Raymond (NSE:RAYMOND) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to Raymond Limited Q2 and H1 FY 'twenty seven Earnings Conference Call hosted by Anand Rathi. 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 this conference is being recorded. I now hand the conference over to Mr. Manish. Thank you, and over to you, sir. Thank you. On behalf of Anand Rati, I would like to welcome all the participants to the Q 2 Q and H1 FY 'twenty seven Conference Call of Raymond Limited.

0:47 Today, we have with us from the senior management of Raymond, Mr. Rakesh Diwari, Group CFO Mr. Gautam Meny, MD, JKM GAL and VC, JKM PTL Mr. Sanjeev Sharma, Joint MD and CEO, JKM PTL Mr. Navin Sharma, CFO, Engineering Business and Mr. Salid Bawa, Group Head, Investor Relations. Without taking further time, I would like to now hand over the call to Mr. Gautam Meny. Over to you, Mr. Meny. Thank you, Manish. Good evening, everyone. Thank you for joining us today for our Q2 and H1 FY 'twenty seven earnings call. I trust you have had the opportunity to review our financial results and investor presentation.

1:34 To set the context, the broader macroeconomic environment through the second quarter demonstrated solid domestic resilience. Strong manufacturing activity, healthy GST collections and active pre festive channel restocking helped anchor domestic demand. At the same time, the increase in the cost on several areas continue to pose challenges. Key commodity and raw material prices, including tool costs, have remained firm at elevated levels, alongside persistent freight and logistics volatility driven by global geopolitical tensions. Disciplined CapEx execution and flexible supply chains have kept our core operational trajectory steady and on track. Turning to our Automotive and Industrial Components business.

2:23 The sector saw healthy operational deliveries through the second quarter. In the domestic market, demand was supported by steady pre festive channel restocking across passenger vehicles and premium two wheelers. On the export front, the momentum shifted from post restocking replenishment into steady multiyear production schedules. As global Tier one OEMs and Tier suppliers continue to derisk cross border supply chains and consolidate their vendor base, India remains a primary beneficiary. We are seeing this reflected in strong customer inquiries and order wins for complex precision machine parts and drivetrain subassemblies. Turning to Aerospace. The global industry continues to see steady production acceleration with major commercial airframers ramping up monthly build rates against historical order backlogs.

3:17 As supply chain bottlenecks and specialty alloy availability gradually stabilize, we are experiencing firm production pulls across all flagship platforms. Tier one integrators have shifted from holding buffer inventory to steady just in time dispatches. This has translated into healthy dispatch volumes across our aero engine modules, activation systems and critical structural components. More importantly, shipset value per aircraft continues to expand as our customers entrust us with larger integrated subassemblies rather than stand alone machined parts. With rigorous AS 9,100 and NatCap qualifications, high single source part approvals and substantial switching costs, our aerospace vertical enjoys strong structural modes.

4:07 This locks in long life cycle program visibility and healthy margin as we move into the second half of the fiscal year. Moving to our consolidated financial performance. Raymond Limited delivered a resilient performance during the second quarter, driven by steady execution across our core precision engineering and aerospace platforms. For Q2 FY 'twenty seven, total income stood at INR $6.83 crores, registering a growth of 21 year on year. EBITDA reached INR 103 crores with an EBITDA margin of 15.1%. On a cumulative basis for the first half of FY 'twenty seven, total income was INR $13.11 crores, registering a growth of 17% year on year and EBITDA stood at INR $20.03 crores with an EBITDA margin of 15.5%.

5:01 This performance reflects our deliberate transition from standard component manufacturing into high complexity subsystems and critical precision assemblies. By deepening our technical capabilities and expanding qualified capacity, we are enhancing customer stickiness and securing long term revenue visibility. In line with our strategy to diversify revenue streams, we officially operationalized our automotive aftermarket business during the quarter. By leveraging our established OEM grade manufacturing capabilities and tooling infrastructure, this initiative positions us to capture attractive aftermarket margins across critical components at White Label Products. Overall, we remain well positioned to maintain the growth trajectory as we expand into new product applications and broaden our geographical footprint.

5:54 Now turning to our individual business segments, starting with Aerospace under JK Mining Global Aerospace Limited. The Aerospace and Defense vertical delivered another quarter of standout performance. Revenue for Q2 FY 'twenty seven stood at INR 193 crores, up 72% year on year, while EBITDA reached INR 29 crores, delivering an EBITDA margin of 21%. For the six month period, revenue was INR $2.62 crores, reflecting a 56% growth with an EBITDA margin of 21.1%. Growth during the quarter was underpinned by the commercial ramp up of our newly commissioned capacities, enabling higher dispatch volumes across flagship OEM and Tier one engine platforms.

6:42 Operational indicators remain exceptionally healthy, highlighted by active RSQ inflows and expanding program allocations. Moving next to Precision Technology and Auto Components under J. K. Mining Precision Technology Limited, the segment delivered robust revenue growth of 15% year on year in Q2 FY 'twenty seven, reaching INR $4.71 crores compared to INR $40.09 crores in Q2 of FY 'twenty six. EBITDA for the quarter stood at INR 61 crores, translating into a healthy EBITDA margin of 13%, supported by steady volume ramp up and targeted cost optimization initiatives. On a cumulative six month basis, performance was strong across both top line and profitability.

7:30 H1 FY 'twenty seven revenue reached INR $9.15 crores, up 13% year on year, while EBITDA grew by 24% to INR 122 crores. This drove a 110 basis points expansion in EBITDA margin to 13.4, up from 12.3% in H1 of FY 'twenty six, driven by higher capacity utilization and enriched product mix and enhanced operating leverage. Growth during the quarter was anchored by steady domestic transaction and sustained export deliveries against long term OEM schedules. We continue to remain a net debt free business. Turning to our strategic manufacturing expansion across Andhra Pradesh, our greenfield facility in Andhra Pradesh is tracking strictly to plan, designed to significantly expand our national production footprint and technical capabilities.

8:29 Construction and setup milestones remain well on schedule to achieve output by the third quarter of financial year twenty eight. Backed by an upgraded leadership and governance structure, this state of the art infrastructure will serve as a cornerstone for scaling volume across complex aerospace and precision engineering programs. We have set up an additional brownfield facility as an interim capacity augmentation initiative, which is also serving as a training ground for both aerospace and precision technology segments. This decision to accelerate ground fleet capacity, in addition, reflects the company's focus on responding swiftly to customer demand while maintaining capital and execution discipline. Thank you once again for your continued interest in Raymond. We are now happy to take your questions.

9:23 Thank you. We will now begin the question and answer Anyone who wishes to ask a question may press star and 1 on their touch tone telephone. If you wish to remove yourself from the question queue, you may press 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 Dheeraj from Incred Equity. Congratulations on the great set of results. I just had a few couple of questions regarding something that we do. Like we had seen that in the current facility that we have in Bangalore, the maximum sorry, the maximum revenue potential that we could do in the Aerospace segment was, I think, around INR 600

10:55 to INR $6.50 crores. And I think we had plans of doing debottlenecking, that sort of thing to kind of increase that potential. And also, we have now committed it from this Q3 onwards, we will have a brownfield capacity in Andhra that will help in the ramping up of revenues from here on. So can you like let me know why has there been any kind of upgrade in the facilities and what will be the revenue potential of the new ground fill capacity? Thank you very much. Yes, you are right. In the past, we did give an indication of INR 600 crores to INR $6.50 crores, but since then we have actually added several more machines and other equipments that are necessary that would be able to drive the turnover to a higher level. We are currently looking at a number of closer to INR 700 crores, and we're still working hard to see if that can go to INR $7.50 crores. So our ultimate goal would be to try and get it to INR $7.50 crores, but we would probably end up somewhere between INR 700 crores and INR $7.50 crores. So this gives us a little bit more time till Anra comes up so that the growth can continue.

12:01 Okay. I mean this is the current facility from like of Bangalore. Any idea about the brownfield capacity that we are adding? So the brownfield capacity that we're initially adding is mainly on the automotive side because we have lots of orders there as well. And we're also adding machines out there to help training for both automotive and aerospace because the brownfield facility is located two to three kilometers from our final greenfield facility. This will help us to understand the region, the area and give us enough experience before we actually venture into a massive greenfield expansion, as you are all aware of. So that is the whole idea of the brownfield. Sure. And you give the bifurcation of the precision, like in auto components segment, like the mix of the three segments in there, like the auto components, suppliers and the precision component and the growth rate for the quarter?

13:05 So your question is not clear. If you can rephrase it and tell us what exactly you are asking for? Yes. In the precision second auto component segment, there are three different segments, right? There is a flyer division, there is Auto Components division and then Precision Components division. So would we have any kind of breakup in those three segments? Like what is the growth rate among them? So basically, I would look at the segments as two broad segments. So just to sort of put it in perspective, one is the B2B segment and one is the B2C segment. So the B2B segment is the combined business that we are doing of the traditional NASIG plants that we had, right, from Ring plus Aqua, which had all the products of ring gears and flex plates and bearings, combined with all of the several plants in Bangalore of the erstwhile mining position that has a one stop shop capability to make parts across all the other segments, including hybrid, electric, power clean powertrain, power tools, etcetera. So that is called the B2B segment, I would say, because it's all OPM business. Then the B2C segment will then comprise of two parts. One is the worthwhile T and H business, which was the tools and hardware business, which was part of the JK files, if you remember, with JK Super five as the brand leader there. And combined to that, we have now added automotive aftermarket,

14:35 which is also the B2C segment, and that has been recently launched this quarter and is gaining some good ground. So we will see some expansion there as well. Yes. So can you give the numbers for these two segments and the growth rates, if it's possible? Yes. So for the quarter, B2B did roughly three fifty and B2Cd is roughly 120 in the Okay. Precision And what was the growth rate, so like we can see the past year number? So roughly, I mean, see, that's the growth rate that you see there. That's on a Y o Y basis, this is approximately 15% growth. Yes, yes. And like for B2B specifically and then B2C?

15:24 So B2B was a little higher. So B2B was roughly 17%, 18%. And B2C was in early teens. Okay. Sure, sir. And just two couple of last questions. As you said, we are seeing that most of the export companies are facing cost pressures due to oil inflation and also the freight charges have increased a lot. Most of our products are being exported only more than 50%, 70% of the products in aerospace. So like almost more than 80% are being exported. So any kind of partnership that you're reaching with your customers that to share these costs and not them having affected the margins a lot?

16:13 Yes. So first of all, we have a complete pass through on raw materials as our contracts are passed through. So you will just get a lag, but that lag is only the time it takes for the implementation of these contracts. So in a sense, the raw material is a pass through. However, freight has to be negotiated in some cases, right? You had a lot of full cost increase, which we are also negotiating now with customers. So it depends from your customer contract. Each contract contains certain things that you can go back to them. Some contracts, you cannot go back to them. Overall, as you can see, in spite of all the cost pressures, the margin has increased significantly because if you remember last year in especially in the Precision Technology business, we had a INR 13 crore onetime from the sale of land, right? So when you look at it, the EBITDA has actually gone up significantly compared to that, and that's because of strong operating leverage, huge efforts on cost reduction, on efficiencies in spite of the headwinds that we were facing. So overall, the team, I think, has done a good job in controlling those costs. But also going forward, we will get back some of these costs in terms of customer price increases.

17:30 See, what's also helping us in between is, if we'll see our revenue growth, while there are cost pressures, but then we are also getting operating leverage as our revenue continue to grow. So that's also compensating to our increased cost to some extent. Sure, sure. And like as we saw that Sir, sorry, interrupt, sir, should you have a follow-up question, please rejoin the queue. Sure, sir. I'll join. Thank you so much, Faram. Thank you. Thank you. Next question is from the line of Sahil Karia from White Pine Investment Management Private Limited. Please go ahead. Go ahead. Yes. Thank you for the opportunity. Sir, could you just give us a color on the automotive aftermarket that you have mentioned, like what is the revenue that we are looking for the entire FY 'twenty seven and for FY 'twenty eight? And what could be the margins from that?

18:25 Well, rather than giving you numbers, let me give you some flavor. We've obviously entered the market in August. So it's just it's we've entered with a strong list of several part numbers, I think almost 800 different part numbers. So there is going to be a time for the market to absorb what we are bringing to the table. The fact is that we are in hardcore manufacturing very critical components, and that gives us a huge edge that we are a manufacturer. We're also using the leverage of our current supply chain as well as white label. So I would say that all efforts are being made to have a good growth rate, obviously, of a smaller base. For sure, also the aftermarket brings a better margin than the OE business in many cases. And therefore, I think we'll be in a better position to make some comments in the next quarter as we see these markets develop. But initial feedback is that we've got good traction and people are able to people are looking at us seriously and as a serious player.

19:30 So hopefully, this makes more traction and this helps our B2C business gain more ground. Okay. You. And the next question was on the Deep Engine program. So the first ship side value of Raymond's products is somewhere around $35,000 right? So could you just give us that number, what it was for the current quarter and what like how do we expect the number to grow in the future, like for FY '27 and for FY '28? So are you referring to the LEAP engine? Yes, yes, sir. Yes. So see, I mean, you have to look at it this way. Like I said last time also, in many parts, we have a 35% market share. In other parts, we have a 65% market share. And this is a continuously evolving process where our market shares have gone up in some of the areas.

20:22 And the volume also of the LEAP has been going up as more and more aircraft are being built as you can you're away from the market. So there is definitely, if you look at the total value, there is a growth. But if you look at content, content only changes to the extent of the market share, whereas the total growth is a combination of market share as well as the growth of the market. So just to follow-up on that, so like of the COVID product that we supply to the LEAP engine, what is the proportion of the end like products in the 65% market share and 35% market share? I mean, I would say that probably 65% market share is about 4245% roughly and the 35% market share would be about the rest with a small content where it's neither 65% nor 35%.

21:19 Okay. Thank you so much, sir. Thank you. Next question is from the line of Bala Subramaniam from Arihant Capital. Sir, on the first question, especially on the defense side, we have one build to spec order. So I just want to understand, how do you understand, especially in the defense side, whether we are willing to pursue Indian defense offset or TOT program. So I just want to understand, especially on the defense perspective apart from aerospace, commercial aerospace side? Yes. This you're referring to the one in our that we have we can't disclose the name.

22:10 But yes, we have got an order where we're going to make at a component level and at a sub assembly level, we're going to make parts for defense. The same will hold good. Depending on where the products fit in, if they fit into our JK Mining Precision Technology, we will do it there. If it fits into JK Mining Global Aerospace, then we will do it there. It's more likely that aero and aero parts are done in JKMGS and the other kind of defense. These are again as a component and at sub assembly level, they are not at a product level. And therefore, it's very much a part of our strategy to grow and diversify in this area as well. Sir. Sir, my second question, I think I missed you have mentioned earlier INR700 crores, INR750 crores that is related to Aerospace and Defense revenue side, The target?

23:11 Yes, that was specifically on the aerospace and related to the current facility that we had because the question was how much can we take it up to. And we said we are going to have somewhere between INR $7.50 crores in the current facility by which time Andhra Pradesh would be ready for us to continue our growth. There was activity aerospace. Okay, sir. Sir, why I'm asking this question because in Q2, have grown nearly 72, almost 139 crores, $1.40 crores range. If we did 150 crores, 160 crores next two quarters also, so the growth rate is more than 45%, 43% in this financial year. So is the right to assume on the next FY 2829 also at least 40% kind of growth we may expect?

24:01 Or it yes, depends upon sir. Yes. So typically, this year has been a good year so far. And obviously, we will continue to try and keep that. But my commitment to the market will be in the high mid-20s, not we're not going to commit to you that we'll do 40%. But I think if we do high mid-20s, then it should be a good indication for you guys. Sir. Sir, on that my last question, especially on that shipping side, some of the players mentioned some of the shipments have been deferred because of the clearance issues or Middle East shipping disruptions. So I just want to understand because we are majorly into exports for our products and imports for raw materials.

24:51 So how we have been hedged and in terms of supply side? So how we are productive? Well, you have to plan with a little bit of safety stocks so that has some pressure on your working capital. But in the end, it's a better solution than having to air freight goods at a premium. So one has to plan, one has to keep in mind that there are global disruptions and one must plan around that. So that's how we do it to make sure that there's minimum disruption at our end. And so far, we have been able to manage to not only keep the growth, also have minimum disruption. Yes, it comes at a cost and that's what we talked about a little bit earlier that we've offset a lot of those costs by our operating leverage as well. Got it, sir. Thank you. Thank you.

25:44 Next question is from the line of Keval Shah from Sanctum Wealth P and S. So firstly, congratulations for the good set of numbers. Sir, now coming to the aerospace part of the business. So for this quarter, what would be the order wins that we got in this quarter? And what would be the order book looking right? And then secondly, for the aerostructure part of the business, so what can be the scale in margin from this business? I understand the margins can be lower for Aerostructure, but what kind of margins are we looking at and from which quarter will it start contributing to the revenue for us for the Aerostructures? So let me I'm not going to give you direct numbers, but let me tell you that as I have said last time, we are making almost a new product every day or you can say five in a week. So obviously, all of these products keep ramping up and then therefore, the order position goes up to that extent. And that's the reason how we are able to keep the growth.

26:46 What we are also seeing is that whatever the customers are ordering on us, as soon as you deliver them, they seem to be placing a larger order on us, which means that it can be one of two things that our competition or whoever has the balance of the market share is not able to deliver, so those customers come back to us. It's also we also believe that the number of aircraft that will be delivered by Boeing and Airbus during this second half would be much higher than the first half. So there is a general market increase and there's also supply chain issues. And I think those suppliers like us that are ready with capacity and we're able to grow and the focus is on execution, we'll be able to grab some of these orders. So they don't really show up as orders, but they end up as orders. And I think that's what shows in the growth. And therefore, to come by that, we have more orders than we had last quarter. And if we can fulfill them and more, we will continue to get more orders. So that's the direction in which we have to look at this business.

27:51 Okay. Thank you, sir. And sir, on the Aerostructure side, from which quarter can you expect the revenue contribution to begin? What can be the scale of this for at least in the foreseeable future until FY 'twenty eight? So as you see, we've been always doing Aerostructure side by side. If you see our percentages, they are only less in percentage, right? So we will evaluate every business of what it's worth. And like I have mentioned in the past also, we will continuously work to see what combination of business is ideal for us, what ROCE is ideal for us. We will target long term ROCE is between 2025%, right? And somewhere in between, we'll have to see how it works out. When you invest a lot in very high precision engine, you end up with higher EBITDA but lower ROCE.

28:37 So we have to always look at it from a mix point of view. The idea is how do you grow every day, how do you scale every day and how do you manage long term ROCE to be in a good range. So it's always going to be a choice we have. Like I mentioned last time, we have a massive pipeline and significant opportunities from where we can choose and we will continuously choose business based on financial prudence and a combination that will allow us to execute. Okay, And sir, for the new Andhra plant, which would be coming up, say, in next four to five quarters. So we would be having most of our work together under one single roof. So what kind of incremental benefits would we get from that? Like is there any quantifiable numbers that maybe margins by a few percentage points can improve or the working capital will reduce because of having everything under one roof? So can you talk some more light on that, the benefits coming out from that plant?

29:36 I think there will be pros and cons, right? In any new plant, it would take a little bit of time to settle down. We would need time to get customer approvals. And that's why we are trying to do these things in parallel. On the other side, because we'll be far more vertically integrated, you're absolutely right, we hope that our not only the working capital should come a little bit down, but more importantly, that we'll be exposed to get larger packages and larger businesses and go up the value chain, which will then bring significant business opportunities to us in the right direction. So I think it's a large strategic move, which we are trying to do, and it will have these pros and cons. So we'll have to have some patience in the beginning, and then it will start to give us good returns. Okay, sir. And for the auto business in the Europe, so which are the top OEMs that we are supplying to? And also the how the current situation is like Chinese auto OEMs are gaining market share in Europe. So can this be potential risk for us in future? How do you see that situation, sir?

30:41 Sanjeev, do you want to take this answer? Risk for the business because our numbers are going up, customer RSQs are going up. So Chinese suppliers, mean, I feel that we will have enough opportunity and room to grow in Europe, U. S. Across the globe. Okay. Fine. Thank you so much. I'll get back in the queue. Thank you. Next question is from the line of Ajinkya Jadar from Crisp Portfolio PMS. Please go ahead. Yes. Congratulations, Gautam, sir, and the team for the good set of results. My question is regarding the new participant answer to the third question bank.

31:31 You said that we can do 700 per revenue from the aerospace from the existing Bangalore facility. And so like my question is, how much revenue we can generate from the brownfield entering facility that we have put up in Andhra? So I don't want to mix the issues, and maybe Sanjeev can answer that. So the brownfield facility Andhra, will be more on the precision technology side, whereas the INR 700 crores we're talking about is on the aerospace side. For the aerospace side in the brownfield, we're going to have several machines that will be used for training people in both the precision technology side and the aerospace side, right? So are you interested to understand the precision technology and how it will grow in the brownfield? And then Sanjeev can give you a background.

32:21 If you're interested to know that the aerospace facility, will it go to the brownfield? It will not go to the brownfield. Only training will be done in the brownfield, and we will continue to grow the business in the current facility till we have to go to Anjar because getting customer approval and those processes, we cannot do in a temporary basis. So it has to be a permanent basis. So for from growing from INR600 crores to INR700 crores in the Bangalore existing facility, are we adding any machines to achieve that jump in the revenue? Or we are increasing the efficiency? What changes we have done in the facility? So it's a combination of everything, right? We are continuously adding machines. We're continuously creating more space. We're changing layouts, we're putting mezzanine floors where required, we're getting cycle times reduction done, we're improving the OE of the plant. So it's a complete combination of several, several small things that come together to ultimately add up.

33:23 Got it. Got it. Yes. My second question is regarding you said like we are aiming to add one part a day. So in the H1, how many parts we have added? And how much cost was incurred for this development? Well, do you want to give that answer? Yes. So I mean roughly 4% is the number that goes in development. So you look at our revenue, if we really look our margins or our EBITDA margins without that R and D cost, we can easily add approximately 4%. But as Mr. Meny said that we keep on developing one part every day. So we have taken a call to write it off in the P and L. Hence, you see the numbers the way you see it, the number comes to approximately 4%, a little bit here and there every quarter.

34:13 Got it. Last question from my end, like we have spoken in the past about the inorganic acquisition that we are planning to do. So any progress made in that direction if we enter? So I mean, like we said last time also, we are in continuous process, and we will continue the process till we find the right one. And once we find the right one, you will all come to know about it. So the efforts will always be on and it is our intention to pursue them. Got it. Got it. Thank you for answering my questions. All the best for the call. Thank you so much. Thank you. Next question is from the line of Vignesh Ayer from Sequent Investments. Please go ahead. Hello. Hi, and congratulation on good set of numbers.

34:59 My question is basically on our Andhra expansion. What is a normal time line when it comes to approval of the product by our customers, what is the general time line post starting of the commercial, you know, commercial aspect of the facility? So are you referring to automotive? Are you referring to aerospace? Are you referring in general to both? No, aerospace basically, but in general would also would like to know what is the approval and... Okay. I'll give you something on aerospace, and I would want Sanjeev to give you a more accurate feedback on the precision. So in terms of aerospace, normally, a customer approval could take anywhere between three months to six months.

35:45 So we have a complete plan in advance of how we're going to do this, so that we close the gap as much as possible. So there will be a set of parts that we already make for these customers, which you would actually transit to the other side to make it faster because we already know how to make them. So we will focus just on plant approval and not on part approval, and that would speed up our transition process. So we have a complete transition team working customer wise on how we're going to address with each customer and what ramp ups will take place in Anza on priority. So all those plans are being worked out to make sure that we do not lose any opportunity while growing or shifting or expanding in Anja.

36:36 Sanjeev, you want to cover the automotive side? Yes. In automotive, it will take about, say, three months to eight to nine months depending upon the validation required for the part. So in our Brownfield facility, we have already initiated this activity. And in greenfield, it will be replicated. So we should start our production in brownfield in this year itself, and greenfield should start next year itself. Okay. And, sir, could you share, you know, for this phase or the block of the greenfield facility that is going to come, you know, start in this current year that is, So what is the total amount spent on that specific block or phase, if you could share that amount?

37:27 No. I mean, you talking about what is spent so far? Are you talking about what we are going to spend by the time we launch? I didn't get your question properly. So basically, phase that is going to start commercial production in December or I mean end of this current year, what is the amount that we have already spent on that phase of the block that is going to come come in the production? So we will start our greenfield next year, December. Are you talking about the brownfield that we are starting? Greenfield, the major... Our major factory in Andhraab, that's starting in December 27, next year. Right. Right. Right. That is that is the that's the I'm talking about. Yes. By the time that factories start, roughly INR 400 crores will be the investment. Our total commitment remains INR 1,000 crores between aero and auto is spread over a period of five year.

38:24 And by the time factories start, we shall be spending close to 400. And depending upon how the RFP sector really take place, it can increase or decrease, but that's the ballpark number that we feel at this point. Right. Got it. Yes. That's the number I needed. Thank you. Thank you. Next question is from the line of Sanjeev from Antique. Please go ahead. Yes, sir. Congratulations, sir. Sanjeev, sorry, we can't hear you. Hello. Yes, we're not able to hear you. Very faint. Is it is it better now?

39:13 Yes. Yes. Okay. Sir, my question was regarding the capital allocation. So we have a very good bank balance right now, and plus we are raising funds. So how would we... At at the same time, we have some debt also at the gross level. So how do you plan to spend the overall capital raising over the next two, three years? And how will the debt look like by the end of FY twenty nine? So so to answer to your first question, see, the liquidity is at the holdco level, whereas debt is in the operating company. As for the in the share warrants, what we are going to use, as we have clearly specified that the amount will be used for specific purpose of inorganic growth perspective. So this is a watch as which we have created and since we are looking at various opportunities, when the right opportunity comes, the amount will get deployed accordingly.

40:19 Okay. And sir, if you could also share the company's vision regarding the name change recently? So for the name change, basically, since now Raymond Limited, as you are aware, the merger, mainly has these two businesses, which is engineering, aerospace and auto component. We felt that from a Raymond perspective, the name should get changed so that it signifies it because for a general public, Raymond otherwise remains as a suiting from a name perspective. So we wanted that clarity to come, and that was the idea. That was the reason for doing this name change. And, also, we've added a defense. So on the defense side, have we been able to, kind of outline the overall plans and where we want to take the company in that segment?

41:16 See, defense is always part of the plan because at the component level, it was anyway going to be done together. So there's clarity that these two companies will do the component in the subsystem level. The rest of the plans are strategically being worked out. And clear intention is that defense is always going to be part of these two companies. It was always part of and it will continue to be part of. So it just brings more clarity. Sir, lastly, typically, our aerospace business margins in the fourth quarter have been much better than the first three quarters. So do you think that trend will continue in this quarter? Is it a Well, generally, the fourth quarter has a higher sales. So your operating leverage to that extent kind of increases.

42:06 And therefore, it appears to be the same. But in the end, you will continue to keep growth and continue to keep efficiencies and use the operating leverage, it will be correct. In some cases, like now in this case, we grew 72. But then to grow 72%, you had to spend a lot more on R and D and therefore, the percentage point went slightly less because you wrote off a lot more than you would normally write off. So there's a little bit of a double edged sword here that when you grow very fast, because we write off R and D, it can have a small impact. But long term, the growth trajectory and efficiencies will always catch up. So it is just a question of timing, it's a question of how much R and D work you did in that quarter, how much scaling you did, how much improvements you could achieve, how much operating leverage you could achieve. So it's always a combination of factors. But in general, when you increase your turnover, it's expected that obviously you would get. But beyond the point, it also you have to write it off.

43:13 Okay, sir. Thanks for answering my questions and all the best. Thank you so much. Thank you. Next question is from the line of Sadar Shetty from Valdivaya. Please go ahead. Sorry. I'm I'm not able to hear you properly. Can you just be louder, please? Thank you. Yes. Please, please speak up. Yes. So my first question was around, if we grow at the current pace, so the aerospace industry would hit INR $7.50 crores by mid FY 'twenty eight. And that would be before the under facility contributes.

44:01 So is this assumption right that we should expect that the aerospace growth should start slightly moderate to 20... High 20s or 30s so that we don't fully utilize the INR750 crores. And once the Andhra plant is active, are fully utilizing. Is that understanding right? No, I think you've got your numbers a little mixed because even if we grow high 20s, we would still not complete it by the end of FY 'twenty eight. Maybe you have to relook at your numbers a little and not assume that we will continue to grow at the same rate. It will be moderated to mid-20s, I would say, is what we are committing. So we would still have enough capacity at the current facility before Andhra comes in.

44:56 Okay. That's fine. And sir, I just wanted to know, in the previous conference, you had mentioned the asset terms of the aerospace and the auto businesses, which is approximately INR 2 point crores, right? And we are investing approximately one closing... Like, dividing one closing monthly. So that is implying, like, you know, peak revenue estimate of thousand close of each revenue segment. So is that range right? And, like, how many years like do you expect this to happen after commissioning? Well, typically, you don't scale immediately. It's a you first get the sample approved, then you start with the market share, which is smaller, then you do a good job, then you increase the market share. So it's a process.

45:43 And then depending on the mix of machines that you would use, depending on the level of vertical integration, There's too many ifs and buts. It's not like a line which you set up and you straight away know you'll do this much, right? It's discrete manufacturing. It's low volume, high mix, combinations change, market conditions change. So you have to be geared up to have an execution plan that's extremely flexible where you can manage the ups and the downs of your customers and at the same time, manage your growth. So it's very simple to say and try to equate it, but it's not that simple when you work towards it. Okay. Got it. Yes, I got it. And so one more question, like in Slide 22, you see that nozzle guide vein capacity is doubling from 8,000 to 16,000 units per year.

46:30 And I guess this was missing in the previous PPDs. So would you like help us with the guideline and like time line case and revenue potential of the same? So basically, the machines have all arrived. Now it will take about forty five days, for instance, for the machines to run, then you slowly ramp them up. So I would expect this quarter to be settling down. And then from the last quarter, the revenue would then start to reflect in the last quarter. Okay. Okay. And so can you also like this was tied to LEAP at 1A, right? So what is your content in LEAP-1B? No, this is 1A and 1B. We do both. Both. It's for both. Okay. Okay. It's for both. It's total leap.

47:15 Total leap. Okay. That's it from my side. Thank you so much. Thank you so much. You. Next question is from the line of Prince Goenka from Narnolia. My question is, so what challenges we are currently facing in terms of hardware demand? And what is the growth outlook for going forward? Sanjeev? We are targeting to launch several new products and about 50% we have already launched in last three months.

48:09 So we are expecting on an average growth in double digit only. Got it. That's all from my question. Thank you. Anyone who wishes to ask a question may press star and one on their touch tone telephone. Next question is from the line of Preetam from. Please go ahead. Yeah. Congratulations on good set of numbers. I want to understand more about the order book and RFQ. So contractually binding purchase orders, like, can you quantify for next twenty four and thirty six months? Also during this long term agreements, how we are protecting against any possibilities of OEM program delays or let's say, build rate reductions?

49:04 Are there any such mechanisms in the contracts? So typically, I mean, in aerospace, are you referring to aerospace or to automotive? Aerospace. Yes. So typically, in aerospace, your order positions, like I said a little bit earlier, keep increasing. And even the backlogs keep increasing. So you will also monitor and see. If you study the two OEMs and the aircraft deliveries that they've done for the first six months and what they're going to do for the next six months, you will see that big difference. Second half of the year, there's a lot more planes that get delivered, and they are basically waiting for engines to get delivered. So in a way, we do expect always that the volumes would sort of go up.

49:53 So the order position is not a very simple thing to say because your schedules can change on a daily basis or a weekly basis. But in general, you have the market share, right? So for instance, if your market share is 35%, but then the market itself, the number of planes itself go up or the OEMs start increasing it, then your order increases. So it's a factor of more than one thing, but I think the trend is in the right direction. Now the market share is also increasing and the number of parts in the market are increasing. So that is the most important thing to take into consideration and your order position changes every day almost. Understood. Thank you. And about the win rates on like multi mills or new complex structures versus the older precision engine components, how your pipeline is currently shutting up? Is it more towards the commercial aviation sector or towards defense or specific ecosystem, etcetera?

50:51 So I think we have a mixed trend out there. We are getting more and more mixture of aerostructure, engines, defense, localization, make in India. So there's a lot of mixture out there and we are making our choices based on what would be the best financial implications for the company. And the important thing is that because we have large RFQs, we are able to make a choice of what we want to do and ensure that our numbers are in the right direction. And that's what we've achieved so far. If you've seen in the last three, four quarters, we have consistently made improvements, moved in the right direction. We've combined it with the growth as well as bottom line. Right, right, right. And about the Andhra facility, basically what is typically the lead time would be from first article inspections the BPP approvals and how we are budgeting the cash burn during that period. So what is basically the provisions for that?

51:54 So basically, I don't know if you heard it a while ago, I explained that we have massive project management going on between our customers and ourselves to compress the time that it takes to approve the new facility. So typically, we would move existing parts that we've already made into the new facility first, so that the focus is completely on approving the facility rather than the part. This will help us to squeeze the time it takes for normal approvals. And we're going to simultaneously do this with five or six customers that we believe will be the first drivers of growth in Andhra Pradesh. So it's very strategically being managed. We're already in touch with the customers now, which is almost a year in advance, and we are working closely with them to make sure that this will happen. It is in their interest also that the growth continues, and they, in fact, would like to have more strategic arrangements with us. So we find a very positive inclination from our customers to work with us on approving the new facility.

52:55 Okay. Great. Fantastic. And is there any utilization ballpark figure for that plant where you would breakeven anything like that? See, this is modular, basically. So we actually bring machines just immediately before couple of months before when the dispatches are expected. So we can actually get customer approval even on 10 machines and then bring another 10 and then keep on going. So basically, it's not like that, it's not like a large when you really take months to get the breakeven. There will be certain preoperative expenses, but I mean, that's not going to change the profitability trajectory for us. Also, see, so there is no point of cash burn or waiting for a large breakeven, etcetera.

53:42 Understood. Understood. Yes, because Andhra facility came couple of times, and we have reiterated time and again. This is technically outskirts of Bangalore. Just I want to reiterate, this is a ninety minute drive from Bangalore here. Thank you. Next question is from the line of Rahul Rao from Atletico Analytics Services, LLP. Please go ahead. Hi. Good afternoon, everybody on the call. We work with materials such as in Conal and titanium. I believe most of it is imported. Have you seen an increasing trend of Indian players getting qualified for these materials?

54:30 Yes. So I think very good question. The trend has started, although it will take some more time, but there are certain approvals that have already been received by Indian suppliers. So we are working very closely with most of the suppliers. Fortunately for us, we have leverage to discuss with these suppliers because they have dealt with us on the automotive side where we have high volumes. And just like when we started aerospace twenty two years ago, we developed the ecosystem with automotive suppliers that came into aerospace. I think the same thing is happening in raw materials. There are large mills that have improved their capabilities and all of them want to get into the aerospace now. And therefore, it provides a great opportunity.

55:16 And the grades are not restricted to just in gold and titanium. You have high nickel alloys, you have stainless steel, etcetera, also which form part of the hard machining. So yes, this is going to be, I would say, a two to three year process for some, but some of them have already started. The upside is that as the Indian suppliers start to get raw material at competitive prices and we have access to them, two things will happen. Our working capital will get better, which is a very big thing in aerospace since the working capital is very large. B, the prices will become more competitive. So overall, we will see India being much more competitive as a country in the aerospace business and we will also see as an industry working capital getting much better utilized. So I think it's a very big plus and we will see it unfold in the next two to three years.

56:06 Great. You said you work with most players in India. Would it be the likes of the Nidani, PTC, Sunflag? Are you comfortable naming any other ones on the call? I have a few more, but I don't think I should be naming them like this. But there are a couple of others as well that we are working with. And but yes, I think the Indian companies are stepping up and we will see good results from all of them. For us, it's great because it adds value to our business model, brings down our cost, makes us more competitive. So it's great for us to have Indian suppliers get qualified. Absolutely. All the best and thank you. Thank you so much. Thank you. Next question is from the line of Chirag Jain from Spark Capital. Please go ahead.

57:01 Hi, sir. First of all, congrats on good set of numbers. I just have one repetitive question regarding the order book. Sir, if you can specify the... Like, quantify the order book in terms of, like, how much is the order book position as of Q2 FY 'twenty, sir? So I would say we had already declared an order book earlier. It's incrementally higher than it is before. Like I said, you know, we it grows for us on a daily basis. It depends on the schedule at that point in time. It depends on whether some more parts have got a market share. So in general, if you don't keep calculating it, but the trend is in the right direction because that's how you're seeing the growth. So I don't think order book is an issue.

57:52 Like I've always mentioned, I said the orders are large. What is important is can you execute. So I think in our industry, the ones who can execute, do a good job with the quality and the quantity and deliver OTIF, which is on time delivery in full, those will be successful companies. I think the orders are very large, including backlog. Yes, sir. So definitely, you are ahead. It's just that three years of investment, is like helps us to gauge whether the company is in good visibility going forward also. Like every quarter, the order is closer to for the company. One more question. Just to give you visibility so that you can get over this hitch on order, You have to understand that the large OEMs have order backlogs of excess of twelve years.

58:48 And when you have market share and you have long term contracts, normally, they go on till the end of life, right? So nobody calculates that because everybody doesn't sign an end of life contract with you upfront. So therefore, if you start looking at really an order book, like for instance, if we started ten years ago with, let's say, the LEAP, and we had, let's say, five year contract, we've already delivered for, let's say, ten years and we'll probably deliver for another fifteen years. So it's a misnomer. What is important is to understand that you are on the platform. These platforms have long life. You have a good market share on these platforms. And then the market is growing because it has a huge backlog. And that's how for the aerospace industry as an analyst, you should look at it. That's my $02 to you.

59:39 Definitely, sir. Just one more thing. Like, we have deferred our commission by one quarter. Any... Anything to look on that? Like, anything critical? We've not deferred anything by one quarter. We were always going to do it in the third quarter of FY 'twenty eight. So nothing is postponed. Where did you read anything else? I think the last quarter, it was was mentioned mid FY '27. No, might be a confusion of financial year or calendar year. It was always December.

1:00:27 Okay. Yes. So the third quarter, just to clarify, it was always the third quarter of the financial year. Next question is from the line of Anoop from Equity Intelligence India Private Limited. Please go ahead. Can't hear. I'm sorry. If someone is speaking, we can't hear. Mr. Anu, you're not audible.

1:01:14 Next one is the next one. Narvin, can we go to the next one? Sure. Next question is from the line of Keval Shah from Sanctum Wealth PMS. Please go ahead. Thank you once again for the opportunity. So, in terms of new additional incremental opportunities from new segments, so are we looking at, say, medical components? Is there any any of which are business possibility from these segments? Like in last quarter, we received a certification for these medical components. Also, do our products also have potential business opportunity from something like gas turbine also where they can be used? So just if you could throw some more light on the incremental segments, if there's any opportunity and if we are looking at it? Thank you.

1:02:03 Yes. So this constitutes what you call edge and adjacencies, and it's very much part of our master plan. Obviously, we don't declare numbers now because we're in the nascent stages. So like you said, in Medical, we're still doing samples for certain European customers to make sure that our back end is very secure. And in a business like this, your quality, the team, the projects is all met. So we would maybe six months from now come out with some plans till then we would like to perfect what we want to say or do. You're absolutely right. There's opportunities in the gas turbine. It's on again, sitting as an adjacency and on the edge of what we do. So all the areas that sit on adjacency and edge are being explored in every manner possible.

1:02:52 And the most important there is to then again put them in our funnel to see which business we should have as a question of choice, where are the margins better, where is ROCE better, is it great to have this mix of customers. So for sure, there are many of these which are being explored as we speak. Thank you. As that was the last question, I now hand the conference over to Mr. Gautam for closing comments. Thank you very much, and I very much appreciate everybody recognizing the fact that it was a good quarter, and thank you so much for your support, and look forward to the next quarter.

1:03:38 And Happy Diwali to everybody as I think we'll meet after Diwali. So enjoy the festive season. Thank you, sir. On behalf of, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.