Interarch Building Solutions Limited (INTERARCH.NS) Q1 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Interarch Building Solutions Limited Q1 FY '26 Earnings Call hosted by Ambit Capital Private Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Jaiveer Shekhawat from Ambit Capital Private Limited. Thank you, and over to you, sir.

Good evening, everyone. I welcome you all to Q1 FY '26 Earnings Conference Call of Interarch Building Solutions. From the management side, we have with us Mr. Arvind Nanda, the Managing Director; Mr. Manish Garg, the Chief Executive Officer; Mr. Pushpendra Bansal, Chief Financial Officer; Mr. Viraj Nanda, Executive Director; and Mr. Anil Kumar Dandani, President, Corporate Finance and Strategy. Now I would like to hand over the call to Mr. Arvind Nanda for his opening remarks. Thank you, and over to you, sir.

Thank you very much. Thank you for arranging this call for us. And thanks to everybody for coming and participating in the call. We have all the members from our senior team, as mentioned just now. So what I'll do is I will take the opportunity again. My talk on pre-engineered building is getting shorter and shorter because I think everybody is more in tune and understanding what pre-engineered building is really what kind of a category it is and what kind of work it is. And now we have some new players also coming into the listed space. So maybe it will become easier for all of you to understand pre-engineered buildings. Most of you have already participated in some of my calls or meetings or one-to-one we have done earlier. So just to give a very brief about the pre-engineered building. So while we say we are buildings and we are primarily steel buildings, but we are not really classifiable in any of the present categories as steel fabricator or buildings or contractor or civil construction, et cetera, primarily because as a pre-engineered building company, our work is, number one, everything is customized. So we do not do anything ready-made or use ready-made materials for our buildings for the customer. We understand the customer's requirement totally, just his requirement. He doesn't tell us how to do the building. So we understand his requirement completely. We have an excellent sales team and a marketing team, which works across the country with various locations and all the customers. So they understand the requirement, get a feel of what it is, do some value add on their own because they are very high-quality engineers, all the salespeople. At some stage, when the buildings are more or less requirements are finalized, they would then get the engineering team. So our second wing of a pre-engineered building company is the engineering and design division. So we do all the requirements are converted into a building by our engineering and design people. They will go through the building. Because we don't use any ready-made materials, they have the freedom to design any kind of column, any kind of beam, any kind of secondaries because everything is manufactured by us in-house. That is one big difference between pre-engineered building and any other building. Most other contractors or building companies have to use ready-made materials available in the market. But pre-engineered building companies manufacture all the items themselves after designing and engineering it themselves. So, nobody designs and engineers and gives us a design and says, okay, make this for me. So that is the second big difference. And then, of course, because we use raw material so, our design engineering company department will totally calculate how much raw material we are using, our basic raw materials being a plate, which is an HR plate or coil, then a galvanized plate --- coils and secondaries and the coil coated roof for roofing and wall cladding, which are, again, very high-quality coatings and some hardware, et cetera. So this being the raw material. So, our design engineering department will calculate the first design and engineer the whole building, then calculate how much material of each type is required, then actually do a costing of that building. So that department, even before we can bid, has to make a very, very good value add and a very good building design because otherwise, we will not be able to compete because in our case, the customer doesn't give us a per ton rate or a per square foot rate. He gives us a lump sum for the building. So how good our design engineering department is or of any pre-engineered building, a lot depends on that on how good you will be in securing an order. So, our design engineering will calculate everything, raw material, production cost, creating it to the site, actually erecting the whole building at site, depending on the location and the complexity of the site and the building. And then we give a lump sum price to the customer. Now all this is done even before we have -- we can make even a quotation. So, the customer's second big advantage is besides engineering and design done by us is that he gets a lump sum price. Unlike most other builders, contractors, which are working on a quantity-based tenders, we work on the lump sum of a building. So, for the customer, the building price will not change if he doesn't change the building. So, whatever may happen to the raw material prices, whatever may happen to other cost going up or down, we take everything into consideration when we are bidding that to what will happen in the coming months while we have to deliver this building. So, we calculate everything. We take all that risk element into our costing and we bid to the client. The client, in most cases, will look at our capability and ability to do the job rather than being an L1 kind of a situation. Pre-engineered building is not really an L1 business. It is like a capital goods industry. That's why we repeatedly keep saying we are like a capital goods partner to the customer that we deal with. Most of the time, we are -- we come in even before he's finalized his capital goods, plant and machinery. So that -- he knows that, yes, this project can be done in a certain time. And because the buildings today are very complex, a lot of the machinery is mounted on the buildings like conveyors, on the mezzanine, you will have a lot of process plants, cranes. A lot of the work is actually happening attached to the building. So, he must be sure that he has a vendor partner who will be able to design, engineer, manufacture and execute that building in that time that he wants. So he chooses the building partner very carefully, just like he does for his plant and machinery, if it is a paint plant or it's an automobile plant or it is a data center, the way they choose their capital goods supplier, it could be anywhere in the world. It has happened in the beginning when we all started in pre-engineered building 25 years, 27 years ago, a lot of the pre-engineered buildings were imported because the customers were not sure that local players would supply. So, it is like any other building. Today, 99.9% of the buildings are bought in India because of the kind of companies that exist like us and some of our competitors who are able to design, engineer and give the customer the building. So, he is going on the ability and capability of the company to decide who's going to be his partner. He's very careful about schedule. Of course, everybody has to compete on price, but he will make to compete on an equal level. So that makes it very important that the way that we build up our company, the way we do the projects, the way we build our relationships with them by continuously performing on time, performing very high-quality jobs because every job leads to another job later. Most of our clients have worked with us for some of them for 40 years, even before pre-engineered building when we were doing other building products, they've been working with us because every time they've been very satisfied that Interarch is they company which will promise what they -- deliver what they promise and give us a quality and satisfaction much higher than what we expected. So, we have had companies like Reliance and the Birla Group and the Tata Group and the automobile companies working with us for decades. And relationships are very performance-based. So, we are also very careful who we work with. We don't work with everybody. We are very careful that we work with long-term partners who appreciate what we do, appreciate the value that we add to their project and are not only looking at a low-price kind of a situation. So, we are very careful when we choose our partners. We do a lot of business development, which means that we try to find the right partners for us before they even come to know about us. So, it could be the new age industry like data centers and semiconductor plants and lithium battery and renewables and anything. And earlier, it was the A-grade warehousing, which we still do a lot. It was all the foreign companies in India, all the large companies in India. Earlier, it was automobile sector, the whole automobile sector we have done. There's hardly any automobile company that has not worked with us in a major project maybe in their auto plants also. Paint companies, whether it's Grasim, whether it's Asian Paints, whether it is Berger, FMCG, HUL, P&G, warehousing, indoor space, Welspun, Amazon, Flipkart, all the developers, we work with them. So a lot of people in India feel that if they want a pre-engineered building without any compromise to their quality and their schedule, Interarch is the right player. We are careful who we deal with because ultimately, it is an item of steel. It is customized. We have to be careful that we will get our money out and that the customer will see value rather than just trying to press us on price, et cetera. So today, we are working with -- out of the 3 semiconductor plants coming up in India, 2 of them we are working on. Tata Electronics, we are doing a plant for them, which they will use for making phones, et cetera. There are 3 lithium battery plants done in India. All 3 we have been involved in. Exide and Amara Raja as well as now Agratas, which is a Tata project. We have done a data center. Gradually, we also want to enter into high-rise buildings and other non-industrial buildings. We have done all types. We have done the Delhi Airport, T3 terminal many years ago. We have done hospitals, schools, colleges, houses, steel housing, villas, resorts, hotels, you name it, and we have done that. But we want to push those more. Also, we are getting more and more into exports, especially U.S. and Canada in spite of the fact that there are these tariffs issue coming up, but most of the buyers that we are in touch with are very bullish that it can be done and pricing or tariffs will not be an issue because there's a huge shortage of supply of these kind of buildings in U.S., and they feel that Interarch can be a very good supplier from India. So overall, Interarch has developed capability of doing all kinds of buildings. So, let's say, we are completely building agnostic today. We are completely industry agnostic. It doesn't matter to us what is your industry. What kind of factories are you putting up. So, it puts us in a great position because tomorrow, something completely new comes up. Like in the last 5 years, the lithium batteries, semiconductors, renewables has come up. But in spite of that, we have been able to participate in every one of them and very successfully. So we are completely industry agnostic. We are building agnostic. And the way we have worked all over India, we are even geography agnostic. We are doing a Tata Electronics plant in Assam. We have done HUL and Berger as well as all these companies in the Northeast. We have worked even in Jammu, Kashmir, we are working in the South, Orissa, we have done some very large projects, Madhya Pradesh, Gujarat. There is no area in India that we are not able to do large projects also. So therefore, we are very much geography agnostic also. We have built up a great team over the years. And we always say that this industry is very much about the future of this industry lies in how your past works. How have you done in the past is ultimately the criticality in establishing this industry and your reputation. I think the 2 major players in this industry, us and Kirby, which is a Kuwaiti company, foreign company, have both been in this business in India for the last 25 years plus. And both of us have established very good name in this industry. So it's not important that a new player comes in and spend just INR 1,000 crores or INR 500 crores or just money is going to get to the business in this industry. And you have to be also very careful that your working capital cycle, your advances, your payments come on time, how you stock because we have to buy material from the steel companies, which are not very reliable suppliers and still supply a complete building, which could use 10, 15 different types of materials, raw materials and thicknesses and types to be able to supply the building complete and in sequence. We can't supply the building as we want. We have to supply it in sequence so that it keeps getting erected. And every part of that building, including a clip or a nut can delay your scheduling if you miss that out. So, all these things are very critical. So we find that it's a very niche business. It's a business which has to be done very carefully with a lot of emphasis, your teams are very critical in this business, your relationship based on your past history. If I have done an airport, it will be easier for me to get an airport job. If I have done a paint plant, Grasim came to us because we have done Asian paint. And we did 5 of their plants substantially. Tata Projects came to us because we have worked with Tata Group for over 40 years. We are working with maybe over 30 Tata companies. So we are always their natural choice when they want to do something large. And they always give us the first choice, Reliance, Tata, Birla, everybody we work with today. The solar industry, we have worked with everyone, renewables. So that is how you build up this business. It is not a business which is L1. It is not a business that you have money, you can do it. You can work with a certain speed in this business, but you can't run too fast, too quickly. Like we always say that we are a 4-legged animal, sales and marketing, engineering and design, production in the factories and project management at site. All the 4 legs must be not only equally strong but run in a proper rhythm. You can't have one more than the other because then the race will be lost. So that is how pre-engineered building industry we see it. And I'm sure that you've heard me talk about this a lot before because I think it will be a separate category. It should be treated as a separate category. The growth can be much quicker as we see the economy opening up. And the way companies are changing to pre-engineered building. The traditional form of fabricated building, steel buildings at site is changing very dramatically to pre-engineered building. So it is not only concrete buildings like high-rise, et cetera, which are changing to steel, but also traditional steel fabrication buildings to us. We have taken up a new vertical called the heavy structures, which we are going to start a plant in Andhra very soon, and it should be in because a lot of the heavy structure is the steel section, each one of them being over 5 to 15 tons. A lot of them we will use for our own buildings. Today, we have that tie-up with JSPL to do that heavy structure, but we feel that we need to put up our own capacity also to be able to do it more efficiently. But also we feel in the longer run, which means in the next 1 or 2 years, we will test out the heavy structure market. There's a very, very large market where sometimes the design engineering of, let's say, a steel plant or a power station or an airport or a fertilizer plant is done by a consultant, but they require huge quantities to be pre-engineered and manufactured by you in the plant and delivered to them with or without erection. That is a huge market today in lakhs of tons, many, many fold more than the pre-engineered building. So that also we are entering in the coming this thing. We cannot give very good projections for it. But I think within 12 months or 14 months, we'll have a much better idea that how big a vertical it can be. If you look at the size of the market, it could be a bigger vertical than the pre-engineered building. Buyers are very similar. Your reputation in the market makes a lot of difference, but we have to build up the capacity for that. And I think I will end over here and let Manish Garg, my CEO, take you through the figures and our future plans going forward, and then we'll open up to questions. Thank you very much for your patience.

Yes. Good afternoon, ladies and gentlemen. Manish Garg here and thank you for attending the call today. Our company operates 5 state-of-the-art integrated PEB facilities located down south and up north with the new ones which have been commissioned in AP Athivaram. Together, these facilities offer a combined capacity of 161,000 metric tons per annum with a utilizable range of about 80% to 85% which translates to approximately 135,000 metric tons per annum. We are on track to commence production at Andhra Pradesh Phase-2 now very shortly and also at the new Kicha box line probably within this month itself, which will enhance our total production to approximately 200,000 metric tons per annum with addition of these 2 new lines. Our recently acquired 20 acres of adjoining land at our Andhra Pradesh facility to set up heavy fabrication unit, as Mr. Nanda explained, to service the sectors which are like data centers and the commercial buildings and the other renewable structures, including semiconductors. And the facility is expected to commission next year quarter 2. Our order book as of 31st of July stands at INR 1,695 crores, reflecting a strong pipeline going forward. We secured orders worth INR 452 crores between 1st May till 31st July, 3 months. Key customer wins during this period include the scooter maker Ather Energy, the EV battery makers Amara Raja Infra, Mahindra & Mahindra, Tata Motors JLR and Craftsman Automation. We take pride in the fact that 80% to 85% of these customers are repeat customers, demonstrating their continued trust and confidence in our capabilities. Looking ahead, we remain focused on diversifying our footprint by securing more orders with new age industries, as explained earlier and also with heavy structures. We entered into a strategic partnership with JSPL to explore opportunities in the multistory buildings. And as Mr. Nanda explained that we are now also setting up our own facilities for such things to add additional capacity. Additionally, we are actively pursuing new growth avenues, including the expansion of our manufacturing operations in Gujarat, and we have already partnered with Mold Tek Technologies U.S. for our U.S. footprint and export market. These initiatives are expected to drive sustainable growth post the innovation and reinforce our market leadership. Now coming to the financial highlights for the quarter Q1 FY '26. The revenue for the quarter came in at INR 381 crores, 25.5% growth quarter-on-quarter when compared to the last year -- year-on-year. EBITDA stood at INR 32 crores and when compared with the similar quarter last year, a growth of 16.9%. EBITDA margins for the quarter stood at 8.3% for the third quarter and profit after tax stood at INR 28 crores as compared to INR 20 crores, a 40% rise as compared to Q1 '25. The total order book, as explained, stands at INR 1,695 crores. Now with this, I would like to conclude my presentation and open the floor for question and answer. Thank you very much.

[Operator Instructions] We have first question from the line of Vandit Shah from Abakkus Asset Management.

Congratulation on good set of numbers. Sir, my first question is one data keeping question. What would be the volume for this quarter? And if you can give us a figure year-on-year, how much was it like first for FY '25?

Volume has grown by about 2.7% compared to June '24 quarter 25,500 to 32,800.

Okay. And sir, second question, I wanted to understand more about the export opportunity. So, as you spoke in your opening remark that despite the tariffs, you are seeing a good traction in export. So sir, just if you want to understand the market, if you have a ballpark number, what would be the realization in the exports margins over there? And what is the working capital cycle in exports?

You see, right now, we don't really have large numbers of exports. We have done maybe what, 10, 15 buildings in the last few months, a year or so. See, in exports, you have to build up partnerships there because there are very few direct buyers who come to you to buy from countries we are concentrating on are in the continent of Africa and the American continent. So we have tied up with many people there. We've exported buildings to them. They have found them very useful, effective and excellent quality and deliveries. So now -- then we participated in the conference also and went to U.S., our top team went to U.S. and has met 15, 20 potential contractors there. The business is through mainly general contractors, not direct users. So they have met them. A lot of them have sent us inquiries. Some of them are coming to visit us also. So we feel that we will have a better handle on the export potential in terms of volume, maybe another 6 to 8 months once these partnerships become a little more effective and they know the potential -- they say is very high. Those guys are -- a lot of them are billion-dollar companies there. So potential is very high. They don't seem to be too worried in American continent about the tariffs. Canada seems to be more bullish on India because they feel that they need to come from outside and import. So I think the potential is there. Exact figures, we don't know, but the margins are definitely much better in exports. The market in India is a little too overcompetitive in that sense in the this thing. Working capital cycle is much faster because you only work against LCs. So you get immediate payment. There is no milestone payments because we don't do any erection work. We just supply the building and these people then erect it themselves. So working capital cycle is also better.

Got it, sir. So just on the final piece. Is it fair to assume that the realization almost double than what we have in India?

Yes. Realization will be better.

We have our next question from the line of Shubham Chopra from Titiksha Wealth.

So my first question is that given the order book is INR 1,695 crores, what is the total order book pipeline as of now? And can you elaborate more on that?

See, this order book that we talk about as an order book is a definite confirmed order with advances. So that is what we talk about as an order book. Then we have 2 kinds of pipeline which are always with us when we are working on business development and sales, et cetera. One is what we call the Pipeline 1, which is where we have got the requirements from the customers, worked on them, given -- made the estimate design engineering and given a quotation. So that is what I would call Pipeline 1, right? So I think Pipeline 1 currently could be in the range of about maybe INR 2,100 crores -- INR 2,500 crores. And then we have another pipeline, which sort of is more orders which are like 6 months to 18 months finalization. Pipeline 1 is normally within 6 to 8 months, they will finalize the orders, not longer than that. So that is INR 2,500 crores. Pipeline 2 could be, I think, currently as much as INR 4,000 crores, which are orders in where we have given estimates, not done the design engineering, a lot of discussion and meetings are still to happen. So one would say INR 2,500 crores to be finalized between 1 to 6 months and another INR 4,000 crores to be finalized between now and 18 months.

All right -- so can you also state the amount of CapEx in FY '26 and '27? What is the expected number?

FY '26, we have already done a CapEx of about INR 40 crores. We are anticipating because we are now starting 2 new plants. One is going to be in Andhra and one is going to be in Gujarat. So they will finish within the next 12 months. But I think -- so the CapEx of both of them together is about INR 140 crores to INR 150 crores. But I think we should be able to spend about maybe 75%, 80% of that by March. So let us say about INR 120 crores of new CapEx and INR 40 crores we've already done. So let's say, a ballpark figure of INR 150 crores CapEx by March next year.

And next question is on the business front. How much time is taken for a building to be assembled from manufacturing to assembly?

See the total building cycle starts from when we get the order. So normally, we have orders which we categorize into 3 -- we have 3 categories of orders. One is what we call small, medium, let's say, under INR 12 crores, INR 13 crores for 1,000 tons building. That would start in the third month or fourth month of order date. Before that will be design, approvals, et cetera, getting the material and then finishing within 5 to 6 months at site. Then we have what we call medium orders, which could be INR 12 crores, INR 13 crores to going up to INR 30 crores. They would again start in the third or fourth month of the order date and finish within 7 to 8 months. Then we have the larger orders, I would say, over INR 30 crores, they could be anything between starting again 3 to 4 months from the order date but ending any time between 8 to 12 months. That is when the supply would get over in that time. So most of the orders, supply period is maximum of 12 months. They vary because of the size, yes.

Okay. My last question is that, as you mentioned that you were doing a project for Tata Electronics in Assam. So what amount of freight cost is included in it? And does that bite off some margins on that front?

What kind of what costs are covered?

Amount of freight cost.

Rate cost? I'm not able to understand the question.

Freight cost. Freight cost.

Freight cost. Freight, yes. Yes, freight is a cost that we add to the job and they pay us. So freight is a part of the cost. It is not very high now because our plants from Uttaranchal supply it and the roads are much better. When we had done plants in Assam 10 years or 15 years ago, the freight used to be a very big part. Now it's not such a major part. But freight is a pass on. We add the freight to the cost of the project and the customer pays us. It's not something that we have to bear.

We have our next question from the line of Jaiveer Shekhawat from Ambit Capital.

Congratulations team. Sir, my first question is, given the current execution momentum that we have seen in the first quarter, which is otherwise a seasonally weaker quarter, I think it seems like you are likely to surpass your earlier growth guidance. So, do you expect this year it will be possibly a 20% sort of a growth this year for you?

I think we will have a better idea after the second quarter because first quarter, second quarter normally can be varying. If there's less -- where we are doing work, if there's less problems caused by monsoon and other things, then the sales go up in the first quarter. Now we don't know how much havoc there will be in the second quarter in the monsoons. But yes, I think if everything goes well, we have the orders, but we have to execute. I think we will have sufficient capacity also now with Andhra and the third line and Kicha coming up within this month. So, we can probably go higher. But right now, we are sticking to our earlier growth given of 17.5%. But I think chances are that we will beat that.

Sure. Good to hear that, sir. Second is, if I see your other expenses, there's been roughly about a 50% increase versus the last year. If you could just explain what's driving that? And then do you expect this to stabilize here? Or will this continue to grow in a similar way?

What happens in other expenses is that we have things like job work and installation expenses going into other expenses. So since we have done more sales, the job work is basically what we are not doing directly in our factories and installation expenses are more at site. So they do move up along with the sales going up. But yes, it's a little disproportionate because we had to get a lot of our parts, job work like Jindal and 2, 3 other players that we work with. So that goes under job work. So job work expenses and installation expenses have increased the other expenses Yes, they can vary, but effectively, they should go under the expense of manufacturing, et cetera, total, but how the accounting is done. So that when they come under that. So freight, forwarding also goes into other expenses, even though it is a recoverable cost from the customer, but it goes into other expenses. So it could be orders are a little bit more long term, installation expenses, job work expenses. It can vary quarter-to-quarter if there is no definitiveness in this because it is actually a part of the total cost. But we have to show it separately because of the accounting methods.

Totally understand. So in light of that, do you feel comfortable with the earlier margin guidance that you had given of achieving a 10 percentage plus sort of a margin guidance? Do you think that's still possible because of the volatility that we are seeing on the margin side?

Yes, yes. Margins, generally, they start improving by the third quarter. So I think if we have achieved -- we have got an EBITDA of 8.3% and a profit before tax of 9.9%, ideally our profit before tax is higher than EBITDA. So, I think we will achieve our EBITDA that we had achieved last year, if not more. We are anticipating that we should cross last year's EBITDA.

And sir, lastly, in terms of the overall market scenario, given that we are now seeing a lot of players also talk about receiving a lot of orders in the market and overall, there is a good growth momentum buoyancy. So are you seeing that the realizations for you guys are improving overall on average across orders. Is profitability across the industry improving?

Yes. It is still a little tougher competition because, again, of course, a lot of supply comes in. Customer does give us a preference in a lot of projects, but they all want to be a little price competitive, but we see it moving up. We are trying that 50 to 100 basis points, the margins should improve in getting the -- since we are also full, we have a very good order book. We can be a little bit more selective in taking orders because we don't really need to take any order that comes our way. But the most important thing for us is that let's get the orders at a better price. So that is right now our focus. I think we should be able to maintain it. And of course, our margins are not dependent on our own internal systems on which also we are working. Once we get larger volume, we can also negotiate better for our purchasing, for our freight, for steel. You can be better productivity, you can do with our own plants coming in, I think that will also help. So both ways we are working that our internal costing should also improve, economies should improve, and we should make a better margin internally as the sales are going up as well as get better margins from the customer. I think we'll have a better picture by the next quarter, we will see, but we are trying for both. And I think we are going to be successful in both.

Sir, lastly, if I may, I heard you talk about your order book pipeline, which is another INR 2,500 crores plus another INR 1,000 crores Pipeline 1 and 2. Usually, what is the strike rate of winning those kind of orders wherein you might have already bidded, done your designs and estimations already?

See, our normal hit rate has been about 25% in the Pipeline 1. Pipeline 2 is a little too general to see where a lot of the projects could drop out, a lot of projects may go into fabricated steel. So there are a lot of things which can happen in P2, which is more than INR 4,000 crores. But the Pipeline 1, about 25% is a reasonably good rate. But then we are very selective in who we put in pipeline. So we are also -- it's 25% currently, but our idea is that have flat in Pipeline 1 where our chances can go up to 40%, 50%. But right now, the current hit rate is 25%. So Pipeline 1 depends on us, which orders do we want to take seriously. We don't put every order into that because don't forget that we have to do design, engineering, costing, everything and many meetings and negotiations with the client to even get sort of a stage of getting the order. So we can't take every inquiry that comes our way. So we are very selective in that. But currently, it has been about 25%. But we want to increase that also, yes.

We have our next question from the line of Pritesh from Lucky Investments.

Yes. Sir, just want to check on the incremental ordering. So are the margins retained on the incremental inflows? And second, just like you have coming up in AP and Gujarat, there are other who had white spots or white patches in some of the locations in India, and they are coming up with their plants. So what's happening on the incremental competition? Do you see a situation where incremental orders are taken at a differential margin by any chance?

You know what has -- what happens in this market is that over a period of especially last 4 or 5 years, our positioning in the customers' mind and the kind of customers we deal with is that we are one of the top 2 companies. Kirby is there, which is from Kuwait, unlisted, but a very large group in Kuwait and us. So most of the large inquiries and orders are coming to either of us or sometimes many times both of us. The projects are very large and both the players get a part of the order or maximum, it goes to maybe a company like Zamil or something or sometimes a simpler building depending on location to MB Engineering, which has come in now or Pennar or even Everest sometimes. So we feel that at that level, we have to maintain our competitive strength by giving the customer a great value add, great design, delivery, quality. That is what he's looking at. If you look at the PEB, pre-engineered building, it is not even 10% of the CapEx of the company. If I'm spending INR 100 in my CapEx, PEB will never be more than INR 8 to INR 10. So I'm not going to be very fuzzy. Of course, I want competition and I want the best price and I want to say that. But I'm not going to save money at the cost of my project.

My question was also from that angle that, let's say, for example, it is a player 2 or player 3. He did have plants in Gujarat. He's coming in Gujarat. You are a player 1 or 2 who didn't have a plant in AP. Let's say, you're putting up a plant in AP. So what we are seeing is a lot of the PEB guys are going and putting up plants where they were not there earlier. And obviously, it's a business where you need multiple plants throughout the country because you cannot transport beyond the point. So in that situation -- and capital has also been raised by multiple players. So in that situation, my question was in incremental orders or in incremental inquiries, are there any changes in margins?

See, in the pre-engineered building case, factory is not the important part because production is only one of the legs, like I mentioned earlier, it is your capability to do design engineering, work with that client, your sales team, how do you build relationship, how has been your past? I mean, Grasim for Grasim, we did 5 plants all over India. For the -- one of the largest projects we have got the single largest PEB order ever given to a company for us is in Gujarat. We don't have a plant there. So it is -- because the freight is a very small element of the whole thing. So factories don't make any difference. Factories you put in different locations as soon as you get optimally utilized in one area. We don't go because the customer is there. So factories is a pretty unimportant part in our case. Yes, it helps you because if you are there, of course, naturally, you will save some money on freight. But it is not an important part for us or for the customer. Important part is can you deliver to him the whole project as you want. So engineering design, sales as well as project management are equally important compared to a factory. That's what I mentioned earlier, it's not a money game that I can just put up 5 factories and I will get my sale. So that is why incremental doesn't depend on where I put my factory. But how do I equip myself well for design? See, I have to do design engineering. If I am having, let's say, even a hit rate of 25%, I am designing and engineering and trying to sell 4x the number of buildings that I've got orders of, let's say, INR 1,700 crores today. That means I must have designed INR 7,000 crores worth of building very well at various meetings, convince them and then got this order. So other 3 parts are equally important. So incremental profitability, incremental sales does not depend on the factory. That is for sure. But you need the capacity. My factories can all be in one place. So Kirby has got 3 large plants. We are now going into our fifth location in Gujarat. So everybody has their own philosophy behind it. But it doesn't make any difference to incremental business. We have to make it grow. We have to go and find the customers. We have to convince them that we are the right guys and what we are giving you is great value. That is more important.

Okay. You are 2 lakh tons, right, in capacity?

Yes, we are 2 lakh tons. And for the first time in our history, we are going to start 2 plants together. So we are seeing that we are able to get a lot of business today if we want. We have reached that position in the industry, but we are not able to take because we don't want to take any order which we can't deliver. And for us, delivery means everything from design engineering to project management.

Will that add a onetime fixed cost? And then -- so will you go through a phase where the fixed cost of those plants come first and the utilization comes later?

No, there's a capital cost. So depreciation might come in. We are not borrowing any money for it. So that is mostly our own money. We might borrow some money for the heavy structure, but that is more to get a better return for shareholders, but we haven't taken a decision. Since we are not borrowing...

Operational cost. So at what utilization did the plants breakeven?

No, operationally, you see you build it up as you get business. So anyway, you can't get people. Let us say I need 400 people in a plant. I don't want to get them overnight. So you operationalize, we have done that to all our plants, operationalized as fast as possible if the business is growing. Otherwise, you operationalize as you get business. No operational cost left hanging.

And just last on the health or the momentum or the status of the market. So if I had to ask you, let's say, 12 months, let's say, 12 months into the past. So let's say, when you were in August 2024 and now you're in August 2025, in terms of the momentum, health status or in terms of the visibility of orders, do you see a improvement? Do you see static? Or do you see any downward changes?

So what we have seen personally as Interarch is that there's been a momentum has increased dramatically, not only incrementally but dramatically. More and more people want projects to be set up faster and more and more people want to get pre-engineered. They don't want to get any work done at site. So we have seen a pretty dramatic increase in the requirements. And I think also fortunately for Interarch, our positioning in the industry is improving, whereby, let's say, 2 years ago, a INR 300 crore order would have got divided to at least 2 companies, if not 3. We have managed to get that singly. So our position is also improving. Market position is definitely improving because these buildings in the sectors like semiconductors and electronics for phones, et cetera, and then your renewables and your lithium battery, these sectors need massive plants. So once they have accepted pre-engineered building as a right way to build, so these are coming up with massive capacities. And therefore, we are seeing quite a major change in the market, at least from the last 2 years and of course, last year as well. We have seen a big change.

Okay. Lastly, have you gained market share? And has anyone lost market share in the process?

No, I don't -- I think everybody has their own market. I think in the larger segment, I think we are gaining market segment --market share in these critical large buildings. I think last year, at the same time, our order book was about INR 1,300 crores. Today, it is nearly 1,700, and we are restricted by our capacity because we can't take orders which we can't deliver. I don't track everybody too carefully about the market share. But I think in our category between us and Kirby, I think we are both gaining market share. The whole market is also improving because like I said earlier, that there's a lot of fabricated steel segment of building, which is coming into pre-engineered. But I think in the organized sector, we are certainly gaining.

We have our next question from the line of Kiran Shah from PhillipCapital.

Sir, this quarter, we have seen a higher other income as compared to last year. So any particular reason for this increase?

Yes, 2 reasons. One is that we have -- of course, because we had done an IPO and we had got some funds in that. So that fund generated some income before we could spend it. So that has been there. I think interest has increased by about maybe INR 3 crores, the interest income. And then also, there is a service tax payment that we had made to the government about 7, 8 years, 10 years ago, which the case we finally won last year. So we have written that back because we have won the case and the government has not gone in appeal. So that is about INR 2.5 crores. So about INR 5 crores is from these other income, INR 2.5 crores from interest on FD, et cetera and INR 2.5 crores from service tax and interest written back. So FD interest might remain in the future also till we can spend it, but we are also generating cash. Service tax will be onetime for this quarter.

Okay. And sir, these 2 new plants that we are about to just commission. So what kind of utilization we expect in this year and maybe for the next year?

See we have planned a total utilization of about INR 200 crores for the next 18 to 20 months, which means 2 PEB plants one in Gujarat. Second one, we will take a call, whether it is to be in Andhra or Gujarat, we have land both the places and heavy structure plant, which will be in Andhra. So, 3 of them combined together because land we have already got. So, 3 of them combined together should be about INR 170 crores, INR 180 crores, let's say, a ballpark figure of INR 200 crores is what we have planned for next 18 months on an accelerated matter. So, we want to build up more capacity because we feel that if we have the capacities, we might be able to generate more business, which is available in the market. So that is our expected CapEx in the next 18 to 20 month.

So my question is regarding the 2 new CapEx that we have just commissioned or about to commission, Andhra Phase 2 and the Kicha plant. So what kind of utilization we expect this year and next year, sir?

I think we would expect full utilization for the last 6 months. It is already August. So, I think by the time we come up to some kind of capacity because these are both our existing plants. So, it is not taking too much time to ramp up to full capacity in this. So I think by -- from September to -- I think 1st October, last 6 months, we should get full capacity from these plants, from both the lines.

And sir, this INR 200 crore CapEx that we have just mentioned, so how much this will increase the capacity?

This will increase our pre-engineered building capacity by about INR 1,000 crores worth of buildings, 80,000 tons, 40,000 each plant. And the heavy structure will give us about 20,000 to 25,000 tons of heavy structure, which could come to in value. Rupee value will be maybe about INR 300 crore.

We have our next question from the line of Nikhil Purohit from Fident Asset Management.

Just 2 questions. All of my other questions have been answered. Any reason for the delay in commissioning of the plant? The plant wasn't it supposed to be commissioned by end of June?

Yes. One, Andhra was supposed to be commissioned by end of June. We had a little supply issue of one of the crane item machine items. So it went into trial production in June, but we couldn't do that full. So we are, yes, month, 1.5 months behind in both. No particular reason, but I think just a little delay in supplies, et cetera. So both of them are in trial production. And I think another week, 10 days, they should be in full production. Yes, we are a little delayed in that. No particular reason as such.

Okay. And Kicha as well?

Yes, Kicha also in trial production. It should be full production by end of this month.

Got it. And just understanding -- so considering the huge Pipeline 1 that you mentioned, INR 2,100 crores. Are there like -- what do you estimate to be our closing order book target for the year for FY '26, considering the 20%, 25% win rate? Like is there any number that you can give to it or something for us to go about?

The way we are looking at the numbers is that what is the kind of capacity we will have by the end of this year, for example. If we can get all this ramped up and let's say, we have a capacity of INR 2,000 crores by the end of this year, then we try to match our order book to our capacity for 10 to 11 months because orders today are available in the market. So I can't ramp up my order book unless I have ramped up my capacity. Or I know that, okay, see, INR 1,700 crore, if I have to execute even in the next 11 month, is still about maybe INR 1,550 crores to be executed -- I mean, in the next 10, 11 months, I have to execute it. So I have to ramp up my capacity. We show that, yes, I've got the capacity to commit to the customer and then take order. Orders today are available in the market. So we are trying to ramp up as fast as possible. So I think that if by the end of this year, we have a capacity of, let's say, INR 2,000 crores in place, our order book should go up to INR 1,800 crores, INR 1,900 crores by the first quarter of the next calendar year. And we are aiming for that. Like you see in INR 450 crores we have taken in the last quarter, last 3 months rather. So that is -- but I mean, we are very careful in taking orders right now because we feel that we need to ramp up this capacity and then take more. So I think as we ramp up capacity, we can increase our order intake. Because our PEB order book cannot be very long. I cannot take an order for 2 years later delivery. It has to be maximum 10 to 11 months completion.

We have our next question from the line of Rajit Agarwal from Nilgiri Investment Managers.

Just a few quick questions. You had spoken about Pipeline 1 and Pipeline 2 and you had shared the numbers for Q1. Would you have the similar numbers for Q4 FY '25?

Q4 FY '25. Manish, do you have these figures with you? Manish will answer the question.

Can you please repeat the question, sir?

Yes. No, I just wanted to know if you can share the numbers for Pipeline 1 and Pipeline 2 for the previous quarter. I just wanted to look at how the pipeline has moved sequentially.

For the previous quarter. Okay. So we talked about 2 pipelines, Pipeline 1 and Pipeline 2. The difference between the last quarter and this quarter is an increase of about 9%.

In total?

That's right. So no, not in total in each of the categories.

Right, sir.

P1 has gone up by about 9% to 10%. And similarly, P2 has gone up by 9% to 10%, sir.

Got it, sir. And any of the orders in these pipelines originated through your partnership with Mold Tek?

Not predominantly in exports, sir. This is -- what I'm talking about is mainly domestic.

Okay. Okay. And sir, one quick question. And in fact, I had written also to compliance on this. I think I'm missing something on the EPS calculation. So if I were to divide your net profit by the total number of shares, considering the warrants, options and everything, the number doesn't seem to match. I mean...

Mr. Bansal can answer. So PAT is INR 28 crores.

If I take the number as 283,789,000 and divide it by the total number of shares on diluted basis, which is 17,429,936, I don't seem to get the same number.

It is -- our shares is 164 crore, sir, not 174 crore.

That is before dilution.

So that is after dilution as well. So our -- Mr. Bansal the total outstanding shares is 164 crore?... Total number of outstanding shares are 1.64 crore something like that.

You might have taken the whole of ESOP as provided. There's no shares issued yet.

They are not issued yet, sir. None of them is listed. So the total outstanding shares is 1,6640,000. Yes, sir. So even then the number doesn't seem to match.

Yes, your good name sir?

Sir, I am Rajit Aggarwal.

Can you send the query on our e-mail [email protected] so we can answer fully working.

Yes, sir, I'll do that. In fact, I had done that previously also. I'll reforward that e-mail.

Yes, please, please. So [email protected] and will definitely -- you can give a reference of this investor call.

We have our next question from the line of Vivek Gautam from GS Investments.

Congratulations, sir, and for consistently coming out with good numbers ever since the IPO good wealth has been created for our shareholders. Sir, I just wanted to know about the opportunity size of the company and the expected growth rate we can have? And is the pie big enough for more entrants in this PEB sector and also some differentiator factor for us, our company versus competition, if you can highlight?

The size of the pie a lot depends on us only. So as companies like Interarch and even Kirby, we do a lot of business development, converting, like, say, high rises into steel, data centers, malls, housing projects, airports, railway stations. So traditionally, you will see that nowhere in the world has any country done fast development without steel. Steel is a primary material to be used in buildings if you want to develop fast. China per capita consumption of steel is 10x of India. World average is nearly 5x of India. So the future is towards steel. So that is going to be, in any case, the -- how the size of the pie will increase. That is how we see it that if we increase the size of the pie, then we can really pick and choose the business we want. So as Interarch, we have always concentrated on a lot of business development, having seminars, in-house conferences, presentations, going to customers who we feel can use our material. So, the size of the pie to grow is very critical in this business. We are not fighting over the same pie. And also, I think the availability of whatever we can call the addressable market is very large because India is very, very low in terms of per capita utilization of steel. And as the problems of environment, labor, site issues is growing, more and more people want the building to be done off-site. And steel -- pre-engineered steel is the only way you can do building off-site. Everything comes ready-made and you do only nut and bolt assembly. whereas not -- you can't do it in fabricated steel, you can't do it, of course, in the traditional cement and concrete. So we feel that we have to not only concentrate on the pie remaining the same and trying to grab the rest of the pie and especially for us because we are in the very high level of value add. We have to work with companies like Agratas and like Reliance Solar and the ReNew Power and the First Solar and the Suzukis. So those companies is what we want to work with and do very complex buildings. The kind of building we are doing, you'll be surprised when you see it that how complex those are. So we are trying to grow that pie. So I think going forward, as Interarch is concerned, we have really next 10 years, I would say, an unlimited opportunity. Lot depends on how fast we can ramp up our own capacity. But then again, by capacity, I don't mean only the factory. We have to equally ramp up sales, design engineering and project management because our complete product can only be delivered if all 4 legs are together. Many companies have made this mistake of only concentrating on a factory or only concentrating on a sales and not being able to deliver the full project. So we are trying to ramp up capacity as fast as possible. And I think we will be an outlier. If you were to ask me which other company would be an outlier in India, I would say, Kirby. They've done a great job in the last 25 years. And I think the pre-engineered building industry's reputation today stands primarily because of them and then to a large extent, because of us also. And I don't think in this area, today, we can see any competition. Now tomorrow, new players come in, world companies come in, and they do, but we consider that we should remain ahead of the ball -- the game. How do we keep improving? Not trying to say only, okay, this guy is competing, let me compete with him. We have come from nowhere. All these other companies that are in pre-engineered building today, whether it's Zamil, Kirby, Everest, Pennar, MB Engineers, they are all older than us, and they were all in building business before they did pre-engineered building. We started from scratch and built ourselves a reputation where we are today in the top level. So we are competing against ourselves in many ways and we want to

I saw an interview sir, on CNBC and make it almost 20 years back. Since passing out from IIT, you went through a very bad patch also in the sense that the personal assets had to be given to the bank as collateral to meet your commitment. That shows your ethical corporate governance also. So the current time, is it the best time you have ever seen in your industrialist period, sir, and the opportunity size is really looking good? And any impact of the tariff and all the suffer between U.S. and India coming up for our sector also, sir?

We -- of course, as a company, we were much smaller. So we were much more badly hit in the '90,91 economic crisis. That was a very bad hit. Then, of course, in 2008, '10, it was a very bad hit. But a very good growth period was us was 2004 to 2009. In terms of percentage, we grew 10x at that time. But yes, from INR 15 crores to INR 500 crores. So that was a very good growth period, but the kind of things that we are seeing today, we have not seen before. That I can tell you, the size of the projects, the greenfield projects, plus I think Interarch's positioning in the market because it has changed. So we are seeing a lot more of those inquiries and orders coming our way. So I don't think I have seen anything like that. And I think whatever the government has done in the last 10 years as far as the industrial environment is concerned, whether it is GST, whether it is every state competing to give land and give facilities rather than give financial incentives, giving facilities to the companies to grow. And I think the new sectors which have opened up, whether it's renewables, I don't think I've ever seen anything like that. We put up the Andhra plant 15 years after our last plant was put up in Chennai. And now Andhra and we are putting another Andhra and we are putting up Gujarat all within space of 2, 3 years. So we are doubling our capacity in 3 years. I have not seen anything like this before.

Sir, and any word on this increasing competition intensity, a company called M&B Engineers got listed recently. And so what is the moat we have with them and the others also, sir?

See, our moat and our USP has always been the way we have worked with every company for the last 25 years in pre-engineered building and 15 years before that, when we were doing other building products related to buildings. So that is our moat. The relationship, every job that we do, we concentrate fully on it, finish it to customers' delight. I think that has been our moat. And that is very difficult to copy. I mean we have newly listed. It's not a new company. We compete with Phoenix in many, many cases all over the country. But they have built up their own niche. Everest, I don't think has done very well. Pennar has done reasonably well again in its own niche. But I think we have built up our own moat in terms of what can we do with the customer. In many ways, we call ourselves the Mercedes of the PEB industry. We want to give good value, and we want to give a great product to the -- our clients, and we feel that they should come to us when they want a great product done for their companies. So I think that is our moat. And our moat is always to stay ahead of that game. How to give better facilities, how to give better service, better quality, project management, sales, you can only remain ahead on that. I don't have any magic formula or any magic technology in which I can say that I'm ahead of these companies. I'm not. But I think in many ways, that is the most difficult to match and compete with compete with.

We have our next question from the line of Deep Shah from NV Capital.

Firstly, sir, congratulations on a great set of numbers. My first question is on EBITDA margins. What according to you would be the biggest risk to our margins, let's say, if tomorrow margins were to fall to 5%, 6%. What according to you would be the main reason for that? And on the opposite side, what is the upside potential that we have on margins? So we've seen some competitors have an EBITDA margin ranging between 11% to 13%. So currently, FY '25, we did close to 9.5%. So like what do you think will help us achieve or increase our margins, let's say, if like exports is not like a big focus area right now. So like without including exports, what would help us reach that level of EBITDA margins? So that's my first question.

See, EBITDA margins in pre-engineered building because a lot of the costing we have to build up first. The factory is one part, but very good salespeople, engineering design team of the top level, project management. So, it also depends on how much is the company investing into its people. That makes a big difference if we were to look at EBITDA margins. And I think if we want to build up good EBITDA margin, we have to have that, but turnover will actually increase our EBITDA margin because we have pretty high operational leverage in our business. So I think our EBITDA margins will definitely improve. But also maybe -- I mean, I don't know how anybody is making more than us because nobody gets an order higher than us. If anybody does, it's only Kirby. But we have never got an order at a lower price at --than anybody else. People have to beat us in price by a great margin to get the orders that they get. So I don't know, maybe M&B Engineering has done some wonders to get 13%, but we are also investing at the same time. And I think EBITDA margin will -- for us will grow with getting better clients and larger projects as well as a larger turnover because a lot of the people cost is fixed. The sales costs don't improve -- increase dramatically with turnover. Same with design engineering, similar with project management. So we are concentrating on this that when we touch our projected figure of INR 2,500 crores by '27, '28, we should have substantially higher EBITDA margin. But I don't know how other people are getting 13%, 14%, that is -- you have to ask them. We think that we are giving a great product. We are building up the company for next future also because you can't get good teams immediately only when you're increasing turnover. You have to build them up earlier. But mainly it depends on your own economies inside, how well do you turn around the project? How well is good is your purchasing, how good are you controlling your wastages and your productivity? And how good is your team? How do you keep your team? Keeping the team is very critical. Sometimes you are maybe paying more than the market to keep that good team because if they perform, then your margins are much better in the future. So I think we are concentrating on that. We have a great quality, margins will follow. I know all of you are very concerned about the margins, but I think the margins are an outcome of what we do rather than something that we can aim for. And we think we will get it. I think we should be the best in the industry, no doubt. But we have to also keep investing for the future.

Got it. So the first part of the question was on like the risk to your margins, let's say, they fall to 6%, 7%, what according to you would be the main reason for that?

If suddenly, the sales drop, there is no other risk. If you look at our margins in 2021 and '21-'22 when the 2 COVID hit years, we had the orders, we had the capacity to deliver the orders we had, but because we had to shut down for 3, 3 months, the margins will drop. So that --, there has been no black swan event, yes.

Got it. So raw materials wouldn't be a problem because earlier you used to give a split between fixed and variable contracts. Can you like highlight or give an update on that also, like how are the contracts

That is now more or less fixed because the steel price variation is very little. See, what happens in fixed and variable is basically who's taking the risk. In the fixed price, I'm taking the risk. In variable, the customer is taking the risk. So in more and more orders -- we have learned how to manage the risk because now there's not too much variation. The steel prices go up and down very nominally every month and there's a certain way they do it. The cycle is very simple. In June, July, August, even up to September, the prices will move downward to whatever they are. October, November, December, they normally remain stable. January, February, March, April, sometimes even till May, they will move up. But at the end of the year, they'll be back to where they started from. So -- and also, we are in touch constantly with our steel companies because we buy from all the majors, and we are always in touch with them. We have 4 to 5 months of material in stock or on order. So we have built up a very good model how to control because when we are bidding, then we know. If I'm bidding today, I know that if I have to buy the material in December, I know that prices will be higher than today. I have to build it up in my cost. So it is more a matter of managing your business rather than because they don't change overnight. And they don't change dramatically except that post COVID when the Ukraine war happened, they doubled overnight. But otherwise, that black swan kind of a thing has not happened in the 25 years. So we have... And I think it's a part of the game.

Second question is on exports. So exports, I think it is better if we have a local presence abroad, right, like some of your competitors have a subsidiary or local manufacturing presence there. So you like mentioned, we currently tie up with foreign suppliers and they do the erection part. So like, let's say, 1 year down the line, would you be like interested in investing there in the U.S. like to build a local presence or a brand there?

See, we have built up -- we have taken -- built a strategy that we will look at various partners. We have found quite a few in our last visit and in the last 12 months of suppliers that we have done. A lot of them are very keen to tie up with us. So we will work with various them. This is -- normally, they are called general contractors there. So a general contractor there takes a turnkey. They are like the L&T, let us say, a simple example could be -- they will take the whole order. And then they buy different items from different people. So we are trying to tie up with a lot of general contractors in Canada and U.S. so that we can supply to them. And if we have good working with them, might not be a year, might be a little longer. We are keen to invest with them over there and be a partner with them in their growth because we can do the kind of building, which nobody really can do in America. The kind of building we have done in India are either not there in America because there are not that many big industrial buildings or they are importing. Then also, we are trying to concentrate on Africa, which has a lot of projects. We are trying to tie up with some companies there also. So I think within a year, we'll have a fairly good idea as to what the export market is like. But currently, I feel that export market is a little overhyped because the business in India is tremendous. I mean, for next 10 years, the kind of business that we can get in India is tremendous. But yes, exports is very critical because I think it improves your quality, your scheduling, your reputation and of course, get to better margins, even if it is 10% of your total turnover and you can make a 20% higher margin, I think it is worth it. So we are certainly concentrating on that. And we do want to invest going forward into a good partnership there.

Got it, sir. Just last question, sir, have we like disclosed the capacity at the Andhra Pradesh heavy steel structure plant, the installed capacity that we are adding?

Yes, I think we have disclosed it. Maybe we put it up today. That will be about 24,000 tons for heavy structures.

And anything on Gujarat? Is there anything like planned

Yes. Gujarat would be a pre-engineered building plant. So because that's a total building plant. So that capacity, we count at 40,000 tons plants because in the building, we also take all the other items, secondaries, roofing, cladding, all that. So basically, structure capacity is very similar, but total building capacity in Gujarat will be 40,000 tons, just like all our other plants. And the heavy structure will be 24,000 tons because it will only make a structure.

We have our next question from the line of Kamlesh Bagmar from Lotus Asset Managers.

Sir, just wanted to understand your inventory management because if I see your inventory days, it's roughly around 60-odd days. And if I compare it with other peers, they are at roughly around 160, 170. So doesn't it indicate that you are taking a call on the commodity prices, which may be like say, worrisome when the commodity prices move up or steel prices move up. So just wanted to know your view on that because across the board, like say, all the companies have upwards of 3 months of inventory. But in your case, it's a month, it's 1.5 to 2 months.

Your question assumes that the steel prices will keep going up. In steel inventory management, you have to also see what happens when prices come down. See, if you see last 3 years in steel, like I mentioned just now, it goes in a cycle. So either I should know that, okay, in the low price cycle, let me buy and keep. But then also don't forget that our buildings are all sold customized. So if I buy, I have to pay up immediately because I can't hedge or I can't forward book. So am I ready to keep? I think it's bad stock management. I feel that what we have is already very high. We are talking to the steel companies how to deliver better, how to deliver on time in full so that we can get lower our inventory. Inventory in steel does not automatically -- one is your interest cost, which you are carrying. Secondly, you will increase your wastage because if you want to build all the building orders that you get today from inventory, there is bound to be wastage. We try to order at least in the large and medium orders on building to building so that we can get pretty cut to length exact material so that we don't have wastage. And why carry inventory? Inventory is a debt cost. And sourcing prices move down and you have to sell it at a lesser price because the competition is there. I think it's more of managing -- see, the question on steel come to in every call, investor call, my personal meeting with people all over the world, I've met people. It does come because steel is the primary material we use. And people feel that steel is somehow very volatile. But actually, it's not true. I think as a company, if after 25 years, we have not learned how to manage our costing and learn to deal with the suppliers and learn to buy material or keep material, I personally feel debtors and stock is a total debt cost. It's very easy to reduce these and reduce the risk that the lesser the stock I carry, I think my risk is less that I don't get left with debt stock. So we have learned to manage it the other way. I think even 4 months of stock that we carry is too high. And I think it's not wise to carry a very high level of stock because in the market, you have to compete with the market prices. When I give a bid today, customers will look at the steel price today. He will not say, okay, sorry, you bought it 5 months ago when the prices were much higher, I'll give you higher because he's buying a building. He's not giving me a steel price. So I think we have got it pretty well managed. I think everybody has the right to have their own method of managing a business.

And that's why you are in the business, sir.

That's why we are in the business, and we have learned that this is a better way. And a business which we have always been very short of money. So we have always learned to manage how do we do business with the least amount of money. That is always the first focus in our mind. Choose the customer well, never have a bad debt, never carry debt stock, never carry too much because steel you have to pay upfront. I get no credit literally, except against an LC. So coming from that kind of a background, I think we are very careful how we use our money.

Okay. But if say, hypothetically, sir, if the steel prices move up like 10%, 12% because it's a commodity, like the way the safeguard duty was imposed. Thankfully, like Chinese steel prices had not moved up, but there has been an increase like roughly around 10%, 12%. So in that environment, it can have some bearing on the margins.

No, but the size is coming down, again, as per the cycle from May, June onwards, it's -- the prices have come down. And you are carrying a stock which you bought before, you are going to be in trouble.

And lastly, like, sir, after, like say, Pantnagar Uttarakhand capacity, we have expanded entirely into the South and now coming in Gujarat. So, what is the mix between the reasons in terms of our project execution, let's say, where the revenue is coming...

See, the main thing we must remember in our business is that we cannot be near our client. We cannot be near our client ever. We can never be near a client. So we have never tried to manage our plants as to being near the client. Let's say, if I've done Tata Motors 4 plants, they are all 4 different parts of India. I'm doing a plant in Assam or I'm doing Kashmir. So we have decided that north, we did because it was natural for us because we were in the north. Our first base was Noida. We sit there, we live in Delhi. So it became the natural base. And Rudrapur, we expanded because that was a good industrial area. Prices of land was low when they started, and we went there. South India, then we went because there was a lot of business developing. So once we reach an optimum level somewhere, then we look at another location. Optimum level for us also means that one management team can manage the plant. So we have one management team in the North and one in the South. So that management team is also very critical. If for every plant, you need a new management team because you set up suboptimal plant, the cost goes up too much. And like a gentleman earlier asked that will you be operational cost without any business? So here, we have done that, one management team here, one there. Now we feel that since we have ample capacity in both these areas, we should go West because that is the next stop. West, there's a lot of business. We do a lot of work out of Gujarat. We do a lot of work in the West. So why not go to another geography. But it's not that because we are trying to save freight or we are trying to get nearer to our customers.

No, a general sense, what comes in our mind is that it's more of an interplay between the freight. But based on your commentary, it suggests that it's more of a how you serve the customer with your designing part and the execution. It's not just near the freight.

No, freight is actually -- if I would put it in a way, freight is really sort of a no-go in this matter. Nobody considers freight and say that -- because see, number one, we are bidding for a building. So I'm not charging freight to the customer for extra. So I am bidding for a building. I have to be competitive. I put the building would be next door to me and if another guy is competitive, he can come and take the order. So in this case -- and freight on a finished item, you see our finished item go for, say, steel could be INR 60 a kg. Our finished item could be INR 120 a kg. Freight remains the same. So freight is a very low element in our costing. But of course, there are so many other elements. But once you are putting up a new plant, you try to go to a new location so that you can, if possible, save freight also. But there are many other issues, land, where do you get it, labor. If you have too much in one area, you need a lot of labor, which you might not get, you could have labor problems, getting that. Some state governments also can be pretty unreliable sometimes, you have something and so you diversify your risk more than anything else. But diversification is not in terms of freight. It is in terms of many other factors.

Thank you. Ladies and gentlemen, that would be the last question for today. On behalf of Ambit Capital Private Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.