Ladies and gentlemen, good day and welcome to the Elecon Engineering Company Limited conference call hosted by Emkay Global Financial Services Limited. As a reminder, all participant lines will be in the listen-only mode, and there'll be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and then zero on your touchtone phone. I now hand the conference over to Mr. Abhishek Taparia, Emkay Global Financial Services Limited. Thank you, and over to you. Good afternoon, everyone. I would like to welcome the management and thank them for this opportunity. We have with us today Mr. Aayush Shah, Director, Mr. Chintan Shah, CFO, Mr. Dipak Dalwadi, Head of Gear Division, and Mr. Kaushik Patel, Head of Material Handling Equipment Division. I shall now hand over the call to the management for their opening remarks. Over to you, gentlemen. Thank you, Abhishek. Good evening, everyone, and a very warm welcome to Elecon Engineering's quarter four and FY 2026 earnings conference call. Joining me today are Mr. Dipak Dalwadi, Head of Gear Division, Mr. Kaushik Patel, Head of MHE Division, and we would like to welcome our CFO, Mr. Chintan Shah, who joined us recently. He brings nearly 19 years of experience, and we are confident that he will play an important role in driving Elecon's continued growth. The earnings press release and investor presentation have been uploaded to the stock exchanges and are also available on our website. I trust that you have had the opportunity to review them. I will begin with a brief overview of the operating environment and our business performance. Following which, Chintan will take you through the detailed financials. Elecon Engineering marks a significant milestone this year as we celebrate 75 years of engineering excellence, innovation, and strong customer partnerships. Over the decades, we have established ourselves as one of Asia's largest and leading providers of industrial gear solutions and material handling equipment, supported by deep domain expertise and strong technical capabilities. Our Material Handling Equipment division continues to build strong momentum and remains a key growth driver for the company. With a legacy of over seven decades, the division has developed specialized capabilities in designing and manufacturing large, complex, and high-capacity systems, including conveyors, port equipment, feeders, and other critical infrastructure. These capabilities are limited to a select group of players in India, providing Elecon with a distinct competitive advantage, serving core sectors such as power, steel, cement, ports, mining, and fertilizers. The MHE business consistently delivers customized high-value solutions that enhance our operational efficiency and reliability for our customers. In the Gear Division, Elecon continues to maintain a leadership position in India's organized industrial gear market. We offer a comprehensive and diversified portfolio ranging from heavy-duty gearboxes to precision engineered components, catering to industries such as steel, cement, sugar, power, and marine. Our continued focus on research and development ensures that innovation, product customization, and end-to-end lifecycle support remains central to our offerings. With a strong domestic presence, an established distribution network, and long-standing customer relationships, Elecon is well-positioned to enter its next phase of growth and further strengthen its presence across key markets, both in India and internationally. Moving to segment-wide performance. The Gear Division, which accounted for approximately 63% of consolidated revenue in Q4, reported revenue of INR 472 crore, reflecting a decline of 21% year-over-year. This was primarily due to delayed order inflows, extended dispatch timelines, and customer-led deferment of deliveries amid ongoing macroeconomic and geopolitical uncertainties. While near-term performance was impacted by external factors, the underlying demand fundamentals remain intact. We expect a gradual normalization in timing difference for order flows and execution as market conditions stabilize. During the year, we secured a healthy inflow of orders across key sectors including power, steel, cement, and material handling equipment. As we are carrying a strong open order book for the next year, supported by a strengthening demand environment and a healthy project pipeline, we remain confident in Gears division's ability to regain momentum and deliver improved performance going forward. The MHE division, which contributed approximately 37% of the consolidated revenue in Q4, continued its strong growth trajectory, posting a 37% year-on-year increase in revenue during the quarter. This performance was driven by sustained demand across core sectors such as power, cement, mining, and ports, along with consistent execution. Looking ahead, we remain confident that the division will maintain its growth momentum, supported by a healthy order book, strong sectoral outlook, and continued customer engagement. Despite a challenging environment, we delivered moderate consolidated revenue growth of 6% in FY 2026. The underlying fundamentals across both divisions remain strong. A robust order book and strong order execution pipeline provide clear visibility for sustained growth in the coming financial year. Elecon remains committed to its long-term growth strategy, with a clear focus on portfolio diversification, expansion into new sectors and geographies, and continuous strengthening of our engineering and execution capabilities. As part of our strategy to expand into international markets, we are pleased to announce the recent establishment of a step-down subsidiary in Mexico, further strengthening our presence in the Latin American region. On the domestic front, core sectors are expected to continue driving sustained capital investments, and we are well positioned to capitalize on these opportunities through our strong capabilities and market presence. Supported by strategic capital expenditure, strong in-house R&D, differentiated product offerings, and a proven ability to deliver customized, high-quality solutions, we are well positioned to address the evolving and increasingly complex needs of our customers. We believe the current challenges are transient and do not alter our long-term growth trajectory. With this, I now hand over the call to our CFO, Mr. Chintan Shah, who will take you through the detailed financial performance for the quarter and full year FY 2026. Over to you, Chintan. Thank you, Aayush. Let me give a quick walkthrough of the financial performance for Q4 and then for the full year FY 2026. Financial performance Q4 FY 2026. For the quarter ended March 2026, our consolidated revenue from the operations stood at INR 746 crores, compared to INR 798 crores in the corresponding quarter of the last year, reflecting a moderate year-on-year contraction. This quarter's performance was primarily impacted by slower conversion of the order pipeline into the revenue. In line with a broader industry trend of uneven execution cycles across all capital-intensive sectors. Several customers across key end user industries recalibrated their CapEx schedules, leading to a shift in the dispatch directions across the value chain. The underlying demand environment remains constructive. Domestic market contributed almost 82% of the consolidated revenue, while international markets accounted for 18%. During the quarter, consolidated order inflows stood at INR 657 crores, registering a year-on-year growth of about 1.9%. Consolidated EBITDA for the quarter stood at INR 158 crores with a margin of 21.2%. Profitability was impacted by operating deleverage due to lower revenue conversion, marginally higher employee cost, along with the change in the product mix. Net profit for the quarter came in at INR 108 crores, translating into a PAT margin of 14.5%. This excludes the one-time impairment of goodwill of INR 108 crores recognized as an exceptional item. We expect margins to improve gradually as execution accelerates and volumes pick up. Now moving to performance for the year ended March 2026. For the full year FY 2026, adjusted consolidated revenue stood at INR 2,341 crores compared to INR 2,227 crores in FY 2025. This excludes realized arbitration award of INR 25 crores recorded in the first quarter of FY 2026 in the MHE division. Adjusted EBITDA for FY 2026 stood at INR 498 crores with margins of 21.3%, remaining broadly stable despite near-term execution volatility. Apart from arbitration award realized, as stated earlier, additional INR 10 crores were recognized under other income as a part of arbitration settlement. Furthermore, this year also included exceptional gain of INR 80 crores below profit before tax, representing unrealized mark-to-market gain arising from the reclassification of investments, as well as impairment of goodwill of INR 102 crores recognized as an exceptional item. Including all exceptional and one-time items, reported PAT for FY 2026 stood at INR 341 crores. Moving to segment-wise performance. Starting with Gear Division. The Gear Division contributed 63% of consolidated revenue in Q4 FY 2026 and continues to be the largest contributor. Revenue for the quarter stood at INR 472 crores compared to INR 597 crores in Q4 FY 2025. The performance reflects a temporary gap between the order bookings and deferment of deliveries driven by the phasing of execution in large industrial projects. Importantly, demand fundamentals remain strong, supported by sustained customer engagement and a healthy inquiry pipeline across both domestic and overseas markets. EBIT for the division stood at INR 91 crores versus INR 147 crores in the same period last year, with margins at about 19.3%. Margins were impacted by low throughput and changes in the product mix. However, these are transitional factors, and we are expecting the same to be normalized as execution improves. Order intake remained strong at INR 550 crores during the quarter, and the open order book that we have is about INR 894 crores as of March 31st, 2026. This provides a good visibility for the coming quarter. As execution timeline normalize and macro conditions stabilize, we expect the gear division to return to a steady growth trajectory. Moving to material handling equipment division. The MHE division continued its strong growth momentum in Q4 FY 2026, reinforcing its role as a key growth driver. Revenue for the quarter increased to INR 274 crore from INR 200 crore in Q4 FY 2025, reflecting a robust growth of 36.8% year-on-year. This performance was driven by sustained demand across sectors such as power, cement, and ports, supported by both replacement demand and ongoing industrial infrastructure investments. EBIT for the division stood at INR 62 crore compared to INR 59 crore in the corresponding quarter of the last year, reflecting stable profitability despite a dynamic revenue mix. Margins remain healthy, supported by a balanced contribution from equipment sales and aftermarket services. Our inflow during the quarter stood at INR 107 crores, and the order book closed at INR 398 crores as of March 31st, 2026. This again towards a strong foundation for the continued growth. We continue to see the MHE division as a structurally high growth segment, supported by long-term trends in the industrial automation and increasing focus on material handling efficiency. Moving to balance sheet and capital allocation. On the balance sheet front, we continue to maintain a strong financial position with a net cash balance of approximately INR 700 crores. This provides a significant strategic flexibility to pursue growth opportunities while maintaining financial discipline. The Board has recommended a final dividend of 150%, that is INR 1.5 per equity share, having a face value of INR 1 each. This is subject to shareholders' approval. While our performance for the year was below initial expectations, this was primarily due to geopolitical uncertainties and unfavorable product mix and delays in customer lead deliveries. Given the continued macroeconomic uncertainty and limited near-term visibility, we believe it is prudent to adopt a cautious approach. Accordingly, we are holding our guidance for FY 2027 at this stage, and we'll revisit our outlook once there's a greater clarity and stability in the operating environment. With that, we conclude the detailed financial review and now open the floor for the questions. Thank you. Thank you. We will now begin the question answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. We have the first question from the line of Animesh Jain from Individual Investor. Please go ahead. Hello. Yes. Please go ahead. Thank you for the opportunity. My first question is, the Gears to MHE ratio was 53- 37 for quarter four, as against historical trend of 75- 25. Do we expect this as the trend going forward and its impact on the EBITDA margin? Just a second. No. Going forward, the EBITDA margins should not be affected. We still do expect further growth in the material handling division going forward, while the gear division grows as well. The mix might change further. We don't expect long-term the margins to vary. Thank you. My second question is, can you give me the number of domestic and export split for Gears and MHE? Sorry. We couldn't hear you very clearly. If you could repeat that, please. Can you give me the domestic and export split for Gears and MHE, and engineered versus catalog mix for Gears for quarter four? We'll provide more details. The mix of the Engineered versus Catalog for the quarter is, CP is 55%, that is the standard product. Engineered product is 45%, that is a customized product. For the year, FY 2026, Catalog product is 55% versus Engineered product is 45%. Okay. My last question is, what issue is MHE facing since order inflow for the quarter was at 10-quarter low? Thank you. That's my last question. It's a timing difference. In fact, we were expecting certain opportunity to be converted into order, but it has been deferred for Q1. In fact, in month of April, we have already received almost more than INR 15 crore order. We are hoping that in April month itself, we can mitigate that gap of Q4, which has been generated. Thank you. Thank you. We have the next question from the line of Balasubramanian from Arihant Capital. Please go ahead. Good evening, sir. Thank you so much for the opportunity. Sir, we have a CapEx program of INR 400 crore. How much was spent in FY 2026? If you could share what is the CapEx split between gear and MHE. I'm trying to understand on the ROC part also. I think ROC fallen from 29% in FY 2024 to 20.4% in FY 2026. I'm trying to understand with higher CapEx and lower margins, whether we can able to bounce back to at least 23% kind of level by FY 2028. Let me take the lead on this question. This is Chintan Shah. We have CapEx plan, as we just last quarter we published INR 400 crores between FY 2026- FY 2028. We have roughly spent about INR 95 crores towards different categories. Out of that, if you want to have a split, Gears has almost 80% spent, and MHE has the rest of the spend. Coming back to your question on ROC from FY 2024- FY 2026, it's a valid question. What I want to highlight right now is, as we grow, our base for equity and capital employed increases. And if you look at the quality of the total capital that we employ, almost INR 800 crores of the balance that we have is parked into different form of investments. Now we have a policy of investments where we are very conservative with the investments, and so the yield on the investment is about 8%. This is point number one. Point number two, every year in last two years, we have generated average cash post tax about INR 300-INR 350 crore. Every year we have added the new cash from the capital employed. To that extent, our CapEx has happened. We have not increased our installed capacity by way of increasing the CapEx. As we move from this year and next two years, we will have our own CapEx. We will build the capability, increase the installed capacity, and we'll see the results in terms of the revenue increase and the EBITDA increase, improving the margins. Having said that, this position of INR 750 crore-INR 800 crore that we have as an investment, it's a good problem to have it. That gives us the flexibility to remain open for any strategic investments, as well as the expansion. We are just closely monitoring the macroeconomic conditions and would like to continue with the same approach, at least for some more time, till the time we have the clarity on the expansions that we want to do. Yes, sir. Sir, on the defense side, one of the Navy order impacted our margins. However, the future RFP also pushed out, like a Corvette by Q3 FY 2027 and IAC also in Q1 FY 2027. Whether we can able to win at least one or two orders, Navy orders by FY 2027, and how long it will take to get larger defense contracts. We have qualified for upcoming Navy orders? Yeah. I'm Dipak here. For this financial year, Q4, we are expecting a very good order from the Indian Navy, and that is a big order at this moment. Okay, sir. Sir, on the follow-up on that, I think it's initial order, we might have a lower margins. Maybe in upcoming defense orders, whether we can expect higher margins levels? As far as these are the project orders, so margins are all actually good margins. For the small orders, of course there will be a margin gap, but for this kind of a big project orders, there are good margins. Just to refine the answer, the first order that we executed, and as we discussed in our last call. Since the first order has a lot of developmental initiatives and activities, we have a slightly lower margin. As we communicated last time, at 1% or 2% margin was lower. If we get the repeat order of the same grades than what we are talking about, then yes, the margins will be good. In terms of timeline, it's almost two years timeline we see. Yeah. This kind of project orders are executed between two to three years. Okay, sir. Sir, my last questions are, first thing about what is our current capacity utilization level in Q4? Secondly, I'm trying to understand our pricing power. If you could rank your end markets, power, steel, cement, mining, defense, sugar, plastic, and rubber by the pricing power side. Where we have seen a more competitive pricing pressure and where we are getting higher margins. As far as capacity utilization is concerned, we are at this moment with addition of CapEx around 56%-60% utilization. Yes, sir. The second one. Hello. For answering your second question, our engineering product has a better margin than the catalog product. Definitely we are going for more the engineering products. Okay, sir. Thank you. We have the next question from the line of Raj Shah from Enam AMC. Please go ahead. Yeah. Hi, sir. Am I audible? Yes, we can hear you. Yeah. Thank you for the opportunity. My first question was, sir, on the revenue front, if we see on the export side for the quarter, we have largely maintained what was there in the same quarter last year. When it comes to gears, especially in the domestic gears, the revenues are down by 27%. Within gears, Elecon in a domestic geography, exactly where are we seeing such kind of delays in dispatches where customers are not ready to take up the delivery? Can you be a little specific in sharing your thoughts? We have faced these issues where the customers asked us to defer the delivery, specifically in the steel sector, a little bit more. Another reason why also there was a reduction in the turnover is specifically because we got the order booking a little bit later, because everyone was trying to defer their CapEx investments because of the current geopolitical scenario. Hence, the order booking was late, so it couldn't be executed within the year. We expect it to really improve in this quarter. Got it. Okay. This delay in orders, was it specific to any large order or it was broad-based within the steel sector you're talking about? It was not for a specific large order. We saw it across the board. Okay. Got it. Second is on this Mexico part, we are aware that the management was contemplating investing or setting up some assembly center even before the tariffs kicked in. Today, what is the scenario? Do we still attract 50% tariff? Or what kind of strategy are we seeing to cater that part of geography? Right now, in the USA, we have the 50% tariff. Whatever we are exporting from India to our subsidiaries in USA or to customers in USA, that is attracting 50% because of Section 232. With establishment of this Mexico, we will serve the Latin America, and the tariff is not applicable there. We want to get the opportunity to establish and to supply our products from there to the Latin America. Okay. Will we be investing or incurring any CapEx in Mexico? Not much right now. We just established, so we will come back to you after some time. Okay, sir. Sir, I understand. Sorry to interrupt you, Mr. Raj. Request you to come back in the queue for follow-up questions. Sure. Thank you. Thank you. Participants are requested to kindly restrict your questions to two per participant. We have the next question from the line of Harsh Patel from Share India Securities. Please go ahead. Hello. Thank you so much for the opportunity. I just wanted the update on export side. As we had planned, we would be ramping our export to up to 50% in next three to four years. In current geopolitical scenario, what would be our export mix going forward? How would be our sustainable margins up till FY 2027, 2028, if we are focusing more on domestic or export? Going forward, this year despite of the existing scenario, we have managed to maintain at least what we were able to perform last year. We expect going forward it will still improve. We have some improvement in order booking in a few of our entities, while the Middle East obviously has suffered significantly. We still expect, regardless of what the situation is, that we will be improving going forward. The EBITDA that you asked regarding the product mix and export versus domestic, we expect it to not affect us that much going forward. What would be the sustainable margins which we would be focusing forward? Right now we can't comment on that specifically because of the current scenario, and it's currently an ever-changing scenario. We cannot comment on it right now. We will assess the situation and get back once we have a better understanding. One more thing I wanted to ask. Going forward, what kind of orders would be on gear side? Is it customized gears or catalog gears are on a selling point for Elecon? Since last couple of quarters, the mix has been majorly on catalog kind. Majority it will be from power industry and steel industries and cement is from that. Majority will be contribution for engineering and customized product. Catalog product, it will be 2%-3% lower than the engineering product. Okay. What would be the margins in this industry in customized products we would be seeing? See, typically we do not reveal the margin profile. We give a broad range in terms of how the product mix is moving and how it impacts our gross margin percentage. Customer level, product level, and mix level margins, we do not provide our comments. Okay. Thank you. Thank you. We have the next question in line of Kashyap Javeri from Emkay Investment Managers. Please go ahead. Two questions from my side. The first one is to Chintan. On this goodwill side, there is a comment number 8B in the notes to accounts. If you can explain that comment, and also did we get any tax benefit from that goodwill write-off? That's the first question. And second is to Mr. Dalwadi. On the gear division side, or even, in fact, if Mr. Aayush can also throw some light. You mentioned that because of the geopolitical risk, there was some deferment of the order booking. Overall, if you look at the geopolitical risks that sort of rose only on the intervening night of February 27-28. Could one month make such a large difference? Right. Let me take up the first question about the goodwill. Yeah. I think you're referring to note number 8.B. Yes. There's a detailed note in the notes to accounts, which we'll comprehensively cover. Let me explain to the entire large audience that we have. This goodwill represented the goodwill that we acquired way back in 2010, 2011, when Elecon did the acquisition of Benzlers and Radicon Group in the European region. Now, what happens is over the last 15 years, Elecon has done an integration of all these business into the Elecon group of products and the geographies that we have it. We do not have any separate structure. The single team, sales and marketing, and the operations team takes care of all the mix of the products that we have it. Eventually, we realized that goodwill as a standalone on this acquisition do not have much value in our financials. Of course, the business as a whole has the valuation, which doesn't need to be discounted right now, but it has a good cash flow profitability and all. From a goodwill alone, standalone basis, we do not see that the carrying amount should continue like this, and that's the reason we did the impairment. Coming back to your sub-question about the tax deduction of this write-off that we have done. This goodwill was never into the standalone financials. It was always a part of our consolidated financial statements. As far as tax deduction is concerned, it will be in the books of the entity where this goodwill used to rest in U.K. As far as the tax deduction in the local tax is concerned, there is a tax deduction which is being claimed every year, and probably now only five years have left with only $1 million amount. It's going to be claimed as a deduction in next five years' time gradually. This is how the position is. Okay. Understood. Yeah. Sorry, if I got it right, you were asking about No, my question was that the geopolitical risks, the major part of it played out starting February 27, 28, and that one month has probably made a fairly large difference on the overall revenue side. Was this largely to do with the month of March or this played out throughout the quarter? Actually, as you rightly said, I think the news about this disruption started coming the last week of February, and it got intensified in the first week of March. The largest impact is in the month of March. About INR 77 crore of the orders were in a different bucket, like couple of orders of INR 12 crore, which were ready for dispatch, but it was on hold by the customer. We also had the order of about INR 34 crore in the month of March, which were scheduled to be delivered, but now it is to be delivered probably in April, unless the situation is clarified itself in the April itself. We also had INR 31 crore of the order which were scheduled to be dispatched in March, but their production was put on hold on immediate basis, and that's how we had almost INR 70 crore impact for the event in the month of March. I know where you're coming from. In the December quarter itself, we had lowered down our guidance, and we communicated that we are reducing the revenue in the quarter ending March by at least 5%. That's the guidance we already had released in the month of January when we were talking about December quarter and March quarter. Okay. Just one last question on the receivable side. That number has gone up from INR 610 crores to about INR 720 crores. Any particular reason for that? If I look at versus September, the increase of about INR 90 crore compared to last year's balance sheet, if you look at it. From INR 90 crore, INR 70 crore-INR 75 crore is largely because of the sale which has happened in February and in March, which is not due even as on March 31st. About INR 15- odd crore is overdue compared to the same bucket of the last year, which is getting revised in the month of April. Okay. Understood. Thank you. Okay. Thank you. We have the next question on the line of Pratik Kothari from Unique Asset Management. Please go ahead. Yes. Hi, good afternoon. Sir, in domestic Gears, we did highlight the delays in terms of from steel sectors. If you can touch upon the various other sectors we cater to from sugar, power, cement. How are things panning out there? Because we see the order book kind of building up from INR 600 crore last year to INR 900 crore. Across sectors, is the execution expected to be delayed gradual? If you can just touch upon that. Moving forward, the executions are not being delayed because for the domestic, now there is visibility, and we are having good orders on hand and at the same time, good orders in the pipeline also. We anticipate that there won't be any delays in deliveries for the power sectors and for the cements and steel. Steel is also now expanding their executions. Power, of course, they are demanding the projects to be closed very fast. They all are demanding. I don't see any delays in delivery for the power sectors and steel sectors. How about the cement, sugar? Cement is stagnant as such. Even though we are getting good orders from two, three major contractors, but cement, they are more in the brownfield projects than the greenfield. They are moving at their own pace. Sugar industry is now, because of this, we are anticipating good orders from the sugar because now the gas and these petroleum, we may face problem from this war situation. Ethanol will be now in demand. We are also anticipating good demand from the sugar also. Correct. Sir, one on margins. Usually, our engineered products are in, when you look at the mix, it's usually in 50s%. This, I think, was a different year where we saw it at 45%. One, if this goes back, why aren't we guiding that our margins will go back to the earlier numbers? We will sustain the margins, but at this moment, we are not. Generally, when we calculate the margins, what we projected at the beginning of the year, we calculate based on the EP and CP, is the 50/50 standard we consider. During the year, the orders we received in the catalog product, because the delay from the customer side of the projects they have. Catalog product order we received much more than the engineered product in the beginning of the year and the second part of the year. That's why they executed in the same year. The EP products order we have in hand on the March 31st of 2026, so it may be executed next year sometime. Just to clarify what[Shah] is saying. We are not giving a clear guidance that we expect it to go up simply because of the current geopolitical scenario, and we don't know how it's going to pan out. If all the domestic orders go smoothly and what demand we are expecting comes in, you're right, we'll be able to go back to the EBITDA levels that we had suggested even earlier, which is close. Close to 2022-2024. That's correct. Sir, last on CapEx. We see INR 150-odd crores of- Sorry to interrupt you, Mr. Pratik. Sorry to interrupt you. We request you to kindly come in the queue for follow-up questions. Done. Okay. Thank you. We have the next question on the line of Aman Soni from Nvest Analytics Advisory. Please go ahead. Hi. Am I audible? Yes, we can hear you. Thanks for the opportunity. First question, do we have any applications or order visibility from the nuclear side? Sorry, from the- Nuclear side. No. No, we don't. Okay. Secondly, you are mentioning that visibility is there in the domestic market, particularly from the steel and the power, and things are improving. I'm not able to understand why are we not giving any clear guidance on that part, maybe on the growth side and as well as the margins front for FY 2027? We have a strong order book, right? Right. We have slow earnings in last two quarters, where despite having order books, there were delays in the dispatch schedules and all. We have Based on that learning, we decided to stay at least for few months till the time we have a clarity in the situation that we have. Geopolitical situation. The situation is quite fluid still at the moment. While we see that there's a possibility that everything will be smooth going forward, again, I believe yesterday or today, we are seeing conflicting news, conflicting information. This is the reason we want to keep a hold on that for right now. Once things clear out, we'll be able to give you a much clearer picture at the appropriate time. Got it. Because of all this scenario in Middle East, there must be some infra redevelopment requirement, right? Do you people see any history of that, like some new orders may be coming in because of this infra redevelopment that will be required in Middle East? Yeah. There is no doubt that there will be a strong requirement going forward once everything clears out. Which direction it is going in, we are still not sure based on how the outcomes go ahead. While you are right, there is possibility for a significant uptake in orders from the Middle East, we can't guarantee that which way it's going to go until the war is completed. Got it. Regarding the defense orders, specifically that aircraft carrier that we were expecting in FY 2027, what is the current update on that, sir? Yes. That's what I am saying. Yeah. The [inaudible] has already got the orders from the Indian Navy. Anytime in the Q1 they are going to release the RFP, and then we are expecting orders to come by Q4 of this financial year. It is getting delayed, right? Because earlier I think you mentioned Q2 of FY 2027. Yeah. It is a little bit deferred from the defense. Okay. What about the P- 17A, sir? P- 17A also, they have deferred, but it may come in FY 2028, around Q3. Because even GRSE have not received the RFQ. Okay, got it. All in all, can we expect a marginal growth over FY 2026, or there can be a scenario of degrowth as in FY 2027? No, we're not expecting any degrowth to happen compared to FY 2026. We're expecting growth. The amount of growth is currently what is under question, but otherwise, we are expecting growth. How confident are we on the margins front? Like we will be able to at least maintain or grow it from here to FY 2027? From FY 2026, we'll be able to definitely maintain or grow it. We are expecting growth, but the geopolitical situation will control it a little bit. What we are anticipating, there is going to be an increase in some raw material costs or logistics costs. We are already factoring that in to our new orders, so that shouldn't affect us at all. Okay. Any kind of supply chain issue are you people observing right now because of this breakup or closure and all, that can further lead to some problems maybe in the margins front or the execution of the orders? Generally, for our domestic orders, we don't see that happening. Only wherever there is something in the Middle East, we expect that to be affected. Our overseas entity, which is in UAE, that one will be affected. Our other entities and domestically, we don't see affecting us. Got it. Thank you very much, sir, and all the best for the future. Thank you. Thank you. Thank you. We have the next question in line of Ashwani Sharma from Emkay Global Financial. Please go ahead. Yeah, good evening, sir. Sir, my first question is on the inquiry pipeline, which you indicated that we have a healthy inquiry pipeline. Is it possible to quantify for both the segments, Gears and the MHE? Yeah. As on Q4 FY 2026, the open orders that we had for the gear division was about INR 894 crore. For the same period last year, what we had was about INR 583 crore. If I look at the MHE division, at Q4 FY 2026, it's roughly about INR 398 crore, versus what we had as at Q4 FY 2025, which is INR 365 crore. That's how it's totaling to about INR 1,292 crore of open order we have as on March 31st, 2026. Versus what we had as an open order, about INR 948 crore as at March 31st, 2025. Basically, this only gives us the confidence in lot of the questions that being raised right now in terms of how do we maintain the margins or revenue. This is all about. Yeah. I was referring to the inquiry pipeline, which did not get converted, which got deferred because of the geopolitical reason. Okay. Yeah. For MHE, yes, we have a good inquiry inflow. If I'm quantifying, it is more than INR 1,000 crore. More than INR 1,000 crore inquiry we have right now for various sector. For the gear division, it is very good news for all of us that in the first week itself, we are having whatever inquiry was in pipeline. It is going to be converted into the order in one or two days' time. We already got the LOI. It's a very single largest big order ever got in the industrial gear business market. That is, in few days, you will get the good news. Okay. From the power sector. Okay. Secondly, since the deferred revenue when you talk about, is it possible to quantify how much was that? Sir, we are at the last leg and we are having a LOI right now. We would like to publish further details once the things materialize. Okay. Sir, second question I had on the MHE. If you look at the growth trajectory of MHE, I think it's been very strong in the last four to five years. This year, I think obviously there's some moderation in terms of order inflow, and that we see in the order backlog as well. What kind of growth one should estimate given the fact that power as a space is doing really great, thermal especially. From an estimation perspective, what kind of growth we should assume going ahead, let's say in the next two to three years? Is it possible to quantify, sir? As I mentioned that we have a good inquiry inflow for MHE business. Definitely, that power sector is going to help us to grow further. At this point of time, I can only assure you that whatever the growth trajectory we have shown in last two, three years, definitely we can continue with the same pace and this growth percentage. All right, sir. All the very best to you. Thank you. Thank you. Thank you. We have the next question from the line of Pathanjali Srinivasan from Sundaram Mutual Fund. Please go ahead. Hello, sir. Thank you for the opportunity. I have couple of questions. Firstly, with respect to increasing prices of input costs, how does it get passed on with respect to the order book business? Because you would have taken the order sometime back, right? In those cases, we would have already placed the orders or secured the prices for the raw material as soon as we received the order, because we were expecting this situation to take place. To safeguard us, we had already taken action as soon as we received the order. Our execution cycle is also not long, so it means it will be taken care. Okay. Whatever orders are on hand, we already placed the order and we are executing. Still, even suppliers are not in the position to claim what they need actually. It is all, for the pending orders, is taken care. Whatever inflation is there, that is taken care of already with respect to the order book. There will not be much impact in terms of margins, whatever existing business we have. Is that the correct way to understand? Yes. Yes. Okay. One more question with respect to our current order book, Gear and MHE, can you tell what would be the segments where we have a sizable chunk, like top two, three segments? Power. Power. Power, steel and cement. Cement. These are the three main sectors we are seeing good demand. Okay. Within this, you were saying there's a slowdown or something with respect to steel, right? Could you explain a bit on that? There was a deferment of delivery that was requested from the customer end. The gearboxes were ready in that case, but we couldn't deliver it to the customer, and we couldn't invoice it because of that. There are few cases where there was deferment, but it will be cleared in the Q1 and they will proceed. Okay, got it. Thanks. This is a usual phenomenon. It can happen, but specifically because of this geopolitical, it was affected even more. Thank you. We have the next question from the line of Rohan from Envision Capital. Please go ahead. Hello. Thank you for the opportunity. Sir, you mentioned that in sugar, given the geopolitical issues related to the crude prices, we expect strong demand going forward and order interest going forward. Can you explain a little bit more? Because what we are hearing from some other players is that there is excess capacity built in the country for ethanol. How should one look at it? Thank you. No, actually, because of this war situation only, we anticipate that if it continues still further, then there will definitely a lack of supply for the gases and the petroleum. That's why we anticipate that there will be demand for the ethanol and we need to produce more and more ethanol. That is all anticipation. Okay. Understood. Thank you. Thank you. We have the next question from the line of Manish Goyal from Thinqwise Wealth Managers. Please go ahead. Yes. Thank you so much, sir. Sir, this is particularly for the Gears business margins. As you provided the revenue mix for quarter four, where catalog is 55% and engineered was 45%. Sir, if I look on YoY basis and compare with Q4 of last year, your catalog has actually come down from 60%- 55%, and your engineered products has improved from 40%- 45%. I just do not understand why there is such a margin impact. Also, related question which you earlier alluded to in terms of development order from Navy, which is being implemented and there is lower margin. What is the impact? What is the size of order and what kind of this development order are you referring to? Is it something related to your P- 17A orders or if you can highlight on that. Sir, if we see your overall margins for the entire year for gears business, what we have reported in FY 2026, these margins are in fact lower than what you have reported in FY 2022. In FY 2022, you were roughly at 20% margin, which increased to 26% in FY 2024, and now has fallen to 18.8%. How do we see this going forward, sir? Would really appreciate if you can provide perspective on this. Thank you. Yeah. Your first question for the engineered product versus the catalog product. This year, we had done the catalog product 55% and engineered product 45%. We have better margins in the engineered product. This year we couldn't execute the orders, or we couldn't supply, dispatch the orders to the customers because of the customer's requirement. The margins are not reflecting in our financials, because we have some inventory of the engineered product, and we have not invoiced during the quarter and during the year. Because of that, the margin has not improved this year against the last year. What is this number, sir? How much of these orders? Earlier you had mentioned INR 77 crore, so just want to reconfirm how much of these orders are pertaining to Gears business and engineered products. Almost 60% of the open orders we have in the engineers product. The inventory we have around INR 45 crore-INR 46 crore. That includes the margin. Because we are valuing the inventory at the cost, so around 30% margins, 25%-30% margins, if we consider in the inventory when we are invoicing, so that is not reflecting in the financials. Okay. Just to complete my earlier question on the five-year picture where your margins are lowest right now. Ideally, sir, do you really expect that margin should revert to your mean level of 23%-24%? Now with your dispatches improving, you would probably get a operating leverage with the revenue growth. In FY 2027, do you expect the margins to improve, sir? If you compare with the FY 2022, 2023, because India is in the growth trajectory, the CapEx was going on and it is also going on. We were getting the good orders in the engineering products. That's why the margins were good that time. We are also getting the orders in the engineering products, but that was not reflected in the invoicing this year. That's why the margins is not reflecting. The second thing, in R&D cost, because we are developing some new products. If you see our investor presentation, we have taken the four patents and we have applied for the three more patents. We are also working on the R&D to develop new products and upgrade the existing products. We are also expending some cost there. What is it pertaining to the development order, sir, what you referred to earlier? In earlier calls also, you had mentioned that there is a couple of percentage point margin impact due to some orders related to Navy. If you can just clarify on this? For the Navy orders, we will come back to you. Sure. Okay, sir. Last question on the MHE margins, sir. Now, how do we see that sustainable? Because now MHE margins, you are adjusting the intersegmental number also, and after that you are providing the margins in the presentation. What is the sustainable margin for MHE? Would it be at 22%-23%, going forward, considering now that equipment contribution will increase and your spare parts may not grow in the same pattern as your equipment business? Considering the revenue mix, as you mentioned, the sustainable margin around 20%-22%, in between. Okay, sir. Thank you so much. Thank you. Thank you. Thank you. Ladies and gentlemen, due to time constraints, that was the last question. I would now like to hand the conference over to the management for closing comments. Thank you all for taking the time to join our investor call today, and for your continued trust and engagement. While the gear division experienced a temporary moderation in performance in FY 2026 due to execution timing factors, the underlying fundamentals of the business remain strong. At the same time, the MHE division continues to demonstrate consistent growth momentum and has delivered revenues ahead of the guidance set for the year, supported by robust demand across key sectors and a strong execution pipeline. With two well-established divisions, the business remains structurally balanced and is not reliant on a single segment for the overall performance. Together, both the divisions position us well for sustained and resilient growth going forward. As previously communicated, we will not be providing forward-looking guidance for FY 2027. However, our strategic priorities remain unchanged, focused on disciplined execution, operational efficiency, prudent capital allocation, and strengthening our presence in high growth markets. Despite near-term challenges, we remain confident in our ability to take advantage of long-term growth prospects and to deliver long-term sustainable value to our stakeholders. Thank you once again for your participation and continued support. Should you have any further questions, please feel free to reach out to our CFO. Thank you, and have a great evening. Thank you. On behalf of Emkay Global Financial Services Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.