Jash Engineering Limited (JASH) Earnings Call Transcript & Summary

Good evening, everyone. I'm Siddesh Chawan from Ernst & Young Investor Relations, and I would like to welcome you to Jash Engineering Q3 FY '24 Earnings Conference Call. [Operator Instructions] Please note that the conference is being recorded. The recording will be made available on the website within a day, and the transcript of the call shall be made available subsequently. To take us through the results and answer your questions today, we have the top management of Jash Engineering Limited represented by Mr. Pratik Patel, Chairman and Managing Director; and Mr. Dharmendra Jain, Chief Financial Officer. Before we begin, I want to remind you everyone about the safe harbor related to today's earnings call. Comments made during the call may contain forward-looking statements that may involve known or unknown risks, uncertainties and other factors. It must be viewed in conjunction with our business risks that will cause future results performance or achievements to differ significantly from what it is expressed or implied by such forward-looking statements. After the end of the call, if you need any further information or clarification, please do get in touch with me. With that said, I will now hand over the call to Mr. Pratik Patel. Over to you, sir.

Good afternoon, everyone. Welcome to our investor conference for the year ending -- the quarter ending December 2023 for current financial year. I would now like to start by giving a small presentation, which we have prepared. This is part of the presentation, which we have been giving every quarter for the people who have come in new, just to give you an idea of what the company is about. We are a company in the manufacturing sector, making equipment for water, wastewater, effluent, seawater, et cetera, treatment as well as pumping and conveyance. We have operations in 4 countries that is India, U.S.A., Austria, Hong Kong. We are on the verge of having operations now in U.K. as well. We have 5 manufacturing unit with around 950 people, and we are supplying these equipments to various government bodies through the EPC contractors. We are basically focused on exports and export to over 45 countries. And we are approved by most of the authorities who are using these products worldwide. The company has grown over a period of time by investing in new technologies as well as new acquisitions. We have done acquisition in India and also outside India. In India, we acquired Sureseal and Shivpad. Outside India, we acquired Mahr Maschinenbau, Rodney Hunt, E&M Hong Kong. And currently, we are in the process of acquiring Waterfront in U.K. All of these acquisitions were done with a reason. The acquisitions in India were done with a view to improve the product reach. The acquisition outside India were done with a view to get recognized as brand. All of our products are sold based on approval. So if you are approved, then only you can sell these products to the treatment plant or the pumping station. And so to get the approvals and get international renowned brands, we went for acquisition, and Mahr, Rodney, and Waterfront were the result of that. Currently, we have 5 manufacturing facility, which 3 are in Indore -- around Indore -- 4 are around Indore, 1 is in America. We are in the process of building 1 plant in Chennai and with the acquisition of Waterfront, we'll have 1 plant in Glasgow. So in a short time within this year, we would have 2 more manufacturing facility added up. The current potential from all these facilities is close to INR 700 crores. We are adding new facilities and that will ensure that over time, we will be able to build up manufacturing capability up to INR 1,000 crores. We have invested mostly in all the manufacturing facility, which is required to produce this product. So most of the facility is in-house. Very rarely we have to go out and that we do when the order booking is much beyond our manufacturing capabilities. As I had already pointed out, we make a lot of products for water, wastewater business. We make gates, water intake gates, heavy fabricated gates, coarse screening equipment, fine screening equipment, screening conveyance equipment; valves, various type of valves: knife gate valves, bulk solids handling valves, and special purpose valves. And we also make process equipment, which is subsequent to the intake. So all the type of process equipment required for primary treatment and secondary treatment are also made by us. We also make hydropower equipment, which can generate electricity, renewable energy at a very low head and screw pumps or storm motor pump. These are the products from Invent range, which we are launching this year, and these are all used in secondary treatment. Most of our product goes into varied application, be it for irrigation, storm water, drinking water or wastewater and in the industrial, wherever huge quantum of water is required. Generally, such water is required in nuclear power plant or thermal power plants, paper and pulp plants, petrochemical plants, steel plants, chemical plants, et cetera. If you see our major business, it comes from water control gates and 61% of our revenue comes from that business. Screen contributes 15%. This is based on what we have -- the earnings for 9 months. On a yearly basis, there may be some changes. Valves does 17% and all other equipment does 7%. So gate remains our main business, but screens and valves also contribute significantly to our revenue mix. We are doing business mostly outside India as well as in India, but our target is to have more than 65% revenue coming from outside India. As of now we are somewhere around 58% to -- 58%, but we are quite confident in 1 or 2 years' time, we will reach 65%. The major market outside India is Far East, Middle East, U.S.A., and Europe. We are still weak in Africa, but we are building up resources to go strongly into Africa as well. I already mentioned that most of our business is related to approvals; and for that, we should be approved by consultants as well as the end clients and also by the contractors. We are mostly approved in India and outside India by all the leading EPC contractor or consultants. And it is a result of that, that we get easy acceptance for new projects worldwide. Coming to the main topic of this meeting. We have announced already our results, and they are also posted on the stock exchange. For the 9 months, Jash Engineering revenue has grown by around -- on a stand-alone basis has grown by around 25%. Shivpad, unfortunately, our revenue has gone down. We will work hard to catch up on the shortfall in Shivpad. The revenue has gone down by 54%; however, in Jash USA, our revenue has gone up by 28%. As a result, we have been able to give quite a good performance on the profitability. The profitability at Jash Engineering has gone up. Profit after tax has gone up by close to 25%. The profit after tax at Shivpad has gone down by 92%, 93%. But most importantly, the profitability in Jash USA has gone up by 28%, so more than 200% because last year we were in losses. So 228 -- 200% the profitability has gone up. This augurs well because once Jash USA is performing well, then we expect that on the consolidated basis, the company performance will significantly improve. Talking on the consolidated situation, our revenue has grown on the consolidated portion by around 25% in 9 months as well as profit has grown by around 27%. So it's a very good sign as far as gross profit, profit after tax and profitability is concerned. The PAT has significantly grown by 50%. And we expect that this turnaround in profit after tax is on account of U.S.A. And as U.S. operations improve, we hope to give much better performance on the end of the year. This shows our consolidated income statement. As you can see, there is a significant improvement in EBITDA margin as well as some improvement in PAT margins at the end of 9 months. We expect this -- as I already mentioned twice before, we expect this to significantly improve at the end of this year because those who are old investors must be knowing that in the last quarter, we do maximum revenue. And with the fixed cost of salary, wages and other expenses, higher proportion of our margins comes on the fourth quarter. So based on the improving situation of quarter 3, I'm quite confident of achieving very good results in quarter 4. Coming to our order book position, as on 1st February, our total order book position was INR 851 crores. Out of which INR 583 crores are orders outside India. Orders within Indian are INR 268 crores. We have INR 440 crores order book in Jash Engineering, INR 380 crores in U.S.A., and INR 31 crores in Shivpad. So overall, I would say, all the 3 companies have good order book position. We were a little bit lagging in execution in Shivpad because of delayed approvals, but we hope to catch up in the last quarter. Our consolidated order pipeline also is quite strong. We have already negotiated orders for INR 53 crores and other orders, which are under negotiations are close to INR 34 crores. The orders under negotiation are expected to be negotiated within the next 1 or 2 weeks. So we are looking at a very strong order book position at the end of this financial year. We still maintain the projected sales outlook, which we had informed at the beginning of the year. Then, I told that we expect to achieve a combined consolidated sales of around INR 515 crores. In spite of the Red Sea problem, which we are facing resulting in delay in deliveries to U.S.A. and UK, we are quite confident of achieving INR 515 crores in revenue; however, if things go in our favor, we can easily surpass this by 5% to 10%. I'm glad to inform that Rodney Hunt has become profitable in third quarter. Last year, it had become profitable in the last quarter. So we are improving our performance at Rodney Hunt. This year, we targeted $26 million revenue and we would achieve this easily. In fact, the Red Sea situation makes us a little bit nervous. But if it was not so, then we could have achieved at least $28 million revenue in Rodney Hunt and shown a growth of more than 40% in this year. However, we keep our fingers crossed if things improve, then we should be touching something like USD 27 million to USD 28 million in revenue this year. We have already met investors and are issuing new preferential shares worth INR 42 crores to the investors as well as warrants to promoters and key employees this month. The purpose of raising this fund is, in America, we are seeing great traction and bigger orders. The last big order, which we received in America was more than $10 billion value, which was received in the month of August, September. This order and all such big orders need a bonding to be given. Now -- as of now we have accumulated losses in America, which does not allow the banks to give bonding without deposit. And so we have to give close to 45% of the bond value as deposit, and this hampers our taking orders because we cannot easily give 45% deposit. So the main purpose of raising this INR 42 crores was that we like to use $3 million to $4 million out of that for bonding purpose and balance in building our new facilities in Orange as well as in Rodney Hunt -- Houston plant. Looking at the very strong growth prospects in export market, also looking at what we have found out in UK, we feel we need to increase our capabilities, manufacturing capabilities at unit 4, Rodney Hunt plant. And so we have now applied for a new plot of 2.75 acres at the cost of INR 2 crores opposite to unit 4. And we will acquire this plot and we aim to build a new manufacturing facility at this plot. The construction will be started in middle of this year and this plant will be commissioned by middle of next year. Regarding Waterfront, I'm pleased to inform you that most of the official formalities have been completed, and we are now expecting final approvals any time now. If we get final approvals in the first quarter or first half of February, then we would be able to wind up this acquisition by February or else in March to make Waterfront a subsidiary of Jash Engineering Limited, thereafter. Our COO, Mr. Bhuvanesh Pandey had been to Waterfront, U.K., with a view to see what things need to be done before we take over the company and complete reorganization of Waterfront is planned along with additional capacities so that we are able to expand rapidly in U.K. I'm pleased to inform that because of the proactive steps, which we have taken, we should be in a position to inaugurate the expanded facilities in June 2024. I would like to sum up by saying that we have had quite a robust growth in this quarter. revenue overall by 28% in the first 9 months and our EBITDA also increased by around 39%. Also, as already I have mentioned before, the consolidated order position is quite strong, INR 851 crores with INR 583 crores for projects outside India. We also have a strong order pipeline, and I expect to end this financial year with at least INR 800 crores in order book. if you see this INR 800 crore order book on what we have projected for next year; next year, we are projecting revenue between INR 625 crores to INR 650 crores, so having INR 800 crores order book in hand end of year, this financial year or beginning of new year, is a very good sign for next year as well. As mentioned before, I'm quite confident of achieving INR 515 crores projected revenue. If everything goes favorable to us, we will significantly surpass this figure. In the end, I would like to say that from my side, I'm quite bullish on the way the company is performing. And I'm happy to say that the international market also looks quite dynamic on the water business. Today, our market capitalization has crossed INR 2,100 crores. And most important is out of more than -- around 325 staff, now 221 staff has opted for ESOP. This augurs well for the company because most of this staff, I understand or I believe, would like to stick with the company and participate in the growth of the company because the company is helping them also to increase their work. And so with such a strong team of people to support the management, I am looking forward to a very good future for this company. Thank you.

[Operator Instructions] Mr. Sanjay Shah, please unmute yourself and go ahead.

Congrats on great set of numbers. Pratik sir, regarding the order flow, which you have cited is very optimistic. Can you highlight upon which are the regions or which are the verticals where the order flow is coming from? And where we anticipate even further more growth coming from which area? Like you were last time talking about the rising sea level, can you highlight upon that?

Yes. So see, Sanjay bhai, our standard business, as you can see, is mostly water, wastewater. However, in future, more than water, wastewater, there are going to be 3 new type of businesses, which will be helping our revenue to grow faster. What are these 3? One is storm water. Storm water is a result of excess rainfall on a given day in any of the city and then that results into flooding of the city. The second is going to be the rising sea level. And the third is going to be reuse. So you will be required to reuse the water, either desalinate -- use desalinated water or reuse water for survival of the human race. So these 3 are going to be the future for all water industry. Coming to storm water, you must have seen worldwide a lot of huge -- high rainfall concentration is taking place resulting into floods. And this is happening everywhere. And so most countries in the world are investing a lot of water into their ability to pump this excess water out so that shops, establishment, businesses don't get much in water. When we talk about seawater rising levels, now I do not know how many people are aware how critical this situation is going to become. Just to give you an idea, we are working simultaneously on many projects related to this worldwide. We are -- in fact, we are expecting a huge job in America, which is still under negotiation. But recently, we have given budgetary offer to Singapore. Singapore is expected to be 800 mm below sea level 2100 and for that the preliminary offer given by us for equipment is SGD 900 million. We are talking of something like INR 6,000 crores. Okay. This is not going to happen very soon. This is all at the planning stage. But this is the extent of equipment required just by Singapore. There will be many small countries like Maldives, et cetera, which will vanish. I don't know also whether you are aware that Kalimantan is being developed as a new capital in Indonesia. Jakarta by 2030 would be under 1 feet of bottom. So all these type of events are going to result into good boost to our products in time to come. How soon they will come? I'm not in a position to predict because it all depends upon the financial capabilities of each country. But for reuse, desalination, and for storm water, most of the cities have started preparing. So seawater issue is down the line, but this is concurrent. In next 3 to 4 years, many of the cities will be investing in all this.

Great, sir. Sir, my second question was regarding, we have not talked about our disc filter opportunity. And can you even highlight about UK acquisition? How do you see the future and what do you see in the current first year itself?

See, on the disc filter, as I said, we -- last time I had said that in this month, in the month of February, we will be developing a new disc filter, which is highly efficient and cost effective. That we'll be doing the trials of the disc filter in coming months. And if that is successful, we look forward to at least INR 15 crores to INR 20 crores of revenues from this filter business every year. And this will go up because every plant, existing or future, in India would have to invest on this type of technology to make the water as clear as possible. So the government, current government also is focused on that and new investments are being planned in water, wastewater treatment. I read recently an article, which says that India has only 1,300 sewer treatment plants as against many thousands, 20,000 or 30,000 treatment plants in China. So you can imagine the gap we have. And once all those type of treatment plants are coming, they all have to be equipped with disc filters, so we look for quite a huge growth in that business in time to come.

What about Riverfront, sir, U.K.?

Waterfront. Waterfront acquisition would be done in this month or maybe in March. And once that is done, we are looking at very high growth. Mr. Mahr is now in India, is within our office to strategize on how to reenter the UK market for the Mahr screens. Mahr has more than 70 screens in UK. And Mahr before winding down their business or scaling down their business were doing very well in UK. We also found -- Bhuvanesh Pandey, our COO was in UK and our initial reading of the market is that we can easily scale up 4 to 5x in 4 years with our UK operations.

So what should we expect in the first year, whole year itself starting?

First whole year, I would say, INR 50 crores revenue. Next year, we can expect INR 50 crores revenue from UK. And we would like to increase this INR 50 crores. This year is around INR 30 crores. From INR 30 crores to INR 50 crores and INR 50 crores to INR 70 crores, INR 75 crores. And then to INR 100 crores, something like that.

Next question is from Mr. Dilip Sahu. Please unmute yourself and go ahead. Maybe we can't hear you, Dilip Sahu. Please get back in queue. Next question is from Mr. Ritesh Patel.

So I'm like new to understanding the company and the industry as a whole, right? So correct me if I'm wrong. So since we have such a huge diverse set of products, so I just wanted to get an idea of what will be the market size of the products? I know like in the FAQ for the investors given, the markets value is around INR 15,000 crores to INR 20,000 crores. But when I look at the reports, they say that the global market size for the equipments that we cater into is more than INR 2 lakh crores globally. But then we ourselves -- our estimates are around INR 15,000 crores to INR 20,000 crores. I just wanted to understand -- so what portion -- I mean, in terms of percentage, what portion of the total equipment in water are we making? What is this market size globally, in India? And the growth rate number, if possible you could give?

See, the market globally is very big, but we cannot be in all the markets. We have a limitation of the language, so we can think of most of the English-speaking markets as addressable market. Even though we do business in France, et cetera. But it's not an easy way of doing business if you don't understand the language. So the addressable market for us would be all those markets, which are English speaking. That is one. Two, we cannot also go with all our products in all these markets. We have to go one by one. Otherwise, the cost is too high. Just to give you an example, Rodney Hunt, we had not screened. We produced screen in 2019 in America and sold screens also in America. But because the company was not doing financially well and for screen, we had to engage 2 people, which was costing the company $300,000, $400,000, we decided to close the screening business in America until such time that we would be having enough resources to market screens and invest on 2 or 3 people to go and market the screens. So even though there is a global market, if you don't have resources, it's of no use. So I would say that the market is very big; however, you address the market based on the resources you have. Resources in the way of financial resources as well as in the way of manpower resources. Manpower resources within India and outside India. I believe we are looking for anywhere between 15% to 20% year-on-year growth. And we would be increasing our -- both these resources in proportion to achieve that growth.

Okay, sir. No problem. Got it. What portion of these funds will be used for the bonding facility? The funds raised.

Yes.

So what's the percentage?

The one way to use for bonding facility $3 million to $4 million. Present plan is $3 million we to be used for bonding facility; however, if the order is very big and it needs more resources than we may use $4 million also out of that for bonding. And just to explain to you regarding bonding, earlier the bank was calling for 100% fixed deposit. Now the bank has reduced to 45%. Once we are net positive we do not have any accumulated losses, the bank will bring this down 45% further to around, say, 10% or 15%. And once that happens then the deposit already created would be able to take care of future orders.

Okay. Got it. Sir, 1 more question. I think we were planning to commence the construction of our Shivpad manufacturing facility. So any status on that?

Shivpad merging?

Yes, yes, sir. Shivpad facility, Chennai.

Yes, Shivpad factory construction has started. The plant would be commissioned in September-October this year.

Okay. And sir, this plant will be -- I mean, this plant will cater to the process equipment side only, right?

No, no. It would be process equipment. Did you say process or coastal?

Process. Process.

Exactly.

Yes. Got it. So sir, if I'm not wrong, Shivpad was doing around, let's say -- I mean, the process equipment revenue was around INR 40 crores -- INR 40-odd crores in 2022, '23, but the Shivpad revenue was INR 22 crores. So what I'm assuming is that Shivpad is manufacturing this machinery and transferring those equipments to Jash Engineering, who in turn is selling domestically, right? Am I understanding it right?

We both are manufacturing in both places. So designed in Chennai, produced at Chennai, designed in Chennai produced at Indore. So depending upon where we have to supply, proximity, depending upon which plant has spare capacity, we produce from that plant.

Got it. Got it. And sir, 1 last question. So sir, the Rodney Hunt facility, which would come in the next financial year, right? So then would the dependability -- dependency on the Indian plant that is Jash plant for supply of the -- in the US, like how much it will reduce and how much Jash plant would be freed up, so any idea on that?

Rodney Hunt plant will be producing only for those business, which is short delivery or Make in America. It is not being seen as a replacement of Indian operation. So Rodney Hunt U.S. operation will never be more than 35%, 40% of the total revenue.

Okay. So I mean more than 50% of the U.S. business, which -- the units will still be supplied by Jash after the facility [indiscernible] also?

Yes, exactly.

The next question is from Ms. Alisha. Kindly unmute yourself and go ahead.

A couple of questions. Sir, firstly, for Waterfront, like you said that the team has already gone there to see what kind of incremental investments will be required. Any thoughts on what is the kind of integration costs we may have to incur, any onetime costs or to get the -- to expand the facility, what kind of investments we're looking to do?

We are not looking at big investment. We are looking at investment of around INR 6 crores to INR 7 crores, and we have been able to negotiate with Scottish government a subsidy of 50% on that investment. So after subsidy, I can say INR 3 crores to INR 4 crores is what we are planning to invest. The manufacturing shed has been taken on lease. So there is no big investment on construction. All this investment we are doing is in the equipment only, machinery.

So this INR 6 crores, INR 7 crores will cover this cost and any other integration-related costs that you may have to incur?

No, it is all within a very small INR 0.5 crores, INR 1 crores.

Okay. And you mentioned earlier that Waterfront UK is currently doing about INR 30-odd crores of revenue. What is the kind of margins that they are doing? Is it profitable? Or what is the kind of expectation we have that they will do, say, this year, next year?

Waterfront is profitable fortunately, but the margins are not something great. And that is our job to convert that revenue as well as margin to a significant level in line with our policy. Our policy is to have net profit from any operation more than 10%. And we are quite confident that as Waterfront revenue goes up, the overheads will come down. And with that, we'll be able to improve the profitability of Waterfront.

So, by the time they do the INR 100 crore kind of revenue, they should be able to reach the 10% PAT margins, which would be at least 3 years plus down the line?

Yes, definitely.

Sure. In terms of CapEx, you said that there's obviously unit 4 that we're incurring CapEx on in U.S. also. Will this be enough to reach the INR 1,000 crores top line aspiration? Or after that also, we will need more CapEx?

Waterfront expansion in unit 4 and expansion in U.S. will enable us to reach that 10%. Please understand that this year, Chennai also is being constructed. So Chennai, Waterfront expansion in unit 4 and expansion in America, all this together will enable us to reach INR 1,000 crores.

Understood. So what is the kind of CapEx that we're looking at doing in FY '25, counting all of this, INR 6 crores, INR 7 crores in Waterfront plus Chennai, unit 4 in US, et cetera?

So this year, we are projecting '24-'25, we are projecting investment of INR 15 crores to INR 16 crores. Next year also, we are planning investment of around INR 25 crores to INR 30 crores. And maybe another investment of INR 10 crores to INR 15 crores. So around an investment of INR 70 crores to INR 75 crores in the next 3 years will enable us to reach from, say, INR 515 crores this year to around INR 1,000 crores.

And just also wanted to check that we did do the fundraise and you mentioned that it is largely for bonding in U.S. and a little bit on the CapEx. But now that more of our business is going to come from the international markets, is there going to be -- and we have an aspiration of INR 1,000 crore top line, is there going to be need for any more fundraise or any incremental funding that we have to probably arrange for, say, for working capital? Capacity looks like it's taken care of.

So we do not expect a big investment for working capital. The company is quite profitable, and we would be able to take care of it as an ongoing concern. For CapEx, also, I don't think we will be required to go for more fundraise. The fundraise -- issue of fundraise may only come if we get a phenomenal order needing huge investment in capacities or if we go for another acquisition. As of now nothing is on the horizon. So I would say we don't look for any big CapEx other than what is already planned in the next 3 years.

And if Rodney Hunt is profitable, so we are releasing some working capital from there also.

Yes, with the Rodney Hunt becoming profitable, then this -- a lot of pressure gone on working capital and funds, cash flow and everything. So hopefully, in that way, we will not be needing funds -- fund raise just for that purpose.

So cash conversion cycle of 150-odd days is what we should be able to sustain at?

We intend to bring it down. The target is 120 from 182 days.

Perfect. And 1 bookkeeping question. What is our effective tax rate because we were slightly lower because we had plants in SEZ this time for 9 months, it's looking like it's at 20%. So what is our effective tax rate going to be for this year, next year going forward?

It depends on -- because our 1 unit is 50% taxable and 1 unit of SEZ is 100% tax free. So, what's [indiscernible] right around the calculation of the net tax. So it's around 21%-22%, effectively tax rate.

Okay. 21%, 22%. Okay. Understood. And just one last question...

And here, we are clubbing with the deferred tax also because you will see the -- accumulated both of current taxes, income tax as well as deferred tax. So it’ will -- also contribution of the deferred tax . If -- because this has been an expense, but every time [indiscernible] because of the low tax.

Understood. And sir, this INR 620 crores of top line aspiration for next year this is excluding Waterfront?

I said INR 625 crores to INR 650 crores. INR 625 crores, it is including Waterfront.

Got it. And just -- since the space, like you were mentioning at the start of the call, there is going to be so much requirement in Singapore alone and, obviously, multiple countries will have requirement. Any increase or new competition that we're seeing or any risks or challenges we're seeing in our execution, which can probably deviate from the aspiration of INR 1,000 crore revenue?

No. There is no such formidable competition on the horizon as far as what we see from the current situation.

The next question is from Mr. Naveen. Please unmute yourself and go ahead.

My first question is on the U.K. market. I just wanted to know you spoke about the revenue potential. I wanted to know what is the opportunity size for our products in the U.K. market? And how is the competitive landscape there?

So the competitive landscape is not very aggressive. For every of the product, there are 2, 3 companies there, mostly not U.K.-based, mostly from outside U.K. So I would say moderate competition. The landscape is, if you look at gates, screens and knife gate valves with process equipment, we are talking at something more than INR 1,500 crores. But because this is the first year we are going in, we have to learn a lot. And that's why we have put a moderate target of increasing the INR 30 crore revenue to INR 120 crores in 4 years' time. However, from the current exposure that our CEO had in U.K., it seems that even this is a very, very modest target. So if everything goes right as it went in Rodney Hunt, we can look at U.K. as becoming quite a big business for us in time to come.

And in terms of scalability, Rodney Hunt, we took some time, but here, we already have a management in place and they have indirectly invested in Jash. So how do you think the scaling up will happen here? And what are the lessons that we are sort of implementing what we learned from Rodney Hunt in this acquisition?

So first lesson was we have some local team already, so that's why we have retained 20% shareholding with the current management. Secondly, we are going aggressive with the investment. So in Rodney Hunt, we have not taken manufacturing facility when we acquired the plant. Here, we -- even before we have acquired the company, we have already placed order for expansion, et cetera. And that is why the deal would be completed in March, but the expansion would be done by June and the innovation will be done in June because all the proactive decisions were taken so that we can go fast. As far as you are saying that to grow fast, I don't understand when we say INR 30 crores to INR 120 crores in 4 years, it is fast enough. More than that, if we can do, we'll do. But I think INR 30 crores to INR 120 crores in 4 years should be considered fast enough.

And in terms of operations, will it be the same what we have in Rodney Hunt, where majority of the product will be produced in India and shipped?

Yes. So 30% to 35% would be done in U.K. Balance 60% to 65% or something like that would be done in India. So as I said, everything depends upon how fast delivery is required, what is the transportation cost involved for what size of jobs, et cetera. That will guide the decision where to make it.

Okay. My second question is regarding Rodney Hunt. Now we have a very decent order book. I want to understand, is there any seasonality in execution of the same? Like in India, the last quarter is a major quarter.

It is the same. In America also, we have done around $14 million or $15 million. As of now, we have done $15 million. And in 3 months, we are talking of doing $28 million. So not much different. Everywhere, everyone is pushing to meet the deadlines. And the deadline is year ending, which could be 31st December or 31st March.

So in terms of the last quarter contributing the most, will that sort of dependency reduce any time? Or will this continue? Because...

I think it will not reduce...

42% to 45% comes in the last quarter, and it's like a one-day match.

Yes, it will not reduce a lot because Waterfront also, the year ending is 31st March now. So all our companies, we are keeping a common year ending for ease of accounting. And with that, even the people and the company people, everyone are pushing to get maximum revenue before the end of the year. And so I would say even if there is an improvement, that improvement may be only 5% or 10%, not more.

We were expecting some orders from Mumbai.

They have come.

They have come through. Okay. And any clarity on Invent JV, when it will start, the revenue potential? And regarding any clarity on manufacturing?

So our engineers are presently in Invent, Germany, undertaking training. They will be back in the second week of February. And once they are back, we will be taking up all the subsequent steps required to produce that equipment.

Do they have a manufacturing facility there or some -- after this JV, will the manufacturing move to India and India will become the manufacturing base?

They have manufacturing facility, some manufacturing facility in Germany, but 80% of their products are made outside their plant. They don't make it. They mostly assemble it. We already supply to Invent a lot of components from India. So if we do a competent job in quality and price, then definitely, they would like to buy from us as well.

The next question is from Ms. Suruchi Parmar. Please unmute yourself and go ahead.

Actually, I'm new to the business. So pardon me for some basic question. Just wanted to know like how frequently our product needs to be replaced? Like you have water control gates and screens. So how...

20 to 25 years.

Okay. So 20 to 25 years, once you are done with the project, so there is no requirement up to 20, 25 years, correct?

Yes, at least in that plant.

Okay. So what do you see the market size in water control gates now?

It's quite huge. Worldwide, it is more than INR 10,000 crores.

Okay. And I guess we are one of the leading companies in water control gates, correct?

Yes, at least in the English-speaking countries.

Okay. Okay. So in other countries, we face problem because of language or...

Mostly because of language and our not being present in those countries.

Okay. So are you planning something to expand there or you're trying to do anything?

We are growing 25% to 30% in America. We are planning to grow 25% to 30% in U.K. I think, madam, we already are planning a huge rate of growth in English-speaking countries. Once we have satisfied ourselves in the amount of business we are able to get in those English-speaking countries, then we would be forced to look after new markets. Most of Asia is English speaking. We do good in Hong Kong, Singapore. Most of Middle East is English speaking. We do good in most of the Middle East countries. Only in Europe, U.K. is English speaking, other countries have Deutsche or Spanish or Portuguese or French. In Africa, all of Africa mostly is French. We have a French employee who looks after that business. Other than that, wherever Spanish, Portuguese, French is there, we have problems. So our first focus is going to be only on those countries, which are English speaking rather than trying to go everywhere. You must be aware, ours is a custom-built product. In custom-built product, small misunderstanding can cost the company a lot. And if you don't know the language, the chance of making mistakes increases.

And sir, this INR 1,000 crore revenue, which you are eyeing, is for which year, 2027 or '28?

'28, '29.

'29, okay. Okay, sir. So going forward, like for this INR 1,000 crore revenue in 2029, this will mostly come from -- majorly from water control gates, screens or the new areas...

Everything. A mix of everything.

Mix of everything. Means storm water, rising sea level, this will also come?

Yes.

Okay, fine. So definitely, then water control gates portion will decrease, correct?

I would prefer water control gate business to go down so that I have a better product mix, but we are in project business. So we never know some projects of water control gates may come, some of screens may come. It all depends upon what type of projects are coming and, accordingly, we have to supply equipment. So the wish would be that water control gates is around 50% of our total revenue, valves and screens 20%, 20%, and other equipment 10%. But it is my wish. Ultimately, whatever is being done in the projects worldwide, we have to supply that.

So the margins in all these products are similar or any particular product command more margins than the other ones?

The margin depends upon the criticality of the project and the size of the project. So for the same product, the margin may be 10% somewhere and 30% elsewhere. So it all depends upon the criticality, the size of the project, what type of competition is there, et cetera. So margin pattern does not remain same based on product. It remains same based on product size, project criticality, and tough norms of acceptance.

That was the last question. I would request Pratik sir, for the closing comments.

Thank you, Siddesh. Thank you, everyone, for being present and listening patiently to us. I understand Mr. Sahu could not come online. So if there is any question here, I'm still in a position to answer if it is not 3 or 4 questions.

There is some technical issue at his side, it seems.

Okay. So in that case, thank you, everyone. We are open to any questions you have, you can write to us. It would be our pleasure to reply to you. And I hope when we meet next time, I'm in a position to give better results than what we have been able to give this time. With that, I would like to close and say a final thank you to all of you.

Thank you. If you have any additional questions, you can reach out to us any time. We wish you a good health and look forward to seeing you again in the next quarter. Have a good day.