Harsha Engineers International Limited (HARSHA) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Harsha Engineers International Limited Q3 and FY '25 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Vishal Rangwala, CEO and Whole-Time Director. Thank you. And over to you, sir.

Hello, everyone. Good evening. Welcome to our quarter 3 FY 2025 investor call. On call with me today are Mr. Maulik Jasani as well as Mr. Sanjay Majumdar. Maulik will talk us -- as we have been doing in the past, Maulik will take us through the numbers in a little bit more detail. I'm sure you would have had a chance to look at the numbers and the deck. Let me begin with -- as you've seen -- you might have seen in the -- our quarter 3 performance has remained overall kind of a flattish trajectory, with the key challenges continuing to remain more or less at the same. Thus, our key market of Europe continues to face significant headwinds. Similarly, the U.S. also is not showing any significant sign of revival. However, on the positive side, we are getting a feeling that with the U.S. taking positive proactive steps under the new leadership of Mr. Trump, geopolitical tension should start reducing, thereby making the business sentiment positive. However, this could be partly offset by increased tariff wars, particularly between U.S. and China, which could have a domino effect on overall international trade. All these may not have any direct impact on Harsha. However, it can create an impact on global commodities and may have some indirect impact. Another fallout of the present scenario is making USD stronger vis-a-vis most of the emerging market currencies, including the Indian rupee. At a macro level, Harsha may stand to benefit since this will increase the price competitiveness of Harsha's products in the U.S. and other international markets. Now if I talk of India, while we have grown in higher single digit in this quarter over the corresponding previous year quarter, bulk of the growth is attributed to strong growth in Bronze Bushing segment and also a decent growth in Stamping segment. The Bronze Bushing business has continued to be strongly positive for us. Thus -- the 9 months year-to-date sales for Bronze Bushing is around INR 60 crores plus, very much in line with our expectation of crossing INR 80 crores annual sales target of Bushing this financial year. If I talk of cages, this quarter was a bit soft in India typically due to year-end inventory reduction pressure felt by our major bearing -- MNC bearing companies operating in India. Since their overseas parent follow calendar year as their accounting year, I believe that normal purchasing will be resumed in quarter 4, and we look forward to a little bit of improvement on demand from their side. Also, we have started seeing some better traction in order bookings for exports, and demand scenario on industrial side also looks to be slightly improving. As informed to stock exchanges, we have concluded a major sourcing contract for cages with a large global customer and we should start seeing considerable additional business coming to us in India from second half of financial year 2026. Again, we are also a major beneficiary of new facilities commissioned by our customers in India for as part of China Plus One strategy. We also expect the demand for large-sized cages to start picking up gradually in coming quarter, matching with increasing demand from the industry. However, the demand from other geographies like Europe, U.S. is still not showing concrete sign of revival. China has not reported good numbers this quarter, though if you look at year-to-date performance, it's still quite improved. We expect China to sustain these improvements going forward. From a Romania perspective, Romania's prospects continues to remain bleak, though we are working very hard on the strategy for improving the product mix in Romania by pushing more cages and also consciously implementing cost-cutting measures. However, Romania will not be in a position to achieve operating breakeven in the current financial year given the fact that overall demand challenges continue. However, on a combined basis between our 2 key subsidiaries, I expect these losses to be reduced and kept at a manageable level in this current financial year. If I talk of Solar business, quarter 3 reported a normalized performance in line with our expectations. As indicated earlier, the Solar division is operating on its own without any material addition -- additional capital contribution or additional management bandwidth and support from the management. So to conclude, I wish to reiterate while the current financial year top line will be more or less flat, as indicated in the past, the bottom line growth would be much higher, more or less in line with our current run rate we've achieved till now. I would really like to express my sincere gratitude to -- for your continued trust and confidence in Harsha Engineers. And I would like to pass on to Maulik to talk about now a little bit numbers in more detail. Over to you, Maulik.

Thanks, Vishal bhai, and hello, everyone, and good afternoon. For the last quarter ended December '24, our Engineering business at consolidated level has achieved top line of INR 302 crores against a top line of INR 310 crores in the immediate previous quarter, and against INR 278 crores top line in the same quarter last year. While we have achieved the consolidated EBITDA for Engineering business of INR 48.2 crores in the last quarter of FY -- quarter 3 of FY '25 against INR 50.2 crores in the previous quarter and INR 48.5 crores in last year same quarter. In our Solar business, we achieved revenue of INR 37 crores and EBITDA of INR 1.28 crores in the quarter 3 of FY '25. Our Solar business continued to have a respectable order level in their pipeline. Our overall working capital cycle has reduced to 144 days against 151 days in the previous quarter. The company has incurred overall CapEx of INR 70.8 crores in the quarter 3 at a consolidated level and continued to spend on the CapEx side as committed for the future growth. With this brief on financial numbers, I request operator to take the Q&A from participants. Thank you.

[Operator Instructions] We have our first question from the line of Jason Soans from IDBI Capital.

Sir, my first question just pertains to the long-term contract which you have won, that's effective December 5, which would put a release on the exchange. Now this agreement is for an initial period of 6 years, and you had mentioned that the revenue potential is around EUR 6 million to EUR 10 million per annum. So sir, just wanted to know what is the update on that? I mean when are we starting deliveries on that? And how is the preparation for that going on?

Yes. So in general, we have signed a contract for long-term supply of product, which we are expecting to start supplying in the second half of FY '26. And from a -- and this is what we have anyway disclosed. And this will be -- I think EUR 6 million to EUR 10 million is what we are projecting at the full potential level. We could achieve that.

Yes. I think the preparations are on and we are on track.

Yes.

Okay. Okay. So revenue potential, sir, you have mentioned EUR 6 million to EUR 10 million per annum. So that gives you a significant revenue potential in terms of that. Okay. Sure. Sure. Okay.

But it will not start with EUR 10 million. It will scale up gradually.

It will scale up. It will scale up. Okay. Okay. Sure, sir. Sir, second question is I just wanted to know -- I mean, of course, in terms of overseas subsidiaries, it's kind of status quo as compared to the second quarter as well. Just wanted to know -- I understand that the situation overseas with Europe, U.S. is pretty weak, as you mentioned. But are you seeing any green shoots there in those regions now Trump also has come? Just wanted your sense on that. Do you see any green shoots going into FY '26? Or are we going to look at a kind of a similar performance as -- when you look at FY '25? Just I'm talking about in terms of the overseas subsidiaries only. When you look at PAT, it's around INR 11 crores loss which we have entailed for till 9 months. So just wanted to know in terms of a progressive thing, how are you looking at any green shoots for FY '26? How are you looking at it?

Yes. So as we mentioned that even though last quarter China was not positive from a PAT point of view. However, we think that year-to-date China performance was a respectable improvement over last year, and we expect that, that will continue. We will -- we should see a decent projection from China. And if I talk about Romania, I think demand remains very subdued, and that has a big impact on us. We are still working on different changes and things like that. And also working with customers to turn around, get the right product mix and all that. Having said that -- so we are expecting that we will not continue with a similar number for FY '26, for next year. Having said that, right now, we are not in a position to really clearly project. There are a lot of [Technical Difficulty] on this trade war. The things are still a developing situation. So we [ don't ] have a very clear picture right now. Having said that, we are [Technical Difficulty] from here on in general.

Okay. Sure, sir. So probably you're looking at a sort of a similar performance in FY '26 as well. Okay. Or a little bit better. Okay. Now just to wanted to know.

We can't say. We can't say.

Yes. And sorry, sir.

Yes, we can't say honestly.

Okay.

I mean, we are not saying it will be similar. But what we are saying is that [Foreign Language].

[Foreign Language].

But we are hoping that -- yes, we are also very eagerly looking for green shoots.

Okay. Okay, sir. Sir, just wanted to also understand, sir -- of course, overseas is fine, but there was a lot of talk about how bearings -- the big 3 in bearings are doing large CapEx in India in terms of localization as well -- for increasing localization big capacities is being planned up. And of course, we'll be a big beneficiary of that. But we are seeing currently some demand softening there also in terms of industrial side and even in terms of domestic demand. So those CapEx are coming in now. Just wanted to understand what is the on-ground update on that because we're seeing some softness domestically as well. So just wanted to know is it -- what do you think, it's just a seasonal kind of thing? Probably at the back-end, we look at good demand coming through for bearing, cages and everything. So how do you view the domestic outlook?

So as you rightly said that we are [Audio Gap] a little bit of softness there. All the big CapEx coming in were catering to both India demand as well as global demand. So we hear that our customers are also challenged with the softening global demand. And so, I would say that some of those projects are a little bit delayed, is what we feel. On the ground, some of the demand which we were supposed to [ view ] earlier are now slightly delayed in how we are seeing on the ground. But having said that, the directional commitment is there from all our customers. They are continuing to say that, hey, don't worry, this is a short-term pushback. And as soon as their capacity comes online, we will see the demand growth as well.

[Operator Instructions] We have our next question from the line of Harshit Patel from Equirus Securities.

So my first question is on our stand-alone India business. So how the cages business has grown in the domestic market in the third quarter? Also, has there been any material change in realizations either on Y-o-Y or Q-o-Q basis here?

With reference to the pricing change, yes, there is a price change as we discussed in the last quarter also. And as you know, that [ is ] priced through mechanism. And hence, the price has been reduced because of the metal has reduced on both front and majorly on the steel front. That is first. Second reference to the India's growth. The overall growth of India has remained bullish because of the bushings has gone up. While with reference to the cages, it is almost flattish. And...

Flattish Y-o-Y? You are saying flattish with respect to the same quarter of previous year, domestic cages, right?

Yes, both.

Yes, more or less, both. Yes.

So as Vishal explained, that softness probably is attributable to maybe this year-end destocking phenomena we generally find in the December quarter, because most of these [ ancillary ] companies they get consolidated with their parent. And then they are very conscious about buying or reducing time. We believe this quarter, Q4, we should see India domestic business also again starting to grow 8%, 10% per annum. That's what our assumption is. We don't see this as a structural issue. It's more like a cyclical issue.

And just to clarify. This is more about -- we are talking about...

Cage only, yes.

Yes, understood. Understood. Sure. So my second question is on our CapEx. So could you provide an update on the commissioning of the first phase at the greenfield site? Also, what would be the overall CapEx number for FY '25 as well as the next year?

So for -- let me start with the second part. The CapEx number we are targeting about for FY '25 about INR 170 crores, INR 100 crores, somewhere in that range for FY '25. And primarily attributable to the new project -- I mean, new plant and building and equipment coming in. And if I think -- what was the -- the first question I missed. Sorry.

Sir, on FY '20 commissioning CapEx, sir.

[indiscernible].

Yes. So correct. So this is going to be in a phase commissioning thing. One of the subsections will be starting pretty soon, towards end of this quarter or early next quarter. And then most of the things will come online -- all the capacities should come online by end of first quarter next year.

Understood. Sure. And sir, just lastly, could you share an update on what has been our 9-month revenues from the Japan-based customers? Any update in the outlook over there will be helpful.

So I think our number for Japan-based customer remains largely flat versus the previous year. About -- I think about INR 50 crores is the year-to-date revenue from Japan-based customer -- or not Japan-based, but Japanese customer, Japanese companies across the globe. And we expect that to be versus last year not much of a growth. However, from a development and all the other point of view, we are, I think, progressing very well. As I had mentioned in the last call that some of the projects got delayed due to technical and other issues, and they should be coming online again soon. So with that -- we will probably come back to the growth phase with that.

So development continues. [ Transitioning ] into sales should happen. This is happening a little slowly. But development continues.

We have our next question from the line of Saket Kapoor from Kapoor & Co.

Sir, firstly, if you could explain to us the nature of losses in our subsidiary when we go into the consolidation? You reported about they being on a declining trend, and it is around, I think, INR 10 crore number for the 9 months. So if you could just explain to us first the nature and what steps are we taking? Or what would be the changes that would lead to first lowering of the same going ahead?

The major losses are coming from our European subsidiary. There are multiple reasons behind it. But the major reasons are, one, demand low, which is the overall struggle at Europe territory per se. And in that also, the Europe subsidiary is serving to the market like windmill market and high-end industrial usage, which is a large-sized industrial requirement, which is significantly low overall demand network over there. Hence, there is a fixed cost component which hits us badly over there. As you might be aware that our Romania site is a leased site and there are -- there are multiple fixed cost component attached to that site. So that is one reason. Another reason is, obviously, Romania site also serves the semi-finished products to one of our customers. And there also, we are making good amount of losses. Reason being some of the inflation cost on our value add could not be passed through, and that also results into the loss because of the overall efficiency of plant has gone down in -- result of lower demand.

Okay. So sir, out of this INR 10 crores 9-month losses, what would be the contribution from the Romania facility in terms of the revenue contribution and the losses?

So China is positive and Romania is negative, [Technical Difficulty] partly positive. So major contribution is Romania only.

The other only contribution to loss this year except for the third quarter minor loss for China is Romania.

Yes, it's Romania.

Yes. So as we said, almost 30% degrowth, fixed overheads remaining fixed. Demand compression continued. So these are the reasons why. You have to maintain the basic infrastructure there.

And sir, out of the total pie of the business, what is the contribution at peak level from the Romania facility?

Peak level was about INR 300 crores plus annually. Current run rate is of sub INR 200 crores. And that too not a good product mix. Major being the semi-finished castings.

Okay.

We're trying to push cages, as you might be aware, but things are taking a lot of time there.

Sir, you alluded to some of your clients domestically looking for higher cages requirement. I missed your commentary in the opening remarks. And if you could just outline to us what are we trying to convey and how -- what kind of incremental business is anticipated going ahead from these customers in terms of the revenue going up once their facilities are commercialized?

So we are not able to fully quantify that as a revenue number. Having said that, what we are trying to say that our customers are putting large CapEx to cater to domestic demand as well as some demand for outside India as part of their China Plus One derisking strategy for bearings. And we believe that we would be a major beneficiary of that. Our guesstimate is that this could be around INR 200 crores...

At the peak.

At the peak opportunity.

Incremental additional opportunity for supplying cages to them.

But this is an ongoing developing situation. It will take a little bit of time because, obviously, they have to also -- these are very large CapEx taking a long period of time for them to bring those capacities to India and bring them online. So...

And sir, domestically, what is our utilization level for our Indian operations in the cages segment?

About 60% you can say average. We have various subsegments and dedicated lines in lot of cases. So it varies from those lines and products and everything. But you can take an average of around 60%.

And sir, depending upon the improvement in the business environment and the demand scenario, at optimum level, what can we reach in terms of utilization levels? From 60% going up to what number?

Around 80% is what we could optimally reach. I think going...

At the optimum product mix. You see we have multiple lines. Each line is designed for different sizes. So if I get a complete bouquet of demand from each size, then I can reach 80%. But it never happens.

Very idealist.

It's an ideal situation, but, yes, theoretically we can reach 80%.

Okay. And last 2 points, sir. Just putting -- the first you have given in your presentation, wherein you have outlined the key strategies going forward. So if you could just throw some light on -- specifically, you have mentioned about the focus on developing products to capture the opportunity in the EV segment. And then I think the bronze bushing and specialized component segment, I think, with respect to the wind energy part. Just if you could spare some time on the key strategies going forward. [Foreign Language].

Sure, Saket. So this is what our long-term -- from our long-term point of view how we look at market opportunity and what we have said within that document or within that presentation what you're looking at, is we are confident of bearing industry growth as a minimum level, and we believe that we could grow much higher based on various strategies, various additional growth opportunities. The specific 2 things you mentioned, I will elaborate on those. One is bushing. Bushing is a product which is very adjacent for us from a cage point of view and we bring in very technical competency within non-ferrous casting and machining area. And wind industry right now, for last few years, has been going through this transition from some of the bearings being replaced by bushings, not all, only select some things. And in that, when they are replaced by bushing, we are -- we have become the only supplier or maybe the first supplier in India to [Technical Difficulty] to supply to wind markets. And we see that as a good opportunity [ from an ] adjacency product point of view, and we could grow significantly in that. That's what we are talking about. And if you look at our numbers, every quarter, we talk about that as a number, and we have been growing -- we will probably grow to the tune of almost 70%, 80% year-over-year on that segment last year to this year. And we expect that, that will continue. That is not necessarily the market. End market itself is growing, but application within end market is shifting from one product to another. We come in and we're able to [Audio Gap]. And we think that, that could -- is -- and it could be a continued additional growth opportunity for Harsha. And the other -- stamping component, what we are talking about, we are a very strong tooling -- tool design competency, tool manufacturing competency, and what we can do is make very complex tooling. So taking those competencies, we are looking to expand into the stamping area beyond bearing, cages. Also focus within that on green -- the battery-operated vehicle area and select some of those products. And that is what we are talking about. We see a lot of growth within that. Even if you look at our commentary, we are saying that in spite of a little bit difficult quarter, we have grown in stamping area. And we see a lot of traction within that what we bring to the table for complex stamping components. And that's what we are talking, that, that could also be a very great long-term opportunity for us to grow in India or for us to grow. And that those are the 2 things we mention, what we are talking about.

Just to conclude, sir. If we look at the peer comparison in terms of the caging segment where we are operating, who is our nearest competitor?

Are you talking of India? So globally, frankly, we have #1 player, a company called NKC in Japan. That is our #1 competition. We believe we have the second highest global market share after them in this outsourcing space. And then there is a company called MPT in Germany. These are our competitors. But we have multiple competencies. So for example, we do steel. We do brass. We do plastics. So we have multiple technologies, multiple competencies. But NKC does mainly steel, MPT does mainly brass. So that way being in India, we have that advantage of being a little more -- penetrative capabilities are higher. Within India, we only operate in organized space. So there are just 1 or 2 players. And we believe we have more than 70%, 80% outsourced cage market share in India. Most of the Indian bearing companies have -- they don't have any cage facility practically, except for very few. So we have that way a very, very high market share in India. And overseas, our wallet share between the 3 giant -- top 3 players, SKF, Schaeffler and Timken, we would be supplying to almost 60, 70 plants worldwide with a 10% to 20% wallet share. That's where we are.

Right, sir. And concluding remarks, sir, if you could permit me is regarding the employee cost. Although, sir, in your presentation, you did allude to increasing operational efficiencies to improve returns. But when we look at employee cost as a percentage of sales -- I think so the fixed cost component you have already explained. But still, even when we look at the Indian operation part, these are higher numbers if you look -- and what aspects should we look at the employee benefit expenses as a percentage of sales? If you could give some more color to it.

Your question is not clear to us. Can you be more...

Are you trying to say in India, the total cost of employees as a percentage of sales is higher?

Higher according to my understanding, sir, on a top line of, say, INR 1,034 crores, yes.

Higher in India, okay.

Higher than?

Sir, at the top line of INR 1,034 crores...

We're not going into -- no, no, no.

Yes. So see, without going into the specifics, I don't know [Foreign Language]. But our employee cost is around 11%, 12%. Two reasons. One, we have a very, very high level of engineering skill set that we deploy given the precision-oriented jobs that we do. So if you are doing a mass scale production, commodity scale production, employee cost for those kind of companies would be 8%, 9%. We are 10%, 12% because, A, we do our own tooling; B, we employ a large number of engineering graduates. We do a lot of training. And this is a very, very high precision job that we are doing. Overseas, if you compare for a similar kind of operation, the cost would be 25% to 30%. So that way, we are quite competitive as compared to the relevant competition. But there's no universal yardstick.

[Foreign Language]. And lastly, sir, margin improvement [Foreign Language] in terms of EBITDA margins with respect of the environment [Foreign Language]?

[Foreign Language] India continues to a margin of 20% odd run rate. The problem is Romania and -- mainly Romania and a little bit of China also. So in a good scenario, Romania was doing 8% to 10% EBITDA, but today it is in negative territory. We are very -- working very hard to see, A, it reaches back to a profit or a breakeven situation and then it starts generating margins. But long-term [Foreign Language]. But it's very difficult for me to predict anything right now.

[Foreign Language].

[Foreign Language].

[Foreign Language].

[Foreign Language].

[Foreign Language].

[Foreign Language]. I'll join the queue. I'm overdone I think. Hello? [Foreign Language].

So Romania has -- including the capital investment we did initially is around INR 180 crores to INR 190 crores.

[Operator Instructions] The next question is from the line of Amit Anwani from PL Capital.

My question is on bushing. So I think I remember bushings we said H1 was about INR 44 crores and 9M is INR 60 crores. We are targeting INR 80 crores. So that gives me the understanding that we are targeting INR 35 crores in H2. So why there's a decline there? And some more highlights on what is the outlook now in bushings? What is the number you're targeting for FY '26? And just like you highlighted the competition for -- or on cages side, if possible for you to highlight competition on bushings for domestic market and global market?

So Amit, bushings' average target quarterly was about 20, and we are on track. [Foreign Language]. So we are absolutely over INR 60 crores in 9 months and 100% over INR 80 crores. So there is absolutely nothing structural or nothing to read about it in terms of whether there is a softening. On the contrary, we are very excited about it. The new greenfield facility also has a decent increased capacity for bushing. [Foreign Language] bushing can take us to easily INR 200 crores, INR 300 crores annual run rate over a period of time. So nothing really negative to read about it.

And what's the target, sir, for FY '26?

We don't have clarity yet on that, but we are expecting to grow from whatever we [ reach ] in the year.

Yes. At least [Audio Gap] crores minimum.

But a lot of questions and uncertainty and a lot of things developing in that reference. So...

And what is the competition there, sir? Whom we are competing with on bushings, anyone from domestic market or global market?

To best of our knowledge, domestic competition is not present. Globally, there are competitions out of Europe as well as strong competition out of China. And we don't have the names.

Sure. My question on Romania, you highlighted that, again, we are in a wait and watch, though we aim that the losses should cover up and we should be on track. So I wanted to understand strategically how one should think? Operationally, we understand things have not been well from past several years. And the objective was to transit from semi castings to the large cages. And that is not panning out and we don't -- obviously don't see too much happening in next 3, 4, 5 quarters also. Is there any strategic thought that we want to make a change or -- any thoughts strategically? Are we following the same thing which -- with the intent with which we acquired the subsidiary?

No. So see, Romania had started generating positive profit. Then first came COVID. We had a hit again. And then while we thought that we are recovering, then came this geopolitical war and inflation and everything. So in all honesty and to be very, very candid, currently, it's a very tough situation in Romania because our strategy is to -- or rather was to increase the share of cages, maintaining the share of castings. [Foreign Language] casting is also down and cages is not improving. So therefore, there is a double whammy. Secondly, it's not possible to just -- so we are trying very hard for cost containment. Can we -- how do we control the costs if we are not able to get the demand. So I think currently, the focus is cost containment. And our teams are pushing very hard on trying to increase the sale of cages out of Romania, but [Foreign Language] overall things are very difficult. So I think, as you very rightly surmised, we don't see a dramatic improvement happening even next year. The first target is whether we can contain losses or reduce losses to the maximum, and that's what we are trying. [Foreign Language].

Yes. So what is the annual fixed cost there?

Let me take this offline. We'll answer.

[Operator Instructions] We have a next question from the line of Prathamesh from PL Capital.

I just wanted to know the revenue for Q3 or 9 months for castings as well as bushings. And yes, basically the bifurcation of India Engineering, if you could.

For some strategic reasons, we don't give the breakup between castings and other products. And we just generally cover the revenue the way we have shown in our presentation.

We have our next question from the line of Saket Kapoor from Kapoor & Co.

Yes, sir. Sir, our Solar EPC vertical, I think so we were not very keen to grow or -- grow it. So what is the thought process now behind and [Foreign Language]. And the thrust which the government has provided on the solar installation and all, if you could give some color. And also, sir, [Foreign Language].

Yes so, Saket, on that railway and other things, again, [Foreign Language] demand is a little bit subdued right now. And we are expecting it to -- relative to the peak, it will remain like that. So what you just mentioned and all, there is some impact on that. However, on the other end of that same segment, we are expecting to improve revenue from the fact that there is a lot of metro implementation and we are -- our products are now increasingly going into that, those bearings. So I mean, all-in-all, we see that we expect the rail to continue to grow. Maybe the reference to what you've just mentioned may not be as aggressive. And what was the...

Solar EPC. The outlook for solar EPC.

Solar EPC.

Correct.

So for the solar EPC, again, it is a legacy -- we had started this business a while back and we had to scale it down because it has become a very competitive situation. The strategy here is to again create a sustainable positive business. And we have from an earlier point of view scaled it down. Now it is growing. And because there is a policy incentive support in place from the government, so we are seeing decent growth. Our focus is on sustainable growth there. And we are not trying to grab very large projects to increase our top line. Our focus is to be -- remain sustainable and within our capabilities continue to execute solar EPC projects. So that's the [Technical Difficulty] single direction. And then from [ a longer point of view ], we'll see how to take this forward. But that's...

[Foreign Language]. I could not hear you. [Foreign Language].

[Technical Difficulty] saying, Saket, that [Foreign Language] legacy that was [Technical Difficulty] inherited by Harsha. Keep in mind, bandwidth and focus remains absolutely to engineering [Technical Difficulty] hardly any initial capital [Technical Difficulty]. But because of current favorable policy regime and lot of investments happening, we are getting projects and we hope the same ecosystem continues to remain profitable. So without too much of a capital allocation, this will be status quo. It will keep on growing because [Foreign Language]...

Sorry to interrupt, sir.

[Foreign Language].

Sorry to interrupt, sir. Just -- can you please wait a second? Yes, sir. Now please go ahead.

Am I audible now, Saket?

[Foreign Language].

[Foreign Language] what Vishal just concluded that we are still [Technical Difficulty] will continue at its current level more or less without [Technical Difficulty] bandwidth. We will remain completely focused on engineering part, and this will go more or [Technical Difficulty] the way it is going.

Correct, sir. So we can also look to [Foreign Language] to continue under the Harsha vertical only? It can be hived out to a different segment altogether? Or any incentive that is derived in terms of Harsha Engineering brand going for Solar EPC, the rationale of continuing with the same?

Actually, it was in a separate company because of some reason. Now this has become part of Harsha. But at this point in time, it will [Technical Difficulty]...

Sorry to interrupt, sir. We're not able to hear you.

It's better? Can you [Technical Difficulty]...

No, no.

No, sir. The voice is still breaking.

So it's only a [Technical Difficulty].

[Foreign Language]. I'll take it also offline. And last point, sir -- whenever it is get connected -- about the other income component [Foreign Language] -- what are the key elements that contribute to the other income? Is it the cash from the books? Or if you could just give the cash -- net cash balance we have currently?

Other income breakup is available in our [indiscernible]. It is similar to our last year financial, and nothing significantly changed. And cash balance, we have around INR [ 300 ] crores approximately.

Sir, I'll take offline, sir. I think so we are on a very weak line. All the best to the team, sir. Thank you for answering patiently to all the questions and [Foreign Language].

Moderator, we may conclude the call, please.

Yes, sir. As that was the last question for today, I now hand the conference over to the management for closing comments. Sir, any closing from you, sir?

Thank you, everyone. Yes, thank you, everyone, for joining this call. And appreciate your interest and enthusiasm as always. And we hope you have a good evening. Thanks. Bye-bye.

Thank you so much. On behalf of Harsha Engineers International Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.