Ladies and gentlemen, good day and welcome to the Q2 and H1 FY 2026 earnings conference call of Pitti Engineering Ltd. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on the date of this call. These statements do not guarantee the future performance of the company, and it may involve risks and uncertainties that are difficult to predict. As a reminder, all the participants' lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone telephone. Please note that this conference is being recorded. I now hand the conference over to Mr. Akshay Pitti, the Managing Director and the Chief Executive Officer of Pitti Engineering Ltd. Thank you, and over to you, sir. 2026 earnings call of Pitti Engineering Ltd. Along with me, I have a senior management team from Pitti Engineering, and SGA, our investor relations partners. We have uploaded our results and related documents on the stock exchange and the company's website. I hope everyone had an opportunity to go through the same. We are pleased to report another strong quarter of performance. Total income rose by 10% on a YoY basis to INR 499 crore, the highest quarterly figure in the company's history. In line with revenue growth, EBITDA also recorded an impressive 17.5% YoY growth to INR 78 crore. Margins remained stable at 16.3%, reflecting a strong degree of operating leverage in the business. Volumes for lamination were up from 16,700 tons to 17,700 tons, of which loose lamination and low-value-added assemblies were 11,801 tons, down by 2% on a YoY basis. High-value-added assemblies grew by 16.5% to 3,168 tons. State-of-the-art shaft integrated assemblies grew by 33.4% to 1,146 tons. On machine casting volume, business fell from 2,583 tons to 2,434 tons, in which the raw castings fell to 1,354 tons, a 11.3% decline. Machine castings grew by 2% to 1,080 tons. We have been shedding the low-value over the years to become a more integrated player across the value chain for our marquee customers by manufacturing a greater share of precision engineered products with superior quality and reliable supply chain. We have successfully increased our wallet share and strengthened our position as their preferred partners. We have also expanded our product portfolio with more value-added products, which will enhance our customer stickiness and diversify our industry presence. On the industry landscape and demand outlook, we continue to witness sustained order inflows and steady demand for the traction motor, railway components, and data center and renewable energy sectors. Our deeper customer engagement has enabled us to enhance our wallet share in these areas. Surge in global data center requirements has significantly boosted the need for power generation solutions, presenting a major growth opportunity for our business. We are actively engaging with customers both in India and overseas to realign our capacities and capabilities with this anticipated rise in demand. Backed by our diversified industry presence and uptake in India's CapEx cycle, we remain optimistic about domestic growth prospects across traction motor, power generation, and wind power segments. Globally, demand continues to remain strong, accompanied by a steady flow of inquiries. With this, I would like to open the floor for the Q&A session. Thank you. We now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. 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 comes from the line of Balas ubramanian from Arihant Capital Markets. Please go ahead. Good evening, sir. Thank you so much for the opportunity. My first question: the new capacity comes online progressively from Q1 FY 2027. What are the planned ramp-up curves for the new sheet metal and casting capacities, and how long will it take to reach 80%-90% utilization on these new capacities, and what are the key dependencies in terms of customer qualifications and skilled labor, etc.? These are my first questions, sir. The capacity increase in Bangalore facility has already started. We expect the order flows to start from Q4 onwards. In terms of reaching 80%, I think progressively by the end of FY 2027, we should be at 80% utilization of the consolidated capacity. In terms of skilled labor availability, I don't see much challenge. We have actually started these facilities, and the customer approvals are already in process, and we are taking the same time to transfer our training to the new manpower to help us bring this facility and capacity online quickly. Okay, sir. So what's the roadmap for new CapEx of INR 150 crores? In terms of roadmap, I think by the end of this year, we should be adding close to 8,000-9,000 tons, and the remaining will get added in FY 2027 before H1. Okay, sir. I think, sir, we are the supplier for Indian Railways and traction motors. And what percentage of revenue is coming from the railway sector in those sites? And how sustainable is this demand given the government CapEx cycle, and what is the competitive landscape against established players? So for Q2 FY 2026, revenue from traction motor and railway components is about 32%, of which the demand from Indian Railways, including the Vande Bharat trains, freight locomotives, would have constituted about 25% of the total railway business, which is to say that 8% of total revenues was exposed to this local railway and metro rail segment. The remaining is predominantly international business, which continues to remain very, very strong. Okay, sir. My last question in terms of the supply chain side. The raw material QCO issue caused a significant inventory build-up. What structural changes have been made to the procurement strategy to de-risk the supply chain from similar regulatory issues in the near future? And are you exploring any long-term contracts or strategic partnerships with domestic steel producers? So on this point, as you know, India is currently deficit in the total capacity versus the demand of the steel. Until and unless the new capacity from JSW comes online, which is expected in FY 2027, we'll continue to see volatility in availability and pricing of this raw material, more especially since all the imports from China, which was a predominant supplier that bridged the demand-capacity mismatch, have not been renewed. The QCO orders and the BIS approvals are still in place, those restrictions. So as a company, what we have done, we have started importing materials from Korea and Japan from approved mills. And as a strategy, we have decided to start about 25% of our total requirements for imports till the situation in the Indian manufacturing of the steel stabilizes. Beyond that, then it will be a price-related discussion. Today, it's purely an availability-related discussion. Okay, sir. So a small question on the data center side. I think revenue contribution is around 4%-5% kind of range. And what are the demand drivers coming up in this segment, and what kind of opportunity size do we have? So data centers, I think, are about 4% of total revenue for Q2, and they have continued to remain strong. For the corresponding period last year, it was about 2% in terms of revenue. So quite literally speaking, data centers on its own have doubled up in terms of revenue for us. The current outlook from our customers remains very, very strong on this particular product line. I think some time ago, I had mentioned that our customers have forecasted double the requirement in this segment, which we have already realized. From here on in, we are given to understand further 50%-60% growth in volumes. However, I remain cautious on this particular statement as the demand is huge, and to sustain this level of increased demand, I see some challenges in the future. Got it, sir. Thank you. Thank you. The next question comes from the line of Rahul Kumar from Vaikarya. Please go ahead. Yeah, hi. Sir, I think you mentioned that your exports continue to be pretty strong. However, your key customer, actually, they mentioned in the call recently that the railroad companies' merger, actually, may reduce investment in the near term. So what are the discussions happening with them for, let's say, for FY 2027 onwards? Yeah, I think you're referring specifically to Wabtec Corporation and their statement. Am I correct? Yeah, yeah, yeah, yeah. So if you look at that statement, I think it was geared more towards new locomotive deliveries. The business that we supply to them is for all of the business verticals, including marine, off-highway vehicles, oil and gas, as well as locomotives. Within locomotives, you have two subsegments. One is called modifications and upgradations, and the second is new loco builds. So from what we are able to understand from our customer and the outlook that we are seeing, the modification business continues to remain very strong in the current calendar year, and the new locomotive business is expected to pick up from next year. So for us, we have seen a record year with the customer this calendar year. However, Q4, as per usual business practice, given that it's their holiday season, will be slightly slower. Q4 calendar, that is. Starting January, we see again a huge uptick in demand and requirements going forward. Okay, okay. I think in the last call, you had mentioned that Q3 was supposed to be your best quarter in terms of exports. So does that stand to be revised? Q3 calendar. Because they work on calendar years. Okay, okay. So you meant Q3 for them, actually? Yes. Okay. See, typically, October, December is their holiday season. So that always kind of suppresses the demand, and then it picks up again in January. Right, right. I understand, understand. The second question would be, I think for some of your domestic customers who might be in turn exporting to other countries, including the U.S., what is your assessment of growth and ordering over there? Are you picking any signs of some sort of slowdown because of disturbances? So far, we have not seen any significant slowdown specifically on account of that. See, there are two things, right? So we have this reciprocal tariff, which is kind of looming large on everyone. But if you see the fine print on the taxes and tariffs, there's a Section 232 tariff, which is applicable for all iron, steel, aluminum, and copper parts. So irrespective of the trade deal with the United States, a 50% tariff is imposed on products containing these items. So it's not having a negative impact on exports from India as such as on this particular date. Of course, these things are fluid, and they tend to change very quickly. But as of now, we don't see any significant fallout of this at our domestic customer level. Okay, okay. So you mean to say that the actual products, which, let's say, would be motors, etc., they would be subject to this Section 232 tariff and not the reciprocal tariff? So for what? See, this is a very complex, what do you say, tariff regulation. We are also not very, very clear on this. But from the understanding that we've been given, if a country has, say, for example, a 10% reciprocal tariff, the Section 232 would apply for the content of steel, iron, aluminum, and copper in a given product. And that tariff stands at 50%. So for India, it makes no difference, right? Because we're already on 50% tariff. But suppose there was a South Korean company, which now with the trade tariff is at a lower tariff rate, the content of these materials in the product would still apply to 50% tariff. And as you know, the material cost is the most significant part of any of these products. It effectively negates any negative tariff impacts. Okay. I think that is one of the reasons, something that we understood very recently, and I think that explains why we were not very badly affected by the tariffs, despite the tariffs being at 50%. Okay, understood. Okay, understood. And the third question which I had was, if I look at your standalone sales growth, that has actually slowed down to 4% YoY growth now versus over the past three quarters from 20%+, while your subsidiaries have grown pretty strongly at 60% in this quarter. So can you help us understand that? So see, as part of business optimization, we had already indicated that we would be shifting equipment and manufacturing between our Bangalore location and Aurangabad and Hyderabad. So this is part of optimizing production at the nearest location to customer. And going forward, we shall continue to see this. We'll be transferring some of our legacy Pitti Engineering business to the subsidiaries. Okay, understood. Understood. So basically, we have to look at the consultant. Okay, got it. Yes. Got it. Got it. And your subsidiary margins are actually, again, lower at, let's say, 10% versus, let's say, the overall business at 16.5%. So is there an outlook, or is there a target to improve this to industry level, sorry, company level margins? So see, when we look at the subsidiary, I think the right way to look at it is each subsidiary in its own right. So if you talk of Dakshin Foundry, they are currently operating at about 17% EBITDA margin. So they are in line with Pitti Engineering. In fact, in terms of raw casting, I would say they are better than Pitti Engineering margins. The Pitti Industries, which is a lamination business based out of Bangalore, has slightly underperformed this quarter. That's mainly on the back of the new capacities which we're putting on stream in that location. We have got the customer approvals, and the production will start to ramp up from January. However, the overhead costs and the labor costs are being incurred. So you will see that margin come back starting January quarter as the volumes pick up there. Okay, understood. Understood. Thank you. A reminder to all the participants that you may press star and one to ask a question. The next question comes from the line of Sunny from Axis Securities. Please go ahead. Yeah, thank you. So sir, my question is, if you see, I think there is a very decent amount of visibility for FY 2026, 2027. But what is our strategy for a longer term? How do you see beyond FY 2027 now? See, till FY 2027, like you said, we have a clear strategy in terms of organic growth. I think this organic growth, subject to macroeconomic conditions, should continue at the similar rate going forward while we continue to focus on inorganic growth beyond FY 2027. Okay, so I mean, we plan to expand our horizon in terms of geographies or in terms of product. How do we plan to do that as we stick to the current product line that we are there and the regions that we have? See, the product line will continue to be engineering components, specifically lamination, machining, casting. In terms of end markets, it's where we look to diversify. We are quite bullish on getting into or expanding our presence in appliance, pump, automotive, and smaller laminations. And also, geographically, our intent is to move towards North India. That's a market which we underserve due to our geographical disadvantage being based in Maharashtra and Karnataka. Okay. So we would be looking for something inorganic in that segment if something comes our way. If not, then we'd have to consider something greenfield. Understood. I think, yeah. But broadly, do we have any specific, say, acquisitions or acquisition targets in mind right now? Because that is where the growth will come from, I think, in FY 2028. There are multiple competitors in the industry, and we are engaging with all of them to see what would be available. If something is available at an appropriate time, we shall move on it. Okay, okay. Fair enough. Thank you, sir. Thank you. The next question comes from the line of Dharmil Shah from Dalmus Capital Management. Please go ahead. Hi. Thank you for the opportunity. Some of them are already answered, but I have no specific question on the data center opportunity. When we see our data center opportunity, is it more like global data center is the term, or is it more India-specific for us? Because one of our customers mentioned that - sorry, go on. So yeah, it's both. The customer that we supply to caters to both India and export requirement. But if I have to segment it, most of the sales that we are doing to our customer would be eventually for the global market. As you already know, the data center in the global context is a huge market, and India is a very small market of that segment. Understood. But the customer's commentary was more that, I mean, the export opportunity for them is quite limited. It's more of India and the neighboring countries which they cater to. So just wanted to, I mean, understand on that part. Because these are heavy gensets, so what they mentioned is export, I mean, shipping these gensets over longer distances is not quite feasible for them. So it does not typically go to North America in terms of any significant volume. But from what we understand, it is primarily catering towards the European requirement. The India opportunity is good, but it's not as big as the overall global opportunity. The new product lines which are being approved, and not just the one customer that I think you are referring to, there are two more customers which are coming into this segment. They are predominantly export opportunities. Understood. Got it. And another question was for the inventory. I mean, the inventory levels have increased by almost INR 80 crore. So is it purely volume increase in? Sorry, sorry, I lost you. I lost you in between. Can you please repeat that question? Yeah. So the question is more on the inventory levels. If we compare March to September, it has increased by around INR 80 crore. Is it purely because of increased volumes, or does price play a role in this as well? No, this is purely to protect ourselves from lack of availability of materials. As I mentioned in one answer prior, there's a huge disruption in the availability of various grades of steel in India due to the quality control orders and the BIS non-renewal of Chinese mills. As you know, the deficit between production of electrical steel in India and consumption is about 200,000 tons. So to secure ourselves, we have started importing material from BIS-approved mills other than China, and this has elongated our inventory holding period as we have to typically buy these materials on LC at sight from these countries and bring them in. And this issue you would assume would pertain, I mean, how long? At least a year or longer? See, if the QCO orders and BIS is withdrawn, I think this would get regularized very early. If not, until the capacities increase in India, which are slated to increase in FY 2027, only then this will get normalized. Understood. Understood. In terms of risk mitigation, like I had mentioned earlier, we have decided to start 25% of our quantity as imports. Okay. Understood. And so the other impact would be your net debt levels would remain high. Is that a fair understanding? Because the net debt has also increased by a similar amount. So would it be fair to assume that? Yes. It will remain at this level till this sourcing issue does not get stabilized. We had expected that this would get stabilized by April, but it continues to persist. Understood. But I see INR 140 crore of cash as well on the books. So why not utilize those cash? And I mean, those would be, I mean, rather than borrowing it, have it. So see, this is a function of operations. If you see the bank and bank balances, this would be the LCs that would typically, the margins that would be there typically for the LCs. Cash and cash equivalents are pure cash. There are certain long-term borrowings that we cannot repay. So it would be coming in from that. Okay. Understood. That's it. That is from my side. Thank you so much. And we have the CapEx, and just to finish that answer, we also have CapEx, which is ongoing, so these are the funds that we have kept aside for CapEx. We don't typically like to keep long-term and short-term funds intertwined. Okay. But CapEx, INR 80 crore is already, I could see, on the cash flow statement. So how is? Yes. We have announced about INR 150 crore of CapEx. So there's another INR 70 crore to go. Yeah, but of that INR 150 crore, INR 80 crore was supposed to be in FY 2026, right? Yes, so now we are almost at the end of FY 2026. We are in November, so we will start the CapEx, so we'll start the advances, so we need to have a cash flow to back us up. Okay. Got it. Got it. Yeah. Thank you so much. Yeah. Thanks. Thank you. A reminder to all the participants that you may press star and one to ask a question. The next question comes from the line of Ganeshr am from Unifi Capital. Please go ahead. Thank you for taking my question. I have two questions. The first is just to develop an understanding, which is when we look at the sales break-up and the volume of it, right, you've categorized it as value-added, volume-based by products. So would these categories be largely exclusive, or is there some portion of the volume-based product that is also value-added? So just to understand, and how do we sort of gauge how the realizations are across these three categories given we have a consolidated revenue number? That's question number one. And the second question is just to understand, over a period of time, we seem to have moved from laminations to higher value-add assemblies, right? So how has this mix evolved over the last three, four years, if you could give us some context? And what would be the future for this? What would drive this improvement, if there is? I'm sorry. I'll answer your question one by one. I'll ask you to repeat your second question after I answer the first one because I'll lose track. Of course. Of course. To answer your first question, you asked me what are the quantities that are sold and what are internal consumption, if I could understand that correctly. Correct? No. Understand, understand. When you say value-added products and volume-based products, is some portion of volume-based product also a part of your value-added product? Maybe you machine something that's volume-based. Where would you account it? And how do I see the realization across the three categories? Okay. Let me clarify this in one simpler way. If you take the loose lamination and low value-added assemblies, this would be the lowest tier of the lamination. These are basically loose lamination, as the name suggests. Then you would take child parts, which we are giving you in the quantification, child parts machine components going into assembly. You take these child parts along with loose lamination and make assemblies, and these therefore turn into high value-added assemblies. Then, the third level of value-add on, say, the lamination business, is you take these high value-added lamination assemblies, and on the other side, you take a raw casting, then which is machined, and integrate this machined casting with that high value-added lamination to get a stator frame or rotor shaft integrated assemblies. So if I were to break up the quantity which I had mentioned in my speech, 17,722 tons of lamination volume, that would constitute 16,500 tons, 16,115 tons of the lamination weight, which is namely quantified in loose lamination, high-value-added assembly of lamination, and stator frame or rotor shaft integrated assemblies, laminations, which indicate the lamination weight going into the finished products, along with the weight of the shaft, which is written as shaft machined components going into assembly, and child part machined components going into assemblies, and stator frame/cold drop products machined components going into assemblies. So this is all the assembly and lamination volumes. This we have done in such a way because there's an interaction between our machine components business and lamination business when it comes to high-value assemblies and core drop products. Apart from this, we also sell machined components and raw castings, which is then quantified separately. If you have to correlate this to revenue of the company, you can probably value it in such a way. This, of course, is just a thumb rule and management estimate. Loose lamination and low-value-added assemblies would be about INR 170,000 per ton. High-value-added assemblies would typically yield about INR 250,000 a ton. Stator frame and rotor shaft integrated assemblies would yield at INR 675,000 a ton. The shafts which are going into the assembly, child parts which are going into the assembly, and stator frames which are going into the assemblies, we are not going to value because we have already valued it in the per ton realizations of the main product amount. Got it. Got it. Got it. The raw castings typically yield about INR 200,000 a ton, and the machined components typically sell at about INR 350,000 a ton. Okay. The byproduct and scrap are about INR 50,000 a ton. Got it. Got it. That's very, very clear. And the follow-up on this is to understand over a period of time, how much should we expect the higher value-added machine component mix to increase, and what could drive that growth, right? And is there more scope for work beyond this? This is just to get a, I mean, crystal gazing or clarity of picture from here. So definitely, machine component business, we see growing quite significantly in the near future. In terms of growth of high-value-added assemblies and stator frame rotor shaft integrated assemblies, while this business will continue to grow, the biggest addressable opportunity in the market is on the loose and low-value-added assemblies. And in the nearest term future, out of Bangalore, we are focusing on this part of the business. So we will see significant growth here in the coming times. Got it. And is there something like an order book that you have on a recurring basis? How are orders typically booked? Does this happen on a recurring contract of nature, or is it project specific? How does that process work? For different products or different sectors, it works slightly differently. On the locomotive or traction motor side of the business, we have a combination of three. The business with the Indian Railways is on a tendering basis. The business with Alstom, Wabtec, Siemens India, these are multi-year contracts, which they had won back-to-back with Indian Railways and therefore extended. That's an anomaly in the business. Nobody normally has that kind of a contractual obligation. But international business on locomotives and traction motor parts typically has a three- to five-year long-term agreement with assured blends of volume. So for example, if my customer makes 100 locomotives and I have a 70% blend, I get 70 locomotives worth of business from him. Got it. That's very clear. So at least if you go to, say, low voltage motors, here the order cycles are something like two to three weeks. So you get two to three weeks of firm orders, and thereafter, it's only a visibility from the customer. So they give you a one-year, two-year, three-year forecast, which has varying degrees of hit rate. Typically, what we see, a one-year forecast is about 90% accurate, and a three-year forecast is about 75%-80% accurate. Got it. Got it. So if you look at the visibility you have for the next year or the next three years, right, where would that be in terms of order book or order visibility? So in terms of lamination, if I talk three years out, including customers that we are targeting down south, we have a visibility to get to about 93,000-94,000 tons of lamination sales, up from our current year's target of about 70,000 tons. That is over the next three years. In terms of machined components, we currently do about 10,000-11,000 tons of machined components in a year. The visibility there is very good. I think over the next three years, we are looking at about 15,000 tons of raw castings and machined components put together. The blend between raw castings and machined components is not very clear to us right now. The desire from the customer is to move towards more machined components so that it's a final product that they can buy, and they don't have to worry about the machining aspect of it. But that would be dependent on the investment that we make and how quickly we can ramp these capacities up. Got it. Perfect. Thank you very much. Thank you. The next question comes from the line of Mohit Jain from Choice Finserv Private Limited. Please go ahead. Hi. Good afternoon, Akshay. Congratulations, firstly, on another strong quarter. It is really encouraging to see consistent growth in high value-added products and continued progress in margin improvement. It's clearly reflecting the company's focus on moving up the value chain. Firstly, I'd like to ask you on the so in our last interaction, you mentioned that you are evaluating acquisitions in, I mean, inorganic acquisitions in copper winding and foundry to move closer to full integration. Could you update on the progress here? Any specific opportunity moved into advanced stages? So on the copper side, we are still a little, like I said last time also, hesitant to move into that space because it is a very working capital intensive business due to the value of copper, but not with the commensurate margins. So the amount of capital we deployed and the return we get, the ROCs are much lower there. So we are a little hesitant to move into that space until unless a customer really forces us to move into that space. On the casting and lamination space, we are actively evaluating. Like I said, we would like to be present in the North India market, which is very heavy on appliances and automotive, two very large sectors where we have negligible presence. So if I would take the automotive and appliance segment, it would constitute more than 35% or 40% of India's electrical steel market. And there we have negligible presence, so that is something which we would want to prioritize in terms of our growth prospect, subject to opportunities being available. All right. And sir, on the volume side, so you've guided on 60,000-70, 000 of lamination sales for the full year. And based on the reported number, I'm seeing in H1 FY 2026, we have already done somewhere around 33,000-34,000 tons across laminations and assemblies, excluding machined and casting. So are we still on the track to complete the 70,000 tons? And given that we have already done 50% H1, do you think we can even do better than 70K? So better than 70K would be subject to what we are able to quickly ramp up in quarter four in our Bangalore facility. But yes, as you rightly noticed, we are at somewhere around 34,000 tons. 70,000 tons is, I think, quite assured. Beyond 70,000 is best offered basis. All right, sir. And lastly, can you just give the numbers on export as a% of revenue in H1 FY 2026? And on that, if you can specifically give out the number of Mexico and U.S. combined. Just give me one second. Yeah. Yeah, exports. I'm talking about operating revenue. About INR 477.72 crore was operating revenue, of which total exports were about INR 135 crore. That's 28%. The North American part of the business would be about INR 40 crore. Mexico is including? In Mexico, the exports would be about INR 80 crore, and the remaining would be to Europe. INR 80 crore in North America is INR 45 crore. North America is about 30%-35%. So that would be about INR 25 crore-INR 30 crore. Okay. INR 25 crore-INR 30 crore. I don't have the final number here. See, I'll give you the other way. The annual North American business is about $16 million. U.S. business is about $16 million for the full year. Okay. I don't have the exact U.S. number with me. The full year number, if you see, it's about $16 million to U.S.A. Mexico would be roughly about $35 million, and remaining would be to Brazil, Kazakhstan, and Europe. I know you don't have the prior figures in hand, but let's say North America, INR 25 crore-INR 30 crore which you have done this time. Is it better than last year YoY? Any rough idea on it? Ballpark? Yeah, yeah. It's better than last year YoY. All right. Thank you, Akshay. Thank you, and all the best. Even if you see quarter- on- quarter, I think it's better. Okay. All right. Yeah. Thank you. The next question comes from the line of Manoj Jethwa from KSA Shares and Securities Private Ltd. Please go ahead. Good afternoon, Akshay. For the very good set of Q2 FY 2026 numbers. So my question is pertaining to the global supply chain resilience and the headwinds, and how do we address as we have got significant presence in U.S.A, Europe, and other markets? Appreciate to share some thoughts on that, sir. So starting with U.S., which is, let's say, the problem area, and then moving to the others which are the solutions. U.S., like I said, is about $16 million annual revenue for us, which is not very significant. And there we are getting into some kind of resolution with our customer, which will help us actually grow the U.S. business going forward. So while we'll have to take some pain, I think overall it will be very good for the business and will be resilient there. Mexico business continues to grow due to U.S. tariffs. I mean, most of the people who used to never give us inquiries are now trying to give us inquiries out of Mexico, and that's an opportunity for us. Europe, as a result of the two subsidiaries that we acquired and had a larger presence in Europe vis-à-vis us as a company, have given us market access, and we expect and hope that over the next two years, Europe should become a significant market for us. Okay. So my second question would be, how do you secure a seamless supply of advanced electrical steel for our requirements with companies like POSCO and all that? Are we eyeing for any special agreements or strategic agreements or any sort of JVs to have the supply on a long-term basis with them, sir? Good question. When it comes to POSCO and JSW, we have MOUs with them, annual MOUs that we sign on volumes, and those we keep growing every year as we grow. But currently, till the capacity in India does not increase, I think we are doing everything that we can to secure ourselves and secure that supply of electrical steel does not curtail our growth. So like I said some time ago, we have started diversifying our sourcing to import to help us through the next one year, by which time we hope that the Indian capacity has come online and the market in India becomes smoother. So what is the total addressable market size in the global level and India level as such for our line of business? Global estimates vary dramatically. Let me start with India. So for the lamination business, the business not only uses electrical steel, but they also use a certain grade of CRCA, which can be unannealed and used for motors and generators. So if I combine the two, it is estimated that the Indian market is about INR 10 lakh-INR 12 lakh tons, of which INR 8 lakh tons would be fully processed Cold Rolled non-grain oriented steel, and the remaining would be semi-processed and CRCA. On the semi-processed and CRCA, India is quite self-sufficient. On the CRNGO part, vis-à-vis the INR 8 lakh estimated demand, in India, the current production capacity is maxed out at about INR 6 lakh tons. On the global front. Yeah, please. Yeah, please. Just one second. Globally, I'm sorry, but we don't have a very strong estimate. From what I was given to understand in one report, the electrical steel value of about $32 billion is the market, so it's not in tonnage terms. It's only in value terms from some of the global publications that we are able to get our hands on. Thank you. So any thought process on the Atmanirbhar Bharat for our supply sourcing of the materials from India only? And do you think that how long it could be a reality for companies like Pitti Engineering, sir? So we had gone to Atmanirbhar Bharat in 2020. We actually shifted everything domestic post-COVID fluctuations. Unfortunately, the pace of growth has not kept with the capacity increases, and therefore now, again, we are going to imports. Okay. Thank you. All the best for FY 2026, sir. Yeah. Thank you. Thank you very much. Thank you. The next question comes from the line of Pulkit Singhal from Dalmus Capital Management. Please go ahead. Thank you for the opportunity. My question is just on the next three to five years, what kind of initiatives you're working on to drive a higher growth than what you're already seeing organically? I mean, 10%-15% seems to be an area that you're working on, but barring acquisitions, is there anything else that could drive a higher growth that you guys are working on? So Pulkit, on that front, I think the higher growth will have to come from non-lamination related businesses. So we are looking at forging. We are looking at further expansion of our machine components business, especially for Europe because that's a market where foundries are shutting down, but the requirement of castings are going up. But that would require a significant capital outlay. And given the current balance sheet, I think we have been slightly cautious and holding on for the current plan to pan out and the balance sheet to stabilize to further invest in those areas. The opportunity is definitely there, but we would want to remain cautious given the overall scenario. Okay. But forging, I mean, how big an investment would it require? I mean, and by when can that be a reality? I think forging, if you do a greenfield, it's about INR 150 crore project because you have to do land building, everything. The equipment alone would be about a INR 60 crore-INR 70 crore project. And then it's not just the forging. You then have to also invest on the machining to really make it a sticky factor. So if you talk of machine forging, we are talking of nothing less than a INR 250 crore investment with maybe a INR 250 crore-INR 300 crore revenue potential to start with. It would be like a very capital-intensive business. And margins would be very good, though. There would be high 20%+ margins. Understood. But what would be our advantage here? Is it because of our current customer base itself? I mean, or you'll have to kind of explore further? I mean, why would we be looking at forging? What's the attractiveness? Sure. So look at two data points, if you can start with. One would be the shafts that we are consuming for our assemblies and lamination. So we are currently consuming roughly 422 tons. Last quarter was our shaft consumption. This is a captive requirement. In addition to this, most of our customers have a larger demand for forged components. Currently, we have already started machining forged components by outsourcing them and selling to the customer. Always, those are a little trickier agreements to get into because if there are supply failures, you are liable for the failure cost. And forging is inherently a tricky part to source, given the capacity shortages in India and the quality vendors' availability. So if you are able to secure the forging supply, then the machining of it is very easy for us. Okay. So broadly, in terms of annual. So it would be a very good horizontal adjacency. Just the way we got the casting going, this would be a very quick ramp-up that we could do. Okay. So it opens up a different time altogether, I mean, once you get into that area. But in terms of the way you look at capital outlay for the next three years, broadly on the current, let's say, balance sheet without raising equity, how much are you comfortable with doing annually? See, right now, the balance sheet is slightly stressed because of this raw material situation and the QCO orders. Something or the other keeps hitting this supply side at our end, which is causing this expansion. But for that, we would have been down to INR 400 crore of net debt, and we would be looking at something going on. But given the elevated debt level, I would not be comfortable going beyond this at all. Okay. So my expectation and hope is that by year-end, something starts easing out on the raw material front. Anyways, FY 2027, the capacity addition is expected in India. So we can ease our inventories as well as the accumulated profits give us headroom in our balance sheet to do these acquisitions or organic growth. Understood. Got it. Understood. Great. Thank you and all the best. Thank you, Pulkit. Thank you. The next question comes from the line of Rahul Kumar from Vaikarya. Please go ahead. Yeah, hi. So just on the tariffs, I think in context of what you mentioned, should the customers be now looking at moving the sourcing over long-term? Sorry, I lost you in between now. Something went wrong at my line. I lost you in between on the tariffs. So I was saying, should your exports customer look to move their sourcing over long-term? I don't think so. I would see where will they move it. Firstly, the Section 232 tariff is a great equalizer for all countries, whether you have an agreement or not, having the 50% tariff on steel, iron, aluminum, and copper. Secondly, the approvals are not very easy with the customer. I mean, even if we have to get a part approved with the customer, it takes us a couple of years to do so. Okay. Any new development. And if they are going to move it, I'm pretty sure they're going to spend a serious amount of money. The qualification costs are in excess of $200,000 for each part, plus there would be tooling and then the lead time. So the incentive to move out is rather the disincentive to move out is very, very high. Okay. More so given that the Section 232 tariff anyway is applicable. So even if they go to a country like, say, Korea or Vietnam, where they have a trade agreement, U.S. and India, U.S. and them, the Section 232 will still apply. Okay. Okay. It's also expected that India will, I mean, it's also expected or implied that India will get a trade deal at some point. While it's highly anticipated and getting delayed, it will eventually come. Okay. No, I think there's some USMCA agreement also, right, which would be advantageous to companies operating out of Mexico even for the [audio distortion] as well. That would become a loophole, which already a lot of people are exploiting, if you would see. So most of the companies are shifting manufacturing bases to Mexico. Canada, so far, is not the preferred destination, but definitely Mexico. So exports, which are going to U.S., are ironically creating jobs in Mexico now. Okay. Okay. But so therefore, I mean, theoretically or hypothetically over longer term, it may be an issue in case the situation remains status quo on the tariffs. There may be an issue for you as well if the customer wants to shift the sourcing to, let's say, Mexico. See, my personal view on that would be that eventually, if you look at Mexico in terms of manufacturing, it's no longer a cheap destination to manufacture goods. Secondly, availability of steel and cost of steel in Mexico is very high. So what Mexico has been quite good at is tier two level assemblies, and now they're migrating to tier one level assemblies. So eventually, if this situation persists, instead of onshoring in the U.S., I would assume that there would be higher levels of value add happening in Mexico and more and more business being diverted to Mexico. But that would be the overall least expensive solution to the clients. Okay. That's a personal estimate and view. No, I get that. I get that. And second, I think for us, if you look at last, let's say, three to nine months, which are the top-tier customers which we have added, and how will they scale up, let's say, over the next few quarters? So, we have added a few customers which we have not actually put here. I think in the next time, we'll have the approvals from them to disclose the names. We are quite excited adding these two clients. They are mainly based out of Europe. And one will represent an increase in lamination volume over the next two years, significant volume, as well as one in the casting space, which will add a lot of business to us. Okay. And any traction on the domestic customers' front? Oh, I'm sorry. We have already added Xylem to the client base this quarter. So yeah, Xylem, we are very bullish on the casting business with Xylem out of the U.S. and SKF for the casting business to the U.S. market. And I may have missed your guidance, which you would have given out the volumes or the growth for FY 2027 and FY 2028. So, I'm going for FY 2027 and FY 2028 to 94,000 tons of sales. Current year would be 70,000 tons with the best effort basis to increase it in Q4. Current rate shows it at 70K. FY 2026, we would be targeting somewhere around 86,000 tons, sorry, 83,000 tons, around that level. Okay. That's for FY 2027. Yes, and then the remaining is obviously FY 2028. Okay. Thank you. Thank you. The next question comes from the line of Abhijit Mitra from Aionios Alpha Investment Management. Please go ahead. Yeah. Thanks for taking my question. Just to sort of understand what are the levers that you have to sort of protect your margins and improve them over the medium term and slightly longer term. I mean, how do you sort of see those levers playing out? Because I can see your operating and manufacturing expenses have seen a sharp jump. So I'm guessing there would be some buffer built into it. If you can give some sort of help us understand what are the margin levers that you have and how do you see the margins panning out in the medium term and in the slightly longer term. Thanks. Yeah. So if you look at Q2 versus Q1, obviously, we've seen a sharp jump. That's mainly on account of annual expenses such as bonuses and other things related to our foundation day, which are booked in Q2. Historically, we should see that booked in Q2. Barring that, I think the way we plan to protect our margins, one, we have a pass-through with our customer on raw material. The good part is every two to, sorry, three to five years, depending on the customer and the contract, we renegotiate the overhead that we add based on our transparent costing model. Additionally to that, I think in terms of margin protection, since we are blending both the businesses and talking EBITDA margins, the increase in machine components is going to help us offset any margin decline due to the increase in those and low-value-added laminations. Okay. Got it. And just to understand this, 18,600 tons, I mean, that also is getting increased to 24,000, 25,000 tons. So you see that utilized by when? By FY 2029? I mean, is that sort of. You're talking about the subsidiary Bangalore facility, right? Yeah. Essentially, the castings, the capacity. So the combined, if I look at your total casting capacity, it is currently at 18,600, and you're increasing it to around 25,000, right? I mean, like you're increasing the casting. Okay. So you're talking the casting. So you're talking the casting. Yes. So yeah, like you're increasing the shipment. I think the casting side, you should see by FY 2028, you should see the full utilization. We typically aim for an 80% utilization. So the target is to do 18,000 tons of castings and machine components by FY 2028. Right, and the machine components, I mean, the ratio, as you said, will depend on how quickly the new customers ramp up and what kind of order they sort of place on it. Yes. I mean, if you look at the machine hours that have been added, they are not commensurate enough to take care of the transition from current raw casting to machining, let alone the increase in the foundry capacity. So obviously, there'll be some more investment required in machining going forward, but that we shall do tactically. Got it. Got it. Understood. Understood. Great. Thanks. That's all from my side. Yeah. Yeah. Thank you. Due to time constraint, that was the last question for today. I now hand the conference over to management for closing comments. Thank you, everyone, for joining us today. I hope we have addressed all your questions. We remain committed to keeping the investment community informed with regular updates on any developments in the company. For any further information or queries regarding our company, please feel free to reach out to SGA or us at any time. Thank you so much for joining, and have a good day. This brings the conference to an end. On behalf of Pitti Engineering Ltd, we thank you all for joining us. You may now disconnect your lines. Thank you.