Goodluck India Limited (530655) Earnings Call Transcript & Summary

Ladies and gentlemen, I welcome you all to the Q4 and FY '25 Post Earnings Conference Call of Goodluck India Limited. Today on the call, from the management team, we have with us, Mr. Mahesh Chandra Garg, Chairman; Mr. Ram Agarwal, CEO; and Mr. Sanjay Bansal, CFO. As a disclaimer, I would like to inform all of you that this call may contain forward-looking statements, which may involve risks and uncertainties. Also, a reminder that this call is now being recorded. I would now request the management to detail us about the business and performance highlights for the period ended 31st March 2025, post which we will open the floor for Q&A. I will now hand over the floor to Mr. Mahesh Chandra Garg, Chairman. Over to you, sir.

Hello, everyone. Ladies and gentlemen, my pleasure to welcome you all in this con call. The year gone by has been extremely good for the company, the results of which are in your hand. There has been a good progress of the company. We have been able to achieve good growth volumes. Despite of so many geopolitical tensions, disturbed, volatile situation, company has achieved a volume growth of around 17% EBITDA -- very good improvement in EBITDA margin. We have been able to achieve before-time completion of our large-diameter pipe mill, which is one of its own kind. Very few plants of that size are available in the world. And I'm fortunate, I'm happy to tell that there has been a good response from our customers all over the world. And ramping up will take a little more time, but it is going in a big way to the bottom line of the company in time to come. Another plant, which we are putting up, the subsidiary, making shells [indiscernible] is going ahead, basically, well ahead of schedule. And very soon we may start prior commissioning of that plant awaiting license. That plant along with the new plant, which we have commissioned would presumptively will add the game changer to the company. I can assure you, overall, performance of the -- all the plants, we achieved exceptionally good performance in the last quarter of the last year. Fourth quarter, we achieved almost 95% utilization OpEx, which was a marked performance in spite of so many headwinds in exports and domestic market. I think I can assure you, company is doing well and will continue to do well. At least next 2 quarters, what I see, I can give the guidance, that we will continue to grow as we have grown in the past.

Welcome, everyone. This is Ram Agarwal, CEO, Goodluck India. As our results are before you, and Garg saab has already highlighted your company's achievements and challenges due to geopolitical conditions before you. I would like to speak today on our journey to transformation. As management decided in 2005 to enter into newer segments, qualifying the criteria of high entry barriers, double-digit EBITDA and product future cycles, we sharpened our skills, good risk. We took risk of entering new areas, which slowed our journey, but for a better future. Since 2021, PAT has increased from INR 30 crores to INR 165 crores in the year 2025. Revenue has gone from INR 1,572 crores to INR 3,935 crores, nears 2.6x. Your company has tried to make a diversified product basket model, which in turn became multi-product, multi-locational market. So whenever need arises, we reshuffle our product basket along with product market. There is a very rare possibility that all the markets and all the products go down simultaneously. Today, world is reeling through companies. Markets have become volatile. VIX index showing the same. Your company has a good exposure to U.S., but at the same time, other markets such as Europe, New Zealand, Australia, Southeast Asian countries are available to us. So we have been able to reshuffle our export market, and at the same time, we have an exposure of 75% to domestic market. We have increased our sales to the domestic market, result is before you. Fourth quarter has achieved highest turnover, INR 1,100 crores. So in short, I can say adaptability is a key to our management efforts. Sales volume was 442,000 metric tons for FY '25, making a robust of 15.3% Y-o-Y growth for the year. This volume expansion was powered by strong demand across sectors like automobile, infra and most notably from our increasing international market footprint. During FY '25, we made strategic capacity additions, all product lines. Engineering structure capacity now stands at 85,000 metric tonnes. Precision pipes and automobile's capacity now stands at 1,70,000 tonnes. CR sheets and pipe capacity now stands at 2,15,000 tonnes. Our overall capacity utilization on an average has been 89%, which underscores both demand momentum and operational efficiency. As your company is available in infrastructure, automobile, oil and gas, solar and defense sector, all are future promising sectors. If we talk of infra, company is on the verge of completion of first order of 22,000 tonnes of bullet train and recently developed second design of bullet train and has secured a new order of INR 52 cores. In automobiles, as Garg saab has told, we have added long dia pipe of unique combination, 219 OD with 15 mm dia to be used extensively in construction equipments such as JCB. World has very few facilities for same product. As long as this venture reaches its 70%, 80% utilization, we hope to add another capacity expansion in coming years. Oil and gas, the all-weather sector, Trump's dialing sector, drill, drill, drill, to getting into contracts with Baker Hughes, ADNOC, Kuwait Oil Company and all the other companies, which we can name. Solar, a sector on horizon, is performing best. Your company has developed tracker tubes, transmission tubes, a 5-wall tube that is being used extensively in trackers industry. As per Mercom, GL is performing best in this sector. Company wishes to increase its footprint in this industry by installing new machines and entering new clients to get required results. Now definitely a very important sector, that is the defense sector, dialing of market, a topic being discussed in every nook and corner of India. Ours is a very small contribution to Brahmos missile as is highlighted by honorable RM in one of their release. Your company is in development phase of many more parts to be used in Indian arsenals. As Garb saab has told, a subsidy Goodluck Defense and Aerospace was established last year to produce 1.5 lakh shells, M107, 155 mm dia. I'm happy to -- I'm happy that your company has completed the project in record time and ready to go in trial awaiting some government clearances. With all the above, your company wishes to enter in a $1 billion club in the next 3, 4 years. Plans are approved and on our drawing board, near the time, we will share plans with our investors, shareholders, partners. With all above, your company is concentrating on human resource management by skilling our labor, by polishing the skills of our management executives. We're having regular workshops with management experts with our executives. Succession plan for second line of executive is being followed. Health and safety, a very important part of our employees, is a primary concern for management, having regular checkups of our workforce and plants, regular upgradation of medical facilities for our staff is being followed. Environment, total world is focusing on that. It's also a primary concern for the management. We are trying to make zero discharge plants. Green energy is replacing fossil fuels. We have established solar plants, up to 30% of our requirement. New discussions are on to establish megawatt scale plant in Gujarat to feed our requirement. Social responsibility is one concern, where management is working relentlessly. Health, education, animal feeding, these are the areas where we are focusing. Social upliftment of our society are some areas where we are working. Corporate governance, a very necessary tool today, is being followed by our team as per established laws. So I feel your company is on right track of growth and fulfilling its other responsibilities in social and legal framework. Your continued support, as always, we have been enjoying, will enlighten our path. Thank you. Now I would like to hand over the mic to Mr. Sanjay Bansal, CFO.

Good morning, everyone. At the outset, I, Sanjay Bansal, CFO, on behalf of Goodluck, welcome you all for joining us for the conference on performance of the company in Q4 and full year of financial year 2025. Regarding Q4, performance, standalone, the sales was increased to INR 1,104.62 crores against the INR 902.49 crores during Q4 of previous year, registering a growth of 22.40%. However, EBITDA for the quarter stood at the rate of 8.44% of sales, amounting INR 93.25 crores as against INR 72.72 crores during Q4 of financial year '24. Profit after tax, including other comprehensive income, was at INR 42.12 crores in Q4 of '25 as compared to INR 35.50 crores in Q4 of '24. The earnings per share has been at INR 13.26 per share in Q4 '25 as against INR 11.32 per share during Q4 of previous fiscal. The performance of stand-alone during financial year '25 was in line with the expectations. Sales increased by 11.66% at INR 3,935.89 crores as compared to INR 3,524.78 crores during the previous year of '24. EBITDA was at INR 340.79 crores as against INR 292.93 crores, registered an increase in growth 16.34%. PAT during the financial year '25 was at INR 161.74 crores as against INR 130.54 crores during previous year, registering a growth of 23.90%. Earnings per share stood at INR 49.71 per share during financial year '25, registering a growth of 8.25% over the previous year. The performance consolidated during financial year '25 was again very good. Total income increased by 12.25% at INR 3,971.21 crores as compared to INR 3,537.72 crores during the previous year '24. EBITDA was at INR 346.16 crores as against INR 295.19 crores, registering an increase of 17.26%. PAT during the FY '25 was at INR 165.63 crores, registering a growth of 25.23%. Earnings per share stood at INR 50.66 per share during financial year '25 as against INR 46.41 per share during financial year '24, registering a growth of 9.15% over previous year. On fiscal front, our interest cost and other expenses have marginally gone up due to increase in level of activity during financial year '25, as compared to previous year. Thank you very much.

Now we are open for Q&A session.

[Operator Instructions] We'll take the first question from Maitri Shah.

Congratulations on the good results. I have a few questions regarding the EBITDA margin. So if you exclude the other income increase, our EBITDA margins have gone down. Is there any reason for that?

EBITDA margins for the year, they have gone up rather. For the whole year, it has gone to 8.64%, whereas in the last year, it was less. Yes, in Q4, it has gone down marginally.

Okay. And the other income, do we expect this similar type of other incomes going forward? Or will the other income like decrease?

Can you repeat the question?

So the other incomes have almost more than doubled this year from FY '24 to FY '25. So do we expect them to stay at the same level or they will go back to the normal levels of FY '24?

Yes. See this other income is a part of operational activity, so see this is a part of operating, so it will happen in the future also. There is no question in there.

Okay. And any guidance for the top line and margins for the next 2 years?

For next year, we hope that you should be INR 4,500-plus crores, but basically a growth of 15% to 20%, what we have been emphasizing for the last 1, 2 years. We hope that next year will follow the same.

There is a clear visibility of 15% to 20% growth in this current year.

Okay. And any margin guidance do we have?

Margin likely will be maintained. We are in the niche segment in all our products, so we don't feel any pressure on margin.

Okay. And do we have any order book in terms of -- so that we can get the visibility?

Order book, basically, we are in segments. So every segment has a different order book. Like in Infra, we have an order book of almost 1 year. Like in our Automobile teams, there is always a visibility, there is no order book because it's a visibility of at least 1 year. In Forgings, it is normally 4 to 5 months order book we have. And in the general products, it's a continuous flow of orders, but still, it is maintained at almost 2, 2.5 months order book. So orders are sufficient, it is only our ability to deliver. How much we deliver, we will get more orders.

Okay. And we have the defense capacity coming in from this year, probably by the second half of the year. So what sort of revenues can we expect from that capacity?

Look, this will be the first year because first, second quarter will remain in the trial and starting. So we hope almost 40% we should achieve in this year. And from the next financial year, we should achieve the maximum capacity.

And what is like the peak revenue at the maximum capacity?

It all depends on the price, but I think it should be between INR 270 crores to INR 300 crores.

And we have talks about the new capacity, like a third capacity coming in. So any timelines for that?

Pardon?

Any newer capacity that we're going to be adding for maybe this year or maybe by the next year?

Capacity addition will depend on -- like in LDP, we want to increase the capacity, but once whatever plants we have put up, it should achieve a capacity utilization of 70% to 80%, only after that we will go for any expansion.

So any CapEx plans for FY '26? Do we have any amount for that?

Right now, 2 CapEx -- defense CapEx is going on, and some maintenance CapEx will also go on. And if some new project comes in between, that we will let you know.

We'll take the next question from Tushar Gupta.

Congratulations for a good set of numbers. Sir, I want to know, can you please throw some light on CDW vertical? What is the current utilization rate on 50,000 tonnes of plant? And how do you see it getting ramped up moving ahead?

Sir, this CDW plant is a precision tube most used in auto sector. And auto sector is growing in India rapidly because auto is no more a luxury, no more a -- it is a necessity of every household. And I don't see any slowdown in auto sector in India and abroad. Still, despite of so much turmoil in the U.S. area, our demand for export products is very strong. So we don't expect any slowdown in precision tube milling, domestically and export.

Okay sir, so what is the current utilization rate at 15,000 -- 50,000-tonne plant?

It is almost 40% right now. And by September, we hope it should be 60% to 80%.

Okay, sir. Sir, one more question I have. The quarterly actually saw a good -- we have seen good topline growth, was there any inventory gain during the quarter? Or is there any quantity change? Can you quantify it?

See, in this quarter, there is no inventory gain, rather there is a marginal down in the price, so there is no inventory gain in that. These all numbers are operationally profitable.

Not only inventory gain, there has been an inventory loss. The price throughout the year went down, and the performance for the company must be reviewed in respect of raw material prices going down. As the price remain same as around 1st April 2025, our topline would have been almost INR 4,300 crores.

We'll take the next question from the line of Mahek Talati.

Yes. So sir, I just wanted to understand. So currently, we are operating at close to 89% utilization. And we are expecting the LDP plant to achieve 80% utilization from -- in this year itself. So any major CapEx planned for FY '27 volume growth?

Basically, I have told you that right now, we are in the implementation of establishing the defense plant maintenance CapEx or capacity increase by debottlenecking. It's a continuous process, which goes on throughout the year. So in this year also, we'll be doing some bottlenecking -- some removal of bottlenecking, and we will be adding some capacity in our infrastructure and in our CDW section, but it will not be a major CapEx. Major CapEx will depend on the ramping up of the production of our 2 new plants, one of the LDP plant and one of the defense plant. So we will be able to give you guidance, I suppose, in H2 only.

Okay. So other than this, this INR 4,500 crores of revenue expectation, which we're expecting, this is excluding the defense vertical, right?

Defense is not included in that. INR 4,500 crores is with the normal growth in the other sectors. Defense, whatever comes, it will be added to it.

We'll take the next question from Yashashvi Bali.

I just want to understand, like if I see, the exports have been going down from the last 3 years, from 30% to 25%. So is there any particular reason for that? And are we going to focus on the domestic front only? Or are we going to focus on exports as well going forward?

Export as a percentage has gone down because the domestic sales have gone up. But export as such is being maintained around INR 1,000 crores year after year. There have been geopolitical tensions, as you are aware. The year before last, there was a lot of [ Red Sea ] problems, the freights went abnormally high given there was a slowdown in Europe, but as such, our exports have not gone down. During the last year, we had even marginal growth in exports.

Okay. The next question is like on the defense facility, which is coming up. What would be the EBITDA margins for that?

Right now it is very early to tell because we are just in the commissioning of the plant, but we hope it should be 20% plus as per the market intelligence.

Okay. And the peak revenue is INR 270 crores to INR 300 crores, right?

Almost. This, we anticipate.

We'll take the next question from the line of Rohan Patel. So we'll take the next question from Jainis Chheda.

So I have a few questions. One is that your long-term vision on the EBITDA front is to clock double-digit EBITDA margins, is that correct?

Yes.

And for next year, you are saying that the margins will be maintained. So can you...

Rather it should increase. But on a conservative side, it will be maintained, but we hope with the market going on, we will improve it.

So can you share your path as to how you are looking for a double-digit EBITDA margins? If you can share segment-wise, what are the margins and where the growth will come in? That will give us a better confidence in terms of how the margins are going to move over next 2 to 3 years.

Sir, I can tell you, double-digit EBITDA margin will come earlier than expected. But looking through the uncertainty in the world market, it is very difficult to commit anything as on date.

I completely understand, but if segmental EBITDA is possible, maybe in the investor presentations going forward, that will help us to look at the picture more clearly.

In this -- in our investor presentation, we have given that what the sector-wise EBITDAs are. But whatever new capacities are coming in, when we are saying from INR 4,000 crores to INR 4,500 crores, our major emphasis will be on auto tubes and the defense sector. So major contribution will come from there. And in these sectors, in auto tube, normally EBITDA is 12%, 13%. And in defense, as I have said, we don't know. But from the market intelligence, it should be 20% plus. So if you calculate, you will come to understand that what we are saying double digit, it can give us.

Understood. And in terms of our debt, our debt has gone up in the current fiscal. Any plans to repay debt in the next couple of years? And what is the blended cost of debt right now?

Blended cost of debt is 9.5%, and we are going to -- in addition to routine repayments, we are going to repay INR 22 crores to the lenders in addition to INR 46 crores normal repay.

Okay. So roughly it's INR 60-odd crores of debt repayment in the current -- in FY '26.

Yes. Yes.

And sir, in defense, because of the current geopolitical tensions, are we seeing a preponement in terms of orders or offtake that -- is government asking to supply it earlier than the original timeline?

Truly speaking, we have to -- we have yet to come in the trial stage, so government can ask only when we start, but it seems, as you have understood from the news items, government will definitely want that any producer -- instead of giving material to outside, government will like to purchase. It's a general newspaper information. So I believe this should be the case.

Do we directly supply to the government? Or do we supply to a private player who does the final packaging and supplies it to the government?

I could not understand your point.

Is government our direct customer?

Yes, government is a customer. Private is -- in India, government is a customer only. In export market, there are many customers.

We'll take the next question from Rohan Patel.

Good set of numbers. Just for a clarity, you mentioned that you are also expecting this year, FY '26, you will grow at, say, 15%, 20% rate. At 89% capacity utilization and with debottlenecking our facilities, you are confident that our current facility can do INR 4,500 crores of top line with current capacity.

There is absolutely no doubt about it.

Okay. And sir, just looking at our trends of division wise, what do you think that which are 2, 3 divisions that will contribute to this 15% to 20% growth? Is it going to come from precision pipes and forging or it's, again, going to be heavy on CR sheets and engineering?

It is going to be precision tubes and pipes and forging.

Okay. So we aren't seeing -- so can we expect that CR sheets and pipes to stay stable at INR 1,400 crores topline?

Yes. Yes.

Okay. So sir, when we are growing -- and what would be the margin profile for our engineering structure? Because I hope...

Almost 9% to 10%.

Okay. Engineering structure is 9% to 10%. So when we are saying that we will be growing from, say, engineering, precision pipes and forging, so shouldn't we be expecting our margins to be way higher than this year, like going to 9.5% to somewhere near to 10%?

We cannot commit. But definitely, as you are hoping, we are also hoping. Margins are bound to improve. EBITDA margins are bound to improve.

Okay. And sir, what we have seen is that after doing sufficient equity raise and for expansion plans, and we were expecting our balance sheet to be much lighter on debt side. But we have seen that this year, we have added debt to tune of 800 -- our debt on balance sheet is into the tune of INR 882 crores. So how -- what's the plan for reducing the debt and debt repayment for next 3 to 4 years as our capacity gets ramped up and the cash flow, which we'll be generating? How much of that we'll be using for reducing our CapEx -- sorry, debt?

Look, whenever we are increasing the capacity, so with our turnover, whatever increases, there is a certain percentage, which we require further expansion. So suppose we go from INR 4,000 crores to INR 4,500 crores, so going ahead to INR 500-odd crores, so we will need a 15% to 20% capital because whatever business we are doing that business is capital intensive. So money is like a raw material for us. But definitely, what we planned, we planned the requirement -- additional requirement whatever will come, the next year, if we have good profits as we hope, so we will be taking lesser money for achieving the increased turnover. In that way, our debts will be paid -- our debts will be reduced in the coming years.

Okay. Yes, because the question is that even after growing our EBITDA, growing our sales, if we are paying, say, INR 80 crores, INR 85 crores in interest, that does not translate into a healthy profit margins. So if our debt would be less than -- that would be reflected in our profit margin. Because we are in historically higher debt levels.

Actually, we are seized of the issue, and management is relentlessly working on to reduce the burden of interest on the company. But definitely, everywhere, there are headwinds. So whatever we propose it is not executed as you know. But repayment we are doing, so our long-term loans will be reduced. And the short term, as I told, with the increasing profits, we will be needing lesser money.

Look whatever you define the debt is a long-term debt, has to be defined as debt. However, the short-term debt is a working capital debt financed by the stocks and debtors. That is not actually a debt. More and more work we do, more and more working capital is required, it is not a part of the debt actually. A company of our size having a turnover of INR 4,000 crores, our debt is only about INR 160 crores. And that long-term debt only has to be considered as a debt.

Okay. Yes. And sir, next question on our defense subsidiary. Like still, we are doing the trial runs, and we are hoping that this year, if possible, we'll get clearer -- we'll definitely get clearance from government. So like lot of things are in flux in this set of our business. But just one question I have and if you can explain to me is that considering that there is a pull down in war scenario globally versus Ukraine and Russia and there are also a capacity buildup in 155 mm artillery shells globally, so with this pull down and with we ramping up capacity, domestically also a lot of capacity is coming into. So what is your outlook regarding that? Do you expect that we'll be on trajectory to get more customer approvals, government approvals, and we'll be able to take our -- these operations to 80%, 85% utilization in the next 2 to 3 years? Do you think that is possible?

There is absolutely no problem. Plan A, plan B, plan C is ready. In case everywhere there's a peace and no use of this shell, bombshell, still we will be using -- making components for ISRO and Brahmos missiles, for which we are regularly supplying. Our places are designed for this conversion to those items. We will be the first to do it. But I don't think world is going to be at peace in future immediately.

Yes. Okay. Okay. Got it. And just last one question. And sir, we have seen a good growth. After a long time, we have seen a steady and higher growths in our Forging division. Like this year also, it has grown 19%. So can you just throw a light on like have we got a new customer or what has happened that forging, which is to be in the range of INR 300 crores, INR 350 crores, INR 400 crores, is now doing consistent, above INR 500 crores, INR 600 crores of revenue. And how can we look at that going forward?

Look, because we -- in the forgings, oil and gas is a major sector. And with the Trump coming in, there is a drill, drill, drill. Because he wants oil to be increased in the market. Drilling, he wants to increase. So what product we are making, 50% to 60% material is what goes to the oil and gas. So there is a good demand. Number two, dairy products, chemical products, which are in Europe, those factories have a good demand because we are supplying as per drawing, material there. And in general also, in defense, however, it is very insignificant because we are in the development phase. But definitely, there also, there is an increment in the -- increments in the past, which have been used in defense. Like some smaller parts in Brahmos missiles, like some parts in other missiles and other systems. So there is a good demand in forging for the precise products, for the quality products. And whatever we make, it's a precise one, it's a niche one and it's a quality product. So demand doesn't bother us -- I think demand will not bother us.

Okay, yes. And just to squeeze in just one last question, in Engineering and Structure side, now you are also expecting that to -- that pie to grow for us, will it be more focused on metro projects, our girders projects and bridges projects? Or you are expecting this to come from more of a renewable side of our solar and tracker tubes and crushing barriers?

Actually, there are 2 sides, what you are asking in 1 question. The first answer is, in infrastructure, there is increased demand of metro, there is increased demand of RRTS tracks, where government is running Vande Bharat. And there is -- government has already approved or they are in DPR stage for 7 more bullet trains to come in the next 5 years. So there is an actual demand, there is a compelling demand of bridges in India. Moreover, government is putting emphasis on thermal plants. So we are -- our one part of the infra is supplying to thermal boiler structures, which this L&T is doing and other companies are doing, so our emphasis is on both the sides. And I think there is no dearth of orders. Rather, we are booked for next 1 year. But if we want, we can take orders for 2 years as well, but it will not be a wise step. So that one thing is there. The other question you asked for the solar. Renewable, we are much, much lower what the world is expecting. We want to go 500 gigawatts, again Reliance was giving 100 gigawatts. Adani, Reliance, everybody is taking because the fossil fuel has to go down. And India is -- I will not say it is at the bottom, but it is not even at the top. So that sector is very promising. And whatever we are supplying, it is being absorbed. And if we put up some new lines in the coming years, I hope, for the next 5 years, there is no dearth of demand in the solar sector.

We'll take the next question from the chat from Mr. Abhishek Dixit. He's asking other income has risen from INR 4 crore in Q3 FY '25 to INR 8 crores in Q4 FY '25, what's the reason behind this?

Other income, you see, there is a multiple income, like one is interest on the deposits. We have done some deposits in the last year. We have earned interest on that. And second is some -- on the export fees, we charged some testing and packing -- on account of packing and testing, so we charged some amount from exports. That is part of other income.

We'll take the next question from the line of Bhavya Shah. So he has asked the questions, when will the second bullet train order will be delivered?

Second bulletin order, it has been cleared, and I hope in this financial year, by January, February, that order will be completed.

The second question is what sort of overall capacity utilization will the firm achieve for FY '26?

Right now we had said that it is 89%, overall capacity utilization we are doing. I hope on the same level, we will be doing.

And the third question was any CapEx for -- I mean, the CapEx estimates for FY '26 and FY '27 both?

For FY '26, I have told the CapEx for debottlenecking. It will be there. Some maintenance CapEx will be there. And in the bigger CapEx cycle, it is a defense CapEx, which is going on. So it will be capitalized in this year, so -- but any other major CapEx I have already told, in H2, we will be able to give the guidance on that.

We'll take the next question from the line of Naitik Mohata.

Sir, my first question is we have expanded our capacity in FY '25 for the fabrication side by almost 25%, so can you give some light what kind of capacities have we added there?

We have added the capacity in our patent structures because we have a good demand of bridges and this boiler support structure from the industry. So on that side, we have added some machine. We have provided some space. So that is a capacity addition we have done of 25,000 tonnes approx. And in Solar, we have added some machinery to increase our capacity, as we are not able to supply as per the market demand.

Okay. Sir, my second question is the tube's CapEx of 50,000 tonnes that we have done, as you said previously in the call that the plant is already running at 40% utilization, so could you throw some light what kind of margins do we expect from this CapEx that we have done?

This site -- this product, normally in our precision tube and auto tubes, the EBITDA margins are 13%, 14%. In this product, we hope that it should be at least 200 bps points plus, but once it gets stabilized. So by September, I hope what I'm saying, it should -- it will be improved again.

Okay. So sir, can we -- so can this be taken that currently, it must be running at double-digit margins?

This product is running on the double-digit margin, but now the question is, it is not going on the capacity utilization. It is only utilizing a capacity of 40%. So despite double-digit EBITDA, it is not contributing much. But by September, once it is 70%, it will start contributing.

Right, right. Also, sir, on the 155-millimeter caliber shells, could you throw some light like what is the price per shell right now? What it has been in the last 3, 4, 5 years? Or how the market is turning up?

It's difficult to give any idea of the pricing. It is a very sensitive information.

Okay. All right, sir. Also sir, if -- so I wanted to understand the sensitivity of our business to the rising steel prices. So if steel prices jump up, do we have contracts in place to transfer the price to the customer?

Most of the times in most of the products, prices are transferred to the customer. It's how the product with a timeline have the increase and so [indiscernible] prices have to be transferred to the customer.

And sir, this will also be the case for the defense orders as well?

Sir, we have not gone into production so far. So once we enter into market, then only we will be able to tell.

We'll take the next question from the line of chat of Saurav Raidani. He is asking how about expansion and future plans in products that will be developed in Goodluck Aerospace and Defense. And also, is there any planning for another round of fundraise in Goodluck Defense?

Right now we have already told that whatever expansion we will be doing in auto. And in terms of defense or this aerospace, we will be able to let you know only once its first product, first line is established and it gets some ramping up and it goes through the required capacity utilization, then it will be -- then I suppose it should be done at that time only.

The next question is even excess capacity is coming for shell. With Rheinmetall coming up with SMPP and Reliance Infra, how you see shell markets which are expansion in defense in products?

Sir, look, there is a -- what Europe was doing? Before this Ukraine war, Europe was not having any ammunition because they all were covered by NATO and other countries. But now it is open for everybody. And a very familiar question, if in your -- in the colony you live, if there is a theft, so what you will do next? There are 20 houses, 1 house gets ransacked. So balance 19 people, they will get barb -- electric barbed wire on their homes. So this is a fear. So with fear, Europe is likely to increase its stock. So everywhere -- but now every country is free. They have to secure themselves against any such kind of loss. So I hope whatever capacities are coming, even they will not be sufficient to fulfill the demand of the fear in people.

Moreover, you should understand since time immemorial, communities, societies never have been at peace. They have been fighting against each other. And I don't expect they will ever be at peace. The wars will continue. I wish everybody lives at peace, but this is a wishful thinking.

We will take the next question from the line of Pratik Bhandari.

Yes. Just a couple of questions from my side. What has been the CapEx amount that you have incurred till date for the defense out of the INR 216 crores that you planned?

Around INR 170 crores we have incurred already on this plant. And by the end of June, we will complete on the CapEx.

Okay. And you also mentioned that you are looking at the top line of INR 4,500 crores, but that excludes defense. Now, as per your last call, you mentioned that since defense segment would commence the production by end of quarter 2, right, and it would just have 6 months to do the business, so what kind of revenues are we looking at from the defense segment for the 6 months of this year?

I told it should be almost 40% of whatever we achieve, whether it is INR 270 crores. So 40%, I hope in the H2, we may achieve.

All right. And considering that if I look at your business segment-wise, and CR sheet and pipes contribute approximately 30%, 35%, so just wanted to understand what kind of margins are we drawing from this particular segment.

This particular segment normally because the run-of-the-mill product, many producers are there. So normally, it goes from 3.5% to 4%.

So is it a reason that we see a drag in our consolidated margins considering that the forgings and the precision pipes are blocking more than around 14%, 15%?

Yes, it is a blended margin because this product we are doing since 1987, and you can say it is a backbone for our infrastructure products. So suppose -- so that is contributing in that way. However, it is of the lesser EBITDA, and that is why we have introduced solar tubes in that, which, in turn, will increase our EBITDA margins. In coming 2 years, it will take us to 5% to 6% because CapEx is not to be done, machines are available. So we will be using zero cost machines to improve our EBITDA from 3.5% to 5.5% in coming 2 years. That is a strategy we are planning. We are executing that.

So basically, a margin expansion of 150 to 200 basis points. That's what you are seeing in the CR sheets?

That is the hope.

Okay. And you mentioned that you've incurred a CapEx of INR 170-odd crores till date in the defense, so is it primarily for the machineries?

That will be for the product -- for the total project. It entails all land, all machines, all civil -- so it's a project.

And have we received the machineries at site? And how is the positioning there?

It is already at the site.

Okay. And you also mentioned that in totality, a debt reduction of INR 50 crores to INR 60 crores is planned for the next -- for this particular year, right?

Yes. Yes.

So there's a follow-up question from Saurav Raidani. Brahmos missile will be manufactured from same machine which are in sales? I think he's asking if Brahmos missiles will be made in Goodluck Defense.

We are making only a part of it because it contains thousands of parts, so we are making...

Some of the components of Brahmos missile are being manufactured in our ports. Should the need arise, as you raised the question, separate line, so we said, even we can manufacture these parts in our gun shell plant also in the missiles.

So will it be made in Goodluck Defense and Aerospace?

Yes.

All parts?

Yes. Yes.

So there's one more question on chat from Soham. So he's trying to understand the revenue split in FY '26. So he's asking of the INR 4,500 crores, which we are aiming, of this, can we expect INR 400 crores to INR 450 crores from hydraulic and INR 270 crores to INR 300 crores from defense?

So basically, hydraulics and the other products as well, like our infrastructure from our forgings, running forging, this LDP plant, this all combined will be almost INR 4,500 crores. And the defense, whatever we get 40%, that will be added to it for the next year, FY '26.

There's one more question on chat. What is the number of shares can we make at full capacity?

1,50,000.

We'll take the next question from the line of Vedant Sarda.

Congratulations on a good set of numbers, sir. Sir, my query was on a margin footprint, like from FY '21 to FY '25, we are in the middle of 7% to 8%, and we are targeting a double-digit EBITDA margin in the current year. Like we have been growing our revenue in the range of 15%, 20%, but our margins are not improving. Like you told 60% to 65%, -- 60% is from oil and gas and 30%, 35% is with an EBITDA margin of 3%. So what...

You have not just gone through. What we have said, 60% oil and gas is only a part of forging. Forging, which contributes only INR 500 crores to INR 600 crores in the business. So that is 60% of that forging basis, not that total overall INR 4,000 crore business.

Okay. So what would be driving like 8 -- from 8% to the double-digit EBITDA margins?

I have already told that whatever we will be expanding, we will be expanding in infrastructure, in automobiles, in our defense sector and forgings. So they are all products. They all are 10% plus. So when we add up these, so there will be definitely a blended margin. This year also, we are almost 8.64%. So I cannot say that this year we will get 10%, but I hope we are in the right direction and we will achieve, maybe not in 1 year, in 2 years, we will get to a double-digit margin. We hope so.

We'll take the question from the chat from Arpita Jena. With marquee clients like BMW, Audi, L&T and DRDO, how strong are these relationships in terms of recurring revenue or long-term contracts?

Basically, we're working with L&T for the last 8 to 10 years, so our -- as far as we are connected to our customers, so it has been in our culture that whosoever customer we are attached, we normally service as long as possible. In export, the customers we had in 1992, in 2025, we are having the same customers. Yes, they have increased, but the old customers have not gone. So our relationship with our customers is the backbone of our company.

We'll take the next question from the line of Meeth Musadiya.

Sir, congratulations on a good set of numbers. I had already asked my questions on the chat box. My line was disconnected. So were they asked or shall I repeat my question?

See if you have any queries -- whatever questions you have asked, we have already replied. If you have any additional question, you please ask.

Yes. Yes. So my question was, currently, our net block is approximately INR 1,000 crores. So is it possible that, say, over the next 3 to 4 years, we do turnover in the range of INR 7,000 crores to INR 8,000 crores with 10% EBITDA margins, 5% PAT margins and without doing any equity dilution, which we have done in the past, and ROCE upwards of 20%?

No. Sir, we have already given our guidance. And in next 3 to 4 years, we have to reach INR 7,000 crores to INR 8,000 crores of turnover. Of course, I cannot guarantee. EBITDA 10% will come, but other conditions I cannot say. That guidance to this extent, management is committed. The blueprints are on the drawing board, and things are being planned accordingly. But we are moving conservatively each step we take and then we progress. We have a product basket, which assures me that we are going to achieve the target in the next 3 to 4 years.

Yes. And sir, just a humble suggestion, to give EBITDA margins excluding the other income if -- because if we exclude the other income, then the margins come to approx. 7.9%. And if we include the other income, then it comes at 8.64%.

Sir, this is a misnomer. Other income is insignificant. As our volume will rise, other income will not rise to that extent. It will become irrelevant. It will totally become irrelevant. Now I tell you, suppose government interest equalization scheme, government on export introduces, other income will rise. It should have risen further, but government -- suppose if government is under pressure, interest equalization scheme is in total waste. And not only this, government gives some RoDTEP, rates are bound to increase export. Other income will rise, their percentage will rise, and it's totally part of the operational income. It is totally part of our working business for this income. So it cannot -- it should not be separate. But any other income, we can separate out any time.

Okay. Okay, sir. And just a last question. What would be our target ROCE, say, from 14%, 15% to 20% upwards? Is that our target?

This year also, we have achieved 20% plus, and we have a target to go further. It should be 22% plus, why not? But yes, this year we have achieved 20.8%.

ROCE?

Yes. Yes.

We'll take the question from the chat from Rohan Vora. He is asking what is the outlook on working capital and operating cash flow going forward?

See our operating cash flow in this year is INR 158.25 crores, when compared to last year, minus INR 45.92 crores. So we are generating cash in the operation. And second question is?

Can you repeat the second question again?

Sir, he had asked for the outlook on working capital and operating cash flow.

Sir, as we have said, our operating cash flow is INR 158.25 crores in this year, so we are generating cash from operations in this year. And on working capital outflow, it is -- as Garg saab said earlier, that working capital is a part of our operation. So -- and in this period, our working capital cycle is around 104 days.

Definitely, it will go up by odd INR 60 crores, INR 70 crores because we will be increasing our turnover from INR 4,000 crores to INR 4,600 crores. So it will be added by another INR 60 crores, INR 70 crores here also.

We'll take the next question from Chirag Mehta.

Yes. Sir, congratulations on a great set of numbers. Now this is in addition to the previous participant's question regarding the -- any further fundraise in the defense subsidiary or the IPO or -- so can you throw some light on that? Then I have a couple of more questions to add, but then later on I can.

Actually, how the business goes forward, how these capacities get commissioned and they are ramped up, that will only decide whether we will need funds or not. At this juncture, I don't foresee any capital from the market or otherwise.

Okay. But sir, do you have any plans like or the drawing plans about the IPO of the subsidiary or in the future or any timelines?

Sir, it will be -- it will come, but let the plant commission first, then only we can give a guideline, sir.

Okay. And sir, regarding this aerospace and defense segment, which you are planning to scale it up in the defense subsidiary, so is there any research and development going in the other product apart from the one, which you are existingly doing it? Or like -- what I'm trying to understand is that how big this subsidiary can contribute to the overall revenue of the group. That is what I wanted to have an idea of.

This subsidiary -- if this subsidiary can go up like anything, suppose it is INR 300 crores, I hope it should go to INR 1,000 crores. But right now it is premature that I can tell anything about that because after commissioning of this plant only, we will let you know.

Okay. And sir, like if I missed out, sorry for that, but what are the actual products which we are looking for in the subsidiary apart from this artillery?

Right now, we will be using it for the artillery. As Garg saab has said, suppose we're in a situation at some point of time that this machine is -- this machine can be used for other forging products also.

Okay. And sir, do we have orders or like negotiated orders or something like for the artillery? Like what I am trying to understand is that the moment we start the production, do we have the upscale for the uplift of the equipment or the sale orders are fixed with us or something like that?

No, no. I'm sorry to tell, as on today, not less than 3 customers every day visit our plant, and they want full capacity for years.

So visibility of the revenue, there is no looking back about it...

I don't see anything, anything that anybody suddenly demand coming down, I don't see any problems.

Okay. And like, sir, what is the maximum utilization, which we will be able to achieve? And what will be the timeline in the defense subsidiary?

We will tell in the future. I'm awaiting commissioning -- trial production to start any day subject to the license, which is awaited any day. Any day, any hours you can call.

We'll take a follow-up question from Rohan Patel.

Sir, just last 2 questions. Sir, when we say we are currently utilizing our large-diameter pipes facility at 40% rate, like are we supplying these samples and doing the cold runs or we have started the sales and we're looking to ramp it?

We have started manufacturing the diameter prices. These -- there are very few plants of our range throughout the world. These pipes will replace seamless pipes. And particularly, these pipes will be used in construction equipments like tower cranes, and these parts are mostly used seamless. And our pipes will be at least 30% cheaper than that. We will be making ready-to-use pipes by -- we are installing the honing machines, ready-to-use as components.

Okay. So we are ready with the facility we are adding with the cold run also. Now it's just about re-ramping up. We have customer approval in place. We have the order book in place that you...

Yes.

Yes. Okay. And sir, in defense, when you say that you aspire to do 40% capacity utilization in this year, the defense subsidiary part, so where does that confidence comes from? Like do you have certain approvals from customers? Have you cracked customers over here and it's just government clearance, which is just a constraint, and once that comes in, we are ready to go? Like we have all the customers ready, is it?

Are you asking about defense? What are you asking about?

Yes. Yes, yes, defense, 155 mm shells.

Defense approval will come through the proper channel. The government agencies are there to approve it.

But on client side, have we figured out the client side, like...

It's from the client side.

Yes. We are ready for that.

Client will get the approval from the firing range.

Okay. And can you just throw some light on whether that would be -- what would be the mix of domestic and export over here?

It is premature to tell. Let the plant get commissioned, we will come out with details.

Today, there is a competition. Exports want total quantity more and the domestic want total quantity more, so I don't know whom to give the quantity.

Since this was the last question for the day, I would now invite the management to give their closing comments.

Yes. I have 1 question. Actually, my line got disconnected. Can I ask the question, if you don't mind?

Yes. Yes, please.

Sir, my question is that since we are getting into the defense in a -- which is a new product line or new segment and also the bullet train is also, I would say that, kind of new segment. Is that correct understanding?

Yes, yes. Definitely.

Okay. So my next question is that since you mentioned that defense, we are not yet into the production mode because -- have we received a confirmed order? I may be asking a wrong question maybe, but just trying to ask, yes.

To be very frank, I have told many times, this is not a question of getting orders. Once it gets commissioned, there is no dearth of demand. So as soon as we get trial, demand is there. Don't worry for that.

Sir, but is there a probability of the trial not being successful?

There is no chance.

Okay. Okay. And one last question. So considering that both these segments are new, how much would they add to the FY '26 topline in percentage terms?

Sir, I would answer you the question otherwise. We are engineers from IIT. We are committed to certain standards of performance, and we are very innovative. Failure is not an option for us. We have to succeed, we have succeeded and we will succeed. Does it answer your question, sir?

Sorry, sir, you said you are from -- you guys are all from IIT, is that what you said?

Yes. Yes.

Okay, sir. I respect the IIT -- I mean, it's the gold standard, so I'll take your word. All the best.

Don't worry.

Mr. Harsha has a question. He's unable to raise hand. Harsh, can you go ahead?

What I wanted to ask was regarding our expansion strategy, like in the future, for any expansion that we do, are we -- like do we plan to fund it through internal accruals? Or are we open for further dilution as well?

Sir, our first criterion is to do through internal accruals only. Dilution of equity is the last option.

Okay, sir. Okay. So as we are growing then the internal accruals will also grow, so it will make us in a better position to fund any further expansion.

Yes. It should grow, and it should grow reasonably well to enable us to do expansion as we've done.

Sir, that is the last question for the day. I would now invite the management to give their closing comments.

We thank you, everybody, who attended this con call. And we hope our investors, our shareholders will keep on supporting us, as they have been doing always. Thank you.

Thank you, sir. Thank you to all the participants for joining on the call and to the management team. This brings us to the end of today's conference call. You may all disconnect now.