Ador Welding Limited (517041) Earnings Call Transcript & Summary

Good evening, everyone. Thank you for joining. Happy Diwali to start with. So as usual, we have Aditya, sir; Suryakant, sir; and Bhide, sir. Incidentally, Mr. Ledwani was also in Mumbai, so he also joined this call. We will start with a short presentation by Aditya, sir, and then we will take questions.

Yes. I hope you guys can see the presentation. I hope it's up. Good afternoon. Thank you for taking the time to attend. Very quick overview on -- we, yesterday, had our Board meeting. The results were announced. As you all may know, Q2 sales were INR 229 crores, which is our highest second quarter sales and a quarterly increase of 23%. We had seen some margin expansion, which goes along the lines of what we've been working towards. Given the fact that Q1 was disappointing in that regard, we had pushed a lot. And we are now coming closer to the normal where we want to be and keep improving from there onwards, HY1 data. On the ground, demand seems to be fairly good, and our continuous hard work is going in terms of -- the continuous hard work is going on in terms of growing -- meeting the requirements of the market, growing internationally, growing domestically, especially for different industries, the way we are moving all of that. So that's where our focus areas remain. Standard data, I think most of you would have calculated this already. 9.8% is the PBT margin that we had for HY1; and ROCE of 25%, which we're going to build on as we go through the rest of this year. Working capital and borrowings for Q2, fairly indicative again as well over here, INR 198 crores in terms of working capital and borrowing at INR 32 crores at the end of HY1 and debt-to-equity ratio of 0.1%. From business perspective, we have 2 very interesting updates that have happened. One is, we have launched India's first battery-powered welder. The interesting part about this was it was started in February, March of this year, and we worked with our technical team to say that we were very keen to have product launch ready by September at the world's largest welding exhibition in Germany. And this goes to show that what we keep talking about is to make, research and create in India. And the investments we have in that regard, which is we have about 38 people in our technical team, 5% of our profits go towards it. All of that, we were in a position to be able to launch a product by September. And there's a lot of interest for it. The official product launch and readiness should be around Jan-Feb. We expect that to take off and lead to strong demand as well. As I mentioned, the ESSEN Trade Show was very important. It's the first time we have participated and especially at a very large level. Given positive India factors that are in play, given the brand placement, given our own focus on the international markets, it was something that went off very well. In fact, we had a virtual reality experience to understand our plans, to get confidence from the customers, that is well. The merger, as you all know, is still going through the NCLT process. However, the vote has happened at both companies, and we're very pleased that the vote went off in favor of the amalgamation in both companies. We now leave it open to question and answers. Thank you for your time.

[Operator Instructions] Our first speaker for today is Mr. Pritesh.

Just a few questions. If you could give, what is the volume growth in your consumables in H1 with the tonnage number, if possible? The second question is, there is a lot of variations that we keep on seeing on the margin front on the consumable side of the segment. As you scale up further, could you call out what kind of margins are possible in your business combined with the capacity utilization that you have today? And my third question is, we had this ONGC order, which was a large order in the flux. What is the progress on that order in terms of execution cycle? Because segmental still didn't show any large execution probably from that order.

Yes, sure. So let me go one by one. I'll just answer those questions quickly, Pritesh. So just to be clear, our volume growth on the consumables...

22%.

Was 22%, and our volume growth in the equipment was 35%?

35%.

35%. Our margin variation was a dip in terms of Q1 due to factors related around primarily a bit of a product mix issue, plus slightly lower volumes, and that was meant to happen. I think what you're seeing is, in Q2, the normalcy is what we would like to say is that this is a factor that we want to play at. It's definitely much closer to where we want to be. And Q2 is more reflective of that as we go forward. Secondly, we do expect volumes to continually pick up and allow that to keep going. So we should be in a position to hopefully sustain what we just saw in the second quarter. On the ONGC run flare order front, we are entering what we call now pretty much the hot billing phase of everything. From December onwards, Jan onwards until June, July is where most of the execution will happen. We are tracking it very, very closely. As we said, at the end of the day, it's INR 125 crore order. It's a large execution of a flare job, and it requires continuous sort of drive in that regard. But it will start from approximately December and Jan onwards is where we get pretty into the kicker of most of the project for the next 6 months. I hope that answers your question. Anything else?

Our next speaker...

[Foreign Language] You have to unmute.

Okay. So the execution will be in 6 months from quarter 4 to quarter 2, that's what you want to call out?

Jan until June, July is where 90% of this gets executed. Correct.

Okay. And what is the capacity utilization that you are running at?

On our consumables?

Yes.

We are anywhere in the region of approximately 75% to 80%, and we are adding a lot of capacity over the next -- well, a lot of capacity means a couple of 6,000 tons, 7,000 tons -- about 8,000 tons, 9,000 tons, 10,000 tons over the next 6 months.

Okay. And my last, what is the progress on flux product line?

Flux cored wire product line?

Yes.

Flux cored wire product line, we're actually building up quite a bit right now at the moment. Touchwood, we are pretty much running at 90%, 95% of our capacity, and that's the line where we'll be adding quite a lot of capacity in the coming months.

Our next speaker for today is Mr. [ Harshil ].

Sir, what I wanted to know is apart from the ONGC order, are we seeing any other big orders, which are coming in of similar size for the flares business?

No, not at the moment. Not at the moment. We aren't -- because we aren't -- so if you remember, we talked about the fact that this is an order that gives us also a PTR, PQR to be able to do demountable flares and stuff like that at a higher level. So we're waiting to execute this order. We are bidding and winning orders on flares that we did earlier in the past, which was more on the line of approximately sub-20 floor type of things. So we're working on those, and we're taking that. We have not bid for such a large order at the moment. We have some other stuff in the process equipment, but it's not as large as this, but we are bidding on stuff relating to desalination and stuff like that as well. So that is ongoing, but we have not won any order of this size or neither have we bid for a very large order of this size at the moment. But we are in a position to prove how we execute this correctly.

Okay. So you said that you're not bidding in for orders of sub-INR 20 crores or something. So can you just help us with your order bid pipeline if possible? A ballpark figure is also fine.

I think we have anywhere in the region of approximately INR 35 crores to INR 40 crores -- I think INR 30 crores to INR 35 crores right now in terms of pending orders over the next year. So beyond...

This is the bid pipeline, correct?

No, that's the confirmed order pipeline will be in the region of approximately INR 30 crores. And the bid pipeline will be another about INR 100 crores or beyond that.

Okay. And just to get a sense of the demand environment, so are we seeing such kind of desalination or the FGD orders or inquiries on a steady-state basis and the demand being robust?

Demand is fairly good on that. Demand is not a problem. I think the demand is fairly there. It's about selectively doing the right order. It has to meet all our criteria, like we keep saying about our cash flows, about our ROCE, anything like that. But yes, there's enough business that is definitely coming out of that.

Our next speaker for today is Mr. [ Chandresh ].

Congratulations on such good set of numbers, sir. Sir, on the consumables side, can we expect like Q3, Q4 is the like better quarter for us in the historical? So can we expect the similar rate of growth going forward?

I don't like to give -- I said I don't like to give forecast in that front or anything like that. But in general, the demand indicators seem to improve, yes.

Okay. And sir, secondly, we had a BIS Hallmark litigation. So can you update on that?

Yes, sure. So I can, actually. It's good you asked that question. So we had a BIS issue that came up that started off approximately 2 years ago. It was on some material that was imported at the time. And there was a BIS certification that said that you could not import without a BIS stamp. We made an error on our part on 2 things. And the first part was that once we knew that the BIS notification had come, we stopped further import. But what had been imported, we were still selling, which is an error on our part. We should not have been doing that. And the BIS was -- filed a case and all that went on. When they filed the case, then we applied for compounding, like you would very normally. You're going to have this very small quantum box of goods, approximately INR 5 crores, INR 6 crores, something like that, and we applied for -- INR 3.5 crores. So INR 3.5 crores, and we applied for compounding accordingly. We believe that, unfortunately, the BIS was quite unfair in its compounding order to us and gave us a compounding order in the region of INR 25 crores, which we believe is very, very unfair. And so we challenged that order, and we were left with the legal recourse to go to high court and put a stain on the matter, which is what we've done. We have managed to do that. So we can continue to work it on a legal basis, and we're quite confident that better sense to prevail in terms of the size of that order at least because it's quite irrational the way we see it. Having said that, we work with the BIS on a regular basis. We are part of many committees of the BIS on technical fronts and stuff like that. We, actually, as a company stand to gain a lot with BIS being more and more proactive in the welding industry. We are firm believers that that's a great thing. It suits us for our main research, create India philosophy, but the quality player works really well for us. And we have good relations with BIS and everything else on that account. It's just that we feel this order was unfortunately not done very fairly to us. And we're following the legal recourse on it. That's it.

Okay. Okay. And sir, what was our export contribution in the H1?

H1, I think we hit about INR 60 crores, INR 60 crores in H1. So we touched last year pretty much almost certain.

Next speaker today is Mr. [ Dhwanil ].

Congratulations for a very good set of numbers. So my first question is, I think you indicated 22% volume growth for this quarter, right? So that's a pretty healthy number even given the very buoyant CapEx and infra environment. So what is it that is working in our favor in -- are we kind of gaining market share from somebody or the demand is so buoyant that we are getting this kind of volume growth? Can you throw some light on that?

Look, unfortunately, it's not a large-enough industry that I can give you the exact science behind a lot of it. But we do have a sense of how we play in the market, but I'll say most of it, approximately 80%, 90% of it may be in some way demand-driven. Not only in India, but also abroad, we're seeing good movement. So I would say demand drive -- for the Indian market, I'd say 80%, 90% of it is demand-driven, maybe some part of it where we are in some market growth that is working well for us. And on the other part, in the international markets, there is both, like we keep talking about, supply chain favorability for India. We are putting a lot of investments and effort into growing in those markets, creating the brand directly and definitely eating into a little bit of share of other players globally over there. So depending on the market that you're talking about, it's a question of demand and in some areas eating in.

Okay. Got it. Sir, second question on the equipment side. I think we've done pretty well, both in terms of volume and value on equipment side. And the only thing I think we're still slightly away from is the margin side of it. I think you had indicated that equipment is equally good margin business, but we are yet to kind of see that. So what are the factors which are still preventing equipment to kind of go to its desired margin level?

So I think you will see equipment has a little bit of more room for scale margins to come in. So it needs to scale up a little bit more. I think the benefit of the merger will also allow that to happen. And you will see a little more margins kick in a little better from that regard. The second is, of course, you're dealing with parts of it that need to be reorganized and stuff like that. That will come in, in time. Product mix improvement, which we're actually starting to see a bit of product mix improvement happening. So that will definitely help. But it will take some time. It's sort of quarterly -- it's not an answer that will come at the end of every month, and you suddenly see the big jump. But over time, as we keep working towards all of this, we will definitely see that the potential is there.

Okay. Got it. And last question...

Also the automation part of the business is very critical to this. While automation is not yet at a high-enough scale, so I think that's actually probably the #1, #2 reason that you will see a pickup is that we can scale up the automation part of the business much higher. We will be able to see that margin improvement significantly.

Okay. Got it. And last question. So I think international business, we are doing a fantastic job, Aditya, again. So whatever that we are reading, Saudi Arabia is planning very big CapEx. We are present right in that market. We are also scratching surface in South America. So very, very large opportunity is in front of us, even if we get a very tiny market share. So are we becoming more aggressive in our approach towards the international business, kind of taking it to maybe much higher level than what we thought a couple of years ago?

Yes, I would tend to agree that that's where we are. We are very encouraged by what we are seeing, so we keep investing like that accordingly. But I think the very important part that we have to get right over here is, okay, Saudi Arabia is a very good example of where the brand is known, but you're building it up and you keep doing it. There's a lot of CapEx that's happening, so you have to do that very smartly and enter correctly and make sure you have the right partners, which we fortunately do, and then where you want to enter. But if you're going into the Americas, if you're going into Brazil market, the Ador brand isn't known. In the Middle East, the Ador brand is known. So we're going into those markets to get our value that we want. It's a longer period because you have a long gestation cycle because you have to do the approvals, you have to do testing, you have to do all of those things. We're not going in as a cheap value only, right? You have to be able to prove the value addition product that you want to do. So the time line for that takes a little longer, 6 months, 8 months, but we'll hopefully break and then you're a part of that cycle as we go. So I think you have to deal with these markets separately. But you are 100% right that I don't think we -- I think we -- the potential ahead is absolutely tremendous or even better in the international market. But -- yes.

Our next speaker for today is Mr. [ Devansh ].

Sir, congratulations on a great set of numbers. Sir, in case of exports, how we are able to scale up? Like you mentioned it, like we have already clocked last year's sales in terms of exports. Because here, we'll be competing with China. And domestically also, we have faced margin pressure because of cheap Chinese imports. So in exports, how we are managing to navigate that competition? Some thoughts, if you can share? And what can be the bigger-picture or blue-sky scenario in exports that is possible?

So again, it does, it varies market to market, varies application to application. So let's talk about the Middle East first for a little perspective. Like I keep saying is we've been in the Middle East for a long time. We've been a well regarded brand as we were undersold. Irrespective of what's happened post COVID where people are reorganizing supply chains, even prior to that, we were an undersold brand in the Middle East where we would just stop putting in [ outputs ]. So the first thing is, what we're doing now is we're just getting a lot more structure in our approach, the right distribution partner, building in, getting appreciation to the brand, understanding how to service the customer correctly and build that part up. And we've competed there against anyone in the world, and we win anywhere between a Tier 2 to a Tier 1 player. So it doesn't have to typically be a cheap competition that you are fighting against. And we've done that in the Middle East market very well for a long time, which is oil and gas trade, which is great for us. When you go into other markets, you're entering from 2 or 3 perspectives. You're entering either as you're plus one to a China supply chain. So people want to have a different opportunity, which they're coming to you saying, we want to certify you. We want to work with a non-same partner that we had earlier for whatever reason. It's fine. That works for us well. Second part is, like I explained earlier, you've got to get into the entire value segment part of it. You've got to go through the approvals, testing. It takes 6 months to go get the right partner, go through all of that and then just fit into the supply chain and then it becomes part of the regular ordering process. I don't think we are finding anywhere -- I don't know anywhere that we are going. I need to be cheaper than the China cheaper product. I don't think we're doing that. I don't think we can do that. And I don't think there's a need to do that. I think you have to look at where you fit in and where you can earn margin. And look, there'll be 5 people in the Indian market who are cheaper than us. So if my only strategy is to go in cheap, it won't really last us very long. So we're doing it in that sense. I hope that helps answer the question.

In the case of working capital, the kind of improvements you were looking out in inventory has still not happened despite -- we have still not executed the ONGC order. So what -- where are the scope for improvement over there?

There is scope for improvement over there. I won't get into the detailing of all of that right now, but there is definitely scope for improvement. And I am fairly confident that in the next quarter or 2 quarters, you should see a significant improvement on that front.

In terms of what can be the synergy benefits in terms of operating cost when the 2 entities merge, what benefits you would expect?

From the manufacturing cost, look, at the end of the day, the Ador Fontech range of products has a different margin than the Ador Welding range of products. So it's more your importance of being able to sell at that correct price, being able to position the value correctly is one of the matters. There is a little bit of service benefits, back-end service costs, site manufacturing costs, all of that, that will come in.

Okay. But in terms of, let's say, G&A or those kind of fixed costs, to what benefits...

Yes, benefits, I don't want to give an exact number. To be honest, we've done the math internally. There are benefits, but I don't want to give you an exact number. But yes, there will be benefits to range anywhere in the region of at least 7% to 10% off the top of my head from what we can see.

Okay. And just last question, what has been the reason for delay in execution of ONGC order? I think we were expected to commence it...

Yes, the execution is going on. Yes, you are right, there's approximately a slight delay that is going on back and forth for many reasons regarding site, design, many, many things that we are in touch with ONGC and working with them. But we expect the catch-up to happen during the execution period as well.

Our next speaker today is Mr. [ Pankaj ].

Sir, my first question is, if we see current 6-month numbers, so equipment sales were grown by more than 50%. So it is only the impact of volumes? Or is there any price increment too?

It's primarily volumes and slight product mix, no major price appreciation and such on a per unit basis, on a per product basis.

So are we expecting to raise price in the coming future?

I don't have an answer to that exactly. I am not in a position to give that. I think it just depends on the market forces. I think if the market is in a position to allow us to do it, then if we can, we definitely will.

Okay. Got it. My second question is, what is the breakup of automation, cutting and other equipment in our equipment segment? And is there any margin difference among the all?

It's small at the moment. It's approximately 10% to 12% of our equipment sales and should be -- we're investing and working towards the fact that it should lead up to approximately 1:1. The margins are -- because it's small on a gross margin level, it's quite okay. It will be somewhere in the region of 25% on a gross margin level. But we're not big enough on a scale level, so you're always going to hurt over there. So I think the scale level needs to go up. But it's definitely -- this is an area which is definitely the big driver of margins.

Got it. My next question is, so what is our current revenue mix of high-value items and convention products in consumable segment along with previous period mix? And how margins differ between the 2?

We are at approximately 85% of the standard range of products and probably about 15% of the higher-end kind of products right now. We keep [ hitting ] down and get to about 80-20, depending on how we invest and then how we drive that. The margins would differ by approximately 3% or 4% or 5% depending on the range on the gross level.

And any future guidance for high-value items?

Sorry?

Any future guidance for high-value items?

Guidance? I can't...

Basically, guidance...

I think we have no choice but to be a seriously good player in it. So we have to keep driving that, which we're doing. We're spending a lot of time and effort on that. And we have to grow that. Yes, we are trying that.

Okay. Just one follow-up question. As you said that our flare business, so there's a delay in flare business. So is there any liquidated damages that we can expect?

Not at the moment, not at the moment. If there was, we would have taken already a provision for it.

Okay. Okay. And just one last question. So what are the total number of dealers and distributors as at the end of period end and total number of SKUs?

We have, at Ador Welding, we have approximately 180, 190 -- 180 distributors and a sales team of approximately 90 people. At Ador Fontech, we have approximately 80, 90 distributors and a sales team of another 60 people, 70 people.

And SKUs?

Sorry?

Total number of SKUs?

SKUs in the welding front, we're dealing with steel of different sizes. So you're talking of anywhere in the region of 5,000 SKUs. So yes, it's a 90-10 rule, not an 80-20. It's a 90-10.

Our next speaker for today is Mr. [ Ankit ].

Congratulations for a great set of numbers, Aditya and the team. On the consumables side, we have seen margins of around 16.5% at PBIT level in Q2. And you were saying -- and these are one of the -- our highest ever margins in any quarter for the past 4, 5 years at least. And you're saying that you hope to build on this kind of margins and these are -- this is the base level and we will build on this. So what all has led to such a significant jump in our PBIT margins on the consumables side? And where do you see this heading towards over the next year or 2?

I think as long as we remain a little smart on product -- it comes at the same principle, basically. This is -- we remain a little smart on product mix. We will get some sourcing advantages with the scale that we are doing. And as long as we understand the value selling in the market, those are the basics that we keep following. And for AI -- or for the international and the domestic, together, we will keep doing this so that we have a lot of benefits going forward. I'm hoping that this space will just keep incrementally building up, but...

[indiscernible].

Sure. And the volume growth that we have seen in H1 is like normally, whenever we have interacted with you through con calls, you have always maintained that the industry growth has been at high single digit or low teens kind of things. And our endeavor has been to slightly better that. But this quarter has seen a significant improvement in the volume growth, and you're saying the momentum continues even in October. So which segments are driving this volume growth, such a huge volume growth?

The domestic market and the Indian market or the general infra is driving growth. Railways is driving growth. Auto is we see going on a little bit. We don't do excess amount in auto, but auto is going okay. Railway shipbuilding is coming in. We have [indiscernible] sorry? Power plants a little bit, cement also a little bit. Just cement -- adding infrastructure in cement, that's also helping. So I think all in all, in general, that's sort of picking it up in that regard.

Sure. On the player segment, we will be starting the execution for the ONGC contract, as you said, from December onwards. So can we expect a billing of around INR 70 crores to INR 80 crores for the full year for FY '24 in the segment?

That is what we are pushing very hard to do.

And the losses which we have incurred in the past 2 quarters, that will also get adjusted in the subsequent quarters, like, let's say, we'll try to reach 10%, 11% kind of margin that we have always endeavored to reach in this segment?

You're right, that's exactly what we are trying to do. Let's hope we can do it.

Got you. My last question was on the Fontech guide. We are somewhere in the vicinity of around INR 50 crores, INR 55 crores of kind of quarterly run rate. So what kind of demand are we seeing in the sector that Fontech -- or in the segment that Fontech is catering to? And what kind of growth rates do we expect in Fontech over the near to medium term?

So it's a slightly different product mix that you're dealing with. And what we've done -- what we've been trying to do ever since we decided to push the merger, we try to do is get the product mix even better at Fontech or higher-margin products, understand where the overlap with Ador happens, with welding happens, understand where those commodity range might be better suited at welding, and try and take those out of play as much as possible and try and push the right product mix, whether it's service or product in Fontech more and more. So I don't think pushing excess topline growth is going to help. I think it's a question of margin improvement. It's at a stage where we're even improving a lot, and we've been seeing that in the results. And then we're able to get that mix of a decent level of growth, but better margin product mix as we do. And that, I think, will suit us in the merger as well, right? So that's what we're trying to do.

So overall, can we expect 10%, 15% kind of growth in Fontech? Or it's...

I think 13% to 10% range is kind of okay here.

Our next speaker for today is Mr. [ Kaushik ].

Congratulations for the good set of numbers. Sir, my basic question is on the PBI numbers. Like what is our Middle East market that we are going to have? It's like in the export side, we are telling that we have the good market on the Middle East. So like what basis are that we are just present there from the longer duration is the only thesis or the supply chain is the thesis?

So the base -- the point that we have been there for a long time allows us to operate on a platform. It allows you to operate on a certain brand level where you don't have to keep producing the brand. It's a very highly, I would say, a well-regarded brand in that point. Now -- and then there's the supply chain changes which happened. But I wouldn't say the supply chain changes in the Middle East are excessive. I think in Europe, North America, they are more excessive or demanding about supply chain changes that they have. Middle East is going to get driven a lot by oil and gas expenditure that is happening. Saudi Arabia, CapEx spending that is happening. In the UAE also, we are seeing a lot of that happen, especially in Abu Dhabi and all of that. So oil and gas related, given the good period that oil and gas has and that they are planning to invest for at least a few more years or 10 years, more years of investment. So that's another driver. And lastly, I think the most important driver for us has been the team that they've been very smart about getting into projects early, getting approvals early, being aggressive at distribution, being aggressive with customers. I think that has also helped a lot. So it's just those main things that have helped. Middle East is approximately 80%, I think, of our export sales. Yes.

Got it. Sir, how long will it take to replicate the same thought process on the U.S. side and the European market side? Like we can assume...

Europe is not a focus area at all for us right now. Europe is not really something comes up, it comes up. The U.S. is a little bit; but other parts of America, Brazil, Mexico, a little more interesting. And then we have other parts like the CIS and all that is also interesting. To replicate that, I don't think you can replicate that. I don't think we are in a position to replicate it. I think we are in a position to do it again, create value in some other way, which is through the supply chain, through testing, through a lot more distribution-oriented way of working. I think value addition, selling may be limited. However, ensuring the product meets all the standards and all of that, maybe more accepting, maybe something there. So it varies. I'd say it's a different way of looking at. I don't think you can just say that we'll replicate the Middle East based over there.

Got it. Sir, last question. Can you give more clarity on BIS Hallmark?

Yes. So, as I mentioned earlier, the BIS issue is we had in -- about 2 years ago, we had run afoul of a BIS notification that had come in that says that you could not import without a BIS approval. We had stopped the imports at that time on the notification, but we made the error of agreeing to sell the product, which we shouldn't have done. That error at that time...

The distribution...

The distribution of the product code was confusing. There were some things that happened. And all in all, there was an error that was made. We then applied for compounding. And the quantum of goods was only INR 3.5 crores. And because of the compounding, given what had happened in the past, the compounding events would have been fine, which is fair enough, and move on and the fine would have been quite understandably fair. However, for some reason, the authorities decided to impose a very large fine on us, which is INR 25 crores, INR 26 crores, which is the max possible allowed. And we felt that it was highly unfair on their part, and therefore, we challenged it. We stayed at the High Court. We're still on the compounding order, and we are continuing to see -- we now are going through the legal process of hoping for a resolution. And like I said earlier also, we have a very good relationship with BIS. We work with them on many different fronts. We work on their technical committees, and we have a lot to gain with BIS. So it's not at a confrontational sort of thing. I think it's a question of just getting everything sorted out over time, that's it.

Our next speaker for today is Ms. [ Ruchi ].

Congratulations for a good set of numbers. I have just some basic questions. Like the current quarter's margin is 12.8%, and FY '23 was 11.2%. So is this sustainable for FY '24 and next years? And in the similar context, is the risk manageable in your business if there is any kind of spike in metal prices?

I think our endeavor is to ensure that this level of margin remains through and through, and we keep building on it. So that's what we are pushing towards. The risk is there in terms of steel prices up and down a little bit, but we are not in a position to be able to pass it forward and all of that because it's a 1-month lag, and that's what we're able to do. There are obviously rate contracts that you have with larger customers, which require a little more detailing, but most of them are fairly raw material linked in some way or form, so we can make those adjustments. So I think most of the risks are fairly covered.

Okay. So like is it sustainable for over next 2 years? Can you specify this?

That's what we are all working very hard, yes, as we all hope.

Okay. And in the similar context, like as you have given the guidance in the con call as well that volume growth was of 10% for FY '24. So like what will be the -- like are you on the same guidance for this year and next 2 more years?

I can't give any guidance. I'm sorry, I don't give any guidance. I can only tell you that we hope to completely outperform on the IIB front, which is exactly what we have been doing, and we'll keep working on that. Beyond that, I'm sorry, I can't give any guidance.

Our next speaker for today is Mr. [ Nitish ].

Congratulations on a good set of numbers. So just a few questions. From what I understand, a lot of welding equipment right now is imported from China. So are our Made in India product right now, is it finding more acceptance in India?

Yes, there's a lot more acceptance for it. I think -- look, at the end of the day, you can't just get away with that. Indian market is very value-oriented, right? It's not going to -- you can't get away with perceived value and real value, delivered value to be very different. So we've been working very hard to ensure that we provide a very good product. And we have a price margin that's built in over a cheap alternative that may be imported. But yes, we feel that the market is very responsive in many ways, yes.

Okay. And any guidance on the time line for the merger, when will it get completed?

That is in NCLT's hands. I don't know -- once we are hoping...

Earliest would be Q4.

Yes.

Okay, by Q4. Okay, okay. That's all from my side.

Our last speaker for today is Mr. [ Harsh ].

Congratulations on a great set of numbers. I wanted to understand, with demand being very strong in the domestic market, do you have any plans for gaining the market share in Indian market also, like you mentioned, for exports, you are gaining market share?

Very much so. It's definitely a very important part. In fact, there was a question tying in about higher-end special products per se, where we do tend to focus a little bit on gaining market share over there. In certain industries, we are trying to gain -- like within the general infra space or within the shipbuilding space, yes, we are trying. But yes, so we do, of course. Yes, it's very much -- look, at the end of the day, the Indian welding business drives the business. So I think -- and given the fact of what we see as great growth opportunity in India, that is where we spend a lot of our mind space as well.

Got it. So just a follow-up to that is, we'll still have tough competition from imports for the lower end, right? Like for the higher end, we'll still be able to...

I don't think that will change. I don't think competition has -- is going to reduce in any way or form. Some other raised hand.

Sir, we have a follow-up question.

Yes, yes, go ahead.

So Mr. [ Kaushik ], you are now being placed in the meeting.

Sir, I just wanted to understand on the ONGC, this thing. So post December or January, we'll be having the order for the next 6 months. That comes out to be around INR 135 crores, and 90% of the work will be done in that 6 months. Is my understanding right? And what about post that 6 months? Any order that we are chasing very currently?

Yes, okay. So I'll try and break it down as much as I can. So it's approximately INR 125 crores, it's INR 125 crore net of GST, INR 120 crores to INR 125 crores. We have built until date anywhere in the region of INR 15 crores -- INR 15 crores, INR 16 crores, we have built already until date. So you're left with INR 110 crores. Approximately 80% to 90% of that balance should be happening anytime between Jan and about July. That's the plan. So that gives you the math in terms of that breakup. We are, at the moment, bidding and have been bidding to add projects into our time line for next year, be able to look at a growth of 20%, 25% minimum, if not more, 30%, 35%, maybe for next year's as a division. So I hope that answers it to some level.

We have one more follow-up question from Mr. [ Ankit ].

Just one question on the margins of the equipment side. So like there were some supply chain issues that we were facing for our -- this equipment segment. So how is the situation on that front? And either you have maintained that in the medium term, we want to have mid-teens or 14%, 15% kind of margins in the equipment side. So any time line on that? When are we looking to reach that or at least double-digit kind of margins can we expect in that segment?

So firstly, most supply issues at the moment that should have kind of okay. We don't see any -- foresee any major issues like there was earlier. I think the answer to the double-digit margin lies in our ability to ramp up our automation very fast, very well and make that a significant contributor, which it can. I'm hoping -- but it will not happen on a monthly basis. It will not happen on a quarterly basis. We are working towards it. You have to just give us a little time. You will see that coming.

That was the last one.

Thank you. Thank you, guys. All done?

Yes.

All right. Thank you.