Ador Welding Limited (517041) Earnings Call Transcript & Summary

Good evening, everyone, and welcome to the Ador's Half Year Ended Investor Call for September 2025. Myself Rishab, and today, for this call, we have Mr. Aditya Malkani, Managing Director; Mr. V. M. Bhide, Company Secretary, Head Compliance and Legal; Mr. K. Suryanarayan, Head Corporate Strategy; Mr. Suryakant Sethia, CFO. And we will begin the present -- we'll first begin with the presentation by the MD, and then we'll open the floor for the question and answer.

Good evening. Thank you for taking the time to attend. We'll have a quick presentation just running through. And like Rishab said, leave it open for questions after that. As we mentioned, this is the opening slide we talk about from a corporate perspective. Just to give everyone an overview again, the company is approximately 850 employees with 5 manufacturing facilities, capacities of approximately 90,000 metric tons of welding consumables and 30,000 welding equipment or power sources. We are a government of India recognized R&D center. We serve the entire breadth of the country and thus, globally, we continue to expand and supply to approximately 15 countries. Last year, our sales were in the region of approximately INR 1,100 crores. Brand Ador, just to give everyone an overview of how it works. This is to just show the scale of where we operate. The global red markets show primarily where we are present, either through distribution or our own sales teams. And the India market shows our infrastructure set up through sales office distribution network plus our manufacturing facilities. Approximately 82 -- 83% of our sales is India focused. The balance 16%, 17% is primarily international from that perspective. An update that we had our Board meeting earlier today, and I hope you had a chance to see the results. Just to give you a quick overview. The sales grew by approximately 5% on a quarterly basis. The gross margins were at 32.7%. There's been a slight improvement over there. EBITDA at 12.5%, again, an improvement of approximately 500 basis points versus a low base. PBT margins ended closer to what we've been talking about as our level that we should be at, which is approximately 12.2%. A big highlight internally has also been that we announced an employee stock option plan, which got rolled out towards the end of September. On a half yearly basis, revenues have been a little bit soft and keeping in line with what we've seen on steel prices plus actual consumption on the ground accordingly has been in line with that. Gross margins at 31%, EBITDA margins at 11%, and the PBT at INR 58 crores, which is approximately 11%. I'm sure most of you had a chance to look at the results. If not, it's pretty much self-explanatory from that perspective. On a quarter 2 basis, I think this is pretty much in line with what we've been talking about for a few quarters for some time that this is a steady-state level we need to be working ourselves towards with an increased better product mix, better maintenance of margins, improving and demonstrating strength in the welding business, which is what we are seeing, and that's being played out luckily, and we're very fortunate to that -- we hope that this is a start of showing these kind of margins going forward continuously. Working capital, the team has done some good work, especially on inventory management and stuff like that, and we've been in a position to keep everything in line with our targets. And this is the overall picture at the moment. The inventory number of days is at approximately 47%, which is a good improvement versus September of last year, which is the correct metric to compare with. And the rest is pretty much in line with what we were looking at. ROCE is -- after the dip that we initially had over there last year is pretty much back in line with where we wanted on 23%. Just to give an overview, we have many people reach out to us and talk about what are the changes in terms of product mix and all of that, that is going on. So we thought this time, we'll highlight a few more details. If you look at the top, you'll see on the welding equipment, 3 different welding equipments that we've been working very hard on with our technical development team to launch. The first on the left-hand side is a product that has data reading, data mapping that can help make the plants -- our customers' plants more efficient and can help reduce wastage and loss during weld usage. The second one is we had an electric battery welder called Rhino-E, which was launched approximately 1.5 years, 2 years ago. We've now introduced -- and we've got a little bit of traction over there, still very slow as we keep building that up. But we've also introduced complementary solar product to it. And I think over time, we expect that also to gain a little bit of traction, especially in certain Middle East markets we take forward from there. We also keep talking about improved products and higher-end products, and that's exactly what the Champtig AC-DC product works on. On the consumables, we are introducing more fluxes that can be used for wind applications, and this will play out over the next few months. Drum packaging for MIG is basically where you want higher efficiency, more for the automotive industry, PEV industry, stuff like that, where they basically reduce changeover times, higher yields on the manufacturing shop flow, and we've just introduced a new line over there. On stainless steel, an area we've been a little bit weak in the last few years. We are talking of introducing new products and a few of those are on the way out as well. Our Welding Automation division, you would have heard over previous calls, we kept talking about the fact that our Welding Automation division is sort of -- we are behind the curve, and we had to make a lot of changes to that. We have been spending a lot of time. The teams has done a lot of good work of late to not only increase the throughput of our existing products. So we are seeing a better order base for our existing products, and we are being more aggressive on that. But we're also now adding more and more products into the portfolio, which is moving more on cobots and robotic solutions and stuff like that, where we have started finally getting a few orders over there. So we built up the team capability for that, and we are now pushing that accordingly. So a division that we talked about has been lagging on sales and has been breathing is now making that turn. And we hope that we keep pushing forward to see that improve a lot because that's definitely a critical part of the future over the next 2, 3 years as we move forward. The Ador brand, as we've discussed in many meetings, is a Tier 1 welding manufacturer in India and the Middle East, which comprises 98% or 97% of our markets. We are probably the only brand that is not linked to an MNC per se. So besides the technology and new products that we talk about, there's also the brand initiatives that need to continuously be done. And we've been better active in terms of pushing that as well. We recently participated in an institution, which is the world's largest welding exhibition in Germany, and we were very happy with the response and very happy with the brand placement from that perspective. And I think that will help us not only continue to help penetrate select international markets, but also help us with our partnerships for the Indian market for various technological reasons. Lastly, we'd like to wish all of our investors and shareholders a very, very happy Diwali and all the very best. Now we are open to questions.

I'm the moderator for today's Q&A session. Our first speaker for today is Mr. Pritesh Chheda.

My question, one on the consumable side of the business. So in the H1, what is the volume growth that you recorded? How do you see the outlook for the year panning out in terms of the volume growth and the value growth considering that steel prices has corrected in quarter 2? And you want to comment whether this margin expansion is linked to that steel price correction or anything else? So this is on the cost division.

Okay. Sorry, that's your first -- okay, go ahead. Then?

The second division, which is your project space where last quarter, you booked a larger loss onetime. Now what is your outlook in terms of the project where you had to incur it? And how do we see the profitability of this segment panning out as we move towards half yearly 2?

Thanks. I will answer your question, first, Pritesh. And I hope it's -- in case it's repetitive for anyone else, so we can take it from that forward. Volumes are fairly flat, and they're in line with what we're seeing in the market in terms of consumption and stuff like that. Volumes have remained a bit flat on the consumables front. Going forward, do we see them getting a little bit better? Potentially, yes, because last year, HY1 was a bit high on the Q1, a bit low on the Q2. So potentially going to Q3 and Q4, you could look at volumes slightly moving upwards. Our margin expansion has come not necessarily from steel prices dipping or anything. I think it's come from a sense of discipline, which I've been talking about for a long time that needed to be built into our management of India pricing, and we are seeing that. And a lot of new management team is working on a lot of those that we're seeing benefit to. One, it is, in my eyes, a steady-state level that we should be working on, and it is definitely feasible. So I think that's there. The product mix is improving. So that's definitely helping as well. And that's part of what we keep talking about in terms of new products being pushed eventually. It's not about only new product introduction. It's about the product that we have. Is it filling the basket more and more? So we are seeing that happen. So quite happy on that front. I think we can maintain it. We expect to introduce more share of our basket should be with higher-margin products or higher, better products as we keep going forward. But it's a month-on-month process that we keep seeing improve. The project status has not changed much since the -- since the last 3 or 4 months since the last Board meeting. We are on track to complete it in this quarter, which is where we're expecting it to be. We took the onerous loss at that point in time. We're going to make maximum efforts to try to ensure that this is the end of it all within the next few months, and it seems to be on track from there. As far as the division is concerned, there is -- like I said earlier, there's no change from the annual call. We will not take on large exposure products at all -- the large exposure projects at all. We will remain very, very focused on key segments for some time, and ensure that it remains within a manageable portion until the end of this year. And then we'll keep reevaluating it. In fact, the Board is discussing today the importance to reevaluate and look at it in the next few months once we have greater clarity. But we will not be taking on large exposure projects. I hope that answers your question, Pritesh.

Yes. The margin number for the first division, was it also linked to drop in steel prices? And did you benefit from it? Or is it just value mix playing out this quarter?

No, I think it's just a question of the pricing being corrected. I kept talking about the fact that we were letting our prices go for some time, and we have just been a little more particular about holding it. So I think the current pricing structure on that front is now pretty much falling in line, a little stronger.

Now this 15%, 16% margin that we see in the division 1, that sustains through considering the pricing correction that you were talking about at the brand level that you're taking?

I think whatever margin level you have seen this quarter is sustainable throughout.

Okay. You see a better H2 over H1 in general business outlook?

It's very hard, Pritesh. It's very hard right now. There are so many factors, domestic and international, it's very hard. I am encouraged by a few order books that we are seeing. I'm encouraged, especially on the welding equipment front. There are a few encouraging order books, but the spread of it across every sector is still hard to assert it.

Our next speaker is Mr. Rajat Joshi.

So my first question is regarding new products and new segments. So could you please share an update on newer products in gas cutting and our entry into segments such as defense and nuclear, which you had spoken about earlier in the preceding calls. Could you please share an update regarding these initiatives?

So they are good. We still remain very, very focused on that. On the gas cutting front, there are many products that our distribution system can take on more, which we are doing, and we are introducing those and coming. But the impact of that is not yet felt. It will keep being felt step-by-step over the months and the quarters. And that's primarily using the distribution network more effectively from that perspective. And we are seeing that come in existing products and stuff. On the new segments, we're doing a lot more work on being aggressive on the ground with defense on the shipbuilding front, a few of the PSUs that work in that space. They seem to be having very interesting order book positions. We seem to be doing a lot more approvals. We're doing a lot of all of that. So we're seeing some results. I don't think you've seen the results of the benefit of the orders for a little bit of time. Some orders have come. We expect a few more to come over time. But we remain very aggressive on the sectors, we believe had an option -- have the opportunity to do well, shipbuilding, defense. Nuclear is a long game. We're just doing some approvals. So we continue doing the approvals. We've got some approvals in the thermal space as well. So I think primarily, that's the focus going right now. But yes, legs on the ground for sure on these things.

Got it. Got it. Secondly, in terms of growth, so this quarter, as you said, volume growth was largely flattish. So I mean, when can we expect that growth to kind of pick up? And what will really be driving that growth? I mean new sectors? Is it new customers? What exactly will be driving growth for us going ahead?

Look, growth is very steel consumption, right? At the end of the day, I think the core sector industries will have to grow accordingly, and we'll be able to see that growth. But like we keep saying for us, we're an undersold -- internally, we keep saying we're undersold, which doesn't mean you take necessarily a market share strategy only, but you also just be more aggressive in reaching certain customers and all that to get some benefit. I don't have a number to give you. I can't -- it's increasingly hard to see beyond 5, 6 months at a time. Right now, we just feel that it's okay. It's all right, right now. Nothing is robust and nothing is bad. It's all right at the moment from that perspective.

Understood. And lastly, in terms of geography. So could you please give some color on how the domestic market has performed and within exports across U.S., Middle East, Australia, how are we doing there?

So domestic is actually done well. We -- for reasons everyone knows, the base effect, the U.S. market, while it's small for us, we invested a lot over the last 2 years, and we expected it this year to sort of go up quite significantly. Tariffs are tariffs. There's nothing I can do about it. We are hoping it settles soon, and we remain on the ground close to certain customers and distributors that we feel as it settles, we'll see a benefit to it. Saudi has been a little odd, which is a big market for us. The last 2 months have been a little tight. I think there's a lot of projects rejigging that's happened, is what we've seen. So we've definitely not seen the same trajectory, which was an amazing trajectory for us. We've not seen that in the first 6 months, and I think it will take a little bit of time to see. I think it will take a little bit of time to see that level of kick in comps. But we're very happy with our home markets in the UAE. We're very happy with some growth stuff that we're pushing in Oman. We're trying to expand a little bit into Indonesia, a little bit in the South America. We're seeing some traction. We're trying to push Russia also a little bit because we feel that's a natural market that we should be reaching out to more. So we're doing a little bit of all of that. I don't think -- I think exports will be a little more flattish than the past years because of these things that have happened on these 2 key markets for us. But our margins are okay, and things are right, and we expect the second half to be a little better.

Our next speaker is Mr. Devang Shah.

Congratulations for a good set of numbers. My first question is that whatever the provisions kind of thing that's been provided by us in the last couple of quarters, that is an exceptional losses and certain at the time of we made a merger of Ador Fontech, also certain provisions we have taken into the books. So can we say all the -- this particular thing related to provision now gets over, and we may see no further any kind of provision that is provided in the coming quarters? That is my first question. So according to you, do you feel it's been now over?

I think most of it is over. I think most of it is over. As I keep saying, our philosophy has been to try to take the pain up front, of trying to take a few -- so we took a few slabs upfront on our face in Q1 and a few during the merger. But when we do it, we evaluate it very thoroughly at that time. And the team spends a lot of time and effort, understanding what is -- for that particular provision, whatever it might be, understanding what is the worst-case scenario, and we try to take that into consideration and do it. So -- that's why you've seen a little bit of pain on these things in previous quarters. At the moment, I'm fairly confident that there is no surprise that I can see at the moment.

So we may not see any kind of exceptional that's what we have seen in the last couple of quarters.

No, no. I don't think there's room for much of that. No.

And only one -- this one provision that has not been provided that has been mentioned in your -- this particular quarterly update, in which you are filing written petition on for that. So can you throw some more light on that?

So the matter goes into -- this is the high court matter than we have basically, NBIS. correct, you're talking about. So that matter is basically under -- it's -- we filed writ petition. It goes back into the court proceedings. I think we have a very strong case that the penalty there was, at the point, given to us, was absolutely absurd. At some point in time, and soon enough, I presume that, that case will come up for hearing, and we'll have to argue it out, but can keep appealing and follow different recourses because the penalty itself was just so ludicrous. So I think we have some strength there. I don't think anything major should come off it immediately. But yes, like we have mentioned, that is going on.

But are you optimistic on that, something?

I think it's hard to -- I would say, fairly optimistic on the basis that it's such a ludicrous penalty that I would have to -- yes, I would say I am fairly optimistic that, yes, we can contest that to be a fair result.

Okay. And then sir, we have seen a very good year as far as FY '24 is concerned. So can we see it is some kind of beginning from here on, we can see some kind of that show as far as your earning is concerned and the momentum, and we may further achieve that kind of level as far as your profitability is concerned?

I think you're very right from the perspective of improving the margins of improving the product mix to get to the right gross margin and other metric percentages. I think from a growth perspective, it's hard for me to give you that answer to say that the top line growth can be at that level also because there are challenges around probably on that front. But I think from a margin perspective, yes, we have the option to grow that to show a good result at the bottom, definitely.

Okay. So can we say at the end, conclusion, at least in a single-digit kind of thing, higher single digit, somewhere close to 10% kind of thing, at least, we can sustain at least for this year and next year as far as top line is concerned?

Top line.

Top line, I think, is going to be -- I don't know if we're in a position to give you that number. I wish I could. I think it's a little tough right now. It is -- it's tight still in the market. It's a little bit -- margin expansion and see where it goes. And it's hard. It's hard to tell you that 10% is possible. But I think growth over last year HY2 is something that we are definitely working hard to do, and you will see growth over that.

Because in last con call also, I mentioned, based on your product and innovation that we were very confident and you were also saying you also -- your aspiration to be also like that only. And now you are also mentioning you are also into shipbuilding and defense, all the verticals in which the government focus is that. So by considering these, all the facts and you are ready for that, all with your products, that's what you may know better than us because you have an order book and everything in front of them.

The opportunity is there. I'm just -- by nature, tend to be a little conservative in terms of giving a number to you right now like that. But by all means, that's what the team is working very hard to be able to do that.

Our next speaker is Mr. Daval Shah.

Am I audible?

Yes. You are.

So 1 of the PSU shipbuilders I met, so he was worried about the shortage of welders. And they said it's a problem in the industry right now. So what is your comment on it? How Ador being 1 of the large players in the industry is helping to solve this problem and along with the customer to help you grow the industry, because he was really worried about this point that we train the welders and then go, and they get a little higher salary and then they go to other place. So that's 1 point. Second is this entire opportunity basket, which is there in front of us, as you mentioned about shipbuilding and so -- so how does this convert for us into an opportunity? When do you think it can really start for? Because like a flat volume growth for manufacturing-focused company like us, where steel is the main raw material. So we have seen the other manufacturing industries growing, but why the volume growth has not come in H1. So where am I lacking in understanding? If you can just help us -- help me to understand. These are the 2 questions.

Sure. So welders is a shortage, the skilled welders being a shortage is a local sectoral and global problem. Any customer, distributor I meet, the reality of life is this simply because there are not enough people who want to be welders and stuff like that. And there are many, many existential reasons that we have. So there are 2 parts to what we can do here. One is we do training and stuff like that, which is not really a business vertical. It's just a focus for certain customers to train welders, and we certify welders and all that, we do that. But the second part that is more important is automation is going to keep coming in more and more, that's a reality, which is why I showed you things like the cobots and stuff like that, which is what we have to work on. So even the greatest of -- India's greatest of greatest of companies in the infrastructure space have welder shortages. It's just a reality of how it works. And yes, we have to keep improving on that. So that's how we support it. Our volumes have been fairly flat as an all company perspective. As I said -- if you look at the domestic versus international mix, you will see that there is a slight momentum upwards in the domestic volumes at the moment. So that's a little more encouraging. If you look at it from a split data perspective, the domestic volumes are a little bit up. I think correct, if I'm not right about 4%, 5% is what we are probably looking at approximately. On the international front, we had a slight dip in terms of that. That's why we evened out pretty much on a flat basis. I think that's what we can see going ahead.

Okay. So domestic volume growth, H1 was 4%, 5%.

Approximately 4%, 5%.

Okay. Okay. Yes. And just on 1 thing in the way segmental reporting is done. So the Welding segment equals our consumables products plus M&R, correct? This is...

Correct. Everything that's basically core to the business, which is -- yes, exactly what you said is what comes into the welding segment.

Okay. And then the intersegment is adjusted from the welding -- the intersegment revenue.

Yes.

Okay. And this FPED division will have your equipment and projects plus...

No, not equipment. Just projects.

Just projects.

Just the project that's...

Just the projects.

And there's processing, yes, correct.

Okay. Okay. And this unallocable expenditure number was some -- is a bit -- so what is it? Is it all the corporate overheads or the number is higher? So for this quarter, about INR 7 crores for the quarter. And it was INR 12 crores for the yes, H1. So...

Yes. So we participated in the conference.

There are some special overheads that would have come in onetime and stuff like that, that may be a little bit higher for a certain quarter that would come.

These numbers are also net of the other income.

Net of other income, yes.

So it depends on your 4S, Gann laws, how it is moving.

Okay. Okay. And is this the first quarter where our EBIT margin of the consumer division are now almost in line with the -- with our peer, right? Or we've done such performance in the past as well?

In the recent past, we've been coming closer and closer. It's in line with -- like I said, I don't want to talk about anyone else. I can only talk about the fact it should be in line with what we should be doing, and I think it's in line with that.

Our next speaker is Mr. Anubhav Mukherjee.

Am I audible?

Yes. Please go ahead.

So in Q2, was the volume growth flat year-on-year? Is my understanding correct on that?

In Q2, you would have a growth in volume. In HY1, you would not have too much of a growth, just a little bit of a growth because Q1 last year had a high base, Q2 last year had a low base. So that's why we took over HY1 to see it kind of come out of that 4%, 5% on a domestic basis. But on a Q2 basis, if you independently versus Q2 last year, you will have a slight increase in volumes definitely higher than that.

And was there any like realization growth?

Yes. We had realization growth as well on a net margin basis, yes.

So was that driven by better product mix? Or did we like take price hikes?

We've not taken price hikes per se. We've sort of just maintained our pricing is what I would call it from that perspective. And there's a certain product mix element, both.

Okay. And compared to VSAB, like in both consumable and like equipment, have we like caught up? Or like are there still like some gaps?

I prefer not to comment on them to ask -- I can only talk about our own expectations and results. And I think given the current state of everything we're dealing with, this is in line with what we were looking at. What we expect to keep seeing going forward. And we're very clear that we would like to continue to be in a very strong position. So I think it's in line with that.

Okay. And last question is like even in terms of pricing, are we like comparable for like-to-like products? Or there is still some -- exist some leg?

We are a Tier 1 welding company, which means that you are -- in my head, when I say Tier 1 somewhere between a Tier 1, Tier 2 would be kind of right depending on the products. There are some products, global MNCs will always have an advantage on, and we have to respect that. And there are some products where we are very, very strong. So I think overall, if you look at it, 1:1, it's not too different.

And how has been the performance of like erstwhile Ador Fontech business?

No, it's going well, post-merger. In fact, it's good you asked that question. I think I'm getting a lot more comfort in terms of finally the merger integration. We've got a lot of changes. In fact, in that division, and we're starting -- we're very encouraged by the results we've had over the last 4, 5 months. It's definitely on the right part. It's on the right part. It's exactly what we were -- in my head, what we explained to the Board, the reasons for the merger are now starting to come in, yes.

And does the like services business help the consumable and equipment as well like...

Very tiny part. It has very tiny impact.

We have a follow-up question from Mr. Rajat Joshi.

Yes. So I mean, historically, we were a bit under-indexed on wind and auto sectors. So in terms of those 2 sectors, have you done anything? And are we seeing some traction there?

Yes. So if you saw the presentation, I don't know if you had a chance, it will be uploaded. There were 2 products over there. One is a submerged arc wire and flux, which is used in wind tower fabrication, which has now been launched by us. We have been historically way behind the curve on that also with our competitors. So now we'll spend the next few months being a little more aggressive on that, and we do see an opportunity there. On the automotive front, I think about market reach. And also, if you saw there's a product there that had higher productive efficiency called a MIG pack drum at 500 kgs. Both of those for not only automotive but for PV, heavy construction equipment, that kind of stuff, definitely should have a benefit, and we are seeing a little bit.

Understood. Understood. Secondly, on the projects business, we saw -- I mean, this quarter had about a INR 2.5 crore odd loss -- operating loss in that segment. Going ahead, what level of revenues, I mean, should be enough for us to kind of breakeven in this? Because I mean, at a consol level, it does affect the overall number, right? So...

That's fair enough. Look, we're going to see next quarter, you're going to see a slight bump up because we're going to close out that project. So you will see a slight bump up, but that project. Obviously, the margins are what they ask. You're not going to see any major impact to the bottom over there. Thereafter, you would require anywhere in the region of approximately INR 15 crores, INR 20 crores of revenue to be able to break even on that business or just about -- have your head above water. We'll have to get back to you with greater details on that front, but our fixed costs and all of that are very much under control once the project comes to an end.

Understood. And with regard to the merger, the synergies that you were expecting to realize there in terms of cost efficiency and on the revenue side as well. Would it be fair to say that all of them have flown in? Or is there still some juice left on that front?

The path has started. We are seeing the benefits of it. We're seeing the benefits of it coming in, in terms of the management structures that we have put in. We're seeing the benefits coming in, in terms of a few distribution perspective, a little bit on the cost front. There's still room to go. But at the end of the day, you're not going to suddenly see a massive margin shift because of it. You're going to just see it step by step. But I think what we are -- like I said, the reasons why we want to do the merger in the last 3, 4 months, at least I am getting comfort that now we are on that path. And yes, we will see better.

Got it. And lastly, on the European market, how are we seeing things there? And how big of an opportunity can it really be...

Not very gung-ho on Europe. We don't invest too much in Europe. It's not really something for us on an outward basis. Maybe some inward technology stuff, a little bit on that. For me, the Middle East, once things settle on tariffs, a few other, Indonesia, South Americas are a little more interesting because you have to understand how we work in these markets. We work with feet on the ground. We work on customer approvals. We work on a long development cycle. And I think those markets are a little more interesting for us.

Our next speaker is Mr. Bhavya Nahar.

He's on mute. Go to the next person.

We have a next speaker, Mr. Dhawan Shah.

Hello? Sorry, can I go with the question now?

Yes, yes. Go ahead.

Sir, so you mentioned that our sales from the electric battery welder is still slow. So is the issue in the demand for the product?

No, no, no, it's an issue -- you have to -- it's a long -- it's a completely new product for the industry. And the only select industries are going to do it, we'll see the green benefit, carbon credit benefit, all of that. So you have to reach out to them, you have to do testing, product approvals. So we've got a few things in the railway front, a few things on the cement front, all of that. So step by step, it's not going to be a revolutionary product from a perspective of general usage. So we just have to keep playing it out and build it from them and take it forward.

Got it. And in the automation segment, do we have any products in the orbital welding side?

No, we don't have. There are a few companies used to represent a long time ago, not right now. We're not in it. But that's not to say that we're not exploring further potential on it. We're trying to identify where we can create the right value addition, where we can create the right solution selling. Orbital is fairly well structured by the current orbital players. I don't know if that's really going to fit in, but we will see. It's not a focus area at the moment.

Our next speaker is Mr. Dhawan Shah.

My question is on the welding side. Do we have the technology available for the shipping welding?

I would say up to approximately 90% of the requirement or 95% of the requirement, yes.

Okay. For the -- what size of the ship can we do the welding? I mean, is this the entire solution available, if there is -- the big ship is also going to be constructed then?

I wouldn't be -- I'm not the right technical person to answer that. But I can tell you that wherever there is a general consumption of welding that goes on and all of that kind of stuff, we'll be in a position to do it. We do it for large, yes, we do it for defense. We do it for large ship stuff. We work with the largest shipyards in India. So yes, given our customer base and the large shipyards in India, I presume, we can cover quite a lot of the bases.

And right now, is there any revenue coming from the shipping side of the business?

Yes.

How much it would be in terms of the percentage contribution?

It's still small. Without giving you a number, I can just tell you, it's still small. Still small. But yes, we are seeing more activity pick up.

We have a next speaker, Mr. Samarth.

Am I audible?

Yes. Just go ahead.

Sir, from June 2023, including the one-off item, we have cumulatively lost INR 63 crores in the flares business.

How much?

INR 63 crores.

Yes.

So why do we -- I mean you have said a couple of times that you won't do large orders, we'll focus on small orders only. So why do we want to continue this business when -- right, it requires a completely different skill set. And rather than spending the management bandwidth in this, we can use the resources for some other business like exports and all where we have a better right to win on. So...

Fair question. I think it's a very fair question, and then it's something that we keep working on. I think let's just get there step by step, let's executive the Union project first. I think our issue is the losses that we have had are around larger projects always. In fact, we still do. It's just that it's not visible to you guys, but we still do small projects are continuing, and we are making money in those projects. And we may not be making margins in line with the welding business, but we're definitely not losing money per se. Now the question becomes strategically, which way should we be oriented? I think give us a few months to get that right. But please keep in mind that we do, do orders, which is in a sweet spot up to about INR 10 crores, INR 15 crores, where we have the margins in line with what we want. It's just that we unfortunately to have mismanaging larger orders. And you're right, it's a different skill set. I completely agree with you. I don't want to even build up that skill set. But that doesn't mean that the benefit of what we have set up on the smaller cannot be done and without impacting the welding results.

The last question. We were focusing on 2 geographies, which was Brazil and Mexico in export markets also.

A little bit, yes.

Like 2 years back, we had considerable supplies to Brazil and all. So how do you see the sales gaining traction over here?

Brazil didn't really take off in a big way. And I think that has a lot to do with the transit sort of the way the economy is set up and stuff, and we never really pushed very impressively there. Mexico does well. Mexico continues to do kind of well for us. And that's more of a focus area. I think Brazil is more being present and stuff like that, and we have a few small inquiries and go on. I would say Mexico is a lot more interesting and has been for us.

Thank you. That was the last speaker for today's Q&A session. Now over to Aditya sir for the closing remarks.

Okay. Nothing to say except wish you all a very happy Diwali, and thank you very much. Take care.

Thanks a lot.

Rishab, well done. Thank you, guys.