Ladies and gentlemen, good day and welcome to Raymond Limited's Q2 FY 2026 and H1 FY 2026 earnings conference call hosted by Antique Stock Broking Limited. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need any assistance during the conference call, please signal an operator by pressing R then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sanjeev Zarbade from Antique Stock Broking Limited. Thank you and over to you, sir. Thank you. For Antique Stock Broking, I would like to welcome all the participants in the Q2 FY 2026 and H1 FY 2026 conference call of Raymond Limited. Today, we have with us from the Senior Management of Raymond Limited, Mr. Amit Agarwal, Group CFO, Mr. Gautam Maini, Managing Director, Engineering Business, Mr. Navin Sharma, CFO, Engineering Business, Mr. Jatin Khanna, Head, Corporate Development, and Mr. Sunny Desa, Head, Investor Relations. Without taking further time, I would like to hand over the call to Mr. Gautam Maini. Over to you, Gautam. Thank you, Sanjeev. Good evening, everyone. Thank you for joining us today for our Q2 FY 2026 and H1 FY 2026 results conference call. On behalf of the entire management team, I would like to take a moment to wish you all a very happy Diwali and a prosperous New Year. May the festival of lights bring you and your families great health, happiness, and prosperity. I hope everyone has had the opportunity to go through our financial results and investor presentations, which have been uploaded on the stock exchanges, as well as on the company's website. Let me start by talking about the broader macroeconomic landscape that has influenced our performance and strategic decisions. India's economy maintained its growth momentum in Q2 FY 2026, with the GDP now projected to reach 6.8% for the full fiscal year, supported by resilient domestic demand and structural policy reforms. The Manufacturing Purchasing Managers Index (PMI) averaged approximately 58.7 during the quarter, reflecting strong industrial activity and resilient demand conditions. The Indian Auto industry demonstrated a multifaceted performance in Q2 FY 2026, with stable domestic activity in most categories being complemented by a moderate surge in international shipments due to U.S. tariff impacts. The domestic market, which gained momentum in September with the early festive season and favorable GST 2.0 reforms, saw healthy growth in the two-wheeler segment, 5.56 million units, which is a 7.4% growth. The commercial vehicle segment showed 2.4 lakh units with an 8.3% growth and a record-breaking quarter for three-wheelers, 2.29 lakh units with a 9.8% growth, while passenger vehicles remained tentatively flat at 10.4 lakh units with approximately 1.5% growth. This domestic performance was bolstered by a powerful export engine, as total made-in-India shipments climbed 26.2% to a new high of 16.85 lakh units. This international success was broad-based, highlighted by a 23% rise in passenger vehicle exports, 2.24 lakh units, and a 68.4% jump in three-wheeler exports, driven by robust demand from key markets in Africa, Latin America, and the ASEAN region. Across global markets, the automotive sector continues to exhibit caution, with muted demand in both passenger and commercial vehicle segments. Additionally, the escalating tariffs in the U.S. are creating new challenges, particularly for Indian exporters of drivetrain and structural components. The Aerospace sector continued its momentum in Q2 FY 2026, driven by defense-related demand and continued localization efforts. The union budget allocation of INR 6.81 lakh crore for defense, including INR 48,614 crore for aircraft and aero engines, supported new orders and supplier engagement. Inflationary pressures were modest but evident in titanium and select aluminum alloys. Geopolitical tensions in Russia, Ukraine, and the Middle East created localized uncertainty, though core aircraft manufacturing remained steady. India-U.S. tariff friction remains a temporary headwind for exports. Global OEM activity remained robust. Airbus delivered 507 aircraft and Boeing 440 during the quarter, both reflecting recovery and easing supply bottlenecks. Indian suppliers benefited, as OEMs diversified sourcing towards India to mitigate Western capacity constraints. Export demand from the U.S. and Europe remained steady, although elevated tariffs on Indian components added complexity and delayed some shipments. Consolidated performance. Raymond Limited continued its growth momentum, delivering a steady quarterly performance, reporting a total income of INR 564 crore, reflecting a 10% increase compared to the same quarter of the previous financial year. EBITDA stood at INR 79 crore with an EBITDA margin of 14.1% in Q2 of FY 2026 versus a total income of INR 512 crore in Q2 of FY 2025, delivering an EBITDA of INR 77 crore with an EBITDA margin of 15.1% in Q2 of FY 2025. H1 performance. Total income stood at INR 1,119 crore in H1 of FY 2026, which is 11% year-on-year growth from INR 1,011 crore in H1 of FY 2025. EBITDA stood at INR 167 crore compared to INR 172 crore in H1 FY 2025. The EBITDA margin stood at 14.9% in H1 FY 2026 versus 17% in H1 FY 2025. The steady financial performance was driven by the Aerospace & Defence and Precision Technology & Auto Components segments, reflecting a major positive shift in the Indian supply chain. Indian suppliers are successfully moving up the value chain from simple assemblies to producing highly complex precision machine components and subsystems, leading to a surge in order intake for both Tier 1 and Tier 2 vendors for export business. The EBITDA margin compression was largely driven by a decline in other income. Going forward, we continue to remain optimistic about the future growth trajectory, given our expansion strategy in new product categories and new geographies. Let's go to the segmental performance. The Aerospace business, which is JK Maini Global Aerospace Limited. At the segment level, the Aerospace & Defense business reported steady performance with revenue of INR 81 crores, which has a 15% year-on-year growth, and an EBITDA of INR 17 crores, which is a 34% year-on-year growth, with an EBITDA margin of 21% in Q2 of FY 2026 versus a revenue of INR 70 crores with an EBITDA of INR 13 crores and an EBITDA margin of 18% in Q2 FY 2025. In H1 FY 2026, this segment generated INR 168 crores in revenue, which is a 26% year-on-year growth from INR 134 crores in H1 FY 2025. EBITDA also grew by 32% year-on-year, reaching INR 38 crores compared to INR 29 crores in H1 FY 2025. The EBITDA margin stood at 22.4% in H1 FY 2026 versus 21.4% in H1 FY 2025. This performance was fueled by a significant year-on-year rise, supported by the production ramp-up at a leading Aerospace OEM and revenue contribution from newly developed and approved parts that entered production this year, strengthening the overall top line. The EBITDA margins improved on the back of higher sales volumes. We continue to witness growth fueled by rising interest from prospective clients and requests for quotations and a growing pipeline of collaborative and strategic opportunities. Certification delays at global OEMs and tariff-related trade tensions with the U.S. posed operational challenges, while alloy and logistics cost volatility added margin pressure. Despite these headwinds, India's positioning as a reliable precision machining and manufacturing hub continued to strengthen. During the quarter, we achieved several strategic milestones that strengthened our Aerospace & Defense capabilities. We successfully onboarded key global customers, reinforcing our international footprint. The completion of audit compliance by one of our major OEMs marks a significant quality benchmark, while the installation of critical machinery has enhanced our in-house manufacturing capacity. Additionally, positive FAIR approvals for critical engine components underscore our technical competence and readiness to scale operations. Let's go to the second segment of Precision Technology & Auto Components, which is JK Maini Precision Technology Limited. At the segment level, the Precision Technology & Auto Components reported a revenue of INR 409 crores, which is a 10% year-on-year growth, with an EBITDA of INR 57 crores, which is a 57% year-on-year growth, and an EBITDA margin of 13.9% in Q2 FY 2026 versus a revenue of INR 373 crores, with an EBITDA of INR 36 crores and a margin of 9.7% in Q2 FY 2025. This steady performance was predominantly driven by robust domestic demand for both Auto Components and Tool & Hardware Components. The Auto Components segment also witnessed strong demand from hybrid products in the European markets, while the Tools & Hardware Components business did witness softness in the export markets. The EBITDA margin improvement was on account of higher sales volumes, favorable product mix, which includes a one-time gain of INR 13 crore. We continue with our strategy to expand into new international geographies and industrial sectors. We are observing business momentum across domestic and international markets, supported by a China Plus One strategy, integration synergies, and focused operational efficiencies across all segments. In H1 of FY 2026, this segment generated INR 808 crore in revenue, with an 11% year-on-year growth from INR 728 crore in H1 FY 2025. EBITDA also grew by 31% year-on-year, reaching INR 99 crore compared to INR 75 crore in H1 of FY 2025. The EBITDA margin stood at 12.3% in H1 FY 2026 versus 10.4% in H1 FY 2025. The Tools & Hardware segment maintained growth, supported by government infrastructure projects in roads and railways. While heavy monsoon slowed construction activity in July to August, momentum returned in September, driven by improved weather, festive demand in real estate, and policy support from the GST 2.0 platform reforms. Debt and cash position at Raymond Limited. We continue to remain a net debt-free business, with a net cash surplus of INR 27 crore in September 2025. The total gross debt stands at INR 972 crore and cash and cash equivalents at INR 999 crore as of September 30, 2025. Status of the operations and the outlook. Looking ahead, we see a positive momentum driven by global customer onboarding, successful audit compliance, and expanded manufacturing capabilities through advanced machinery like the GROB machine. The business is seeing increased RFQ activity, particularly in Aerospace components, supported by positive FAIR approvals and strategic investments. To meet rising international demand, the company is actively adding capacity, positioning itself to scale exports and deepen global partnerships. OEMs and Tier 1s are increasingly sourcing from India to de-risk the Western supply chains, signing multi-year strategic supplier agreements that include design and manufacturing and not just build-to-print orders. As India strengthens its role as a precision manufacturing hub, Raymond is geared for strategic business expansion and long-term global traction. Thank you again for joining our call, and we would be happy to take your questions. We may now open the line for questions. Thank you very much, sir. We will 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 remove yourself from the question queue, you may press star and two. Participants are requested to use handsets when asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Balasubramanian from Arihant Capital. Please go ahead. Good evening, sir. Thank you so much for the opportunity. Sorry for interrupting, sir. Can you please be a bit more loud? Thank you so much for the opportunity. Sir, the engineering business has been restructured into two separate subsidiaries. I just want to understand what is the long-term strategic intent for these entities, or what kind of value unlock we may expect over the next three to five years' time frame. Yeah. Basically, you know, each of these companies have different growth paths. You know, the Aerospace & Defense industry has a completely different growth path off a smaller base, and the precision engineering company, which actually supplies across eight different segments, has a different growth path. The idea was that each of them having its own unlocked value, we would like to grow each of them independently and let them both grow to their maximum abilities. This was the idea of strategically having them separate. Even the operational way of running them, the mindset, the thought process, as they will grow, will help each one of them get better results. Yeah. Thanks, Gautam. I just want, this is Amit Agarwal. I just wanted to supplement what Gautam said. You know, as a group philosophy, we are very clear in unlocking the shareholder value. You have seen the demonstrated performance when the businesses reach a certain scale and size. We find the most appropriate manner in order to keep them pure play businesses and entities. That is the exact philosophy that we are in the process of building our two engineering businesses on that path, one being the Aerospace & Defense. We all know that Aerospace & Defense, India is getting up a huge unlocking opportunity where you are seeing a tremendous growth. We are also witnessing, and you have recently heard also in terms of our plans to expand the capacity by going to Andhra Pradesh. That is one part of the story. Similarly, on the other side of the story is also on the Auto Components. India is becoming a very large auto ancillary hub with the combination of the Maini Auto Business as well as the JK Auto Business. We have been able to supply to the top 15 OEMs globally. There, we are seeing more and more products to be expanded. Both these businesses, once they achieve a certain scale, they will eventually go on the basis of unlocking the value as the group has been demonstrating over the last five years. Okay, sir. Sir, around 15% of Auto business is coming from hybrid and EV pipeline, are also remaining strong. What is the target for EV or hybrid as a percentage of JK Maini Precision Technology's revenue in the next three years? For three-wheeler transmission parts in India, who are the major key OEM customers? What is your market share target? Basically, you know, we have grown this business quite significantly. It's roughly at 15%. Rather than giving you an exact number, I think the philosophy for us is that we've developed some very critical parts for the hybrid market, which we read, you know, in Europe. If you saw two or three years ago, everybody was talking about EV. We believe that more than EV, the hybrid market will grow faster because there is a huge charging infrastructure issue in Europe. All countries then mutually agreed to extend that. I believe it will be extended again. That gave us the ability to look into hybrid. Now that we are there with a very large customer, we will now horizontally deploy to other customers. It takes time, but we believe that we will, having gained the experience over the last two years, we are in an extremely strong position to go to several OEMs across the globe to increase our hybrid business, especially in Europe. Okay, sir. I think, sir, we are expanding the business rapidly. I think this Aerospace & Defense are like capital-intensive. What is the expected trajectory for working capital as a percentage of sales? Are we facing any pressure from longer renewable cycles from global OEMs? How are these working capital things managed? There are several combinations to this. Number one is we've started to reach a scale where we have lots of part numbers with similar materials. We have very good supply contracts with the supply chain because we can leverage that relationship. We are in a good position, I would say, in terms of coordinating with different raw material sources across the world. We are in touch with more than 14 different mills across the world. All of the material today is imported in Aerospace, as you know. Yes, there is a challenge, but I think we are managing it very well. In terms of working capital, in terms of raw material, we're doing a good job there. In terms of actually finished goods, you're actually flying the parts. There's not much inventory. In fact, the Aerospace has a smaller inventory because the parts are flown and not sent by sea. Your turnaround time on that side is, in fact, much better. We are managing the situation pretty well, and we'll only get better from here. Yeah. Just to add, you see, the working capital in this business is a strength because what happens is for an aircraft, it is not like an Auto business where you are producing 50,000 or 100,000 units every day. Here, the product you produce is multiple SKUs, but they have a certain delivery schedule. What you do is, in order to optimize your production, you do the production in one go, keep it into WIP and finished goods. We are considering ourselves as a local supplier, local vendor to the European guys. Therefore, what happens in certain cases in automotive, you have to keep vendor-managed inventory at the warehouses, but this is our own inventory. Actually, the working capital in this business gives you more connection, more binding with the customers in Europe and America. I think that is something which we want to continue. We are very clear in this business. There is a certain working capital which will be, compared to other kinds of businesses, higher. Truly, it is a strength rather than a working capital blockage. We are very cognizant of the fact that we continue to move, maintain the inventory, the freshness of the inventory so that if something goes obsolete, we know we have to manage that. Therefore, it is a very important aspect in this business because you're dealing not one, two, three, five SKUs. You're dealing 1,200- 1,400 SKUs in a small business in Aerospace. Okay, sir. sir. Sir, my final question is, I think we are still in single-digit margins. What are the initiatives we are taking into reaching double-digit rates over the next few years? This is my final question. At an operational level, we are all in double digits. I think we'll have to separate the non-operating, and maybe Amit can explain more on that. At an operating level, as you saw, we are in double-digit margins. We are at 22.4% in the H1 for Aerospace, and we are at, if I remember correctly, about 12.2% in the automotive business. We are in double-digit growth, and we've grown the EBITDA at over 30% in both businesses from last year in the first half. We are in a good position, I would say. We should not mix that with the non-operational, which Mr. Amit will explain. No, no. I think there may be slightly a confusion. I think if I look at the quarter two numbers, we have delivered on a consolidated basis 14.1% margin. In quarter one, we had a 15.7% margin. As a business, I think all of our businesses are in that 14%, 15% range. I think that is a fair margin, which we have also given the guidance also always that we would be in that 14%, 15% market range. I think maybe there is some confusion. You might have looked at some other line items. Just to give you the perspective, which is in the 14%, 15% range. Okay, sir. Thank you. Thank you so much. Next question we have is from the line of [audio distortion]. Please go ahead. Hi, sir. Am I audible? Yes, yes, you are audible. Thank you for the opportunity. In the Aerospace business, you've sequentially grown and the margins have also come now. Can you explain that? In any business, as you're growing, your product mix keeps changing, and the way you produce will keep changing. You have to evolve. We are making new parts every day. As you go up the complexity of parts, it takes you a longer time to get the new processes in place. All of the development cost is written off. Therefore, there will always visually look as if there is a margin decline, but you're actually creating new products for the future. As you are scaling and making more and more products, that pressure will always be there. I believe that a good mix of products, which is what we have of less complex but the future products which are more complex, and you have a mixed bag across all of the engine segments, which is a very difficult and high-precision segment. We believe it is a healthy margin, and it will get better as you develop those complex products in those segments and get more and more used to it. It is a continuous learning process in this business. Like Amit was saying, it's not a one part you make of millions. Every part has to be ramped up. Then you reach a certain level, like a 35% market share or something. When you are stable, then the customer gives you a 65% market share. When you move from 35% to 65%, that's the time where your margin will also improve. This is happening, you can imagine, continuously over 200 parts, new parts every year. It's a very complex situation, but I can assure you that the direction is absolutely in the right way. I think the learning curve towards high-complex parts is on track. Okay. Just to add, I think, again, maybe there is somehow, maybe our presentation is such, maybe there is a slight confusion. If I look at the Aerospace quarter two, last year to quarter two of this year, we had last year 18% EBITDA margin, and it has moved up to 21%. Similarly, in the first half, which was 21.4%, has moved up to 22.4%. Maybe there is some confusion. I think the way it has been read out or such things because what we have very clearly, we are focused on, if you see the revenue growth is going to deliver the optimization of the capacity, is going to help us. Operating leverage kicks in and is going to help you in the EBITDA increase. I see. It's correct, sir. I wanted to understand the Q-o- Q decline, and also the sales Q-o- Q decline. Quarter on quarter, it's there in the results. Yeah, yeah. Quarter one, quarter two, because again, the way he explained, Gautam and myself also, what happens because you have different products, different customer segments, and you will not exactly see month-to-month same supplies because some aircraft supply component which we have supplied in the month of May may not happen exactly in the month of July again. It may happen something goes in May may not be going till September, October. Therefore, what happens is every component customer will have a different supply mechanics. You would see some products because you will never have same margin for every product. Some margin you will have very high, some margin you will have some products you will have lower margins. Therefore, it is a basket. Our whole focus is to see that on a broad basis, at a decent level, in that range of 22%- 25%, we have been targeting to go out and deliver the margin on a consistent long-term basis in the Aerospace segment. Understood, sir. Can you give your Aerospace portfolio breakup of, let's say, products with 35% market share, below 35%, and products that have reached 65%? Let me take that. You see, you have to understand how the Aerospace industry works. It's very rare that you get 100% market share of any product, especially when you talk about the engine segment where we are more than 70% present, which is a very complex and critical segment. Generally, the customer would give you a 35% market share. Once you prove yourself, you stabilize your product, the customer is very happy with your product, and you're competitive in the market in terms of quality, price, and delivery, they then negotiate a 65% market share. The 65% could be 70% or 60%, the 35% could be 30% or 40%. That's a reference point. The idea of companies to grow would be to make sure that you do a good job so that ultimately you can reach a much higher market share, which is when all of the margins start to improve. For each part, this could be a two to five-year process because the market shares could have already been given to somebody else. Even if you're very good, you'll have to still wait till that contract ends with that customer relationship with your competitive supplier. This is a long-term business. Over 20 years, we have understood this business and how to grow it and how to increase with the market shares. That's how this explanation is. It's not in your hands fully. You can do a good job, and you can keep everything ready. When there's an opportunity, then the customer will increase your market share. Our job is to make sure that we execute well, we do a good job, and when the time comes, we can take the additional market share. Okay. Understood. In the Precision business, your segmental EBIT that you've reported in results has gone up quarter on quarter from 5.7% to 9%. Your EBITDA margin quarter on quarter is flattish or 100 basis points down, 200 basis points down. I wanted to understand that as well. Yeah, because. Navin, can you take that? Because very simple, now that this is there, we had mentioned there was a one-time gain on account of certain land which we were there, additional land which we have been able to sell. That gain has contributed some INR 13 crore. Therefore, the margin you would see is reflective in the Precision business. Got it. Understood, sir. Also, this business of job processing and non-scheduled airline operations, I see it as losing money at a run rate of INR 1 crore or INR 2 crore a quarter. I want to understand how to look at that business. You see, we have a small helicopter in the company, which is being rented out or chartered. Some quarters you get some charter, some quarters you don't get charter. It is primarily used for running the business. That is one where you will have a small loss here and there. I think broadly over the years it goes through, and it is not such a large cost. Got it, sir. How should we look at it going forward? Like, it stays in this range or? Yeah, it will stay in this range. Okay. Understood. Yeah, that's all from my end. Thank you so much. Next question is from the line of Guru Darshan from Kitara Capital. Please go ahead. Am I audible? Yes, sir. Please go ahead. Yes. Thank you for the opportunity. Sir, as I understand, you're among the leading players in engine components. Who would you consider your key competitors in India for your current product range? Let's take a long-term strategy. Five years down the line, what would be your strategy to move up the value chain from being a precision machine company? Let me answer one by one. First of all, I think, you know, we've had a head start over everybody. We started 21 years ago, and most of the other companies started much later. In this business, the entry barriers are very high. It takes a long time for you to get the confidence of the big OEMs to know that you can supply engine parts globally that fly on aircraft. To that sense, we've had a huge head start on everybody else in this country. Secondly, we have always followed the policy of a horizontal situation where we've developed capability across materials, across processes, across machines. You know, and having that experience for more than 52 years in our precision machining business has created a massive foundation for us to be ahead of the curve. Unlike many other companies that go vertical, like many of our competitors are in one or two segments, we are in maybe 50 or 60 segments across the engines, you know, families. Therefore, our ability to be more flexible, to grow at a faster pace, or also to match complex parts with less complex parts because the cycle times and the turnaround times are different. For instance, if you take a simple part, sometimes in the engine, we can turn it around in three to four months, whereas a medium complex part could take six to eight months, maybe even 10 months. A complex part could even take one and a half to two years. It is very important that for a growing company, you must continuously churn out new parts in all of these categories so that there is a continuous growth quarter on quarter. I think we have been able to master that better than all of our competition simply because of the fact that we have been 52 years in precision machining. A lot of our precision machining, especially our exports that we did in our fuel injection sector, our engine sector, was so much ahead of what was being manufactured in India that the expertise in those manufacturing processes and those toolings, when we brought them to Aerospace, we remained ahead of the market. I would say the Aerospace business being a low volume, high mix, you needed this capability strength, which we naturally developed over 50 years. Therefore, I would say we will hope to continue to remain ahead in the market. The relationship now with most of the OEMs in the world puts us in a very good position to look at the future strategies. We are continuously evolving plans to move towards much more complex parts and complex modules in the future. We see a good overall future. The main thing is the market is available. It's an execution strategy that is very important for us to continuously go. It's a high-precision business. You have to be on top of the ball. You have to make sure that everything from your quality to your delivery is clear. Your supply chains are clear, and that will help you to execute the strategy. Okay. Thank you. Thank you, sir. I just have a question regarding debt and cash position on the balance sheet. Could you elaborate how these funds are planned to be utilized or deployed in terms of, you know, debt repayment, CapEx, or overcapture? There are two parts of cash in the balance sheet. One is at Raymond Limited, and one is at the engineering business. From the cash flow generations of the business in the engineering business, we will definitely deploy it into the growth CapEx, which you know that we are envisaging a big growth in this business. Therefore, that will be deployed. As far as the cash, which is lying in Raymond Limited, obviously, the purpose, you know, I don't know how much you're aware that the whole reorganization was done. We sold our FMCG business and so on and so forth. The idea was to evaluate the opportunities and see when there is some good opportunity available, either to invest into the business directly or some inorganic opportunity comes up, we will evaluate. That's the way we want to keep that cash on the Raymond balance sheet so that it could be a possibility for future organic or inorganic growth in any of the businesses. All right. Thank you so much, sir, and all the best. Thank you very much. We have next question from the line of Darshan Jhaveri from Crown Capital. Please go ahead. Hello. Good evening, sir. Thank you so much for taking the question. Firstly, congratulations on a good set of results, sir. I just wanted to know or get a sense of, like you were saying, that our Aerospace business, we are investing in the high complex parts, which can maybe pay dividends later on. Currently, our range out there is 20%- 25%. Can we go further in this because we are going to go for higher complex parts? I also wanted to know, any new opportunity in Aerospace that we are looking at, where we are on the cusp of getting some new certification and orders, or that business can also start growing faster. There are a lot of tailwinds in the industry. I wanted to get your sense on that, sir. There is a huge pipeline of business that we have. We have to continuously maintain a pipeline of new business that we need to quote for. Plus, we have a huge pipeline of what we call FAI in this industry, which is a First Article Inspection, which means a new product development based on the customer's drawing. We have very healthy pipelines on both of them. It's very important, like I said earlier, to have a good mix and not only in one direction. The reason is when you have very complex products, you also need to have more expensive machines to make those products. There, the EBITDA can be higher, but you'll need to end up with a lower ROCE. It is very important for a company like ours to make sure that we have the right mix, the right balance. As we grow up the value chain, we make sure that that balance and mix continues to be there to optimize both the EBITDA and the ROCE. Amit, if you want to add something, then please feel free. No, I think that's fine. That's absolutely fine. Okay. Fair enough, sir. Just want to know, in terms of our vision for Aerospace, where do you see it in the next two years? Can we cross INR 500 crore annually in this business, or how do you see, sir, this growth for Aerospace? I would not like to commit on a number. Rather, I would say that the opportunities are tremendous. The market is very large. We've talked about backlogs in both Airbus and Boeing, which ultimately drive the business. We've seen Boeing do very well. We have a lot of parts on different aircraft, both by Airbus and Boeing. It puts us in a very strong position. It is up to us to put our execution together. We believe that over the last year, we've put good teams together. We've continuously enhanced our systems and our processes. Our baselines are very good. We will execute. Obviously, I would not like to commit on a particular number, but I think we see healthy growth in the business over the next many years. Okay. Fair enough. I have one more question. Can I ask that, sir? Hello? Sure, go ahead. Yeah, yeah. Just from my understanding of big news in the business, how does the order book in this work? I don't think we mentioned the order book or the pipeline. How do we understand that, sir? If you could help us get to what is our order book, what's the big pipeline, and any kind of execution that we're planning for this year or next year, that would be really helpful, sir. If you look at the order book, most of the order book in our businesses run with a five-year contract in Aerospace business in general. Therefore, if you say on an average, if each contract is coming up on an average every fifth year, right? 20% every year. You would end up having that kind of an order book. The schedules could change a little bit up and down where the customers give you huge visibility on what to procure. The long-term contract helps you to make sure that you buy raw materials. Certain raw materials have lead times of up to two years. Therefore, this whole business of Aerospace is a very long-term business. Also, since all of the OEMs run with huge backlogs, and the design changes are minimal, this business is very different from the rest. The visibility, the long-term order books, the pipelines are all very healthy and in multiples of years. Okay. Can we quantify what's our current order book and what's the pipeline if we could do that, sir? It's not an easy question to answer. If you want to have an understanding of the order book, typically, if you have a five-year order book on your orders and let's say you have an average of the revenue that you look at today, you would end up with an order book of close to 2.5x, 3x what you have on a yearly basis. That would be approximately a good way to see your order book position, which is more or less confirmed. You have a pipeline. We make almost one new part every day, so we have a pipeline of about 150 new parts in the pipeline just on new product development. We have another 2,000 drawings or part numbers in RFQ that we have to quote to customers and negotiate with them to convert to business. We have to manage all of these pipelines in a healthy manner to ensure that we take the right businesses. We don't just go after any business, and we have a good product mix, like I said, to improve EBITDA and ROCE over a period of time. That helps me a lot. Thank you so much. All the best. Thank you. Thank you. We have next question from Pranjal Mukhija from GrowthSphere Ventures. Please go ahead. Yeah, am I audible? Yes, sir. Please go ahead. Yes. Thank you for giving me this opportunity. I have a couple of questions. Just following up on the previous participant's question on how we're imagining the Aerospace business to be. It's on similar lines, sir. I just wanted to understand how are we seeing this business three, four, five years out in terms of our facility, like to what it is right now and what we're imagining it to be in maybe three, four years out. In terms of customer, I just wanted to understand, given that we recently started, tied up with an American-based engine OEM, how does the ramp up look like here and how does the ramp down happen on the alternate suppliers? I just wanted to understand, from a capability point of view, how does the business look like maybe three, four years out? Like I said, we are continuously enhancing capability on a continuous basis. It's not like in any other plants where you do one capability and you wait for years, right? Here we are making a new part every day. You can imagine we are enhancing capability on a daily basis. For each kind of project or process, we handle about 110 different grades of material, which is very highly complex, right? When you handle materials like titanium, Inconel, super alloys, these are very difficult to machine materials. You have developed over the last 20, 21 years a huge amount of internal knowledge and capability on processes and on quality systems and how you inspect, check. We have five internally approved quality people from our customers, which means we make a new part, we send it on self-certification today. We have reached those levels. That's how we are able to rotate the business much faster. We have five customers with which we have self-certification. They do not check our parts, even if it's the first time. We just have to submit paperwork. They put it straight on the aircraft. That's the level of confidence that we've built over the last 20, 21 years. Now, because of that confidence having built, the customers are looking at us for far higher precision in our products. As those requirements come in, we will continuously enhance the level of investment and the level of complexity of machines that we will buy over a period of time. It's an evolving process as you encounter these. In the direction, we will definitely go up the value chain. We will go into more complex parts. We will continue to be dominant in engines, but we will also access the systems and structures part. Like we supply products to landing gears. We supply products to fuel. We supply products to hydraulics. These are also very complex parts. The idea is to have a broad band of customers, which we have over 25 customers. These 25 customers' opportunities come at different times. We should always be in a position to grow on a continuous basis, having kept this in mind. We will evolve into a much higher level, into subassemblies, into main assemblies, and hopefully into modules. That's a journey which will steadily take place over the next few years. When, like how out do we see that inflection point hitting in terms of scaling up with the customers in terms of volumes and meaningful scale-up happening on the customer's end or a particular project end? Just wanted to. I'll tell you, it's unlike automotive and our hybrid business that we talked about where we get a business and then suddenly, you know, you put lines and you grow them. Aerospace is not like that. Aerospace will grow continuously and steadily on a daily basis. If I make even one new part a day and that converts into business, you know, that will have to ramp up to a 35%. You wait for two, three years, depending on when the opportunity comes. That goes to 65%. We are talking about volumes that are mostly sub- 1,000, right? It is not like an automotive business here. It's very steady. You aim to do a good job, get the maximum market share, and keep improving your processes, learn from that, and go up the value chain. This is a very different kind of a business from a general automotive type of business. It's a different mindset. It's a different way to look at it. You cannot mess up on the quality, right? You have to be very sure of what you do. Right. Sir, I was just researching and I understand in the engine part, we're operating on the hot section, some of the components. I just wanted to understand how many people or players in India are working in the hot section part of the engine. I just wanted to understand, these technologies, EDM and abrasion that we're using, how tough is it for a new player to acquire these technologies and make these products? Just some clarity on that. It is very tough because, you know, like I said, there are intrinsic barriers. First, you should have a product that is complex. Then you have to decide how you're going to get the technologies. In our case, we were supported by our customers. Technology was given to us by them. It helped us to move. Even though technology was given to us on one of the very critical parts, it still took two years. That is the point I'm trying to make. This is a business where you have to have a mix of different varieties of products, varieties of customers, because each product could have a different, the more complex it is, the longer it will take to actually implement. There is no very big ramp-up that happens, because once you implement it, also the volume is going to be a much smaller volume and not like automotive. It is your ability and your speed to develop new products continuously. Right. I was just looking at our company's LinkedIn, and I think we mentioned that, you know, JK Maini Precision Technology Limited has recently tied up with CTC. Like upon doing some research, I got to know that CTC is doing some carbide cutting toolings, and I think they're specializing in micro tooling, you know, dealing with nickel and aluminum alloys, like maybe Inconel as well. I just wanted to understand, you know, the whole rationale behind this business. My follow-up with this question is because we have some history in the tooling segment, right? Are we also looking at MRO as a space, you know, to develop something there over there? Right now, we are just working together because we have experience in our Tools & Hardware division. We're trying to figure out all the synergies possible. This is exactly what we've been doing over the last period with many other items within our company, to see on one side how to add value, how to bring our knowledge of Aerospace into those tools, and how our Tools & Hardware division can then leverage this knowledge. It's a very big win-win situation and a huge synergy effort that we've put together. Similarly, we've done this in many other areas. To give you an idea, when we make a fuel pump for a customer in the automotive, we make 500,000 fuel pump bodies, which are very, very critical, and exported. Till today, nobody even makes it in India. Nobody assembles in India. That's the kind of those materials that are as difficult to machine as Inconel and titanium. Now, when you make 500,000 pieces versus maybe 1,000 pieces, you can imagine the learning curve. The learning curve we have in machining complex products of high precision, because of the export-oriented nature of our business in automotive that we've had over 50 years, has helped us to speed up all of our engine manufacturing business in the Aerospace. That's the advantage we have over the others, which is why we are probably ahead. Right. Two quick questions. I'm sorry I'm asking a lot of questions, but the second last question I had, I was just doing some research. You can correct me if I'm wrong, but is there any other player in India who's working with all three engine OEMs apart from us right now? There are more than three engine OEMs, so I believe. I mean, the main, you know, 85%- 90% of the market, these players come out. I believe we are the only one working with the range we have, but maybe your research might find otherwise because we've had a head start. To get an engine OEM approved takes a couple of years on the engine side, and we've been at it for 21 years. Obviously, we've had the head start, we've had time to work with more of them, and therefore, I believe we continue to have a lead in that area. Right. Finally, I just wanted to understand a little bit on the defense piece. This French company that we've been working with for a long time now, they've also announced plans of developing a lot of these engine technologies for maybe AMCA or, you know, they're also wanting to scale up and help India to sort of make it in India. I'm just trying to understand, would we also be a beneficiary of this because we've been working with them for a long period now? They're also seeming to scale up in India now. No, I mean, definitely. You know, all these relationships, that's what the importance is. They know how good we are. They know what kind of parts we make, you know, and therefore, it puts us in a very good, advantageous position to be in all of the programs in some form or the other. Some in a larger form, some maybe in a smaller form. In the end, we have the knowledge, we have the technology, we built the businesses, we have the relationships. Therefore, it puts us in a good position to take the right businesses for us. Now, every business may not be right. We have to choose. We are today, luckily, in a position where we can choose the businesses we want because we believe that the market is far bigger than what we can possibly deliver, even by extending all resources. Therefore, we are in a good position, and we will continue to choose the right businesses and deliver value to our shareholders. All right. If I may, one small last question. Just on the business development side, what has changed post this, you know, post Maini becoming a part of Raymond? How are we approaching customers? How are they reacting to us? What are we doing to sort of build a team on the business development side, especially to sort of approach customers? Just some color on that. We've got, before the merger, we always had the customers. We had the vision. We had the knowledge, except. Hello? Sorry. Yes, sir. Yeah, basically, sorry, I think that disturbed me a little. Basically, can you just quickly repeat that question? I just wanted to understand, like how are we, like how has our approach changed or, like, you know, what is new to our approach when we're approaching customers now on the business development side? How are we trying to win bigger pieces of the pie? Absolutely. I think Raymond brings in that huge strength, which we didn't have just as a standalone Maini. I think Maini always had the customers, the reach, had already developed the business. I would say it's a great partnership where one and one is 11, where we have the large strength. Today we can quote large businesses, we can quote strategic initiatives, and all of our customers have recognized that. We were also present at the Paris Air Show earlier this year, and we had some very good strategic meetings. I feel that the whole positioning of the JK Maini business with Raymond as part of it gives us a massive opportunity to pitch for very large initiatives and large strategic businesses for the future in Aerospace. Right, sir. Thank you. Thank you for answering my question, sir. I really appreciate it. Thank you, and all the best for future results and upcoming performance. Thank you. Thank you so much. Thank you very much. We have next question from Mr. Sanjeev Zarbade from Antique Stock Broking. Please go ahead. Yeah, sir. My question was regarding the Aerospace business. I just wanted to understand, is there any cyclicality in terms of quarterly revenue in the business? We had INR 107 crore revenue in the fourth quarter, and then it has come to INR 87 crore in the first quarter, and now it is at INR 81 crore. Do we expect the revenue to ramp up again to the fourth quarter of this fiscal, you know, somewhere around INR 1,100, INR 1,200 crore? Is that kind of pattern prevailing in the segment? There is always a good situation in the first quarter simply because all the global OEMs in quarter three have their year-ending. You know, if you know in Europe and U.S., they mostly close in December. When they close in December, what they do is they bring the safety stocks and inventories to the absolute lowest levels. In general, we will always see it's not that their consumption goes up. It's not seasonal from a consumption point of view, but because the December month is a holiday season, they reduce their inventories, and then they have to catch up because, you know, they always have backlogs in Aerospace. It so happens that Q4 ends up with the largest number. This year also, the same thing will happen. It'll end up with a larger number. Okay. Sir, segment margins in Aerospace have also followed a similar trend. Fourth quarter was at 16%, then 13% in first quarter, and now I think 8.9%. Do we see the margins bottoming out over here? I believe that the Precision Products business in Aerospace should deserve much higher margins than this [8.9%] level. I'm sorry. I think you've got the numbers wrong. Navin and Amit, can you explain? This is very soft. Can you please say it again? Yeah, I was talking about the segment margins, sir. We had very good margins in the fourth quarter in the Aerospace business. After that, on a sequential basis, it has been softer. Sorry for interrupting, Sanjeev sir. Can you please speak a bit louder? Yeah, is it good now? Yeah, it is better. Please continue. I was talking about the sequential trend, sir, in segment EBIT margins for Aerospace, which has been softer in recent quarters. Can we consider it to bottom out at these levels? Given the Precision Products business, this type of manufacturing typically deserves much higher margins. I just wanted to understand the future. Yeah. If you are comparing to quarter four last year, this goes in the ratio of how our top line is performing. If you are comparing with, yeah, that operating leverage will always come if we are operating and have delivering a larger quarter, then the margins will look different. In the current quarter, you just raised it a couple of seconds back that these quarters were a little softer. Hence, you see these kind of margins. Of course, it will go into the upward trajectory because most of the cost remains at a constant level, and we'll get the operating leverage as we go into the subsequent quarters. Right, sir. In the Auto Components business, I believe there was some legacy business earlier, which was kind of weighing down our segment margins in the Auto Components segment. When do we expect that legacy business to phase out so that, you know, our overall margins start looking much, much better? First of all, our margins are already starting to look better in that area. We have got some price increases on the legacy business. We are pushing for making sure that we are making them more sustainable. The efforts will be on, and these are relationships with customers over 50 years. We have to also watch what our new business opportunities are. Sometimes you have to look at these relationships as a whole. We are trying to optimize to make sure that we keep the relationship also, but also optimize our EBITDA in the right way. Yes, some legacy businesses do have lower margins, but businesses coming in the future continue to have higher margins. You will definitely see quarter-on-quarter improvements unless there are seasonal variations. As a percentage, they will go up over a period of time, yes. Okay, that's it from my side, and all the best. Thank you. Thank you. We have next question from [audio distortion]. Please go ahead. Hello, sir. Thank you for the opportunity. I am actually very new to the company. Some of my questions will be very basic. Sir, first question is, this gross block you have, can you give a rough split between Aerospace & Defense and then the other Precision Components & Auto business? Rough split will do, sir. Yeah. Navin? Yeah, one second. If you will look at our segmental results, we already have it in our segmental results. It is in the Precision Technology business, INR 152 crore, and in Aerospace, you can see this is INR 86 crore. This is total. This is total. Our gross block is only INR 250 crore, sir. Sorry? Our gross block is only INR 250 crore. That number doesn't sound right. INR 1,500 and INR 800. INR 1,500 and INR 800. INR 1,500 and INR 800. INR 2,300 CR. This INR 800 crore gross block, I mean, I don't know how much is land. If I remove the land, what kind of assets can we see in the Aerospace & D efense business? Maybe just some plant and machinery, some rough ballpark just for modeling. If you just look at machines because, you know, your land and building can be either rented or bought or, you know, your own. If you just look at businesses which are, for instance, what we are our current mix, I would say it would average, you know, 1:2 ratio of CapEx roughly. As you go up complexity, that could come down. That's what I was talking about earlier, that we have to manage the product mix so that we can optimize EBITDA and ROCE. That breakup doesn't come here. Okay. What is, like, you know, our CapEx plan for FY 2026, FY 2027? I think we have announced some CapEx in Andhra Pradesh, I think in India, because the number is INR 510 crore. How would that, I mean, would it be over one, two years, five years? Some qualitative, quantitative color around that will be very helpful. CapEx, how are we looking for CapEx in Aerospace & Defense? INR 100 crore is the CapEx that we think that we shall be doing each year because we may aim to double this business in the next four to five years' time. Okay. All of this will be in Andhra Pradesh other than CapEx? In our existing facility, but yes, largely it's still a new location too. Okay. This INR 500 crore outlay, if I take 2x assets, then that comes to around INR 1,000 crore, right? Even if I assume, I don't know, should I assume like INR 750 crore of new revenue can come from AP eventually in four to five years? Like I said, there's going to be a product mix involved. We'll have to see how much of that remains in the old plant, how much of it is in the new location. The ballpark will move depending on the complexity of parts that will come in. What other investments we will do with that in terms of surface treatment, heat treatment, it's a more complex question because that would all change the dynamics. In the end, what we've understood very clearly is as you go up the value chain, you need more investment. Your ratios will fall, your ROC will be slightly lower, but your EBITDA will be higher. That's the compromise that one has to do. It's best to have a good mix, like I said. Okay. Okay. The third, I mean, Aerospace & Defense, you said roughly 3x of annual revenue is generally what our order book is. How about the other business segments, Precision Technologies & Auto? What sort of order book do we have there? In Precision Technologies, also 80% of your order book, if you look at the OEM business, is again long-term contracts of five years or six years, etc. It depends on each contract. Obviously, we have a business of Tools & Hardware, which is more dealer-driven, a domestic business. Those have different kinds of pulls. In general, in all the OEM type of businesses, we do have long-term contracts like in Aerospace. In Aerospace, sometimes we have contracts going up to 10 years, whereas in automotive, generally, it's restricted to five years. Aerospace companies give you a 12-month visibility on a monthly basis for their schedules. That's how you plan your materials and everything else because you know you have to export the containers all over the world. Therefore, you need visibility in terms of what they need at the location, which would be three to four months in advance. You have to probably manufacture it. There is a lead time there that you need to take care of. Therefore, the visibility is very good for that. Long-term contracts is the way to go. You can predict your sales and the rest of your numbers over a period of time. Okay. The final question, sir, is, I mean, if I look at the reported numbers, the gross margin is roughly 65% in Q1, Q2. By the time we come to EBITDA, it's 15% blended, maybe 15%, 16% blended. Is there a score to take it to, you know, maybe 20%, 25%? I understand employee cost will always be high because it is an engineering business. How about operating leverage from the other lines? We are operating, you know, first of all, we are putting all the synergies together in all of the businesses. That is going to give us definitely some gains going forward. We do have some businesses, as you know, which are 52 years old. Therefore, the cost structure in those businesses is different. We are trying to make sure that we are finding a strategy of how to work towards the direction in which you're talking. Obviously, can't commit to numbers. For sure, we have benchmark factories within us, and we are working on a long-term plan of how we bring increased operational efficiencies and much better OpEx conditions and much more low-cost automation into the businesses. There's a lot going on now, and you will hopefully start to see results over a period of time. Thank you very much. Ladies and gentlemen, in the interest of time, that was the last question. I would now like to hand the conference over to management for closing comments. Thank you so much for taking out time to be part of the call and the very interesting conversation. We will remain available to respond to any questions. You can send us an email if you have. Thank you and look forward to talking to you again in the next quarter. On behalf of Antique Stock Broking Limited, that concludes this conference call. Thank you for joining us. You may now disconnect your line. Thank you.