I wouldn't say it is a $100,000,000 opportunity.

18:11 It can be together altogether it can be almost 8,000,000 to $10,000,000 opportunity for our part of the business. But finding people and training people in that line is becoming challenging. We have just now started a team for this new client and created the content, created the videos so that our engineers can be trained in the American way of electrical design, so the electrical line and distribution design. So that work that will initiate us to ramp up little faster in future. So but I wouldn't call this line as a $100,000,000 opportunity. It will still be 5,000,000 to $10,000,000 per annum opportunity, but with a good profit margin. Fair enough, sir. And sir, in this particular quarter, we surprised everyone in terms of the margin that we clocked in of 19%, whereas we guided, I think in the previous call that we will be achieving somewhere around 15%.

19:06 So just trying to understand, I do understand there are the very decent which ultimately led to higher margins. But is there some sort of seasonality involved here considering one of our better quarters? Or is there some product and service mix change which is leading to such higher margins versus what we guided? So if you can help us understand the sustainability Yes, on that yes. Actually, Q1 was last Q1 was not so good. Actually, we only 8 lakhs profit and a very low EBITDA. So that way there is nothing called seasonality. The real seasonality comes in terms of workflow. You always like in packaging, we talk about EBITDA per kg, but here in technologies, what I would look at is what is the work on hand at the end of the quarter. Today, it is $4,500,000 in civil as against $3,700,000 last year. So we are confident that the next quarter also is going to be good.

20:06 Work on hand is a very important measure for us because if the project flow is coming down, even if you have the team, like in EV case, that's what happened. In EV, we have created a big team of 150,130 people, but the workflow used to be 100 ks, 50 ks per month. So and the accumulated work at any given time was less than $250,000 So that is not a good indicator. Here in civil now, we have $4,500,000 work on hand as of today. That's a good indicator for me to see the next quarter also with a positive optimism. One more thing that adds to my optimism is Beryl, which has not contributed in this quarter rather it is a small losses, would definitely become breakeven next in this Q2.

20:53 And from Q3, it will start contributing because our design team will be ready. Makes sense. But is it fair to say that we only guided for them to take orders kind of run rate for FY 'twenty seven. And given the volumes of order that we are receiving at the moment, is it fair thing that we will definitely achieve on that spend? I think we already achieved in this particular. Yes. INR 50 crores is possible. INR $2.40 crores, INR $2.50 crores is possible because we have done around INR 61 crores now. And I think this trend in the Q2 also gives me confidence similar level of achievement is possible going forward. And sir, on a margin plan, do we want to revise our guidance on the earlier 15% level? Or will we stand with that level and hopefully over deliver? What's your take on that one?

21:44 I think the trend was the way it's going on, the EBITDA margins can even reach at least 20%, if not 23% what we achieved in the current quarter. So last year, it was around 16% EBITDA. It should at least cross 20%, 23% level sorry, last year, it was 11%. So it should reach at least 20% plus in the... Sir, historically, we have always done, I think, 20%, 25% kind of EBITDA and rate, due to the harsh results in certain segments, we were earlier having all these issues. But now directionally speaking, sir, how confident are you about this business? Because like, even if you're wise, we could see a lot of optimism versus the previous quarter's phone calls. So what are you seeing on now that gives you so much confidence in the business? Yeah. Two things. One is the workflow is increasing. The the projects are taking off more and more in civil.

22:43 And second thing is the Beryl is going to start contributing from next quarter, at least Q2, Q3 onwards. It will certainly start positive contribution. And the third thing is our power and transmission line business is increasing with a strong leader giving us that MSA and what started for them. So this will be a very good referral point for us to showcase our liabilities in U. S. For the other clients also. So with all this gives me confidence and our new productivity drive through automation is improving the output per person. So without increasing our employee costs that I mean proportionately with a less increase in the employee costs, revenue growth can be better, higher. So that is what gives me a confidence on the overall performance.

23:38 This is just one last question from my end. So we did mention in one of our previous calls that in Beryl, I think the external promoters are also supposed to subscribe some warrants in the business, but due to fall in the share price, they couldn't. So any incremental infusion is planned on that trend from their end? See, it was part of the understanding MoU at the time of the acquisition within a time frame of six months. The six months time lapse in April. That time, this six months average price was coming much higher than the current market price. Is normal for any human being to think why should I buy a 30% higher price when the share price is $130 He was offered at $165 I think, according to the six months average.

24:25 So he didn't show interest and we didn't press upon it. So everybody has to make their own investment decisions. We can't push people to They own cannot And there won't be any incremental expenses from there. And I was just trying to get that one because the six months period has already lapsed as you are saying. Yes. In the six months, they have just a small negative for the eight months what they concluded some 5,006 thousand dollars loss in the eight months, which is not a big And you can expect the while the integration is taking place between an Indian and American company, there will be some people who leave the company and that skill set has to be created. So that challenges have been now overcome and the team is slowly gathering pace and the communication between Indian team and their American counterparts is pretty good. We just lost two out of the 38 people when we acquired.

25:22 But those two both belong to design unfortunately. So that is what has given a little setback to them. But those two six people team in design what we created now are catching up with the domain knowledge. So now I think going forward our support to Beryl in design will be strong enough to for them to go aggressively in the market. Mr. Dhruv, I would request you to rejoin the queue for a follow-up question. The next question is from the line of Kostav Pavna from Kamana Holding. Please go ahead. Yes. Hi. Thank you for taking my question. So in your press release, you have in the growth opportunities in the Civil and Structural Division business, you said rising investment in data centers, right? So I want to understand right now, what are we right now, I don't think the company is doing much in data centers in the Civil and Structural Division.

26:20 Is there any plans over the next one, two years to enter the space and how in the civil and structural division? That's the first question. No, we already doing done couple of data centers actual work in the last one, one and a half year. And now with that background and showcasing that our team is aggressively marketing for more and more data center structural work. We have already done a couple of them. So with this new acquisition that you're talking about, which you're planning to do now or to add design capabilities, will that will your value proposition and offerings improve for data centers? Not only for data centers, project, any commercial or residential building, when one company is giving both structural design, detailing, connection design and the whole thing including permits and all, obviously you can charge not hourly rates, can charge as a percentage of the project cost, which we can't do and you're doing in bits and pieces. So once we have a structural designing company in hand, which is an American company representing by American PEs, and then we talk the fee and the cost of the project. Let's say the cost of the project is $100,000,000 probably we can charge 3% to 5% for the entire structural design, connection design, drafting, maybe architectural will be left over. So probably together

27:50 structural and architectural, the general fees are 3% to 5%. So at least 2% to 3% can be charged as a project cost on the project cost, which we can do only if we have a strong design team representing the whole company. Fair enough. And you had said earlier on the power side of the business where substation poles etcetera designing we are doing, The opportunity size is 5,000,000 to 10,000,000. So is that opportunity size the sector opportunity size or the opportunity is No, not going no, no. Sector is much more than $203,100,000,000. What we can deliver in that is what I'm saying, 10,000,000.

28:36 That is more than $05,000,000,000 maybe. You can deliver more than $05,000,000,000 but majority of that main design is done in America. So substation part design and detailing is what outsourced. So out of $500,000,000 or even $1,000,000,000 maybe $400,000,000 may go out of America for substation design and detailing. In that I'm hoping 5,000,000 to $10,000,000 for MOLDTECH. So sir, let's say we are $10,000,000 if you're hoping for $10,000,000 let's say, where are we right now? What's the revenues right now from that business? I mean we can get right at the No, end, but where are we right right now probably we are around 1.2 how much is our pole cent of us?

29:26 This is 1.5 and this is about 500. So about 2,000,000 now. So you're saying it can become 5x in about three years? Yes. It can at least three to four or 5x in next two, three years. And you're saying this is a high margin business? It is high margin. Sir. Best of luck. I hope you continue to give this good performance with higher margins and I hope the performance isn't volatile like how it used to be. Best of luck for the future. Thank you. Thank you, Vishal. Thank you. The next question is from the line of Manish from Swastik Investments. Please go ahead. Yeah. Thank you for the opportunity, and congratulations on the very good set of numbers, sir.

30:14 Sir, I had a question. One, will you increase employees in your design team in US since you've said they've expanded to one more state or home team, which is Georgia? There is no need. The design team is being created in India. One or two people there is good enough to take care. One PE is going from India to settle down in Florida from October onwards, maybe October, November once he get his L1 visa. So that will be enough with the current another three member four member design team available in Beryl. They will be able to do the front ending. And the back end team, what I said now, six to eight people here will be ramped up to 15, 20 people as the growth comes in. So there will not be any much addition of American staff in this domain.

31:12 I ask Yes, you a go ahead. No, even if we go the structural designing company which we are in talks with, we will be expanding the team here in India, not in U. S. Yes, I understand that, but the acquisition that you've been talking about, I know we've been talking about it since long. Unfortunately, Beryl happened. But Beryl, like you highlighted some time back, has not given us the end to end expertise, right? Maybe in the residential segment, yes, but there are a few open gaps, which maybe one of the acquisition can add. Now my question was more in the context that you highlighted in the previous calls that there are so many counties in The U. S.

32:02 And the opportunity to expand to those counties is definitely there. So because you also highlighted that you guys have expanded into Georgia this quarter, so that was the reason as to why I was asking if it makes sense that we increase the design team in U. S. So that we can expand to maybe more counties or maybe take more work coming our way. No, I understood your question now. See, if we expand Beryl's operations further beyond Georgia, yes, we'll be needing people there. But currently, this is the first step we have taken to start in Georgia because of our offices there in Atlanta to coordinate and make it easier for Beril to communicate and take up the work of Atlanta County jobs. So once we see merit in that, we will certainly go aggressively across some more states And then we need to add people because the work what they do is more permits and inspections, which require a physical presence.

33:06 So design work can be done from anywhere. So there will be a need for increasing the team there only when we move to other states. In Atlanta, currently we have a staff of five, six people who can help Beryl in executing the work once it starts from the Atlantan County. But I'm not looking at that as a permanent immediate goal because immediate goal is to set the barrels design team in place and start executing the barrels design work which we are losing now. So that is a step one. And step two is Georgia County addition to barrels operations, where our current office people will be enough to take care. And once this success comes in, probably it will at least take a year to see some good traction in a new county. And then probably we will be looking at expanding the team there also as per the business states.

34:02 Thank you, sir. That answers my question and best of luck for the subsequent quarters. Thank you. You. The next question is from the line of Preet Shah from Bluestar Capital. Please go ahead. Am I audible, sir? Yes. Yes. First of all, congratulations for a good set of numbers. Sir, as I'm new to your company, so sir, I just want to understand what was the reason for big jump in the margin? And are these margins sustainable? So could you please help me with that? Yes, I was telling the same thing. The two things are helped us to improve the margins and will continue to improve.

34:49 One is our reduction in non performing division of automobile engineering, which we have reduced the manpower and saved the cost. But more than that, the real contributor is high automation what we brought in our operations and an incentive system which is driving the people towards higher productivity is visible in the last at least last three to five months. So these two are going to be a long term in nature. They are not one time. What is the point of indicator of the growth is work on hand at any given time. That looks very solid now around $400,000,000 as against $3,200,000 last year same time. So it indicates that things are positive in the project flow. And now execution costs are now brought under control and they will be under control in future also.

35:46 So what is going to further improve is Beryl which is not contributing to the bottom line will start breaking even in Q2 and might start making profits from Q3. So that is why we are confident that the margins are sustainable going forward. Got it, sir. Sir, as you have given the guidance for FY 2027, any sort of guidance for FY 2028, what you are looking for? A ballpark figure would be also helpful. Yes. I think we should at least do in the same way for the next four quarters is the minimum what I expect. No, no, no, For FY 2027, you have said 242 to two fifty.

36:34 FY 2028, for next year, what you are expecting? Next '27, '28. See, numbers are dynamic because one thing is sure, we are in a strong wicket of civil engineering and not so strong in MES. And in MES, now we found a very good footing in the electrical distribution and substation work, which is becoming our forte. And automobile is there, but it's not a great reliable line for the last several years. It's been going up and down, which has now narrowed to a small team. So going forward, I mean, I would say, levering in the performance won't be there, I hope, as long as the civil work on hand is strong.

37:20 And going forward, we'll be making definitely acquisition in the structural engineering side, which can add numbers beyond annual growth. So I can't predict next year, probably at least INR $3.50 crores should be our target for FY 2028 along with an acquisition. Got it. Got it. Thank you, sir, and all the best. Thank you. Thank you. The next question is from the line of Praneeth from SJ Investments. Please go ahead. Hi, sir. Thank you for the follow-up. So I wanted to understand, you mentioned the 4,500,000 of work in hand, sir. How much was the contribution because of Beryl? Was this a regular course of business in terms of order book? No, in this, we have not added Beryl number at all. This is Mold-Tek Inc.

38:11 Work on hand. Okay. Beryl, does it have a work on hand basis? Is it usually how it goes every month that this changes? Their work on hand is typically small in nature because their work is more of residential in clients, so each maybe $10,000 $5,000 projects or maybe $20,000 Whereas in Mold-Tek INC where we do structural steel buildings, where the project sizes are anywhere from $20,000 to $500,000 each. So our work on hand is more of a measure for our future. But whereas Beril's work on hand is immaterial. They keep getting daily orders or weekly orders, which are completed within a week or ten days, whereas our projects last for six months to one year or at least three months to one year.

39:02 So for us, work on hand is an important measure. For Beryl being a retail kind of work, that's not a big deal. So we don't really monitor that. So is this the highest work on hand you ever had since the company's inception or how is it in terms of the size of work on hand? That's work on hand means this is a number of projects awarded to us which are yet to be executed. One good thing in the case of Daril that happened recently is that they received a $1,000,000 work master purchase order from the county, which is going to help them to have a steady flow of work from the county. So that was not there three months ago. They recorded just last month. This is apart from regular.

39:53 That is apart from the regular day to day orders they receive from the residences and individuals. Understood, sir. So one more thing I wanted to understand in terms of PAT margin sir. You mentioned that a lot of efficiencies that are usually sticking in terms of reducing cost and all of it. And you also mentioned the productivity efficiencies in terms of labor utilization. So do you think the margin of PAT can go above the 15% mark in the next one, two years? Or do you think that will still be remain the highest level we'll probably able to do? I'll be glad to maintain this at 15%, but it can move up once Beril start contributing a little bit. So for the time being, we can keep 15%, 16% PAT margin as a target. But is it possible for us to let's say go beyond 20% because a stand alone business is anywhere at that level anyway. So is it possible in terms of consolidatedly it moving to 20% or the profit margins there are little lower compared to our stand alone Indian business?

40:53 Yes, Beryl cannot have 20% PAT margin. Probably they will at the most reach 10%, but our standalone can reach that. So let's see how it goes. Got it, sir. So sir, one more thing in terms of understanding our past. You So mentioned that mechanical, it's been there for last ten years, right, sir? So how many of them were profit making, was non profit making for mechanical division over the last decade? Yes, two, three years of profitability, '22 and '23, I think, 2223 and 2324 to some extent. Only two, three years it was profit making, MES. But for that almost remaining five, six years, the team was not fully uniformly loaded. There were projects for three months and no projects at all for the next three months. That kind of uncertainty was there in our particular domain for quite some time. So that's why the call has been taken to come out of that and keep only steam of 45, 50 people who are getting regular work and the redundancy has been removed.

42:03 Understood, sir. Sir, in terms of the work on it, did we add new customers also, did more work from our existing customers itself, most of it? No, no, in both ways. We are getting more work from the existing clients and then also new clients are being added. Now various BD team is also going to work for our regular core business. They have been trained how to handle the business development for our structural designing and structural detailing operations. So one team, one person from Atlanta went and spent a month training them. And their contributions also will start coming from maybe next couple of quarters. So we are making sure that their American presence and their contacts are also can be used for our core business.

42:49 So that is another delta that can happen from Q3. They have started now, but for them to get used to the language and properly give a presentation might take a couple of months. But once they do it, they can be much better because an American engineer talking about MOLDTECH will convince the contractors and fabricators to give the work to us. So that can help our core business also. That also we initiated now. So basically we're training the salespeople already there for Bharat to sell our products also basically Yes. That's the already three member team, a strong team is there and they are engineers and they can easily catch up what is they are doing work for the residences and government projects.

43:42 So they have to twist the story and they have to catch the way of presentation of our services. That maybe couple of months it will take and then they can also contribute towards our core business. Understood, sir. Sir, and one more thing with regards to our structure different from acquisitions, so when do you think we can close by because I think in the past we got some delays because we're not able to identify the right company. So just wondering when do you think... I think again, now also if I give a date and it will change, it will not look good, but there is a close proximity. If it happens, it can happen within this calendar year. So let's see. There are opportunities I'm going to meet them in September end. Meanwhile, Prasad, who is here now currently in India, is going back CEO back to U. S. On August 16.

44:41 So from then he will be interacting with them and I'm going there in the second half of September. And if things go well, we may either take the deal or drop the deal in October. So it can happen in this year. Got it. So but it will not be easy but can we not build our own PE because we already had the rail. Can we just expand the No, Building up a PE team in U. S. Is next to impossible. Finding PEs who are willing to come and work to an Indian company and with reputed ten, twenty years of experience is very, very difficult. We can find one or two people, but not a team. So this one what we are looking at is a team of about 15 engineers, half of them are PEs and SEs.

45:28 So that kind of company with more than twenty years of existence. So they will have very deep rooted contacts and many projects to showcase, which you can't get by yourself. It will take another ten years. So we want to buy the time. So but are there offices with these kind of fixes, are there options to begin with because it is seem like not that many companies will be available. So if not, if this doesn't work out, do we have options or we need to end up waiting for a while after? There is always options, but the time, you you will be keep losing time. So let's keep that as an additional bonus if it happens. I'm not concluding that it's already done. It has to happen. We have to find the correct fit.

46:14 People who are willing to stay with us, people who have similar mindset, all that need to be discussed. That's why these acquisitions, though small, take long time. But they are good probability. Let's see. Got it, sir. So in terms of number of PEs, sir, how many do you think there will be in The U. S. Combined because you're telling it's impossible to build probably a team by yourself. Like do you think how many are the numbers to begin with in The U. S. In terms of PEs certified? You mean in the entire U. S. A? Yes, Like the supply wise, is it going to be a more trend or is it what are the numbers exactly just to understand the market? There may be thousands of fees across The U. S. A. For structural design. Otherwise, so many sectors cannot be designed and stamped.

47:04 There will be thousands of them, but many of them are huge companies, construction companies or very few of them practice. It's like our CA and CPS. Many CAs work and very few CAs start practice. So like that many PEs work in companies, very few PEs start practicing. And even if they practice, if they have only two, three people PE team, they can't execute big projects. So we have to look at a team which is minimum five to 10 PEs. So this is where it will be difficult. In small towns, you will find three or four people, two PEs and five, six engineers forming and doing their own work and making their own money and be happy with it. But there are firms which have about five to 10 PEs and about another five, 10 engineers, a 20 member team that is what can add value to a company like us.

47:57 A small group is again not so much valuable. We are looking at a sweet spot of 10 to 20 employees, half of them PEs as a guidance. So that is what we are now talking with. So let us see how it happens. Got it, sir. That's it from me. Thank you so much. Thank you. Thank you. The next question is from the line of Bharat Sharma from Three Sigma Asset Managers, LLP. Please go ahead. Thank you for taking my questions, and hearty congratulations on a good set of numbers. I just wanted to understand your, say, a long term vision. Where do you see your company next, say, next ten years? And also wanted to understand that you have been doing so much good work in U. S.

48:49 Similar kind of, I would say, developments are happening in Indian markets. So what's your plan for domestic cases? Thank you. First, let me answer your second part. As of today, markets and their rates are very, very low compared to what we can get from USA. So we are not aiming at U. S. Indian work unless it is something exotic and needs good value addition. Coming to your first question, ten years may be too longer period to envisage, but in the next five years, I see that our company becoming a complete civil engineering of course, mechanical also will be there, but major more... I just wanted to understand in terms of your maybe aspirations in terms of how big the company you want to see yourself in five years from current say? Yes, yes.

49:43 That's what I'm answering. We want to see that we are a complete total solution provider for civil projects, either commercial or essential, government or funded or either ways. And I wish, because you're saying five years, not only structural engineering, we also want to have architectural services also in our gamut going forward. So that right from project inception till the end, our service are required for a general contractor or a builder. So adding architectural will be my next lookout. Once the structural engineering has been acquired, the next step what we require is to become an architectural service provider also.

50:32 That also we wanted to do acquisition only because again that also calls for reputation and deep experience in American ways of designing architectural design. So because you're giving me five years time, my aspiration is to have even an architectural form under our wings. So that A2C for both residential, commercial or even industrial will be in a position to provide and work on not only not on hourly rates, but on percentage of deposit costs. That's what my aspiration. Sir, I also wanted to understand that your, I'll say, gauge of the capabilities or design capabilities of people who are available in US versus India. And are you going to primarily expand the USPs for sales purpose or you plan to... You...

51:28 There is a depreciated engineering design ability... I'll say capabilities also which are there in US, which are now there in Indian students? See, what I am looking through acquisition is their contacts with the general contractors and the local presence and proven track record. Once that is time consuming to achieve that by an Indian firm, we're to set up an office, start practicing over a period of five, ten years, you execute some projects and then your name will be heard around. So what we the shorter way of doing this is acquiring a firm which has done it before. So if the company is there for fifteen, twenty years, they would have spread their wings across the state at least. So that entire state knows the some of the unique projects designed by an architect or a design engineer and that preference gives a long way in getting new projects. It's like a doctor or a specialist, anybody goes by reputation.

52:27 So buying a firm gives you a long time advantage and local presence of American PEs and SEs gives them confidence that the work is done from India. There are people who are monitoring and checking in U. S. And ensuring everything falls as per courts of American standards. So this is a win win for both sides. Thank you, sir, and best wishes to you, sir. Thank you. Thank you. The next question is from the line of Samad Singh from TTF Capital. Please go ahead. Yeah. Thank you for the opportunity. So last year last quarter, we had this FX M2M loss. Has there been either a loss or a gain in this quarter?

53:16 This quarter, there was a gain. Could you quantify that? Because the dollar has been more or less stable, rather little rupee has got strengthened a bit. So there is some gain. Could you give me the amount? It's about INR 1.2 crores. And the second question was on Beryl. This $1,000,000 order that you got with Hillsborough County, is that a recurring order or is it just a one time? I don't have much knowledge about it. I had to ask our CEO, Prasad, but this is one thing which will be completed within six months to one year. So it will be spread across a period of twelve months from July.

54:04 Okay. And then, Bharat, I think last time you had mentioned that we need to do about $7,000,000 of revenue that will get us to about 8% to 10% EBITDA margin. Is that still the number that you hold? And by when do you expect to get that? See, last year, they did about 5,400,000 with the profitability of around 89%. So this year, I think, again, they will be able to sustain similar number because their workflow has impacted a little bit because of the disruption in their design team, which we are now building up. So hopefully this full year again they will close somewhere close to 500,000,000 with EBITDA margin of around 8%. Currently they are just in the eight months we for acquisition, they made a marginal loss of $5.10000 dollars So that might fill up in the next remaining this current financial year, is remaining nine months.

55:03 And hopefully, it will go into positive terrain from Q3. So the barrel sales issue was an internal issue. It has not nothing to do with the fact that Florida residential permits are, I think, down about 10% Y o Y. Which is 10 down? Florida residential permits. It's not a... It... The residential permits. So I'm just saying it's not a demand issue as far as that is concerned. It was more of an internal issue, which led to the, know, know, slow sales growth. Little is bit of demand issue to the extent that the government funding has been stopped, if you remember. The American government funding shutdown government shutdown has happened for four, five months in the beginning of the year. That has an impact because these guys do more mostly government funded projects.

55:57 So they have some impact in the month from January to May. I think now it's again open. So they are expecting the workflow to improve. And last question on there was also a plan to sort of move some of their operations from The U. S. To India to reduce costs. Is that still the plan or we are not that is no longer the plan? Yes. No, that is the design part. That is the design part which we are planning to create here. And what is happening now is they are leaving the opportunity soon after the inspections and permits. In fact, the guy who is getting the permit and plan approvals, he can easily seek the design work also, which they are not able to do because of lack of manpower, which we are creating now in India. So going forward, what they are leaving the work client at department level and approval level, they can continue to provide design level also once our team is in place. So going forward, we are positive about the Meryl's contribution.

57:00 Might take So one or two the 10% margin that we had put in as the ceiling, that would be just on what kind of work Meryl is doing today. But once you start providing the design services, that's what you expect, that could go up. Once the design services start in a big way, that can improve. The 10% can slowly move upwards. But currently, why I'm saying is majority of their revenues are even today are from approvals, permits and inspections, nothing from design. Nothing means insignificant. So $20,000.30000 dollars a month, which can go up to $200.300500 thousand also per month once the team is in place, because they have the contact. A guy who is going to ask them for a permit approval and inspections and insurance claims and all that, he will also be happy to get the design done in case they have the capability, which So they don't that is what we have to fill in now. Once we fill it in, then their numbers will start growing up. And that team is in place already or they are still working? Yes. We have seven people now here in India and three there in USA, but they lost two strong hands in the end of November.

58:10 So we are now filling up that gap from Indians and local outside work. So when you pay local outsiders, you don't make any money because their costs are same. So until a team from India starts executing, you will not see the cost arbitrage. Right. And you said that you expect that to start from next year onwards? Yes, definitely. Okay. That's it from my side. Thank you. Thanks. You. Due to time constraints, we take that as the last question. I now hand the conference over to management for closing comments. I thank MK Global and also all the participants who shown interest in our company's quarterly performance.

58:56 As we discussed, the future looks bright and I hope things will fall in place as per our plans and companies definitely working towards improved efficiencies and improving the output of per employee through automation and other tools that are available. And definitely keep up the performance in the coming quarters, I hope so. And I wish you all a great evening. Bye. On behalf of M and T Global Financial Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.