BEW Engineering Limited (BEWLTD) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the H2 and FY '25 Conference Call of BEW Engineering Limited. This conference call may contain forward-looking statements, which are based on beliefs, opinions and expectations of the company as of the date of this call. These statements are not the guarantees of future performance and involves risks and uncertainties that are difficult to predict. [Operator Instructions]. Please note that this conference is being recorded. At this time, I would like to hand over to -- hand over the conference to Mr. Rohan Prakash Lade, Managing Director of BEW Engineering. Thank you, and over to you, sir.

Hello, everyone. Welcome to the earnings conference call of BEW Engineering for the second half and year ended 31st March 2025. I welcome you all, and it's a pleasure to have all of you over here. I appreciate everyone's presence here today. Joining in the call with me is our CFO, Mr. Yogesh Darekar; and our Investor Relations team from Adfactors. Prior to this call, we have uploaded the updated presentation. I believe everyone had the opportunity just to go through it. So let me begin by saying that FY '24 has been a year of a very steady progress despite facing headwinds in some of our key end user industries. We have remained -- though we have remain focused on building long-term capabilities employing operational efficiencies and strategically positioning BEW Engineering for the next phase of sustainable growth. To just start with, I would like to provide a concise summary of who we are. The market dynamics we are navigating, key recent achievements and our strategic outlook going higher. So BEW Engineering had made a very strong progress over the past years, basically founded in 2011, we had established ourselves as one of the leading designers and manufacturers of precision equipments for the pharmaceutical chemicals and specialty chemical industries. Our product portfolio spans into the various categories out of this, 6 of them are in dryers and 3 of them are in filters, is designed for high performance, quality and customization. We currently enjoy a market share of approximately 40% in our segment. Our equipments are widely used across pharmaceutical applications, fine chemicals, agrochemicals, specialty chemicals, pesticide, dyes and some in food industry as well. As an ASME and a U and R STAMP certified manufacturer 2016 and a listed entity on the NSE platform since 2021, we remain committed to innovation, precision and customer satisfaction. Today, our products have raised global markets, including Japan, Germany, Israel, U.S. and Southeast Asia. Global chemicals, specialty chemicals, agrochemicals companies reported their fourth quarter of FY '24 and 2024 results growth primarily driven by the volume growth. EBITDA prices remained subdued, prolonged period of the global inventory destocking in the chemicals and the specialty chemical sectors was largely over by the end of year 2024. However, the agrochemicals segment is still struggling with inventory pressures. Nonetheless, the intensity is moderated substantially. Despite the challenge -- inventory challenges, agrochemicals companies posted year-on-year volume growth 2024 amidst a challenging pricing environment. After a modest year performance, company's outlook for 2025 remains mixed with some expressing concerns about demand recovery, while other remains a bit optimistic. Even with the optimistic view, demand in growth is expected to be gradual. Agrochemicals companies expect volume growth in 2025 and further elevating inventories, however, low form product prices can play spoilsport. Yet companies on pricing environment. Volume recovery across global chemicals, specialty chemicals, agrochemicals is likely to add growth for the Indian chemical sector without any material support expected from pricing. Given the critical role of filters and the dryers in ensuring safety, solidity and process efficiency, we see -- we still see a rising demand and significant opportunities for our company to scale further through product innovation and again capacity expansion. I'm very proud enough to celebrate this milestone with BEW marking over 10 years of manufacturing as the ASMEs pressure vessels and process equipments made the highest in the industry standards. The recent export of our filter to United States, a significant achievement and strength of our presence in the global market. This accomplishment not only reflects our technical capabilities but also reaffirms our commitment to delivering safe, reliable and high-quality solutions to our customers worldwide. It is with a deep sorrow that we have to inform you of the passing away of our Chairman, Mr. Prakash Lade, the Director of BEW Engineering on December 29, 2024. Mr. Lade was a very much internal part of our organization and a true pillar of strength whose vision, leadership played a very pivotal in shaping this company. His absence leaves us a profound void and the entire BEW family deeply mourns this loss. We extend our heartfelt condolences through this in these difficult times. I'm thrilled to share some exciting news that fills up with an immense pride. BEW Engineering recently delivered -- successfully delivered its latest innovation in the pharma industry which is closed loop comical mixer dryer and deal with the clawbox per containment. Entrusted with this project by a prestigious domestic pharmaceutical manufacturer, we are proud to have not only met but exceeded their expectations. It is our great privilege to welcome the National Institute of Pharmaceutical Research and Development delegation to our facility. It was a great opportunity to strengthen our relationship with NIPR and reinforce our commitment to supporting the mission to advance pharmaceutical research and development in Nigeria. Additionally, we have successfully delivered a state-of-the-art soil and containment suitable Cantilever vacuum dryer for pharmaceutical sector. This latest innovation reaffirms BEW's commitment to provide high-quality customized solutions for the pharmaceutical industry. And we recently also launched one of the vacuum tray dryers of 96 trays with Halar coating, which was provided complete systems like heating system, cooling system and a vacuum pump. We successfully delivered a lab scale equipment to one of our valued to clients and also benefit fully integrated a COD system with 3 kilowatts capacity tailored for high quality and stringent demands of pharmaceutical -- active pharmaceutical engineering production. As we continue to grow and innovate, my focus remains ensuring that we made the evolving needs of our clients while upholding the highest standards of safety and performance in every product we create. Our current order book stands strong at INR 80 crores, and we anticipate this to grow to INR 150 crores by the end of FY '26. The order book composition reflects our strengths and customer demands, which with filter dryers accounting to 70% of it and paddle and some other dryers to 20% and the remaining 10% will be mixers, blenders and some other products. These are the key growth areas where BEW has continued to innovate and meet high standards of quality and innovation. In our export market, we are seeing strong traction, especially in Africa, where we expect a significant growth, roughly 40% of the revenue is derived from the repeat customers, a clear indicator of our product's liability and the value we provide. We are proud to serve some of the most respected names in the industry. Our largest client this year was Harman Finochem which contributed nearly 25% of total revenue. Other managing cost clients plants like SRF, Piramal, Cipla, SABIC, Lupin, Mylan, Piramal, they have remained an integral part of a growth strategy currently contributing another 20% of our revenue. We are actively exploring new opportunities also in Africa, in Japan, Middle East, South Africa, Israel and Russia to expand this base further. Looking into the future, we are actively executing our growth strategy, focused on capacity expansion, new product development and export marketing penetration. I'm pleased to share that the expansion on the newly acquired neighboring land is also now 90% complete, and is expected to be operational by mid-May -- sorry, by this month end or by mid-June. The expansion will nearly double our production capacity and position us to achieve our target of INR 175 crores revenue by FY '26 and going ahead close to INR 300 crores by FY '27, where we're targeting an EBITDA margin of close to 20%. While the commissioning of our new facility and a focused strategy on reducing inventory cycles, we're confident that our operational efficiencies will continue to improve. We recognize the challenges posed by high inventory levels, largely due to our strategy of stocking specialized raw materials and advance. However, we are taking to normalize our inventory cycles to around 200 days, and our working capital cycles have improved through more disciplined procurement or immediate payment terms. On the financial side, we are targeting a 20% reduction in debt, which will enlarge our balance sheet strength and cash flow visibilities. And coming to the financial -- half yearly financial performance and the full yearly. I think our CFO, Mr. Yogesh would guide you through all the figures. Yogesh, can you please give them all the financial performances?

Hello. Good afternoon, everyone. Yes. Coming to half year financial performance. Revenue from the operations for the half year was INR 83.26 crores in half year -- second half year, financial '25, as against INR 55.20 crores in H2 FY '24, a year-on-year increase of 50.83% by strong execution of orders, improved demand from key sectors like pharma and specialty chemical and better capacity utilization. EBITDA excluding other income was at INR 9.80 crores in H2 FY '25 as against INR 15.72 crore in H2 FY '24, a decrease of 37.68% year-on-year, mainly due to the sharp rise in raw material expenses, which more than doubled year-on-year impacting gross margins. Additionally, higher employee and operating expenses contributed to increased total expenditure. EBITDA margin of 11.77% as against 28.48%, year-on-year decrease of 1,671 bps. Profit after tax stood at INR 6.13 crores in H2 FY '25 compared to INR 19.38 crores in H2 financial year '24, year-on-year decrease of 34.65%. PAT margin was at 7.37% as against 17%, year-on-year decrease of 963 bps. Earnings per share stood at INR 4.69 in H2 FY '25 compared to INR 32.22 in H2 FY '24, year-on-year decrease of 85.44%. Coming to our full year financial performances. Revenue from operations for the year ended was INR 134.36 crores in FY '25 as against INR 120.76 crores in FY '24, a year-on-year increase of 11.46%, on account of strong order execution, particularly H2 FY '25 higher demand for the company's specialized process equipments, improved client actions including repeat orders from domestic and international clients. EBITDA, excluding other income was at INR 20.40 crores in financial '25 as against INR 23.91 crores in financial '24, a decrease of 14.70% year-on-year. EBITDA margin was at 15.18% as against 19.80%, a year-on-year decrease of 4.62 bps. Profit after tax was INR 12.16 crores in the financial year '25 compared to INR 13.56 crore in financial year '24, year-on-year decrease of 10.36%. PAT margin of 9.05% as against 11.23%, year-on-year decrease of 200 bps. Earnings per share stood at INR 9.30 in financial year '25 compared to INR 46.56 in financial year '24. Now I'm happy to open the floor for any questions you may have. Thank you for your attention. Over to Mr. Rohan Lade, Managing Director.

[Operator Instructions]. We have our first question from the line of [ Garvit ] from [ Invest ] Analytics.

My first question is on the margins front. Our margins had been very much fluctuating historically. And I want to understand from you the reason for the same because the range of fluctuation is broader. It is like we have not been able to pass on the raw material side to our end customers. So can you please put some color on that?

I mean you are saying the reason for the margin drop, right?

Yes. And over the years, fluctuations had been very high.

Yes. See, I think the fluctuations mainly happened due to the raw material prices. If you see the raw material prices are inflated in the last couple of years. So because of that, the margins will find different margins across the half year and the next half of the year. And the reason for the drop in the margin is mainly due to 2 factors. One is the -- if you see the last year and if you see there is a drop in the export -- by export business this year. And also since the domestic market, especially is comprised of the pharmaceutical and the chemical those 2 sectors were not doing that good or a little bit on the downside, I would say. So because of that, with respect to the margin pressure in the domestic market, so the margins have dropped a bit dropped out as compared to the previous year.

So what is the outlook from here onwards looking at FY '26, are we...

Yes. See, what at least in the last couple of months, what I have seen like going ahead, a lot of CapEx now I am seeing taking place with a lot of customers in pharmaceuticals as well as in agrochemicals. So yes, I think going ahead, I think, generally, I have seen in the industry that whenever there is a certain boom happening in the industry like if you see after COVID there were huge expansions in 2020-'21. And after that, then there a sudden drop off -- sudden drop in that requirements. But again, now I'm seeing those requirements going up going ahead because in the last couple of months, we have closed down on good orders from a very good reputed customers in pharmaceuticals. So I'm now that is -- now that CapEx also was very much visible. Earlier, the CapEx were there, but I think customers also were not going ahead maybe due to the internal reasons. But now we can see that they're also going ahead with those CapEx. So basically, I would say industry was under a bit of a wait-and-watch mode earlier due to the uncertainty in the global market, mainly because of the policy changes expectations in the U.S. also. So -- but now I think -- see, I can see now they are now going ahead with the CapEx slowly, slowly. So definitely, this year should be better.

And you mentioned about earlier, they were on hold due to global uncertainties. But those uncertainties are still existing because the tariff situation is not yet cleared. So how do you see like -- you are mentioning you are getting some good orders in the last 1.5 months from pharma company and today, I think one of the pharma company got a big -- a long-term agreement as well from a global pharma company. So that may also eventually lead to some orders to you. So I'm asking on the perspective of the continuity of these orders in FY '26, like we are having currently an order book of INR 80 crores, how do you see the order book to shape up in FY '26? an what is the guidance for FY '26 in terms of revenue?

Yes, going ahead, definitely, I would see that more order book will be built up. As I told that yes, lot of CapEx are happening now and mostly all those CapEx are also getting closed also. So earlier, like customers were taking a lot of time to close those CapEx number now I can see a bit of a fast forward going out everywhere. So going ahead, yes, we will definitely booking more orders. And earlier, like last year, we were a bit hesitant because the neighboring -- the expansion, which we did that was also not under completion. But now that is under completion, we will be able to take more orders so that we have -- because we have that confidence that we'll be able to deliver all those orders well on time. Earlier, there was a bit of a doubt in our mind that even though we'll take those orders would be able in position to complete those orders on time. But now the expansion we are nearing completion. So definitely we are now focusing to increase our order book also so that we can deliver the products in a much quicker way as compared to the last year.

And what is the guidance for FY '26 revenue guidance? Sorry Revenue guidance...

What I'm not able to hear you, venue?

Revenue guidance, sales guidance.

Sorry, I'm not understanding. What he is asking...

Sir, he is asking revenue guidance.

Revenue, okay. This year? We are expecting -- see revenue-wise, we are targeting somewhere about INR 175 crores this year with 15% EBITDA.

How much, sir? Sorry, I missed that.

15% EBITDA.

First line, INR 135 crores.

INR 175 crores, INR 15 crores...

INR 175 crores and 15% EBITDA. EBITDA margin is going to sustain from here is what you are saying?

Yes, yes.

We have our next question from the line of Agastya Dave from CAO Capital.

Sir, I'll have to repeat the question about the margin. So my -- what I thought was the entire point of keeping a large inventory was to protect ourselves from random fluctuations and steep volatility in raw material prices. But now like last quarter, somebody had asked you -- I mean, the last con call that you did, somebody had asked you about margin guidance, and you had given 21% to 22%. Today, you're saying 15% guidance for next year. And this is -- all this is happening when we have like on a revenue of INR 134 crores, we have an inventory of INR 117 crores. And last year also, we had INR 100 crores plus inventory. So where are we going wrong? We are carrying so much inventory, yet we are taking such substantial hits on our -- because of raw materials. So what's the point of keeping such a large working capital? So that's the first question. Second question is on the working capital, even the receivables have spiked quite substantially in terms of number of days. So we are from INR 12 crores, INR 13 crores, we have gone to INR 40 crores. That's 30% of sales. So whichever way I look at it, I fail to understand what exactly has happened here? And what are the normalized levels? Because in the opening remarks, I believe your CFO mentioned 20% margins. But to the previous participant, you have replied 15% margins. So can you -- so I have like 2 requests. First, with such volatility, kindly start providing quarterly numbers because we can't have like a 6 months gap and then suddenly like a dramatically different picture appears. And second, sir, whenever we are discussing numbers, on the same call, we are hearing 2 different numbers. So which one should we take? And we are working with the publicly disclosed numbers, but the publicly disclosed numbers need to be accurate. So please be a little bit more careful if you're -- if the numbers are being given out, then at least there has to be some thought process behind it. So can you just like explain this, that would be very helpful.

Yes, I understood what you are saying over here with respect to the margins and everything and with respect to the high inventories also. Basically, see, the high inventories, which we had kept, it's basically for a different type of raw material. It was a nickel-based alloy raw materials, which we had kept the high inventories. And it was -- those inventories were kept with the particular order which was expected to come up in this year. But unfortunately, I think it was mostly into the Bangladesh. But I think what happened at the start of the year...

Understood, that got canceled.

Because of that, so that inventory is still like that only. It has not gone down. And also in the domestic market, -- like last year, this nickel-based inventory, if you see the last year, it contributed mostly 40% of our turnover of these orders. But in this year, we have seen a drop in those particular nickel alloy orders. At least at the start of this year, there was a huge drop. But I think in the last 6 months, at least in last few months, I saw a little bit pick up, but not that much. But still by the closing year, I think we did 40% in the last year and this year and current FY year the last year, we were hardly 20%, I guess, 20%, 25% we did. So because of that, the inventory cycles for the raw material are still there. And because we work into nickel alloys also and we are working into stainless steel also. So a lot of orders this year were of stainless steel not of nickel alloys. So stainless steel doesn't -- we don't keep that much stock because it is something which is readily available in the market. And so we don't keep that much stock of stainless steel inventories, but this nickel alloy is a very costly material and also it do takes time also to manufacture those equipment. So that's why we are keeping those stock. So that was the reason the inventories are still on the higher side. And also last time when we had spoken about this EBITDA because we had a good order book also at that time. But I think as I told, we saw the drop in the orders later on. So because of that, in the next half of the year, we were not able to maintain those margins also. And with the pressure also of the domestic market was not performing that well. So whatever requirements which are coming and which we saw that, yes, we can take those orders, but margin drop will be there. But again, looking at the quantum and everything because again, the order book has also to be maintained by us. So looking at that, we a little bit compromise on the margins and we took those orders also. So that's why you will see -- that's why the drop has come in the EBITDA right now.

Understood, sir. Understood. Sir, but you are seeing pickup now in the market?

Sorry?

You are now seeing CapEx picking up, as you said.

Yes, sir, last -- at least after March now, over the last 2 months, I have seen is a lot of customers are now closing down with the orders. As I told you we recently got some 2, 3 orders from very reputed customers and a very big name in the pharma. So yes, hopefully, it will be the same going everywhere because we are seeing new requirements also coming up. -- that is why I'm expecting it will grow up -- grow...

Sir, one follow-up now to what you -- a comment you made during your opening remarks that there will be a 20% drop in the inventories either you did or your CFO did. I may be slightly mistaken there. So you mean as of now, the inventory as a percent of your revenue was 87%. Do you guys mean that this will drop to 60%, 67%? Or do you see the 117 absolute number dropping by 20%? What exactly did you mean by the 20%...

Not absolute, I would say. I think somewhere in the range of 65% to 70%, yes, it will drop.

Understood. Okay. Great. Sir, I have then -- again, I'll repeat the request that I made. Kindly start giving quarterly numbers. Specially...

We will try our best to do that.

And you need not report like fully audited numbers, nobody does. You did not even report the full P&L. Just give a sense of what the order book is looking like, how much revenue was booked during the quarter. And like what were the margins like, And if there is a CapEx which is going and now we have just finished our CapEx. If you can give like every quarter, if there is a CapEx which is ongoing, just an update on that, update on what the inquiry pipeline is looking like, some commentary. It will hardly take you 10 minutes to write a one paragraph press release and just post it on the exchanges if you are not giving quarterly results. But a good practice would be to start giving quarterly reports voluntarily. It is just a good practice, sir. And second, sir, just on the numbers also, sir, kindly be careful because, again, as I said, there were 2 different numbers for EBITDA in this very call. and a dramatically different EBITDA number last quarter. So kindly keep that into your consideration.

We have our next question from the line of Maneesh Kaila, an individual investor.

I have 3 questions essentially for the management. One is, sir, you talked about revenue guidance of INR 135 crores for this year, right? And your current order book is INR 80 crores. So do you think you have sufficient orders to be able to kind of meet this revenue guidance? So that's my first question. Second is, if you look at your debtor days, it's gone up sharply when you compare it with the previous financial year. So I wanted to understand the reason behind that. And third is the margins fell during this latest half yearly period. And you talked about increase in the input prices, especially commodities. So which commodity are we talking about specifically wherein the prices went up by more than 100 percentage. So these are my 3 questions.

Okay. Sorry, what was the first question you said?

First question was on your guidance. So you've guided for INR 135 crores this year.

The order book and how we are going to maintain...

Yes. .

We are confident on the order book because right now also we are having INR 80 crores order book. And as I told you, we are able to see a lot of CapEx coming in and also those CapEx are getting closed down also. So -- and new, new requirements also coming in from pharma, from agrochemicals, from specialty chemicals. So yes, we are definitely expecting that we will having a good order book. And not only that now in the coming months, we are going to exhibit in Japan also. But it's not exactly, I would say exhibit, but we are -- we have signed an NDA also with one of our reputed manufacturers over there in Japan who are into similar kind of manufacturing. So they were interested in one of our products also. So they have their stall, they are exhibiting in one of the exhibitions. So they assisted us to participate through them in the exhibition. So yes, so there also, we are doing that. And not only that, recently also, we had some discussions with one of a very reputed U.S.A manufacturer who is into similar kind of equipment like mixers and everything. So they themselves have approached us also for sort of collaboration. So currently, we are in talks with them. nothing as such concrete. But yes, but they have put the foot forward, not us, but because of that, so definitely, that also, we are seeing that, that will also go on the floor, definitely because it is looking good for us. So with all these things going, yes, we are -- and with the domestic market also doing good now. So we are expecting the order book to be going upwards only.

Yes.

And what was the -- sorry, what was the second question?

Yes. My second question was on the debtor days. So it shot up sharply this year.

Sorry, what? Data what?

Debtor days, the receivable days. It...

Receivable days.

Yes.

Yes, because I think we had a very high sales in this last quarter. So because of that, you will see the receivables and certainly look higher since it was just the sales was done in just last 2 months, I think February and March. So generally, a lot of customers, it is around 30 days or 45 days or like that, something. So yes, the receivables are there right now, but I think it will come down going ahead.

My final question was on the commodity wherein you talked about more than 100 percentage increase in the input cost. So which commodity are we talking about because your margins were impacted.

Basically, the raw material prices are inflated with a lot of fluctuations you can see in the raw material prices, stainless steel also and nickel alloys also. And also, I think we have increased our workforce also. So that has also -- because we are targeting now a huge business also and to cater those business, I think definitely, we need to have a good mix of manpower in all various different departments also. So because of that also, you will see that difference over there.

Okay. But if you look at the first 2 months of this financial year, which is April and May, how does the pricing scenario look?

It is like -- it is pretty much the same only, I would say, not much of a difference, though, pretty much the same what we had seen in the last 5, 6 months.

All right. Yes. Sir, if I can squeeze in one final question.

Yes.

Yes. So if we look at the current capacity, what is the capacity utilization, not counting in for the additional capacity, but the existing capacity that we had. So where are we as far as capacity utilization is concerned?

The existing capacity is almost, I think 90% is utilized. It was utilized earlier also. That was the main need to do the expansion also because for us, for when we make this equipment, we require a lot of space while manufacturing the equipment. And sometimes, it is like that a lot of customers sometimes delay it or don't clear it out fast. So again, it blocks a lot of space also sometimes. Then again, the raw material storages, sometimes that also becomes a very congested area. So with all those things, yes, we have utilized this current facility a lot.

And so with the expanded capacity now in place, what is the peak revenue we can hit with all the capacities in place?

As I told, I think we are targeting INR 175 crores this year.

No, INR 175 crores is the target for this year. I'm talking about what is the potential with this asset base what is the maximum revenue you can hit? Like can it be INR 300 crores or something over the next 2 or 3 years, something of that sort?

Yes. Next 2 or 3 years, yes, definitely. If you see in the next 3 years, there's definitely INR 300 crores is what we are targeting.

Yes. With the same capacity, you need not add new capacity...

With the expansion kicking in with that facility, yes.

We have our next question from the line of Shri Krishna Bhutra from AIM Realtors.

So basically, we had a con call in March, I think, around 27th of March. During that con call, the revenue guidance that was given for FY '26 was INR 200 crores. And the order book that we expect like had at that point was around INR 90 crores. However, in the investor presentation, it is mentioned as INR 80 crores for 31st -- as on 31st March and may be because of certain orders getting delivered. So what is the order book as on date? Is it still INR 80 crores?

Yes, yes, it is INR 80 crores because again, in last 2 months, we have dispatched also and orders are ahead also. So that's why the order book is right now around INR 80 crores...

Okay. And so again, coming back to my earlier question, which was INR 200 crores of target given for FY '26, we have now reduced it to INR 175 crores, even though we are seeing some upbeat orders which are coming in the market and kind of customers putting up capacities. So is it like we are being more conservative or our stance has changed from earlier INR 200 crores to INR 175 crores?

See, we have the figure in the mind of INR 200 crores, but we don't want to necessarily hype it out and give a much, much bigger figure. We will be targeting INR 200 crores definitely, but we might end up somewhere near to that INR 175 crores because again, a lot of factors are there towards the end of the year. Sometimes customer doesn't pick up. There are sometimes delays in happening. sometimes the plants are not ready. So this -- because the earlier we face those things.

Since you were at the end of the year almost like we did commit that the EBITDA margins would go up to 20%, 22%, but it has been around 14%, 15% for FY '25. Are we seeing those margins to kind of gradually grow to 15% for FY '26? Or we expect it to be 15% for FY '26 and not gradually?

No, it will gradually go up.

Okay. Okay. And for FY '27, we still have around 20%, 22% in mind? Or is it...

We are expecting that way if the market stays the same going ahead also, then yes.

And the revenue target is INR 300 crores that we have in mind? Or are we...

Yes, yes.

Okay. Again, one question on the inventory, and I may sound a bit repetitive over here, but we mentioned that there was margin erosion in H1 FY '25 because of steel prices going down and -- or maybe the revenue was lower because of steel prices going down. Now so has the steel prices going up also had an impact on our revenue? Or is it because -- like how is the formula connected? Do you have like order books based on historical steel prices? Or has it changed based on the delivery?

Steel prices do play a part, but not that much, I would say. Mainly it is with the -- I think with the orders, I think mainly with the drop in the global market with the pharma and the chemicals. So that's why the revenues had dropped with respect to the that. And mainly whatever orders which were visible, so they were at a bit of a lower margin. So -- and just -- and to maintain the order book also, we had to grab those orders and not leave those. So even though they are a bit of a low margin. So because of that, yes, the margins did take a hit a little bit.

We have our next question from the line of [ Sharan khadbeer, ] an individual investor.

I have a question, that you are...

Sorry to interrupt, can you please be a little louder?

Can you hear me now?

Yes.

Your peers like glass line equipment players are trying to expand in your domain and are having a pilot plant. So how do you see that like on this front? And my second question is same repetitive question on the part. Like is it going to continue because I could see 3x jump from the last year? And is it going to continue? Or is it due to the high sales in H2, like it won't -- this is the onetime one-off for this year?

First question, what is -- what pilot plants, what you said?

Yes. So the glass line equipment players are trying to expand in your domain and are having like pilot plants for the filters and dryers. So how do you see that? And how do you see the competition in this front, sir?

In the pilot plant section, you are saying...

Are having pilot plants like how do you -- are you having any pilot plants for the dry...

With all our equipment, what the range which we have, the product portfolio we have, we are having all pilot plants with us. So because a lot of customers, generally, whenever they put a new project, a new greenfield project, a lot of customers are not aware sometimes that which of the equipments will suit -- will be compatible with particular products. So most of them do take trials in our pilot plant. So we have the complete range of pilot plants over here.

So how do you see the competition here because 2 players actually try to expand in your domain from their glass line thing because they are finding the glass-line industry in a big downturn. So are you seeing any competition and...

I would say there are 2 of them are there, but I would consider only one of them as a competition with respect to the process equipment like filters and dryers because the other one is not that usually doing filters and dryers, and he doesn't have an expertise also to make those sort of glass filters and dryers in so much numbers also because we ourselves have done a lot of rectification and repair work for those equipments, which customers are signed to us from the other manufacturers. So yes, with one of them, we do have the competition. But I think even in that also, it doesn't take much of those pilot scale equipments or even a very, very use scale. Like I would say we have a good capability like a filter dryer, if you say we have a small 2-liter filter dryer also. And we also have a 20,000 filter dryer also. So that is something range which we have at our end. Not all of them have that sort of range because that sort of design is not there with everyone. So in and out, you can make a lot of NFDs. But again, those NFDs have to perform also should give a good performance. So that is very important. And over the years, that has only helped us to grab more and more orders. Even one of our competitors who has a much bigger name, I would say, just to say it, a much bigger name. But even though with that, we were able to capture those orders and get those orders just because of the performance, which our equipments have done over the years.

And sir, one more question, sir. So on the -- you told in the last con call that we are not -- like we are going from equipment -- selling equipment to solution -- complete solution for our customers in the last con call. So how is that panning out, sir, because that will give you more margin and like more...

Yes. We are now pitching to a lot of customers that generally whenever our project -- new project is there in the line. So there are lot many equipment other than the filter dryers, which are there. So yes, definitely, when it comes to some stainless steel reactors, nickel alloy reactors, then some mixers, blenders, even some high nickel alloy tanks and then the filter dryers. So whenever any new big fac definitely, we are approaching that way. And I think Harman Finochem was that one of the customers who came to us with this multiple solution, multiple equipment. So we have -- we did supply reactors, we did supply filters, dryers, some blenders. So with that, we had got that start and now we are pitching with a lot of customers to and approaching them in a similar way. So that is the difference over there.

Okay, sir. Sir, how is your investment in Bangladesh? So like last time you told like we are in a tricky situation. Has that improved sir, on...

Yes, what happened in Bangladesh. But after that, I think we did participate on the exhibitions also, I think in the month of February over there. And we did got a good response also even though what has happened in the country with respect to that, but still the response was pretty much good over there. And also whatever supplies we had done to the pharmaceuticals over there. So now they are under operational and now they already started also with their productions. So going ahead, yes, we are expecting that they should be going into the second phase also at their end. And we have received also some new requirements just a few weeks back only from one of the customers to whom we have supplied the equipment also over there. So we are seeing that they will pick up again. It will take time, but yes, but they will pick up.

Okay. Great news, sir. Sir, can you just explain on the receivables, whether the receivable will be same for like year after because I could see 3M, which was not there in other cases, in other years.

Receivables generally see whatever receivables are there because of the sales which we did in the last 2 months of the financial year. And generally, a lot of customers have a payment terms of 30 days, 45 days, being a bigger MSME more than 45 days, generally is not what we go. But because of that, the receivables will be visible over there in that particular .

So it won't be there for the next year, sir, with respect to our sales ?

No, no, no. And the number of days will be definitely not that much, definitely.

We have our next question from the line of Garvit from Invest Analytics.

You are saying we are seeing good traction in the market in terms of expected orders and customers are -- CapEx is picking up at the customer end, particularly on the pharma and agrochemical side. So I just want to ask like earlier, we were having a target of around, I think, INR 200 crores for this year. So why we are reducing our guidance to INR 175 crores?

See, earlier also same question one of the person had asked, we are targeting near to INR 200 crores, but we also don't want to give some unrealistic figures also. because again, the market has to stay over the year like this. So whatever figures I have given is to the current situation. If the market stays pretty much strong like that, we would be definitely targeting INR 200 share. But again, sometimes the supplies are also not picked up by a lot of customers. Sometimes there is a delay at customers' end. So we might end up to near to INR 175 crores because of that.

So that means INR 175 crores you are saying this is after accounting for all this kind of downside, right? And this is a minimum number.

This year also had the same. This year also, we were very much easily going to reach INR 150 crores, but a few of the dispatches were not done. So because of that, we ended up around INR 135 crores...

And secondly, like you mentioned very well, we are seeing some traction. But if you can put some color in terms of the kind of quantum of orders are we expecting in the next, say, 4 to 5 months and which are the major areas from where we are seeing these orders?

Yes. As I told you like in this 2 months also, we got a good mix of orders from pharma, I think. Some of the key customers and I would say very big customers, they placed the order upon us. And also going ahead, because what I see every day, a lot of requirements are coming in every day and most of them are coming from pharma and from agro. So yes, going ahead, we do see these 2 sectors performing well. And these 2 sectors are the ones which have performed well over the years also. just if you the last few years, but before that, they have been doing good. So yes, I'm expecting the order flow coming from these sectors more.

And the quantum?

Quantum, yes, I think quantum see, generally, what happens, I would say pharma might be a bigger quantum as compared to the chemicals because the chemical business is -- will give you less margins as compared to the pharma business.

By quantum, I mean like the amount of orders that you are seeing?

How many orders?

Amount of orders in INR terms?

It's not possible for me to put up a figure in INR. But yes, quantum-wise, pharmaceuticals will be the higher.

Got it. And lastly, on the mix side, geographical mix basically. So this year, export was a little down. How do you see exports...

Sorry to interrupt, I please request you to rejoin the queue?

Just last question. Follow up.

Yes, what?

I'm asking how do you see exports to follow in FY '26?

Yes. I think right now, what we are doing is, if you see by the start of this year, we are targeting a lot of geographies like we went to Bangladesh. Then last year, we -- when lade sir was there, we had gone to Indonesia over there. So this Japanese connection has happened because of the Indonesia exhibition. So they approached us over there. They saw us over there, and this is how the Japanese connection has been developed. So now we are going to Japan also this year. Then again, in August, I think we are exhibiting in Jordan also. And I think maybe by the end of the year, we are trying to exhibit in Russia also. So yes, we are targeting these geographies because we can see some requirements coming up from these regions. So that is the reason we are exhibiting. And the reason to exhibit is that unless until we don't exhibit, we also don't come to know how big the market is over there because a lot of local people approach us over there. And then we are able to gauge what sort of market this will be. So I'm expecting since we are approaching -- we are exploring so much of geographies. So definitely, you will see a pretty steady exports also happening this year. I think recently, we closed on an order also from Israel Which was good for us.

[Operator Instructions] We have our next question from the line of Keshav from BHH Securities.

I really, really miss your father. He was a very dear friend of mine, and we had regular conversations and I've had many meetings with him. So it's with a lot of thorough and a lot of grief I'm actually -- I'm right now in. I need to ask some questions. So basically, we had EBITDA margins of 28% in the first half. And in the second half, the EBITDA margins have dropped sharply. So when we take orders from a client, do we factor in possible increases in raw material prices and then give a quote to the client? And when a client gives us an order, is it against an advance of 10% or 20% of the order value? And what do we do to insulate ourselves from raw material price increases?

See, basically, what you said is correct, the raw material prices are fluctuating a lot. So whenever a customer places order, so we have to look into the raw material prices also. But sometimes, again, the competition is so fierce that -- and since the market was also down, so looking at those things, we have to again select like what set of orders we can take -- we can book. So we have to look at the margins. And even though the margins are a bit down than what we used to take it, but to maintain the order book, we have to get those orders at a lower margins because of that.

Lade sir had done the maiden call where he had very clearly said your father, Prakash Lade sir, that he's not going to compromise on margins and we'll only take those orders where the margins are there. If the margins are not there, he's not going to take those orders. And in fact, you phase out UPL and those clients kind of clients which have not given you the margins which you're looking at. That is what Lade sir had mentioned as a philosophy. Now you have guided for INR 175 crores for FY '25, '26, that's the current year. And for next -- '26-'27, you've given a guidance of INR 275 crores sales. So are we going to have EBITDA margins which we had in the first half of 28%? Will we be able to get those margins? Are you looking at lower EBITDA margins for FY '25, '26 and '26, '27?

28% won't be there, but we are looking at somewhere around 20% at least 20%, 22% EBITDA margin.

Got it. Now Lade sir passed away on 29 December 2024. So as I was in close connect with him, he had identified a process equipment company in Ankleshwar, which you are looking to go and have a conversation with, with a view of making an acquisition. So do you have any idea? Are you having any plans of doing any inorganic growth, any acquisition?

Yes. In fact, that particular company was identified by me only. Lade sir was just following that lead from given by me. But I think since Lade sir passed away, so my focus at that particular time, and he passed away at a very wrong time, I would say, because we were just 3 months away from the...

It is a big shock for all of us, it is a big shock for me personally.

Yes, -- so even for the same for me also because it was very shocking for me being his son something was not expected that he would go like all of this in a very sudden way. So for me, it took us some time to grab all the things and to look into everything. So I had to prioritize a lot of things considering the financial year ending and all those things. So I a little bit didn't focus on that considering the March and everything. But yes, after that, we had discussions on that part. And already, I think we had discussed 1 or 2 times with the Ankleshwar vendor also. Hopefully, in this year, we would be doing something with it, and we are trying to see whether Mitra we can collaborate with them.

Okay. So this can potentially INR 100 crores..

Not INR 100 crores, but INR 50 crores to INR 60 crores it can add.

The next question is from the line of Amit Agicha from H.G. Hawa.

Sorry to hear about your Sir, my question was connected to like the order book. Like could you provide visibility into the INR 80 crore order book and expected execution time line and margin profile for that order?

Sorry, what -- can you say again?

The INR 80 crore order book visibility, expected execution time line and margin profile for...

Execution and time line. This INR 80 crore order book is mostly, I think, we are in May around, I think, August to September -- September, I guess.

Execution will be completed by September?

Yes, yes, yes, yes.

And sir, we would like to visit the plant whenever we complete organize this?

Yes, yes, you are very much welcome. You can just let us know well in advance so that you are welcome here accordingly.

We have a next question from the line of Maneesh Kaila, an individual investor.

Sir, I'm going to repeat my question once again on the commodity price increase. So you talked about more than 100 percentage increase in the price of raw materials itself, while I understand that there was also increase in employee and employee costs and other operating expenses. So you specifically talked about a couple of commodities, which was steel and nickel. So I track steel very closely. I don't think...

Sorry, what? Steel?

I don't think steel had such a big under discussion. And nickel also, when I look at the price chart, I'm not able to see such a big variance. So when you say that the raw material prices more than doubled, I mean, I'm kind of looking for an answer on.

I say it is doubled, it has increased, but it's not doubled.

But that's what your investor presentation says. Maybe you can look up to your investor presentation. That is what it says.

Okay. It might be with respect nickel and nickel alloys or something. I think the presentation with respect to the overall half year, I would say, not just in this couple of months, I would say. If you see -- if you compare last 6 to 8 months, the prices have fluctuated a lot. Like if you see last year, around November or October, the prices were on the very different what they are right now. -- in our equipment, if you see 80% is the raw material.

Yes I understand, because...

So the raw material is the main thing which affects us.

Got it. All right. And I'm only quoting as to what is mentioned on the PPT. The PPT says that there was more than...

It's not just 1 or 2 months. It is over the half year generally. It's not just 1 or 2 months data.

Ladies and gentlemen, due to time constraint, that would be the last question for today. And I now hand the conference over to the management for closing comments.

Any more questions?

That was the last question for today.

Okay. Okay. So thank you, everyone. I would like to thank you, everyone, for taking out the time and attending this call. And I'm also thankful to each and every member of the BEW Group and as well as our clients, creditors and the bankers and the financial institutions and all our other stakeholders also. And for any further queries or information, please get in touch with our Investor Relations team. Thank you.

Thank you. On behalf of BEW Engineering Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.