Ladies and gentlemen, good day and welcome to the Q3 and nine-m onth FY 2025 Earnings Conference Call of Happy Forgings 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 of the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on a touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Ashish Garg, Managing Director from Happy Forgings Ltd. Thank you, and over to you, sir. Thank you. Good morning and a very warm welcome to all of you to Happy Forgings Ltd. Quarter 3 FY 2025 earnings call. With me, I have Mr. Pankaj Kumar Goyal, CFO of the company, and Strategic Growth Advisors, our Investor Relations advisors. I trust everyone has had the chance to review our financial statements and investor presentations for Quarter 3 and 9-month FY 2025, which we have filed with the exchanges. Let me start by outlining the key highlights for 9-month FY 2025. We achieved growth in absolute revenue, EBITDA, and PAT despite persistent challenges across the key industrial sectors. Our strategic focus on diversification and profitable new business initiatives enabled us to outperform broader market trends. For 9-month FY 2025, the domestic business, which contributes 81% of the revenues, grew by 7% year-over-year, and direct exports, which contributes 19% of the revenues, grew by 4% year-over-year. Average realizations improved by 4% and volumes increased by 1.5%. Revenues, EBITDA, and PAT grew by 5.5%, 8.2%, and 14.3% year-over-year, respectively. The aforementioned growth figures have been adjusted to account for the impact of higher realization from a single export order at the segmental level. For the 9-month period, we observed. Sorry, sir. Also, can you repeat your last line? Your voice broke for a few seconds. At the segmental level, for the 9-month period, we observed growth in both volume and realization for machined components, with volume growth being particularly strong in the crankshaft segment. On a geographical level, our domestic sales growth was primarily driven by a significant improvement in realization, while in the export segment, realizations remained stable, and volume growth contributed to overall segment expansion. Talking about segmental performance, the domestic CV sectors saw muted growth due to delays in fund releases and slower financing approval. Industry data indicates a 7% year-over-year decline in the medium and heavy truck segment for the 9-month FY 2025 period. However, with infrastructure activity gaining momentum, we anticipate a gradual recovery in Quarter 4, supported by government incentives. For international markets, S&P Mobility Projects had a 10%-15% decline in heavy-duty truck sales, both in EU and North American markets for the calendar year 2024. Leading OEMs have also reported a 9% drop in truck deliveries for the nine-month calendar year FY 2024 period. Despite this, our sales in the CV segment have seen a marginal decline at a rate that is significantly lower when compared to a drop of 7%-8% in the domestic and a 10%-15% drop in the export sector, with domestic sales holding steady and export-dependent sales declining less sharply than the broader EU and North American markets. Domestic CV production in Q3 positioning us for sustained growth while maintaining strong CV volumes. On the farm equipment front, we are witnessing promising signs of recovery, with OEM sales data and production sales volume indicating a positive growth. Our farm equipment sales in the domestic segment were better than the growth production for the industry in the nine-month period, while there was some decline in the export and export-dependent sales as the farm equipment industry is witnessing a significant degrowth in EU and North American markets. In recent client additions, we believe that we are well-positioned to capture growth when the market. Just to interrupt, you say your voice is breaking at times. We are unable to hear you. I'll call you on your backup number. Okay. Thank you, sir. Ladies and gentlemen, please hold the line while I reconnect the management. Thank you. Ladies and gentlemen, thank you for patiently holding. The line for the management has been reconnected. Over to you, sir. On the farm equipment front, we are witnessing promising signs of recovery, with OEM sales data and production and sales volume indicating a positive growth. Our farm equipment sales in the domestic segment were better than the growth production for the industry in the nine-month period, while there was some decline in export and export-dependent sales as the farm equipment industry is witnessing a significant degrowth in EU and North American markets. Given our strong relationship with key OEMs and recent client additions, we believe that we are well-positioned to capture growth when the market regains momentum. Our industrial business segment has witnessed a significant growth on a year-over-year basis, and its share has now increased from 11% to 14% in nine-month FY 2025 in overall revenues. As highlighted earlier, this segment is high margin, high ROC contributor, and our conscious approach to scale this business has helped us de-risk ourselves from the volatility of other business segments. We have seen growth in our sales for most of our clients in this segment on a year-over-year basis, and some of these client relationships onboarded in the last few years have a significant potential for growth for us going forward as well. In the off-highway segment, the industry continues to face significant headwinds in export markets, with double-digit decline, which has affected our sales in the segment, which show a mid-single-digit decline over the previous year. While we have been able to maintain market share here, we believe that as OEM sales bounce back, there will be a significant demand coming in. Passenger vehicles now contribute 4% of the total sales. This segment remains a positive promising avenue for future growth. In December 2024, we received one more order for a leading Indian OEM valued at approximately INR 140 crore, for which the deliveries are scheduled to begin in FY 2026. We are expecting INR 30-INR 50 crore of peak annual revenue from this order win. The deliveries of e-axle components for North American clients have also commenced during this quarter. We remain confident that the segment will account for 8%-10% of our overall revenues in the next few years. We are excited to share our significant INR 650 crore CapEx investment to establish state-of-the-art forging capabilities in heavyweight component segment, focusing on large crankshafts, axles, gears, oil and gas valves, and other precision machined components. This new facility will be the first of its kind in Asia and the second largest globally, catering to high-potential markets like power generation, marine, mining, oil and gas, wind energy, and specialized segments such as aerospace and defense. The total expenditure will spread across two to three years, funded primarily through internal approvals and partially through debt, with production expected to begin in FY 2027. This strategic investment positions HFL at the forefront of the global supply chain of high-weight components, expanding our capabilities and enhancing profitability while strengthening our export footprint. Looking ahead, we remain focused on scaling our business, expanding volume share, and exploring new product launches and geographic diversification. I would like to hand over the call to Mr. Pankaj Goel, our CFO of the company. Hi, good morning, everyone. I would like to walk you through the financial performance of the company. So I'll start with the quarterly numbers. Revenue for Q3 FY 2025 stood at INR 350 crore, a growth of 3.6% despite a decline in steel prices, which affected revenue growth. Our realization improved by approximately 4%. EBITDA for Q3 FY 2025 was INR 101 crore, representing a growth of 6.6% year-over-year. EBITDA margin for Q3 FY 2025 stood at 28.6%. Profit after tax for Q3 FY 2025 was INR 65 crore, translating to a PAT margin of 18.2%. Now, I'll come to the nine-month number. As you may recall, the nine-month FY 2024 financials were previously favorably impacted by higher realizations due to air freight cost recovery from one of our specific orders, which contributed approximately INR 13 crore to revenue, INR 9 crore to EBITDA, and INR 7 crore to PAT during that period last year. 9-m onth FY 2025 current financials were favorably impacted by higher other income due to a non-recurring income of INR 4.8 crore. This is on a post-tax basis. To enable a fair year-over-year comparison, we have provided adjusted growth metrics, excluding these one-time impacts. Revenue from 9-month FY 2025 stood at INR 1057 crore, reflecting a year-over-year growth of 5.5% for 9-m onth FY 2025 on an adjusted basis. EBITDA for 9-m onth FY 2025 stood at INR 304 crore, representing a growth of 8.2% year-over-year on an adjusted basis. EBITDA margin for 9-month FY 2025 stood at 28.8%. For the 9-month FY 2025 period, PAT stood at INR 200 crore. However, after adjusting for a non-recurring one-time income reported in Q2 FY 2025, adjusted PAT would be for 9-month FY 2025 stood at INR 195 crore. A growth of 14.3% year-over-year on an adjusted basis, with a PAT margin of 18.4% on adjusted basis. Our total finished volume for nine months FY 2025 increased by 1.5% to the tune of 42,564 metric tons. The realization per kg stood at 248 per kg, reflecting an improvement of INR 9 per kg year-over-year. This is despite softening of raw material prices during this period. We remain well-supported by a robust balance sheet, which positions us to seize growth opportunities and continue delivering value to our stakeholders. That concludes our update. The floor is now open for questions. Thank you very much. Thank you very much, sir. We will now begin with the question and answer session. Anyone who wishes to ask questions may press star and one on the touch-tone phone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use only the handset while asking your question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Abhishek Jain from AlfAccurate Advisors. Please go ahead. Thanks for the opportunity and congrats for this decent set of numbers in a tough time. Sir, my question on the export side is where you are quite positive and expecting a very strong growth over the years. But now the situation is very challenging. Other than the two issues, one is that slowdown in Europe, and second is that a lot of the concern on the tariff hike in the U.S. So if you can throw some light, what impact can be possible in the near- term on the tariff hike and slowdown of Europe, and how Indian companies will overcome from these issues? Hello. Am I audible? Yes, sir. So yes, on the export side, currently, the export share for the company is around 19% on the direct basis and around 9% on the indirect basis. We also have certain domestic sales which are going for the European market and North American market. So currently, if we see the share for the direct exports to North American market and also through our vendors, it is currently around 3%-4% of the total revenue, which is not a very significant number. But at the same time, yes, there are industry challenges being faced by European and North American CV and farm equipment sector. Farm equipment sector has seen a sequential degrowth in the last calendar year. If you see the last quarter, probably the productions were down by 37%-38%, whereas sales were hit by 27%-28% reported by some of the key farm equipment players in Europe and North American market. We expect that, yes, in the European market, recovery is due because as of now, we have been seeing a sequential dip. On the CV side, again, we have witnessed a decline of last year, where there is immense inventory correction which has happened. On the tariff side, as of now, we don't have much exposure in the North American sector. It is around 4%. But considering the testings for the new products, we are going ahead as it is. There are no changes in terms of any working because the products were developed for some of the North American clients on the PV side, and the ramp-up is expected as usual. And these testings have taken over a period of one year, and it involves current capacities which cannot be created overnight. So as of now, we don't see any threat of tariffs on the products which are going to be sourced from us in terms of North American market. I hope I'm able to answer your query. Thanks for the detailed insight, sir. Sir, what is the current tariff structure of North America and how much impact is possible on the business because of this? Yeah, as of now, it will be too early to say because things are not very clear whether it is because what we are seeing is that the imposition can happen on Mexico, Brazil, and Canada. But for India, it's still not clear what type of tariff we will be seeing. So it will be too early to actually comment on this. Okay. And how is the outlook for the industrial side? Because industrial, you are looking at very strong growth in the export market as well. And there's a significant positive. There are a few positives also there. We just wanted to understand what are the key trends in the export market and the industrial side, and what is your growth? What kind of growth are you looking forward to? Yeah, on the industrial side, we have added a large customer base in the last couple of years, four or five years, which are maturing. There is a slowdown even on the industrial side globally, but there are various segments where the company has entered. We have secured large orders from the power genset business, from some of the players, which is under execution. We have wind sector doing well, and we have certain CapEx which is done for European clients for the wind sector. So we feel that the path for the industrial sector will be very positive on the overall growth story of Happy Forgings, and we'll keep on expanding in this sector, and there are more and more developments which are ongoing in this sector because we have to create a complete range. So we should be looking at a number of, say, 18%-20% of the overall sales in the next two years. Okay. And my last question on the CV side, domestic CV, we have seen a slowdown in the last nine months. But as you mentioned that you are looking at some positive trade winds in the industry. So if you can throw some more light over there, how is the fleet utilization now, and how do you see increasing the freight and the fleet utilization in India? So on the domestic CV side, we have yet to see positive signs of recovery. Even in the domestic sales, what is happening, we have some bit of the revenues coming from the bus segment, which is kind of replacing the heavy-duty trucks and long-haulage trucks. So if you look at the part-level consumption by OEMs, part-level consumption by OEMs is certainly less than last year because bus consumes less material in comparison to the long-haulage multi-axle trucks. So over multi-axle trucks, yes, we are still seeing a slowdown, and we have yet to see signs of recovery. So I hope I have answered you. Yes, it is. Thank you, sir. That's all from my side. Thank you. Participants who wish to ask questions may press star and one now. The next question is from the line of Jinesh Gandhi from Ambit Capital. Please go ahead. Yeah. Continuing on the tariff question, so any sense on what are the existing tariffs from India to the U.S. in terms of your exports? Hello? Yes, yes, Jinesh. Good morning. Yeah, good morning. Jinesh, sir, in our exports to North American market is to the tune of 2%-3% as direct exports, and most of these sales are routed by or lifted by the Indian OEMs, where they are kind of it's kind of a deemed export. And we don't see the tariffs as of now, if we see, are not significant in terms of the working, but we'll just provide you the actual number on the tariff. For sure. Secondly, with respect to our CapEx for this non-auto side, so given that it's a totally new segment for us and very few suppliers globally, how do you think about the timeline for full ramp-up of this plant, given the customer approval timelines and the stability of the plant? You think we can fully optimize the utilization in two to three years after commencement of the plant and end of 2027? Jinesh, on the full-scale level, we expect asset turnover to be around 1.2x-1.3x. But even at 0.8x kind of a utilization level, we will be able to generate high-level ROCE of 30% as revenues will be over INR 500 a kg. And there are certain orders which are in discussion, large orders in this sector, where the sampling needs to be done in early 2027, and the testing period will be around five-six months. Doing the sampling as these single orders are large, we expect to touch around 0.5x-0.6x kind of asset turnover on these in two years' timeframe, and around 0.8x kind of asset turnover in three years is what we are targeting on this. So it will take at least three years to reach 0.8x utilization. It will take at least 0.8x is what we are expecting, but this can happen even faster because the discussions are ongoing, and we have recently announced this. So we'll have more clarity over it in the next one or two quarters. Right. Right. Right. And any update on the 14,000-ton press and the large forge for power genset, how are they ramping up? On the 14,000-ton press line, the industrial business that has gained momentum is on the 14,000-ton press line, even in this quarter over there. At the same time, we have certain CV products which have already launched, where we expect revenues to start coming from April onwards. The testing has been completed, and pilot lots have been supplied. At the same time, on the CV side as well, we have entered the development process for certain crankshaft, for which the development process is completed and ramp-up is ongoing on the CV side as well. Okay, so we'll be still at about 60% utilization for this press? Yes, approximately. Yes, 57%- 58% on 14,000-ton. Okay. Okay, and lastly, can you remind us of how should we budget for our CapEx for FY 2026, and how will our existing capacity of 27,000 tons shape up based on all the expansion which we are doing? We are looking at a CapEx of almost INR 400 crore, Jinesh, in the coming financial year, which will be including the CapEx and some advances for the heavy-duty line. The addition will be on the 10,000-ton press line and the 4,000-ton press line in terms of forging. Then similar capacities will be created in machining. Pankaj will provide a detailed working to you for this. Sure. Yeah. Yeah. I'm largely done with my questions. Thanks. Okay. Thank you. Thank you. We'll take the next question from the line of Ajox Frederick from Sundaram Asset Management Company. Please go ahead. Hi, sir. Thanks for the opportunity. Sir, can you explain or clarify the increased airfare cost? So the customer was ready to pay this higher. It was the customer's demand that's what drove this, and then we were able to bill him for it. How does it work? I mean, just some basic understanding. Yes, hi. So basically, the existing supply base got disrupted due to certain issues because of which there was an immediate change of shift in the source. And we are already suppliers to this customer in India. And basically, these airfreight costs were taken by one-off. It was kind of one- of-a- kind, and it was taken over by the customer, where this invoicing is done by us. Oh, okay. So the requirement was from the customer's side, and hence he took it up. That's how it works, right? Yes. Yes. Yes. Otherwise, we supply through ocean route only, and there is enough stock in pipelines normally to cover this. Oh, okay. Okay. Understood, sir. Very clear. Just some clarification on that. Thank you. Thank you. That's it from me. Thank you. We'll take the next question from the line of Arjun from Kotak Mahindra Asset Management. Please go ahead. Sure. Thank you for taking my question. Sir, the first question is regarding the expansion in heavyweight components. So while we mentioned the INR 650 crore CapEx, so essentially, this is the CapEx to get the plant running. And is this in phases, or this is the first phase, and if there's demand, possibly it could be larger? And what kind of tonnage essentially should one build into this CapEx, sir? Yes. Thanks, Arjun. So yes, this INR 650 crore CapEx that is planned, it includes the first phase of the forging as well as the machining lines, where approximately INR 300 crore will go on the forging setup and approximately INR 200 crore will go on the machining side and balance towards the infrastructure. So on the forging side, we will be having certain capacities available. This is the first phase of CapEx. And if we have to grow further, we have to invest on the machining side of it. So on the first phase, the CapEx that is planned can generate asset turnover of, say, around approximately 0.8x- 1x. And if we go ahead, we just need the CapEx towards the machining side of it, where we can have even further asset utilization on the hammer line. Sure. So just to understand, sir, this machining will cover what percentage of the forgings that we are looking at in phase one? It will cover approximately around 40% of the forging capacity. Sure. Sir, just on the forging line, given, like you mentioned, it is one of the largest facilities in Asia and the second largest globally. So in terms of execution, while we have done a very successful 14,000-ton plant of late, are there any execution risks, and how does one look at this in terms of technology requirements? So we will not call it as it is. It's a brand new equipment that we are buying. Plus, we have over 40 years of experience now in the forging domain. Started with the hammers. We have a long history on the hammers, where we have worked on these technologies for over four decades now. This is definitely one of the largest equipment, second largest equipment in the world, where definitely we will be needing the capability. But on that front, we are working on the organization build-up. Being a brand new equipment, we have full support from the service provider, from the manufacturer. And at the same time, in terms of the products that we have to do on this, we are already manufacturing close to 80,000 crankshafts now on a monthly basis. So we know the requirements very well, but the equipment scale is altogether very different because we will be able to do up to 1.5 tons on it, which is almost four to five times of what we are doing. So yes, definitely, it will require the skill set, but definitely, we don't see any challenges in that. Sure, so just the last bit on this. While we mentioned asset turnover of 1.0x-1.2x, essentially, this would take time, so probably by 2030, do you believe this is possible or maybe 0.8x? Yes, surely, it is achievable because some of the large orders and discussions are in hand, and the same product over here can fetch INR 100 crore-INR 150 crore of revenues. So definitely, this is something which is doable and achievable. Sure. Just to understand, you're saying the domestic market itself currently for these products is at least INR 150 crore? No, no, no. Not the domestic market. Domestic market is also quite large. And overall, on a global side as well, also, EPC is close to INR 10,000 crore of market, which is majorly being dominated by one of the significant players in the European sector, European market, which holds currently 40% of the market today. So we are targeting of the total level, if you see, around 7%-8% of the total revenue in this sector. Sure. Thank you so much for this, and wishing you all the best. Thank you. Thank you. We'll take the next question from the line of Mihir Vora from Equirus. Please go ahead. Yeah. Hi, sir. Thank you for taking my question. So my question was on the PV side. The recent order which we won in December, was it for a new customer, or it's the existing customers only? It's for the new customer, as already indicated during our last call as well. But in the domestic side, yes. Okay. In the domestic side, and sir, how is the export ramping up for the EV customers? It has already started for North America. In fact, it has started in the month of December and is kind of ramping up. Okay. But is it on the expected lines which we had, or is there some kind of a slowdown which is impacting our volumes also? It is ramping up as per the plan as of now. We don't see any issues. Plus, one of the large order wins on the PV side is expected to ramp- up in the third quarter of next financial year, for which we are also putting up CapEx that is also in line. Okay. And secondly, sir, on the new CapEx which we are doing, so basically, what would be our right to win as such? Would it be the low-cost manufacturing base which we would provide, or would it be technology and pricing both? How are we going? Can you be a little louder, and can you come once again? Sorry. Yeah. So basically, my question was that if we are competing with a global leader, say, having a 40% market share, and they would be here for a very long time, so what are we competing on? Are we competing on the costing because Europe is facing some kind of pressure in terms of costing, or what is our right to win here? One is the cost because there is a significant cost difference between the European supplier and us, and definitely, there are capacity constraints in this sector globally, so data centers currently consume around 3.5% of the total North American requirement. We expect the data consumption, the electricity consumption on data centers will be around close to double or maybe three times going forward by 2030, and you'll see a significant increase, and we are not seeing these types of capacities being created globally for these products, so definitely, there will be kind of a capacity constraint, which will be in addition to the cost. Right. Basically, so domestic also, we are seeing a lot of data center CapEx being done. So are we in talks with any domestic players as well here that going ahead, we can? Domestic as well as the global manufacturers are the same. They have plants in India as well. So if the demand for these data centers will come up in India, it will be catered by these large players only. Okay. Okay. Sure. Okay. That's all from my side. I'll get back in the queue. Thank you. Thank you. We'll take the next question from the line of Sonal Gupta from HSBC Mutual Fund. Please go ahead. Yeah. Hi. Good morning, and thanks for taking my question. Could you sort of quantify the impact of the steel price decline on the top line? Yes. Yes, Sonal. Yes. Yes. Yes, Sonal. Am I audible? Yes. Yeah. Yeah. Hi. I can hear you. Yes. It is INR 10 crore for the quarter. And around INR 34 crore for the nine months. Right. Right. Are we still seeing a decline, or I mean, these things have stabilized? I'm just trying to. At the moment, as the domestic consumption for steel is majorly affected due to the infra sector, we are still not in a phase where we can say that prices will start ramping up. Definitely, in the nine-month period, we have seen a significant inventory correction, as well as we have taken a hit on the scrap prices because for the scrap, it is kind of, it's not taken into account by OEMs while doing our working. So we have already taken a hit of almost INR 15 crore-INR 18 crore as of now in nine months. And inventory has also corrected because of the steel price correction, but as of now, we are not seeing for next one or two quarters where the steel prices will start taking the hike. It is very important for the infrastructure sector to actually start moving. Once we see some positive signs over there, I think we'll start ramping up. So I think it's a little early to actually comment on this where we can say formally that it'll start going up. Got it. Got it. Thanks, and just on the, I mean, just in terms of the near-term outlook, right. We've been stuck around, let's say, roughly INR 340 crore-INR 350 crore top line for a while now, right, since listing. So I mean, just in terms of the visibility that we have in the near term, do you see some step-up happening in the coming quarters, or I mean, or are we waiting to take a slightly longer time frame before we really start seeing some of our other orders ramping up and then we see revenue top line growth, which is much stronger? We have seen certain decline in our legacy business, which is our forging business, where there is a drop because a lot of products are being forged for some of the companies domestically, which are catering to the highway and farm equipment sector in the European market, which has seen a significant dip. In fact, some of our European CV orders have also taken a hit of almost 40%-45% because of the inventory correction, which is there in the pipeline. But yes, on the new business side, we are doing well. That has given a positive impact on the gross margin impact as well. And in terms of new revenues, there definitely will be some improvements that we are seeing will start happening because some of the products are matured and the capacity addition for machining has already happened. So we should be seeing a positive impact from these levels. And the certain orders in terms of our on the PV side for the North American market are expected to pick up from third quarter of next financial year, which are in line with the developments that we have done. Got it. And Ashish, I mean, just on the overall environment, I know it's a very difficult situation, especially on the industrial side and international export markets. But if you were to sort of look at it, I mean, do you see, like you said, there are some channel corrections, inventory corrections also happening. So are we closer to the bottom here, or even if things normalize and these inventory corrections sort of impacts are taken away, then we see improvement, or I mean, there's not enough clarity at this point in time to say that how things will pan out in the near term? Inventory correction has certainly happened according to us. We are not seeing further correction in terms. Inventory correction on the CV side for the last three or four months on the European side, we have been seeing even the domestic. So that is largely completed, where we are not seeing any further inventory correction taking place. That has been done. We should be seeing positive uptrend from these levels going forward quarter- on- quarter. Got it. Okay. Great. Thanks, Ashish. Thank you so much. Thank you. The next question is from the line of Mitul Shah from DAM Capital. Please go ahead. Thank you for the opportunity. Sir, I have a first question on overall manufacturing situation in North America. Sir, whatever you have done, any basic studies, right now, how much is the manufacturing base within North America and how much is outsourcing, or how they are depending on that? So even in case of tariff, as you indicated earlier, that they cannot build the capacities overnight. So just try to. I'm trying to understand the situation on this front. Yes, you are right. The automotive industry, as well as the industrial industry, takes a lot of time in terms of its testing requirements. It cannot be done. These cannot be done overnight because it's a long process. Plus, the capacities one is on the testing, but plus the capacities are not available in North America to cater to such kind of requirements because a lot of requirements are being catered from Mexico for the North American range. And it's not something that can be done overnight. And definitely, it will have impact, but to what levels and whether I think that India will still be competitive enough to cater to these requirements if the tariffs are not big enough. So currently, we are not worried because some of the capacities, even for the large shaft business, are not available in the North American market. These are being catered currently from the European sector, where the cost implication is currently, if you compare with India, is quite big. Okay. But we don't have any ballpark number in terms of how much the local manufacturing out of overall forging requirements. We don't have a number right now, but it is very less because we see a lot of products going out, not coming from the U.S. right now. A lot of capacities have died out in the U.S. market for forging and casting in the last couple of years. Yeah, so that's what we are hearing in the last 10 years. Maximum is shifted outside of the outsourcing model. Yes. The second question, sir, we highlighted we have roughly 3% direct export to North America. Any indirect through Mexico or any other geographies where we are supplying to tier one in those countries and they are supplying to North America? Any indirect number? No. The 3% also includes the indirect number. But yes, it's not happening through Mexico. Okay, so last question on this new capacity, that INR 650 crore CapEx. Out of next year's INR 400 crore, how much would be towards that, and how much would be the routine CapEx? And secondly, on the same, it seems it is entirely non-auto side for such a large-sized component. Is there any auto possibility to supply to the auto segments also within that? And in this, whatever we have right now, we are carrying out advanced discussion with a few clients. Are they from the domestic side or export side, or which segments within non-auto? Can you provide any more detail on this? It's majorly for the export requirements, which are in discussions, and we are in very close discussions to actually formulate into a business. I think the next one or two quarters, we'll probably have more clarity over it, but definitely, automotive cannot be ruled out on these product lines, but these are highly fungible lines where we can forge within non-auto. We can forge very large components starting from 250-300 kg. We can go up to two-three tons. Sir, and at this 30%-40% utilization in initial one or two years, what could be the margin differential compared to the current blended margin? May not be the exact number, but what could be the ballpark difference generally these types of businesses have? Roughly, this will go upwards of INR 500 a kg and with very high in terms of gross margin, and initially, we'll have certain costs involved with it with the ramp-up, but definitely, it will stabilize over 30% kind of EBITDA margin. Definitely, it will support that because the gross margin requirement is very strong. It will be upwards of 35%. Sir, on that, out of INR 400 crore, how much would be towards that new and how much routine CapEx? Or how much would be the balanced CapEx will come in FY 2027 from that INR 650 crore? Routine CapEx is very less. Around INR 30 crore-INR 40 crore is the routine CapEx, and balance is towards these large new equipments. Can we assume out of 650, more than 50% would be spent in FY 2026 itself? So remaining will be in FY 2027. Is it like that? Yes. Yes. Thanks, sir, and all the best. Thank you. The next question is from the line of Vivek from Avendus Spark. Please go ahead. Yeah. Hi, sir. Good morning. As I understand from the last question, that 3% of the sales is to North America. So I just want to understand what kind of tariff or what kind of tariffs will actually lead to the uncompetitiveness from India to North America for the forging components? Sir, currently, there are two things. As Mitul also said, currently, the capacities are not available in the North American market. And these types of capacities cannot be created overnight. It cannot be created overnight. The cost impact between US and the manufacturing, the supplies which are happening from India or from China or from Brazil, the differential in that is quite big. The differential is between 20%-30%. So it's not that easy to create a setup and start manufacturing. So this will not have the overnight impact for sure. And also, OEMs will take a lot of time. If you look at some of the players in the North American sector, where they are already working in the forging domain, are going through tough conditions right now. So even at the current price levels, at what they are supplying, they are not able to make money. For the new capacities to come in, we don't see something which can happen overnight. We don't see kind of an immediate threat to any of the businesses because capacities cannot be created overnight. There are testing timelines. Plus, there are cost impacts. Even at, say, 20%-25% levels, we don't see that there is a threat to the business. Okay. Thank you, sir. Thank you. The next question is from the line of Khush Nahar from Electrum PMS. Please go ahead. Sir, thank you for the opportunity. Just one question. Can you elaborate more on the type of new products we are working on? And are we still pursuing the bearing ring segment that you were targeting before? Can you go on once again? So I just wanted to say, can you elaborate more on the new products that we are developing as of now across the segment? And are we still pursuing the bearing ring segment that we thought of entering before? Definitely, we are on the new product development side. We have certain launches for the small crankshaft sector, which is for the portable gensets and the power generation sector, which is a new product for us. We were not doing less than 10 kg. We have, again, developing some of the components for the very heavy axle programs for European markets, which are largely for industrial usage for material handling systems and for large excavator and mining sector, which are in development right now, which will help us in expanding our footprint in terms of industrial businesses. And on the passenger car segment, we are exploring more components towards the lightweighting technologies. On the CV side, the front axle beam is one product which is launched and currently at a very nascent stage where we are kind of supplying the pilot lots. So these are on the development side. We also have plans to bring in the ring-rolling line, which can cater to the bearing space as well. But as of now, we are not in discussions. We have not formalized or won the business on the bearing side. Okay. Thank you. Thank you. The next question is from the line of Sahil Sanghvi from Monarch Networth Capital. Please go ahead. Yeah. Hi, good morning. Thank you for the opportunity. I just wanted to understand, is there any progress on the Jammu machining capacity and any timelines and a bit more understanding on the tax incentives? On the machining capacity, the plan was to touch 62,000 tons by end of Quarter 4, and we are in line with those CapEx. So the Jammu plan. Still? Further, even for next year, we're formulating our clarity on the machining CapEx, which will be provided in the next quarter. But for this year, the planned CapEx on the machining side is very much in line. Got it. Got it. Thank you. Thank you. Thank you. The next question is from the line of Manish Goyal from Thinqwise Wealth Managers. Please go ahead. Yes. Thank you so much, sir. Sir, a couple of questions. One on the new businesses, what we have been securing in both industrials as well as passenger vehicles. So would it be possible to give us a perspective as to what kind of visibility we have in terms of volumes for FY 2026 and FY 2027? Just to get a perspective that what can be the incremental revenue growth coming in from new businesses apart from the organic growth we see from the existing customers. That was my first question. Second question is on the industrial. So you did mention that we expect 18%-20% revenue contribution. Probably by when do you think you will reach that? And what will it mean in terms of volume tonnage when we reach that? And does this include the new facility for the large forging equipment, large equipment, or that will be the incremental what we would get? These are two sets of questions. So I'll take your second question first. So industrial business, that's what we are targeting, 18%-20% will come in the next two years. In terms of tonnage, Pankaj can provide you the data for this, which will take some time. And these are majorly for the exports. And this 18%-20% kind of revenue that we are discussing about is not considering it's excluding the new CapEx that we have announced because new CapEx will be largely catering towards the industrial sector. So this is excluding that. If we start ramping up on that, then this certainly 18%-20% will definitely look beyond 30% in the next four to five years. I hope I'm able to answer you on this question. Yeah, and can you probably give us some indication that if you probably reach 20% industrial, what would be the volume tonnage and what would be the average realization? I think Pankaj will be able to provide this data in terms of segmental number on tonnage as well as realization. Sure, sir. And sir, yeah, please go ahead, Mr. Goyal. And sir, can you also probably reply to the first question? What is the visibility you have in terms of volume contribution, incremental growth coming from the new businesses which you have secured across your business segments? Yes. On the industrials, the realization I've just said is around 300-plus, which will continue to be maintained between INR 300-INR 350 a kg on the industrial side. And in terms of the volume metrics, as we have been discussing, see, we have certain forge businesses, forge and semi-machined businesses also taken in the business. We should be looking at, in the next coming year, between 10%-12% kind of a growth for next two years in terms of volumes. But on terms of realization, we should be seeing a better growth. Mr. Goyal, do you want to answer your question? Yes. Thank you. Fine. Thank you. I'll take it off. Thank you, sir. Thank you. Ladies and gentlemen, as there are no further questions, I would now like to hand the conference over to Mr. Ashish Garg for closing comments. Over to you, sir. Thank you, everyone. To conclude, we are confident that our investments in innovation capacity and customer partnership will drive sustained growth and value creation. With this, I would like to thank everyone for joining on the call. I hope we have been able to address all your queries. For any further information, kindly get in touch with Strategic Growth Advisors or Investor Relations advisors. Thank you. Thank you, members of the management. Ladies and gentlemen, on behalf of Happy Forgings Limited, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.