Aequs Limited (AEQUS) Earnings Call Transcript & Summary

Good evening, ladies and gentlemen. I'm Karthikeyan, moderator for the conference call. Welcome to Q3 FY '26 Earnings Conference Call for Aequs Limited. [Operator Instructions] Please note, this conference is recorded. I would now like to hand over the floor to Mr. Diwakar Pingle from EY. Thank you, and over to you, sir.

Thank you very much, Karthik. Good evening, good morning to all participants on the call, depending on the geographies you are logging in from. We welcome you to the Q3 and nine-month FY '26 earnings call, the first earnings call for Aequs Limited post the listing. Before we proceed this call, let me remind you that the discussion may contain forward-looking statements that may involve known or unknown risks, uncertainties and other factors. It must be viewed in conjunction with our business risks that could cause future results, performance or achievement to differ significantly from what is expressed or implied in such forward-looking statements. Please note that we have made the results and the same is available on the exchange. In case you have not received the same, please write to us, and we'll be happy to send the same to you. To take us through the results and answer your questions today, we have the management of Aequs Limited, represented by Mr. Aravind Melligeri, Executive Chairman and CEO; Rajeev Kaul, Managing Director; Dinesh Iyer, Chief Financial Officer; and Harish Bang, Vice President, Finance. We will start the call with a brief overview of the quarter gone past and then conduct the Q&A session. With that said, I'll now hand over the call to Aravind. Over to you, Aravind.

Thank you, Diwakar. Thank you. Good evening, everyone. Thank you for joining this call, the first one after we became a public company. This is an important moment in our journey. The strong reception to our IPO, which was subscribed more than 100x, reinforces the trust placed in us by our customers, partners and our shareholders. This also reflects the confidence placed in us by our investors and the dedication of thousands of colleagues across manufacturing clusters in Belagavi, Hubballi, Koppal in India and units in France and U.S. As you may know, Aequs began its operations in 2006, '07 as part of QuEST Global with the ambition of building a resilient, scalable institution from -- for the long term. Early customer insights showed that aerospace success would require a fully integrated manufacturing ecosystem. This led us to our first facility in Belagavi in 2009, '10. That milestone marked the start of a multi-decadal journey to build a world-class manufacturing ecosystem in India for the world. The focus was also on maximizing in-country value add. We originally started with about 20% in-country value add. Today, we have evolved into a 100% in-country value add for select parts like aircraft wheels for the global commercial aerospace industry. Today, Aequs is the only precision component manufacturer operating within a single special economic zone in India to offer fully vertically integrated manufacturing capabilities in the aerospace segment. This sets us apart from other manufacturers with selective manufacturing capabilities amongst the suppliers across the world. This unique approach gained global acclaim in 2016 when Airbus conferred Aequs an Innovation Award in recognition of unique ecosystem that we have built here in Belagavi. Subsequently, our scale, capabilities and compliance-driven approach in aerospace segment has enabled us to venture into consumer industry with a unique value proposition through manufacturing ecosystems. We strongly believe in partnerships and treating people equally. This led us to rebrand us as Aequs in 2014, reflecting our view that all stakeholders are partners in growth. Aequs in Latin means equal. This philosophy has embedded in our values of transparency, trust and respect and institutionalized as a DNA of Aequs. Quite naturally, we have leveraged global partnership to enhance these ecosystems through joint ventures to gain process capabilities. We have partnered with Magellan Aerospace of Canada for surface treatment with Aubert & Duval of France for forging. More recently, we have partnered with Accel India and Vagus Defence to enter the design and manufacturing of unmanned aerial vehicles, primarily for India defense requirements. In consumer segment, we partnered with Brazilian multinational Tramontina to tap the global cookware market. We have thus emerged as one of the India's largest end-to-end aerospace suppliers to OEMs, Tier 1s and such as Airbus, Boeing, Collins, Safran, SAAB, Honeywell, to name a few. In the consumer verticals, we apply the same engineering discipline to produce precision components for consumer electronics, toys and cookware for global leaders. Many of our relationships with the top OEMs in the aerospace segment and clients in the consumer industry span over a decade. This is a validation of a trust that we have built as a reliable partner with scale to meet their growing demands. Speaking of the industry scenario, aerospace and consumer segment have addressable market at over $447 billion and $126 billion, respectively, by 2030. Speaking of the opportunity in the commercial aerospace market...

Participants, kindly stay connected while we connect the management back on the call.

Yes. Again, I think I will repeat this sentence in case somebody missed. Speaking of the opportunity in the commercial aerospace market for the Indian supply chain company, this market opportunity, we still are -- India is only 2% of the global supply chain, whereas currently we are about 5% of the global market India has. And this is going to go into a 10% of the global market. India is going to be 12% of the global market for the commercial aerospace industry. And our focus has been to grow India as in line with the global market, what India opportunity provides. This dynamic offers the tailwinds for India manufacturing, including the cost competitive skilled engineering talent and rapidly maturing quality ecosystem. To capture growing share of global aerospace sourcing, particularly OEMs diversified supply chains to leverage India. Coming back to this quarter's performance. This quarter's performance reflects the strength in our operations, which we will discuss in further details during the call. The growth was driven by ramp-up in aerospace programs and scaling up in our consumer business. Our Aerospace segment continues to be profitable with a strong order book of $814 million. In consumer electronics, the programs we won earlier are now industrialized. We are starting to see the revenues coming through. During the quarter, we received approval from MeitY for PLI incentives under Electronics Components Manufacturing Scheme. Further, we brought on Mattel as a new customer and started shipping -- shipment started in the last quarter in the Q3 and started recognition of revenue. As we step into the new phase as a listed company, our focus remains unchanged to deepen capabilities, expand our integrated ecosystems to support our global customer programs from India. Thank you once again for your trust and support. I will now hand over to Rajeev Kaul, the Co-Founder and Managing Director, who will walk you through our operations and road map in greater detail.

Thank you, Aravind, and thank you, everyone, for joining us today. We are grateful for your time and interest in our company. As Aravind explained to you, we are a precision manufacturing company. We make complex, high-quality components for some of the world's biggest brands, which include almost every aerospace OEMs, Tier 1s and consumer companies, including a large consumer electronics player. Our manufacturing presence is vertically integrated, meaning we manage the manufacturing process end-to-end. It starts from forging, machining, molding, stamping, special process, various secondary processes and assembly. Everything is done at our three integrated clusters in Belagavi, Hubballi, Koppal, supported by facilities in France and the U.S. This setup has kept us close to customers, while at the same time, capitalizing on India's position as a value-oriented supplier. Our integrated ecosystem gives us strong operating leverage, shared infrastructure across ecosystems and delivers faster cycles and better cost efficiency. We have built deep process expertise across forging, machining of titanium, high-strength aluminum alloys, steel and super alloys, supported by NADCAP certified surface treatment that meet stringent aerospace standards. These capabilities require years of investment and qualification, making them difficult to replicate and establishing a strong competitive moat for our business. In terms of manufacturing capability, we can handle large long-term aerospace programs as well as short-cycle consumer production at high efficiency. We currently operate around 3.96 million machining and molding hours annually, which is supported by our 424 CNC machines and 161 molding machines. Now I would like to explain our two segments in detail, aerospace and consumer. In aerospace, we manufacture critical parts of aircraft for aerostructures, actuations, engines, landing gear and interiors with a comprehensive portfolio of 5,221 parts as of December end. These programs are highly regulated and qualification cycles are long. But once approved, they tend to stay with us for years, which gives us visibility and sustained growth. The aerospace industry is also difficult to enter, but is a large runway for entrenched players like Aequs. This vertical contributes around 86% of our revenues during the nine-month period of FY '26. Global OEMs are increasingly rebalancing their supply chain and turning to India as a reliable manufacturing partner. And as Aequs, we are well positioned to benefit from this shift, offering a fully integrated global certified ecosystem that delivers consistent quality and scalable capacity, supported by strong engineering talent, competitive cost structure and efficient SEZ operations, we have seen meaningful growth in sourcing from major OEMs, including Airbus and Boeing. In consumer, we apply the same precision and discipline to make components and products for consumer electronics, toys and cookware. While this vertical contributed 13% of our revenues during the nine months, we are seeing rapid expansion of demand in this segment. At the end of the quarter, our aerospace order book stood at USD 814 million. During the quarter, we also commenced deliveries to Mattel and the consumer electronics programs awarded earlier have been fully industrialized with revenues now begin to flow. Before I close, I would like to highlight one thing that truly defines Aequs, our people. We have a strong team of 725 engineers out of total workforce strength of over 2,968. That reflects a significant investment in our engineering capability. They are the reasons we take a new product development to commercial production with speed and precision. We'll continue to build on this strength. With that, I would like to thank you for your time. and will hand over to Dinesh Iyer, our CFO, who will walk you through the financials and the key highlights for the quarter. Thank you.

Thank you, Rajeev. Good evening, everyone. I'll be taking you through the financial highlights for the quarter and the first nine months of FY '26. For Q3, revenue from operations stood at INR 3,262 million, reflecting a strong 51% growth year-on-year, which is also the highest quarterly revenue for Aequs Limited, driven by continued growth in the aerospace and consumer verticals. We reported an EBITDA of INR 381 million, up 353% year-on-year. This translates to an EBITDA margin of 12%. PAT for the quarter was at negative INR 426 million, but this includes both the impact of the labor code expense and IPO-related expenses amounting to INR 167 million. Our adjusted PAT after taking -- removing these onetime items would have been a negative INR 259 million. For nine months FY '26, revenue stood at INR 8,633 million, up 28% year-on-year and once again led by strong momentum in the aerospace and consumer segments. Our EBITDA grew 85% from INR 662 million to INR 1,222 million, improving our EBITDA margin from 10% to 14% year-on-year. We have also been able to reduce our PAT loss from INR 1,115 million in the nine months FY '25 to INR 593 million, an improvement of 47% year-on-year. If we adjust for the onetime labor code expense and IPO-related expenses, our adjusted PAT for the nine months would be a loss of INR 426 million. Coming to our JVs. If we include our proportionate share of the joint ventures that we have, total adjusted revenue for Q3 stood at INR 3,554 million, up 49% year-on-year, while EBITDA grew 228% to INR 449 million, resulting in an EBITDA margin of 13%. For nine months, revenue, including JVs would be INR 9,482 million and EBITDA INR 1,410 million, reflecting a 15% margin with growth in revenue of 29% and EBITDA growth of 75%, respectively. Our aerospace joint ventures continue to deliver strong margins, reinforcing the integrated ecosystem that differentiates Aequs from forging and special processing to machining and assembly. In Q3, the aerospace business contributed INR 2,685 million, translating to 82% of consolidated revenue. Aerospace revenue grew 38% with segment EBITDA at INR 633 million, which was up 163% year-on-year. For nine months, the aerospace revenue was INR 7,424 million, which has showed an increase of 26% and segment EBITDA was INR 1,803 million, which reflected a 62% year-on-year growth. The consumer vertical reported revenues of INR 577 million in Q3, up 157% year-on-year. While our EBITDA loss in this segment widened from INR 95 million to INR 159 million, this is primarily due to us being in a scale-up phase. As our utilization improves with scale, we expect operating leverage to improve our profitability. For nine months, the consumer segment revenue increased to INR 1,209 million, showing a 39% increase and segment EBITDA fell to INR 159 million, which was 9% year-on-year. Turning to our balance sheet. Total assets stood at around INR 30.5 billion in December versus INR 18.6 billion in March 2025, reflecting IPO proceeds, investment in CapEx for consumer segment and increase in working capital in line with business growth. Coming to the key ratios, our balance sheet metrics continue to improve. Net debt to equity reduced sharply to 0.1x as of nine months FY '26, reflecting deleveraging following the IPO and improved capital structure. Due to significant capacity additions in consumer segment, fixed asset turnover moderated during the period to 0.84x from 1.3x. Excluding the capacity addition in consumer segment, which is starting to deliver revenues, the ratio would have been 2.14x. The ongoing ramp-up across consumer programs is expected to improve utilization. Net working capital days stood at 120 days of sales as of nine months FY '26, broadly in line and showing a slight improvement over FY '25, which was 132 days on sales, reflecting the long-cycle nature of aerospace programs and inventory build to support growth. Aerospace segment ROCE was 18.5% for nine-month FY '26, reflecting a good improvement over FY '25, which was 14.3%. This was driven by the operating leverage. Consumer segment being in a ramp-up phase with investments front-ended shows negative ROCE, which is expected to turn positive as utilization increases. To summarize, top line growth remains strong. Margins are improving driven by operating leverage and our balance sheet is well capitalized to support growth. Aerospace being our mature business segment continues to anchor profitability, while the consumer segment will move towards profitability with increased capacity utilization. Our priorities remain clear: first, continue to grow aerospace segment profitably; second, drive utilization in consumer segment on the back of customer additions; and third, continue to look for opportunities in aerospace related to defense. With that, we will now open the floor for questions. Thank you.

Thank you, sir. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] We have the first question from the line of Bhavika Singhvi from Niveshaay.

Firstly, many congratulations for the IPO debut and for a good set of numbers. So, basically, I have a few questions of, one around your business side. As an aerospace company, I just want to know the management view why they enter on the consumer segment, especially on the plastic engineering. And going forward, what's their view on the same? And the second question I have regarding the results, like I see the margin. The consumer segment margins of Q3 have been like impacted. So I want to know the reason behind it, like even though you are doing good on -- in terms of electronics side. So why there is like margin got impacted in Q3?

Okay. This is Aravind Melligeri. Back in 2016, 2017 is when we expanded into consumer from aerospace, the thesis at that time was our capability, if you really look at precision manufacturing and also the requirement, what is required for the industry, toys industry was pretty much similar with respect to the compliance and also the regulations in a sense, if you look at it, compliance, regulation and safety side of it, especially. And the global customers who came to India, they were looking for manufacturer with the background of aerospace, automotive, that kind of thing. And we saw the opportunity to enter this vertical and scale without compromising any on investment possibilities in the aerospace side. And it leverages -- apart from leveraging the high precision capability, which is required for molds and manufacturing and also the assembly side of it, this is an opportunity to scale. It's a fairly large market and where we -- it's about $80 billion global market on toys. And there are no players in India at that point in time, significantly contributing. And we have entered that market. Later, we decided that we expand this into consumer electronics, where the opportunity is much larger than what we have seen. So, as a product portfolio, if you look at capability perspective, Aequs has always driven on the capability in the manufacturing of machining, we have stamping and similar in the plastic injection molding is there. And in consumer electronics, we are doing stamping and precision machining and injection molding. So there is a combination which comes into the consumer side of business also. And coming down to your question of -- that's the reason we believe it's a complementary for us to leverage capability of the -- what we have, what we learned in aerospace into apply for consumer. It's a much higher volume. And what has taken 15 years for us to grow in aerospace, this can happen within a few years in the consumer industry because of the way the product scales in this industry. And the second one is on the consumer electronics, the consumer performance perspective, we invested on this product in the consumer electronics over the last 24 months, and we just started production...

Participants, kindly stay connected while we connect the management back on the call.

Yes, majority of the capacity has come online. And now because of that, our EBITDA looks much worse than what it was in the previous quarter. And as our utilization is today only at 35% and utilization will continue to improve on a quarterly basis, you will see the improving the EBITDA numbers and also profitability. And we have to work with this and because early investment phase, and it is working through this -- working through and making sure that we are going to get utilization up and correspondingly translating into our profitability.

I have a follow-up question on this. Like on aerospace, you are making -- like you are profitable. But because of the consumer segment, your aerospace revenues like margins are getting wiped off. So is there any plan like you are thinking to do something in future? Because I think in the plastics side, it's been -- consumer segment has been loss-making since like a lot of time. So is management planning to do something regarding the same? And like the second question is regarding the ecosystem, like as it's highlighted that because of your ecosystem, which is the precision making, I just a little confused that why it's not getting reflected on your margins, like being aerospace company, you are making margins less than 20% and like being -- like I just want to understand like how this ecosystem is helping you on aerospace side?

This is Dinesh here. Maybe I'll just take that question, and I'll just take the last part of your question. Again, if you see our segment results, if you see aerospace for the nine months reported, it's at 24% margins. So the margins are, I mean, healthy there. So that's the margin that you should reflect. In terms of consumer, again, I think what we just mentioned in the sort of introduction is the manufacturing business requires investment upfront. So if I take consumer electronics or toys, I think the investments have been made upfront. If you see year-on-year, we are showing a steady growth in revenues. And with the revenue growth, you will get the leverage and the margin should come back. So the focus, two things. One, on consumer electronics, already we have the customer in place. The products are getting industrialized. The demand is there, so we should see revenue growth. And with revenue growth, you'll see a leveraging of whatever investments we have made in terms of CapEx and people that we have got on board. It's a similar situation for toys as well. We have the fixed assets in place. So as the revenues grow, you'll see a leveraging and we should start getting into a good margin profile. I hope that addresses your question.

We have the next question from the line of [ Renuka Baid ] from IIFL Capital.

Congratulations for the results and IPO listing. My first question is on the aerospace business. Can you help us understand what are the time lines of execution of the order backlog, which you have shared in terms of number of years? And also, if you can share with us the guidance for fiscal '26 and if any, you have for fiscal '27 for this point in time? That's the first question on aerospace. On consumer part of the business, it would be helpful if you can help us understand how is the order book with the key customers on the consumer electronics part of the portfolio, which you recently added. What is the road map to scale the revenues in that segment? You did highlight that the segment turning profitability is contingent on the improvement in utilization levels. So this is the order book that we have in your view, by when are we expecting the business to break even and turn profitable? And what is the kind of CapEx requirement in this business that you're forecasting for the next 12 to 18 months?

Thank you. For the first question in terms of order book, again, as we mentioned, the order book is USD 814 million. We expect this to get delivered over the next five years. So this order book is there up to about 2031. Obviously, we continue to win new orders. So this is not a static number. But the number of $814 million will be delivered between now and 2031 as the projects start scaling up. The second question...

So, we can consider this as the TCV value, right?

Yes, this is the TCV, total contract value. That's correct.

Thank you. Sure.

On the consumer electronics, again, in terms of order book, typically, the structure with the customer is that we build capacity based on demand that they project. So, typically, the way it works is they have a certain demand. We work with them to build the capacity to sort of fulfill that demand, which is why I said the demand is already there and where you'll start seeing the ramp-up in revenues. So the -- there's no order book as such, but the way they work with their manufacturer -- contract manufacturers, they build the capacity to meet their demand...

So based on the indicative demand ramp-up on target that you have from the customer. In your view, how should we look at the growth on volume scale up in this business? And at what utilization levels in your view, we would be -- the consumer business will be turning profitable or to breakeven? And any time line should we have for the same?

See, time lines, I think -- I mean, we'll have to see as it goes. I think today, if you see, we are seeing a growth in the quarter. In terms of -- again, what I can say is the capacity that we have built is already fully committed by the customer. Now it's a question of how our ramp meets that requirement. So there's no issue of demand. It's only our ability to scale at a quicker pace that will meet the demand. So that's the...

And due to the ongoing memory chip price, both steep hike in the prices and availability shortages, have we seen any volume impact or probably since we are in the early phase of ramp-up, we are broadly unaffected by some of these macros here?

Renu, this is Aravind. Just to give you a little bit of broader understanding. Look, the products have been qualified in the consumer electronics, both the products and commercial shipment has started. The customers are happy with where we are, and in fact, they have asked us to increase our capacity. So, the combination, obviously, there's no issue with the market share perspective, volume perspective because we are a very small percentage of the overall market share of the customer. And so we don't see that as an issue at this point in time.

Sure. And second question would be, given that India has now signed up with EU on the FTA, we also have a subsidiary and we have a French unit there. So, in any way, do you think our portfolio tends to benefit on any import of certain components coming up for Europe or especially on the aerospace part of the business?

Actually, aerospace itself did not have any kind of a tariff between U.S. -- sorry, EU and India. It has been zero, zero. And whereas consumer toys have certain tariffs certain products have, consumer electronics typically don't ship to Europe. And obviously, since our contracts are always works or delivery duty unpaid, customers typically bear the duties. And in that situation, we become more competitive in this situation when the tariff, whatever the 4%, 5% in there goes to zero in those areas.

Correct. Got it. And lastly, to close, would you like to share any guidance on revenue margins for fiscal '26 or anything in fiscal '27 at this point in time?

No, Renu. Not at this time.

We have the next question from the line of Nemish Sundar from Elara Capital.

Congrats on a very healthy set of numbers on growth. Sir, just a few questions. So, on the order pipeline, our order book, you highlighted USD 814 million is the current order book in aerospace. Just wanted to understand how would be the ramp-up in order book? Like is there any order pipeline that we could work with for the next one, two years or the upcoming quarters? Or how would we go about that? Any indication?

Yes. I mean this is a constant process. Our sales team is upfront in our customer engagements are continuously. Our account managers are working with our customers. The RFP pipeline continues to happen, and we convert some of them into contracts every quarter. And that gets added into our order backlog. And that's what we will communicate every quarterly basis, what's our current order backlog -- order book looks like. And so you'll see that continuous update on a quarterly basis. And it's a continuous process. Every quarter, it moves up, whatever it is, depending on what we executed plus what we signed up.

Okay. So it could be in tandem with what the revenue growth is currently there, and it would move along the same lines as what we could work with. Is that a fair assumption?

Yes. I mean, look, I mean, these contracts are anywhere between five to seven years when we sign the contract. Some of the contracts signed long back would be ending and new contract renewals would have happened. All that combination will come up. And obviously, it's a measure of what would we deliver in the next five years.

Okay, sir. And on the CapEx requirement, so what would be the CapEx that we could assume for this year and for aerospace and consumer, if you would like to provide a split of the CapEx?

So, this year, you should not -- I mean, most of the CapEx is already done. There will only be some more capitalization. So the spend has happened. Some of the capitalization will happen in the consumer electronics. But otherwise, we should not see any big CapEx -- new CapEx that are coming in. So you see some numbers getting into capitalized in Q4. But otherwise, there are no significant investment in this year.

Okay. And just my last question on the component manufacturing scheme approval that you have mentioned. So I just wanted to know for what product or segment, if any particular segment was this for?

This is for our consumer electronics segment, mechanical enclosures.

[Operator Instructions] We have next question from the line of Dev Thacker from ithoughtPMS. Congratulations for the listing.

Congratulations for the listing. So I had this question. So what would be our wallet share in absolute terms per aircraft, maybe the narrow-body ones? And going forward, what could be the growth in this per share aircraft?

Look, we are not currently disclosing the exact content per aircraft at this stage. Obviously, I can qualitatively say that Airbus A321 is a significant content as an overall revenue perspective for Airbus A320 family for us as at Aequs. And narrow-bodies overall is generally a largest market -- largest revenue share what we have today. And it continues to be because the volumes are largest in the industry. And also growth is also highest in the single-aisle market, which is predominantly Airbus A320 and 737. Both are growing up -- growing in the volume. So that will continue to have a larger share for us also and winning opportunity also for us. But having said that, we have enough content of long range, both on 350, 787, 777, 777X, and that's the overall narrative I can provide.

Okay. Got it. Could you provide a mix of like what could be the onetime delivery part and what could be the repeat business parts of this?

We don't do any onetime delivery parts at all. We generally, all -- everything what we do is under contract, long-term contract.

No, no. As in -- like what could be the like for the fresh aircraft and what could be for the like MRO business?

For aftermarket?

Yes.

We don't really pitch that because everything we deliver is under contract to the OEMs or Tier 1. And they are -- it's left to them, and we have no differential pricing, at least out of India. A little bit, I would say, in my -- our French facility, we segregate between MRO and aftermarket and OEM. And then there is a content which there. Obviously, it's a differential pricing. And so that's how it works.

Okay. Sir, on the consumer electronics side, is there any like change in capacities like for enclosures, if I'm not wrong, we had 10,000 per day capacity. In watch cases, we had 4,000 per day kind of capacity. Is there any change in that? As you said, capitalization is still yet to be done. So what could be the final capacity for that?

Yes. I mean, look, we have no comment on that specific activity question.

We have the next question from the line of Shashi Kant Brighter Mind Equity Advisors.

My first question is client-wise breakup of revenue, if you can tell us, I mean, from Boeing, Airbus and...

Yes. I mean we don't provide that split.

Okay. Sir, the next question is many -- recently, we have observed many Indian groups are trying to build a commercial manufacturing in India, commercial aerospace manufacturing in India. So how we are seeing that opportunity?

Look, we would be happy to supply to anybody who does commercial aerospace or aircraft build. We have no issues with it. Ultimately, these are all approved by the OEMs. If I'm supplying to the OEM, all these designs are not done in India. These are existing designs getting built in India. So if we are supplying to that original design, those same parts will end up coming here for supply if they set up a facility here. So, it just translates.

And how we are seeing about the opportunity in the defense aircraft manufacturing in India?

Look, we have capacity to support anyone. Its question comes down to is we want to -- in the defense side of it, we would like to be more of a system-level contributor. That's why we announced a joint venture partnership with Accel and Vagus Defense to get into the EV market, design and manufacturing. We believe we would like to play at a system level in that segment, in the India defense specifically. We do support the defense activities in France and U.S. locally also.

We have next question from the line of [ Sharan P. ] from Unifi Capital Private Limited.

So my question is on the consumer side. So, on the consumer side, we have toys and electronics, right? So the cookware business we are doing via JV now. So my point is how much of a cost mix would be of this quarter or for the nine months would be from toys and from electronics? And second question would be from toys perspective, in one of the TV interviews I heard you say that you are in line with increasing and bringing on some new customers for the toys business. And how is that going? And how is the Hasbro's business currently we saw a dip in the last year. But again, we are seeing that Hasbro is planning to shift again from China to India. So how is the growth in the toys business? And third one would be the electronics business. I can understand that once the ramp-up comes, we would be seeing the profitability. But how do we see maybe how many months or how many quarters roughly we can get to achieving that ramp-up, if you can comment on any of this.

In the -- let me maybe try to answer this question. The consumer side, you're asking how much is the toys versus the consumer electronics. We don't split that number because predominantly it's evolving vertical segment for us. And today, I can say that the consumer electronics is a small portion of the overall nine months. And we believe it's going to accelerate much faster, and it's going to be a significant portion of our consumer business as we go forward. And the price prospective customer basis, we have onboarded Mattel as a new customer, strategically long-term agreement signed in. And we believe Hasbro is also growing, and we'll continue to grow both of them. That's how we look at it. And we have existing capacity. We are not investing any new capacity in this vertical at this stage.

Yes, I get that. Okay. So, Mattel, so when will revenue kick in like...

We already started the revenue.

Oh, already started the revenue, okay.