BEW Engineering Limited ($BEWLTD)

Ladies and gentlemen, good day, and welcome to the H2 and FY '26 Earnings Conference Call of BEW Engineering Limited. This conference call may contain forward-looking statements, which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not guarantee of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rohan Prakash Lade, Managing Director from BEW Engineering. Thank you, and over to you.

Can you hear me?

Yes.

Good evening, everyone. I welcome you all to BEW Limited earnings conference call for the second half and year end of FY '26. Today, I'm joined here by our CFO, Mr. Yogesh Darekar; and our financial consultant, Mr. Anuj Kanodia. So before we begin, I would like to take a moment to acknowledge and thank all our stakeholders, our customers, employees, partners, bankers as well as investors for their continued trust and support. Your encouragement has been instrumental in helping BEW sustain its growth momentum and execute our long-term Prior to this call, we have uploaded the presentation, I believe everyone had the opportunity to go through it. So to 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. So BEW has continued to strengthen its position as a leading engineering solutions provider for the pharmaceuticals, chemicals, specialty chemicals industries. Since our inception in 2011, we have built strong capabilities in the design and manufacturing of high-performance process equipments tailored to diverse industrial requirements. Our portfolio comprises 9 specialized product categories, including the 6 dryers variance and filtration solutions, all focused on delivering superior efficiency, reliability and customization. With a market share of nearly 40% in our core segment, we have established a strong presence in the industry through consistent quality engineering excellence and customer-centric innovation. Our equipment caters to a wide range of sectors, including pharmaceuticals, sterile applications, fine chemical, agrochemicals, pesticides, food color and industries. Since becoming an ASME U&R stamp certified manufacturer in 2016 and subsequently getting listed on the NSE SME platform in '21 -- 2021, we have remained focused on enhancing technological capabilities and strengthening the customer trust. Today, our products are supplied across multiple international markets, including Japan, Germany, Israel, U.S.A. and Southeast Asia, reflecting the global -- growing global acceptance of BEW process equipment solutions. Now just coming to the market environment and the demand trends this year. So this year, it remained a very difficult year from a margin perspective due to the sharp volatility in the stainless steel alloy and the special metal prices. Since many of our projects have longer execution cycles, the sudden increase in raw material costs impacted profitability during the year. However, we consciously adopted a balanced relationship oriented approach with customers in order to protect long-term business opportunities and maintain our strong market positioning. Despite this temporary cost pressure, our operational foundation has become significantly stronger. Our order books stood at approximately INR 50 crores as on 31st March 2026, providing good visibility for the coming period. We continue to witness healthy inquiry generations from pharmaceutical, specialty chemicals, API and agrochemical market, especially for the advanced, special and dying systems. The overall market environment for process equipment manufacture remains encouraging. India continues to emerge one of the large -- global pharmaceuticals, specialty chemicals and intermediates Capacity expansions across APIs, CRAM, specialty chemicals and high-value chemical segments is also driving the increase in demand for filtration, drying and solution. Many global companies are also diversifying supply chain beyond China and is creating incremental opportunities for the Indian manufacturers like us. In the pharmaceutical sector, the increasing focus on containment systems, manufacturing, environmental automation and higher [indiscernible] demand for advanced drying and systems as well. Similarly, in specialty chemicals and agrochemical, customers are increasingly investing in high capacities and equipments using materials such as titanium and equipments as well... [Technical Difficulty]

I'm sorry, you're sounding muffled. Can you just repeat the last sentence again?

[indiscernible]

No, it is still muffled.

Can you hear me now?

Yes, better. Please go ahead.

I was saying that the filter and dry industry is also undergoing a structural transformation. Customers today are looking for very integrated solutions that improves their product recovery, the contamination risk, how they can optimize the energy consumption and how they can improve their efficiency. The demand is very steadily shifting towards higher automation, closed-loop systems, GMP compliant equipment and customized solutions. This is particularly positive for companies like us because we are not merely fabricated, but we engineer-led solution providers with strong design and customizing -- customize and capabilities as well. Now coming towards the operational and strategy developments. We are among the leading players in the filtration and drying equipment segment, which is one of the widest product portfolio in the industry. Our dryer contributed around 48.5% of the revenue for the year FY'26, while filters contributed 6.4%, demonstrating a strong acceptance of our product categories. Our products such as agitated nutsche filter dryers, rotary vacuum paddle dryers, rotocone vacuum dryers, cone mixer dryers and our proprietary dryers continue to see healthy of the industries. One of our key differentiators remains our strong engineering and innovation capabilities. We successfully manufacture the world's largest with the drying option of and continue to develop advanced solutions for the complex customer requirements. Also our unique spherical dryer design and the customizing filtration systems continue to receive stronger customer response, particularly in the pharmaceutical applications requiring efficient, talent contamination control. Another important area of progress this year was transformation. We have initiated [indiscernible] consultants for operational enhancement financial planning stability, scalability. These initiatives are expected to improve production planning, inventory control and digital monitoring, working capital management and overall operating efficiencies over the coming years. We also continue to strengthen our infrastructure. During the year, we expanded our production capacity and improved the plant layout efficiency to support execution and higher throughput. This position us well to -- to growth demand from both domestic as well as the international market. And on the export side, we are steadily expanding -- We have already supplied equipments to market like U.S.A., Russia, Thailand, Bangladesh, Israel, Indonesia, Saudi Arabia, Brazil and several others. We are also focusing on approvals in audits from global pharmaceuticals and chemical companies, which can become an important growth driver going forward. So looking ahead, our focus remains very clear. Firstly, to improve the [indiscernible] and the margin profile; second, expanding our export market and global partnerships; third, strengthening our position in high value filters and dryers; fourth, developing new engineer products and solution; fifth, automation and system integration capabilities; and last, building a strong leadership in execution platform for long-term... While facility was impacted due to unprecedented raw material volatility, we believe that this long-term industry opportunities remain very strong. engineer expertise diversify the customer base and [indiscernible] capabilities and market presence, we're confident of sustanable value of the Now coming to the half-yearly financial performance. So the revenue for the operations for this half year was INR 98.44 crores in the H2 FY '26 as against INR 83.26 crores in H2 FY '25. So year-on-year increase of 18.24% driven by our combination of new customer additions and healthy order execution momentum reflecting sustaining across key elements. EBITDA excluding other income was around INR 2.09 crores, and profit after tax was INR 2.44 crores. Coming to our yearly financial performance, it was INR 185.54 crores as against INR 134.36 crores last year. So year-on-year increase of 38% driven by demonstrating strong scale up in operations and sustained momentum during the year. EBITDA for the year was INR [ 9.67 ] crores. The margin was 5.18 for the FY '26. So profit after tax is INR [ 3.7 ] crores in the FY '26. So this was it. So now I'm happy to open the floor for any questions you may have. Thank you.

[Operator Instructions] We have first question from the line of Harshit from RoboCapital.

Am I audible?

Yes, yes.

Yes.

So just wanted to understand what is the revenue and EBITDA outlook or guidance for FY '27 and '28?

See, considering the current market volatility with respect to the prices of the steel and the Hastelloy, so -- I think, yes, it can definitely go up with respect to the current year. And that's why if you see the -- whatever I told right now, we have brought in a specific consultant for improving the production efficiency, the operational efficiency. So going ahead, yes, and the market, which I see right now is doing good, quite good. So definitely, the revenue-wise, the EBITDA will improve for the next year.

Sir, we used to write INR 300 crores for FY '27. So are we still maintaining it? Or are you deferring it for a year or so? Like what is your outlook on that? What are your comments?

See, definitely, we are trying to see how much close we can go nearby to the figure which we had given to you because earlier the space was a constraint, but now -- as I told, our new setup is completely ready. So definitely that will help us to achieve those targets also going ahead. But still, we are keeping those targets in our mind going ahead. So we will see how this year goes and we will see how to -- we will try our best to achieve those targets.

Okay. And my next question is regarding margin. I'm looking at [indiscernible] sales and it says that the input cost pressures had an impact on margins. So can you just elaborate on that, why were margins so low in Q4 FY '26?

See, as I told you because of the volatility in the raw material market, which has become very uncertain because what has happened because of this increase in the market, it has become very difficult to sustain also because the earlier the market was very less and with this increase in the steel price also, whatever orders are there, so we have to close in those orders also. We have to maintain the sales also. So somehow in order to maintain the sales and to achieve the turnover also, we had to a little bit drop down our margins also because of the heavy competition also going ahead. So that is the reason mainly the margins have taken a hit in the last year compared to the previous years.

Can I add one point here? Yes. So see, if you see the nature of this business, nature of the work that is done at BEW, we have any order which we take, okay, it has a turnaround time of around 5 to 6 months. So -- and the raw material cost is one of the major costs which composes -- which determines the price of a particular product. And there is very limited scope or room that we have in case of any kind of major volatility that happens in the prices because when the raw material -- when the market is volatile, it is not only about the price of the raw material, but it is also about the availability of raw material, which becomes a little challenge. So I hope that answers your question.

I understand. But sir, I just have one doubt, right? So the volatility of raw material actually raw material was more volatile in the last month, let's say, in March. So I guess we would be having some inventory before that as well. So why were we not able to manage the inventory and why were the margins so low?

So volatility of -- if you see the prices of products, for example, and Hastelloy, the highest price, which it touched was not in March, it was in November. And from November onwards, it started moving upside.

Yes, correct. It was the highest in the month of March. And after March, it went up further. Last month it went up further now. Because of the war and all the situation, it has went up further.

Okay. Understood. So the prices have further increased. So Q1 margins would also be in the similar range like how we have done in Q4? Like do you have any visibility on that?

We expect that the Q1 margins are going to be in a similar range because right now, we are all waiting. I mean, if you see the entire industry is waiting and looking forward for inflationary trend going ahead. So if you look at the raw material prices as well as the power costs, on both front, there is a challenge. But then we are also looking forward to implement some efficiencies by -- internal efficiencies in terms of production planning as well as our entire management and as well as leadership. And that should definitely improve or keep us a little vigilant in terms of checking our margins.

Okay. Understood. Sir, my last question is regarding the debt level for next year. So I just want to understand what would be our debt level for next year? And are we going to raise any fund?

So currently, we are not looking for raising any further debt till the time we have any visibility in terms of stability. However, we might decide to raise any kind of short-term debt that will be required, which will be specific to any project since we have a very good order pipeline. We might -- in case if we are closing the deals faster and we have some visibility in terms of requirement -- additional requirement of working capital, then only we are going for any kind of fund raising.

[Operator Instructions] Next question is from the line of Sontosh Shigh, an individual investor.

Am I audible?

Yes.

Yes. So my question is like we know that we are in a volatile environment and the industry nature is like that. So what would be our strategy to protect our margins? I think partially, you tried to answer that. But I would like to hear more around this because then we know that it is the nature of this, and it is going to be like this, right? Now this is a new normal. So what management thinks around this? So that is my first question.

So first, we have -- we are going forward with a 3-pronged strategy to tackle this because as you said, it is going to be a new normal and everybody is feeling that. So what we are doing is we are -- on the first part, we are trying to bring in internal efficiency. Previously, space was a little constrained because of which our production flow was a little taken aback. So that is on the first front, we are bringing -- streamlining that. We are bringing in efficient procedures in that in terms of planning our workflow and planning of our entire production process. That is first strategy that we are looking at. Second is that we are focusing on high-margin orders. So for example, if you see in the current year, our exports were less than 1% of our total revenue. However, in the coming year, we are focusing towards seeking more export deals. We are already in talks with a couple of customers from abroad, from overseas. And we are looking forward that will also help us relieve in terms of the margin front. Third is we are also looking at bringing better financial management as well as operational management with the implementation of SAP which will also help us in effective decision-making and improve our efficiency overall.

Okay. Understand. But yes, but doing all that, I think you will have only marginal improvements, not like something very big like 20%, 30% kind of thing with all these like internal efficiencies and improvements. So that is -- I think management should think something bigger on that, not like marginal improvements. So -- yes, that is how I'm thinking around that. Okay. So my second question would be like as I said, this is the industry and the nature of industry is like that. So any plan to diversify in the other areas of the business where we have some stability. Margins are not collapsing like this. And we are, at the same time, exploring the newer things happening in the different areas, like what I mean with that like green energy, hydros and other areas, which is happening. So can you comment on that? Can we explore something in other areas as well?

I would like to -- Okay. So if you look at -- your suggestion is quite validly and we thank you for the input, but I would like to point one thing. It is not only on the internal efficiencies that we are counting to improve our EBITDA, but we are also looking forward for greener pastures where we can seek high-margin orders because that is our primary, primary goal. So I hope that answers your first question, which will definitely help us improve our margins. Second thing, if you look at this entire volatility, which happened in the H2 of FY '26, it was practically unforeseen by everybody, everybody from the industry, whether it is the tech giants, whether it is any of the other engineering companies. So now that we have a visibility in terms of how this is going to be and how we have to manage our supply chain as well as the margins. We are taking steps, we might also look at steps which will help us hedge our procurement. So that is one more point that I want to make. In terms of the product portfolio, Rohan sir will guide you in terms of what are the changes that we are bringing.

Yes. So I think you said why we are not looking to diversify. Yes, definitely, it's not that we are not thought of it. But again, we are into sort of a business -- engineering manufacturing business. So definitely even though -- we will look into some sort of a similar kind of a industry only. So as you see our current portfolio is filters and dryers. So already we have -- of developments also with respect to dryers only, but the kind of dryers which we are manufacturing are mostly on batch dryers, whereas there is a different range of dryers which are continuous dryers. So that also we are focused now. So we have already developed some -- 2 different dryers and for which we already pitched some 4, 5 customers also going ahead. So definitely, we are expecting that they should be -- they should increase our product portfolio going ahead over the years. And not only that since now the space coming in, we have started approaching lot of customers to view a complete package orders also. Because whenever you see any greenfield projects or any CapEx or any pilot fund project, so it is not just the filters and dryers. There are mixers, reactors, filters, dryers, blenders. So there -- this all manufacturing range we are having, but we never concentrated on the other products because of the space and all these issues. But now all this coming in. So if you see we are having a mix of all this now. So definitely, we are trying to approach customers in that way so that we can get a lot of package orders also going ahead.

Okay. Could you also comment on the pipeline which you have, right? This will be my last question.

Currently, we are having a order book of INR 65 crores. In pipeline, there is orders of around INR 200 crores.

Okay. Okay. And are we expecting 50%, 60% conversion in that? How is that, I want to understand.

Yes, yes, yes. We are expecting at least 50% of the conversion in that.

Next question is from the line of from BMSPL Capital.

So your gross block -- sorry, your fixed assets, I think has gone up from INR 12 crores to INR 60 crores. So could you give the details of capacity expansion that has happened recently? And what is the optimum revenue company can achieve on full capacity theoretically?

Sorry, I didn't hear you properly.

Yes. Can you hear me now?

Yes, yes, I hear you now.

Yes. So your fixed assets has gone up from INR 12 crores to INR 60 crores. So I want to understand the details of capacity expansions that have happened recently? And what is the optimum revenue company can achieve on full capacity?

See the details of expansion, as I told, we almost completed the expansion. As it was the neighboring land, so there was an amalgamation of both the plots, which was the balance. So almost that has also completed now. And that is the only last leg of the work going on currently, which will be completed in this coming -- in this next month itself. So we'll be on full capacity with the new expansion coming in. So -- and with respect to that. And what was the next question you told, you asked that?

So part of that question, theoretically speaking, okay, theoretically speaking, at normal realizations, right, in a normal market, what would the optimum revenue be -- what can -- what is the optimum revenue that can be generated from the full capacity?

See, with the full capacity, yes, it can generate a revenue of -- as we had said earlier also INR 300 crores. Definitely, this expand is complete manufacturing setup can generate that much of revenue going ahead.

Okay. Fair enough. And also if I just go by the cash flow statement, if I just read the cash flow statement that you put out in the FY '26 numbers, right, the company has managed its working capital due to increase in trade payables. So the company held back payments to suppliers to manage cash flows. So if I just read the cash flow statement. So on top of that, cash burn also happened due to the increase in PP&E in the cash flow, which we spoke about the CapEx, which assuming is the capacity expansion that has taken place. So long story short, it doesn't seem like the company has the balance sheet to withstand one more year of poor performance, even if it's due to macroeconomic factors beyond the company's control. So the company would have to increase its leverage or do some other corporate actions in case of prolonged poor performance. So what are your comments on these observations?

Okay. So I'll just clarify this. So if you look at the current order book that we have, we have a confirmed order book of INR 60 crores right now. And in terms of we are looking forward for another closure of around INR 60-odd crores till the end of the next quarter positively, okay. In terms of the cash flow, what we have. So currently, if you see our borrowings are quite less. In case if we need any other to finish or to complete the order book that we currently have, we might go for debt fundraising, which will -- but that will be in the range of additional around INR 15 crores to INR 20 crores only if we require right now. So we are also looking to manage from our current inventory. We are also looking to manage in terms of the advances that we are going to receive from our customers. And we might be a little bit aggressive in terms of seeking advance from our customers for the orders that we are going to take ahead so that we can manage our cash flow in a better way.

Yes, because concerned the leverage could go up meaningfully, right, if the market continues to be bad?

See, market is...

I mean your raw material -- what I mean is the raw material costs are high and you're not being able to pass on the cost...

I would like to correct you on this point that the market is not bad. In fact, the market is -- the order book is swelling, okay? Because of this uncertainty, it is pushing our customers to close the orders quickly. So what they have been sitting on inquiries, they are actually coming forward for and pushing us to close the orders. So that way, if you see, market is not bad. In terms of geopolitical situation, we have to be vigilant in committing orders going ahead. And we are also thinking on front of hedging for our procurement because as we all know that the geopolitical situation has become extremely dynamic. However, we are taking those steps in terms of planning our cash flow in a way where the execution doesn't become a challenge for us. And that is why, as I told you that if required, we might seek an additional facility of INR 15 crores to INR 20 crores in case that we need to execute that orders. So one thing is for sure, market is not bad. And the new orders that we are getting, we are already factoring the cost of the increase in the raw material prices as well as the other costs that are being impacted.

So then on INR 300 crores of theoretical revenue at optimal utilization, what are normalized margins you can expect in a normal market like in a normal scenario?

See, again, the definition of normal is quite changed.

Realistic. I mean realistic scenario for your company, not something far-fetched, given the current market conditions, given the raw material situation, given that new orders are being -- you're saying given that new orders are -- you're saying that new orders are being placed at higher prices. So given all these things you mentioned, what are sustainable margins that one can expect on INR 300 crores revenue?

See, if you look at INR 300 crores revenue, what we are looking for the current year, we -- since the entire cost cannot be passed on to the customer, we also have to be a little better reasonable in terms of absorbing the costs. So in this current year, we look -- you're asking about the gross margins? Or are you asking about the PAT?

EBITDA, not including other income.

Not including other income. Okay. So we look forward that we should be able to anywhere in the range of 8% to 10% is what we are looking for the current year.

So you're looking at INR 300 crores of revenue in this current year, you're saying?

No, I didn't say about the INR 300 crores revenue in the current year. When you're asking about the theoretical...

Next question is from the line of Darshil Jhaveri from Crown Capital.

Sir, just wanted to understand in terms of our order book and execution. So we have, I think, around INR 60 crores of order book. So that will be something that to be done over 4, 5 months or how much, like what will be the execution period for this?

Yes, yes, it is around 4 to 5 months. Might 6 months, not more than that.

So that way we are planning to win another INR 60 crores in maybe the next quarter. So that way, we will not have a lot of order book compared to like -- comparatively, our revenues could be flat or maybe negative if we have such a less order book, right? Like how would you comment on it? Because INR 60 crores...

That is the current order book. It doesn't mean that the next quarter will have the same order book. The next half year will have the same order book. Order book that does increase. That is the current order book, which I am saying. But definitely, as we said earlier also, we are seeing a rise in the market also now. So we are seeing a lot of requirements coming in, in the past 2 months. Lot of requirements closing in also because if you see what I see from December to March, the requirements are coming, but they were somehow not getting closed down. I don't know the exact reason. But now I think I'm seeing since the prices are going up very high because of the current situations, whatever it is, the customers are a bit worried also because they also have their budget sets, they also have the time line. So they also can't delay further hoping that the prices will come down. But considering that, so they are also now getting going ahead and closing down all the requirements so that the execution can be done on time for them also. So yes, we are seeing a good rise in the orders also. So that will definitely give us a good order rise also. And as the prices are increasing, as compared to the last year. So the overall price also will go up, like the same equipment which we manufactured last year was a lesser price. This year, it will be for a higher price. So that also will help us to have a good revenue.

Correct, correct, correct. So okay, that's something that helps a lot. So sir, and now you're saying, sir, interest cost in H2 was significantly lower than H1. So can we understand that as a sustainable cost because we don't want to increase a lot of debt, right? So how do you look at the interest cost going ahead, sir?

Anuj, I think you can answer this.

Sorry, I was not able to hear the last line.

So I was saying interest cost, I think, in H2 was around INR 1 crores. And in H1, it was around INR 3 crores. So what is the -- a significant reduction, right? So can we maintain this trajectory like our H2 cost? So what do you feel, sir, in terms of interest cost? Because our debt is on balance sheet is similar, right, for last year and this year as well.

If you look at the long-term borrowings after last year closing and the current year closing, there has been a significant change in it. If you look at the overall debt, yes, there has been a significant change in the debt, which has come down because a portion of our long-term -- term loan have been -- that has also been paid that has come down. However, in terms of interest cost, in case we borrow or we seek some additional facility for -- which will be a working capital facility for fulfillment of our orders, then the interest cost might take -- it might increase a little bit in the current year. Otherwise, I don't see any reason.

Okay. Okay. Fair enough, sir. And sir, just wanted to know like can we have some quarterly calls because in 6 months, a lot of situations change. So if you could just maybe -- I don't know if we could give quarterly results, but at least we could have management interaction during the quarter that can at least help us because it's such a dynamic situation, right, sir, in 3 months, war is there 3 months, war is not there. And we will also be able to help get a better call for that, sir. That would be one request. And sir, just wanted to know in terms of hedging, like what is our key raw material and how much can we hedge? Is it available to be hedged in either MCX or globally? So what can we do to hedge it? Because we've gone from 15% to maybe like to 5% margin. So that's I just wanted to understand.

In terms of your first request, I will definitely consider that. We will definitely consider that on the company level. In terms of the second question about hedging, our main material is stainless steel. So that definitely can be hedged, if not on MCX, but definitely on NCD as well. We are evaluating options right now. We don't have any a very, very detailed or articulated plan regarding that. So once we finalize something regarding that, we'll definitely appraise our investors.

Okay. Fair enough. And just last question from my end. Sir, in terms of our revenue for FY '27, can we look at around INR 250 crores or INR 230 crores, INR 240 crores, like 15%, 20% growth Y-o-Y, can we look at that, sir?

We would like to be a little reasonable as well as conservative in terms of quoting the numbers for FY '27 as of now because since the geopolitical situation is looking quite dynamically tweaked. So right now, our target will be -- first target or you can say, optimistic target is to give a sustainable revenue growth. Whereas we are also not looking only on the growth in terms of revenue. But this year, we are also focusing on the margins because our priority will not be substantial growth in the revenue, but also our first priority will be to see good margins.

Next question is from the line of Maneesh Kela, an individual investor.

So sir, I just wanted to check this is the announcement that we received from the exchanges, right? I don't remember seeing any announcement on the new order wins that the company would have received during the last 6 months. So has the company stopped disclosing that or we've not received any order wins during the last 6 months at least?

No, we do receive orders, but we give announcements only for some very, I would say, a very big size equipment orders or very -- some new equipment orders which we have recently developed a new product like that or something -- some new visits are going up of our very big customers. So those announcements we are going. I think last announcement last year, what we've done was of a Japanese manufacturers, which have visited also last year. I think that announcement we had given in the -- I think in the last year itself. This year, we didn't have any such big announcement as if to tell our investors that something big has happened. But yes, it doesn't mean that orders are not there. Orders have coming and that represent of our regular customers as well. But yes, definitely, we going ahead would be giving announcements going ahead. I think we spoke, we are targeting now a lot of other parts also like we are seeing a good growth from U.S. coming over in this year. So definitely, you will be seeing a lot of announcements going ahead in this year.

Yes. Yes. Maybe I think irrespective of the size of the order, it makes sense to kind of publish it to the exchanges because as you would understand, the stock price is also not doing too well. So maybe that has a positive impact on the stock price, so that's one. Second is I also wanted to check upon the new expansion facility. I guess it's already operational. So during the previous call, you had talked about the various advantages that you guys would derive in terms of shorter manufacturing time lines, and you need to kind of stock lower inventory and so -- So you talked about those advantages. So if you can give a flavor on that?

Yes, the expansion is completed, and we are not utilized to the full capacity yet now. but yes, around 50% capacity is utilized for working purpose. And the balance capacity will be utilized going ahead maybe in the next 3 to 4 months. The reasons for that was, I think as I told you, it's a neighboring expansion. It's neighboring plot. It's a neighboring expansion. So there was amalgamation of these two units. So that took a bit time because it requires some approvals also going ahead. So that has been done. And so what the amalgam has done that, it has given additional working space also. So that was pending because that was creating a lot of hurdles in our day-to-day working and day-to-day operations also because of the movement of the raw materials, movement of the -- our equipment. So because of that, that will help us reduce those particular things. And definitely, we are now trying to see how fast we can bring down our delivery schedules also. Like the products which are taking 6 months, we are trying to see -- trying to bring it down to the 4 months, which are taking 4 months, we are trying to bring it down to 3 months like that. So definitely, that the space will help us to bring more deliveries also going ahead.

Yes. And can I ask as to what was the sales that we had from this new facility during H2?

No, it was very less, I would say, from the new facility percentage-wise, if I say, it was hardly some 10% sale was done from that, 10% to 15%. Yes, yes, yes. Because issue because of the amalgam was not done. So we didn't target that much over there.

Okay. 0So sir, I also have a question on the inventory. So you are sitting on huge inventory. So can you explain as to what -- in what time frame do we expect the inventory levels to come down to reasonable levels? And what is the bulk of this inventory? Is it steel or is it alloy, nickel alloy, so if you can give some status on that as well?

Inventories, yes, it's a mix of the alloy, it's a mix of -- all of the stainless steel because again, we have to forecast what sort of orders are expected, whether it's Hastelloy or whether it's stainless steel. So a mix of both we have to keep. But yes, it is more on the Hastelloy because Hastelloy is something that it is not available off the shelf. So again, you have to plan a lot earlier to manage the inventory of Hastelloy. So that is one of the reasons the inventory is on the higher side and also because of the delivery cycles which you are having. So the quotations are not that fast for the inventories also because of that, the inventory cycles on the higher side.

So what would be the Hastelloy inventory out of the total inventory of INR 128 crores?

I can't give you a number right now. But yes, it is pretty much on the higher side, I would say.

Can I send an e-mail and if I can get a response...

Yes, you can send an e-mail. We'll let you know for that.

Yes. I also remember, sir, during the previous calls, you had talked about not all orders that you received, right, wherein Hastelloy is used. So do we run into a situation wherein this inventory is still sitting with us unutilized?

Yes, the last Hastelloy order ratio was less. And as I think I told also in earlier calls also, the inventory was particularly kept brought in keeping in mind some export orders, which I had spoken on earlier calls also. But somehow it didn't went off with whatever political reasons were there in the export part. That's why this inventory was there with us. But yes, now I think this year, we are seeing increase in Hastelloy orders also. So I think it can help us going ahead to utilize those inventories also.

And my final question would be on the receivable days again on the higher side and the amount of debt which is greater than 6 months. Can I get a flavor on that? What would be the debt sitting on books which is greater than 6 months?

Receivables, you are saying?

Yes.

Receivables on the higher side. Yes, because again, as I told you, our cycles are on the higher side [indiscernible]

Maneesh, I request you to join back the queue, please, as we have participants waiting for their turn. Next question is from the line of from analytics.

Hope I am audible.

Yes.

Several questions on the balance sheet. So firstly, sir, like the previous participant was mention about the inventory. So inventory has been one thing that has been a problem for us for not just this quarter, but I think for almost 2-plus years. Every time we have got our margins because of the commodity prices. So why is this happening one after the other? is the intent to secure our inventory did secure the inventory, but still we didn't see those margins into the P&L. And just one last point on that. So last call, you mentioned that some INR 20 crores, INR 25 crores of inventory there. And similarly, there was other raw material with us. So the prices have actually gone up. So in fact, we should have inventory gain, right, instead of a loss?

Prices have gone up currently only last -- as I told the last 4, 5 months, the price started increasing and now it has gone up too high. But before that, the prices were not that high. And the inventory which we had brought in some 2, 3 years back was what at the very different prices also. And because of that, we were not able to utilize this inventory since the prices have gone down after that. But now, yes, the prices are increasing. That's why a little bit inventory we utilized also in the very last leg of the year also. And now also, we are trying to see how much -- how better we can utilize inventory. So yes, over the year, you will see that we will utilize this inventory.

But that would be true for the this would be true for Hastelloy...

Can you speak louder, I'm not able to hear you clearly.

This would be to for Hastelloy and nickel alloy possibly. But for stainless steel, the commodity cycle has been totally different. In that at least we should have been able to see some inventory gains given we get orders which are long term and we fix them, but...

Yes, yes, stainless inventory, we have never built up. We always keep to the minimum levels because the prices have become so volatile. So -- and the reason we have not done that because stainless steel is always available all the time in India itself. Hastelloy is something that is not manufactured in India. So the time line is huge for getting -- I remember some 2 years back, the Hastelloy -- getting the -- sourcing the Hastelloy getting it at your place would take around 14 months. Because we have to book the raw material, we have to pay them advances, then the 6 to 8 months was the manufacturing time, then 2 to 3 months is the shipping time. If there is a delay, it goes up. So that is a big, big problem. So that becomes a huge issue. But with stainless steel, it's not like that. Here, there is the biggest producer of stainless steel. And it is any given point, it is available in the market also. So stocking stainless steel on higher levels is not was never done from our side. Yes, what the stainless steel is maintained in the stock is with respect to the order flow and the order book only. Even now also every week -- every week there is a price increase, every week. So we are keeping the stainless steel stock with respect to the order book.

Like you're saying that we do back-to-back order booking of our raw material as per the orders, then the margins should not be impacted?

Yes. But right now, the prices are so increasing, like suppose you are taking -- like you are taking order from the customer and if the price goes up and you are not able to book on time, then it becomes a problem for us also because not just booking, we have to pay them also. It's not just the booking part, even though you suppose you are blocking the raw material, but if you're not paying them, then they are not blocking also. And what happens when the rates are going up, they are closing down the bookings also. So that also becomes I am ready to place the order, but they're not taking the bookings also. So that again becomes a problem. But certainly, we can't say to the customer also because if I say there might be some other guy who will pick up the order immediately. So that also we have to be very, very, very much clear and be careful also while taking the orders.

And similarly, on the other 2 aspects of your working capital like several parts have mentioned, the debt and payables are also looking...

Yes, yes. No, because as I told you because the cycles are quite big for us because we don't bring down our delivery cycles, that also won't come down that fast. But yes, definitely, we are trying to improve on that also. Now this new expansion completely coming in, so that will help us to bring down that as well.

And sir, secondly, on the order book, I think the one which is mentioned in the presentation from INR 53 crores, INR 54 crores, while on the call you said INR 60 crores. So let's say INR 60 crores, but this order book is also, I think, one of the lowest in last 3, 4 years from what I can recall, I think we've been able to maintain INR 80 crores, INR 100 crores of order book. So this has been one of the lowest?

Yes, because I think as I told you prior to this, like, say, from December to March, as I told you, a lot of requirements are there, a lot of requirements are there, but customers were not going in and closing the orders. But now as I told that in the pipeline, there is orders of around INR 200 crores. And even in the 50% target, still it is INR 100 crores business. So with those INR 100 crores, INR 150 crores, anyways, it will be INR 160 crores over there. And not only that, the booking will keep on increasing over months and months now because we are seeing customers have started closing the orders very fast, very fast. And that to some big, big orders are closing down now.

Any specific reason why we don't have any export orders? Because this year, I think hardly we did any export orders...

Yes, last year, we did...

Several export orders.

See, before that -- before to last year, if you see earlier 2 years, 1 year, we had a very big order from Bangladesh, which is around INR 25 crores, INR 26 crores itself. So that was a big order for us from a single region. And prior to -- next to that year, there was a big order from Thailand, which was also worth of around INR 15 crores, INR 16 crores. So that's why you saw that quite amount of good exports happening in those 2 years, whereas after that, there was not such any big order from any particular region. We had some 3, 4 orders only like one from U.S.A., one from Egypt, one from Russia, one from Nepal. So that is how we did. So that's why the exports are less. But now as I told you that we are already in talks with -- we have signed the NDA with Japan or Japan also from the customers visited our facility, so they are about to close the order on us and we are going to exhibit in November this year in Japan as well with one of our equipment over there. And also with U.S.A., we are in talks for closing down on a good set of orders, not just orders, but for continuous manufacturing over the years now. So definitely, that updates you'll be getting up very soon. So that -- so all these things will help us to increase export this year.

Got it. And one last question, sir. I think in past, we were talking that we'll be working with our bankers and with improving scale and business, we'll be able to get a better rate of interest. So what has been the update on that? Have you been able to get a better rate? And if yes, what is the current rate?

We are in negotiation for that. So first, what we are looking at, first, we are initiating the negotiation with our current bankers to seek better finance cost. And the company is alternatively also looking at other facilities, other types instruments. And hopefully, something should work out in a couple of months.

And what is the current...

I request you to join back the queue, please. There are participants...

This is the same question, ma'am. missed answering the second part.

Sorry?

I'm saying what is the cost of borrowing for us as of now?

So as of now, the cost of borrowing is somewhere around 9.5% to 9.75%.

Next question is from the line of Harshit from RoboCapital.

Sir, I understand that the nature of business is so that the turnaround time is 5 to 6 months. And as you rightly said that the new normal has been changing and it is a totally different scenario right now. So let's say, sir, right now, we have an order book of INR 50 crores to INR 60 crores and say we end the year at a flattish growth of -- let's say, we clock a revenue of INR 200 crores in FY '27. So the incremental INR 150 crores of order book that we are going to make, are we going to take any price hike? Or what strategy are we going to implement to stabilize the margins? Because do we -- I just want to understand how is the competitive intensity over here? Why are we not able to take any price hike or maintain margins?

Definitely as I said in the earlier question -- as we also asserted in the earlier questions, our order book now stands at around INR 65 crores only because we have been a little vigilant in terms of the margins and the current geopolitical situations, which is impacting the costs. Going ahead also, whether we close in 200, whether we close in 240 or depending on what we have targeted and how things turn in the later months of this year, we will be definitely -- our first priority will be to safeguard our margins. We will not be -- we will be approaching a balanced strategy since the competition is also there. So we have to approach a balanced strategy in terms of our revenue as well as margins.

Next question is from the line of Keshav Harlalka from BHH Securities. Since there is no response, we'll move on to the next question from the line of Darshil Jhaveri from Crown Capital.

Just wanted to elaborate a bit more on our inventory and order booking. So when we get an order, we book the raw material, right? Or how does it work? Because sir, I think inventory is around INR 130 crores, which is nearly 75% of our revenue, right, like of this year. So can you walk us through how do we book inventory or how does it work? Because previous participants also asked the question that if we have such a huge inventory, then we shouldn't have -- the impact shouldn't come that much, right? Or how does it go ahead? Can you just walk us through that process?

Yes, sorry, I was not able to hear you, sorry?

So I was asking, sir, we do back-to-back order booking, right? If we get an order, we would be booking raw materials, right, for buying it. So do we get any -- we would be getting some credit period or is it spot payment. So how does that process work through? Because if we have INR 100 crores plus inventory that is nearly 70% of our revenue, we should have some better -- at least gross margin should not suffer so much, right? Like how do you -- could you explain the process? How does that work through, sir?

See, yes, definitely, we -- generally in a normal case, when the steel prices are not fluctuating and they are pretty much on the standstill level, so in those cases, we do stock raw materials because we know that the prices are not going to jump like that. So we are able to plan also with our orders and with our raw materials also, and we can place at a good prices also. But with this -- but whatever has happening from the last 6 to 8 months, the prices have been quite volatile and they have not been at all standstill. So when such things happen, we are not booking any raw materials, basically stainless steel, I'm saying. What are the inventories you saw are, as I told, it is more of the Hastelloy, which I thold -- which I spoke just a few minutes back with some other questions. The reason also I told why the Hastelloy inventory is on the higher side and why we are carrying it over the years. So because of that only, you will see the inventories on the higher side. But at any given point, with respect to the current situation, we are only booking material in respect of the orders only. Like suppose any order comes, then only we see to book it. But with current market scenario and very high volatility, we have to be very careful because even though we take an order, sometimes the booking is not going through because here the stainless is not sometimes holding the bookings. They are not going ahead. So sometimes we do end up buying the raw materials at higher prices, which are not expected. But yes, so that -- likewise, we have to be very careful because the prices are literally going up every week, which was never like this. So yes, we would have to be careful with that.

Okay. Got it. So sir, Hastelloy is what is the -- if you could quantitative value like out of INR 120 crores, Hastelloy would be INR 50 crores or any range also I don't want to...

I can't give you a figure right now. If you want the details, you can mail me. I will separately let you know on that.

Next question is from the line Maneesh Kela, an individual investor.

Sir, you have taken [indiscernible] efficency. So can you give us a flavor as to what are some of the which have come out and we've already started implementing those?

Yes. See, we have hired a consulting firm who are having experience of more than 200-plus years. So they will be helping us to bring in efficiencies in all the departments like the -- like production planning, sales and marketing and all the departments will help us to bring the efficiency. So they are working with from now almost from past 45 days over here. And weekly, they are coming over here. So they will be having one-to-one discussions, one-to-one meetings with our department with all the heads as well and how they will be seeing how to work on the partners so that where we can bring a lot of the product as well as in the planning. So that will help us to reduce our delivery cycles also. It will help us to streamline our production planning also, which I feel was a bit lacking over the few years. Because of that also, we are not able to bring down our deliveries. And not only that this will help us to help us to have a good revenue also. So because it was like that we might be end up using a much raw material than what we had than what we expected. So that -- because of the efficiencies, it will keep us track also that what exact raw material is to be used. And not only that, as we told we are implementing SAP also. So that also will help us to have our exact didn't have that. So it was a bit of a problem for us to manage. So all this will bring in efficiencies and that will help us going ahead to plan our production activities. And it will not only -- it will help us to streamline our complete flow of work. So yes, definitely, it will show a bit over the years because of this particular consultant and the SAP system...

So when do we expect this assessment to get complete by I guess your PT sales by Q2 financial year '26?

Yes. So as you told, it is showing that, but it's a slow process. It is not that it can be done very fast. So it is a slow process of over 2 years to have that complete turnaround also because for over the years, we are working in a specific manner, which I -- when the people came in, they told us that this is not the way it should work. This won't bring in efficiencies in work. In fact, it will increase a lot of difficulties also going ahead because you have a very big space also. So accordingly, the space also they analyzed how the flow should be there. So that is something which I never thought when I was -- when we were working -- so yes, it's a slow process. It doesn't -- even though the implementation will be there, but the actual effect will take time because our whole team, they have to go through it. They have to bring changes in their approach in the behavior that the particular thing has to be done in this way only. So whenever you put in such processes, there are a lot of yes and no. So yes, it does take time to implement such things. But yes, once it's implemented, it does wonders. It helps you stream your processes because right now, I have to be involved in a lot of activities over here. So going ahead, that will definitely come down and it can run smoothly also. So that will help us to achieve our targets also going ahead with respect to order book also.

What would be the P&L on account of the services that we've taken from the consultancy and also from Anuj Kanodia?

I think that we can separately. You can put a mail to us so we can let you know on that.

We take the last question from the line of [indiscernible]

My first question is regarding the peak revenue. There was a discussion earlier that it will hit INR 300 crores. I just wanted to reconfirm my understanding that at that scale of revenue, did you say that we will do about 10% odd margins? Is that -- is my understanding correct?

Yes, yes, yes.

Okay. So we are lowering our margins guidance because I remember asking you this question about margins, I think a couple of calls earlier and that time you were reiterating much higher margins, I think.

Yes.

And my second question is on the revenue, like whenever -- suppose '27, the visibility is low, but say, FY '28, we hit about INR 230 crores, INR 250 crores revenue. That time also, you will expect similar margins, right?

See, generally, whenever you target higher margins -- sorry, higher customers, higher revenues, so margin has always taken a hit because previously, when we were at a INR 100 crore level, we used to target only a very, very good margin orders. We used to let go margins with less margins to those orders. We never targeted those orders because we know we are okay with INR 100 crores also. But now whenever you target big turnover, so yes, the margin does take it. But even though saying that we spoke in the call earlier also that we would be targeting better margins this year. Suppose even though we are not able to achieve the target turnover numbers, but we would be targeting to have a better margin. So 10% is the minimum margin we are saying. But yes, definitely, we try to see how much better we can get at least some around 13% or 14% margin we try to get down. And if the export comes in every year, definitely, the margin would go up.

And typically for the order book that we have, what is the -- like which are the companies that we compete against for the order book?

See, mainly if you see we are working mostly if you see our order book come from a lot of dryers, like filter dryers and some dryers which we're manufacturing. So for them, we are competing with other manufacturers, both are in Gujarat region. But we don't compete with them for all the products. We are competing with them in 2, 3 products only. But again, those 2, 3 products are the ones which are giving us the maximum revenue.

I now hand the conference over to Mr. Rohan Prakash Lade, Managing Director for BEW Engineering Limited for closing comments. Over to you.

So thank you, everyone. So just in the closing statement, I would like to say this year will mark a period of progress for the BEW and our foundation remains strong built on engine excellence, customer trust and disciplined execution. And with our new facility, we are set to come online in place. So we are entering an exciting phase of scalable growth. So I would like to thank you for taking out the time and attending this call and thankful to each member of BEW as well as our clients, creditors, bankers, financial institutions and all the stakeholders. So for any other queries or information, so please do get in touch with us. Thank you.

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