Jash Engineering Limited (JASH) Earnings Call Transcript & Summary

Good evening, everyone. I'm Siddesh Chawan from E&Y Investor Relations, and I would like to welcome you to the Jash Engineering Q4 FY '24 Earnings Conference Call. [Operator Instructions] Please note that this on-site 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 reasons and answer your questions today, we have the top management of Jash Engineering Limited, representative 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 good in conjunction with our business risk that could cause future result performance or achievements to differ significantly from what it is expressed or implied by such forward-looking statements. After the end of this 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 presentation post announcement of our results for this year. I would like to present a brief PowerPoint show in which we will explain what we have done and what we intend to do in the next year. To those who are new to the company, I would like to inform you that we are a company making equipment for waterways for the treatment plant and pumping station conveyance lines. We have 6 manufacturing unit. Earlier, we had 5 manufacturing unit. The sixth manufacturing unit is now being inaugurated in U.K., Glasgow on 31st of May. This is the unit belonging to Waterfront which we acquired recently. So with the 6 manufacturing unit and 1,075 employees, we are doing business in more than 45 countries and our consolidated revenue for FY '24 was INR 522 crores. This shows the stages how the company has grown and evolved over a period of time. Latest addition which you can see in 2023 is about acquisition of Waterfront. So with this acquisition, now we enter the U.K. market and we are very hopeful of a bright price future in U.K., similar to -- and we intend to do in U.K., what we have done in America. So the acquisition is nearly on the same matter, except that Waterfront was an operating company, and we have taken our operating company for the first time. We acquired many companies over a period of time, starting from Sureseal, which was water hammer control valves manufacturing company; Shivpad which is process equipment company; Mahr Maschinenbau which was in screening business, a very well-known brand worldwide; Rodney Hunt which was a gate company, one of the very old gate companies of the world; and Waterfront which is again a gate company. The acquisition of all these companies have been done with an intention to either grow the product portfolio or acquire brands so that we can increase our export to international markets. I believe that our acquisition of Mahr Maschinenbau and Rodney Hunt has proved successful because today, our exports out of India, the business out of India is close to 60%. Next coming to our plants. The 6 plants which we have, we have been every year adding on our manufacturing capability. So this year, we have added a new segregated product line in Unit 2 for stainless steel product and this year, current year, we are adding in Glasgow at Waterfront, a new facility. So with all these facilities which we own now, our turnover potential has gone to around INR 800 crores. So we are committed to big festivity as we grow INR 800 crore turnover facility, I think we would be able to sustain in next year. However, once we again add new facilities in SEZ next year, we intend to take this capacity up to INR 1,000 crores in a year or 2. Next, this is slide showing various type of specialties which are in-house and which shows that most of the critical facility for a product company like ours need has been invested upon and is available with us. Next, as you are aware, we are a water industry company, making equipment for water, waste water treatment plants, pumping station, transmission line, also desalination and so on. Most of our products are shown here. We are predominantly as of now in water control gates and screens. These 2 products contribute to more than 70% of our annual revenue. However, we also have various other products like screening conveying equipment, knife gate valves, special purpose valves, bulk solids handling valves, each contribute another 10% and then process equipment and hydropower equipment and screw pumps, et cetera, being another 10% over business. New products which we have introduced for secondary treatment like diffuser, aeration systems, mixing & aeration, decanting, turbo blower are now being launched in India. It is German products, it takes time, but we hope that as India proceeds towards reuse of water, all these products would become quite integral to our future growths. Next, these products are used in water intake, in storm water pumping, water and wastewater treatment plant, irrigation systems, desalination, power plants, paper and pulp plants, petrochemical plants, steel. In the industry, where ever you need a lot of water as process requirement, we are there in those type of big plants, industrial plants. Other than that, major of our business is in municipal and irrigation. Next, as I said before, 60% of our product portfolio comprise of water control gates, 15% comprise of screen, 15% comprise of valves and 10% comprise of miscellaneous equipment. Now these vary little bit every year here or there depending upon type of projects which we get. But this mix is something which would vary not more than plus/minus 5% in the coming year. Next, when we started on our journey, we have decided that we need not be India centric. We should be more focused towards business out of India. I would like to inform you that this year, our revenue out of India is nearly 60% of our total revenue. We are doing business in Europe and Africa. We are doing business in U.S.A. We are doing business in the Middle East, in Far and Southeast Asia as well as in India. We continue to expand our markets by entering new markets. This year, we have entered into Vietnam, and we also aim to enter into Laos, Cambodia and Indonesia. One of the key factors contributing to our growth is that we are approved by most of the clients and consultants in India and outside India as well. This business is based on approval. If you are approved in a project, preapproved in a project, the contractor will come to you to buy our equipment. And so pre-approval in very critical to grow and let me say that in whichever market we enter, we are approved because of our credentials and because of our past performance in the right markets. Next, this shows our accruals in the international market at least is much, but bigger. We have used here only few names, we may have better recall. But other than these consultants and contractors, we are approved by many other big international players as well. Coming to the purpose why we are here today. I am pleased to announce that the 3 performing companies of the group that is Jash [indiscernible] Rodney Hunt have together achieved mixed type of result. The revenue growth in case of Jash Engineering and Rodney Hunt has been excellent. Jash Engineering has shown 25% revenue growth and Rodney Hunt has shown nearly 30% revenue growth. In case of Shivpad, we had some said debts. The said debts were not because we had over order book position, the said debts were because the projects for which we have got the orders had got delayed in the execution. And so we could not produce equipment and deliver within the year as planned or envisaged. So on the revenue front, overall, we have done good. In case of Shivpad, we do expect that this year we'll overcome the shortfall and again, be on the path of fast growth. Coming to profit after tax, the profit after tax in Jash has grown significantly by, say, 23%. And in Rodney Hunt, there has been a stupendous growth of more than 110% in our profit. In case of Shivpad, the percentage has reduced because of the revenue has reduced. However, we believe that we have a good chance of recovering on PAT also in Shivpad this year. Next. Coming to the financial -- consolidated financial snapshot, we would like to show you that over the years we have been doing consistently. Some years, we have grown very fast and some years have been moderate. But I will say, we are growing at a CAGR of more than 15% year-on-year. We expect this growth to continue in future also. Our gross profit also, as you can see, is improving significantly as well is our margin, gross margin, profit margin. In the FY '24 our gross profit margin has been 59.7%. The EBITDA and EBITDA margin also shows marked improvement in this year. Last year was 18.6%, this year is 20.2%. As I have been informing all the investors over the last few years, we are [indiscernible] of increasing our EBITDA margin up to 23%, 24% in time to come up. Coming to profit before tax, there has been a stupendous increase of 47% in profit before tax as well as 29% increase in profit after tax. Our ROE also is quite good at 19.7% with the increasing base of reserve surplus and cash position of the company. It is dipping little bit. However, I consider that our ROE is also quite good. Next. Coming to our performance. I'm glad to inform the in comparison to acquire '23, there has been a slight increase in our PAT margins. These were 12.5% last year, and now this year is 12.8%. As already informed by me before, we expect PET margins to grow between 12% to 14% in time to come up. I'm quite confident that if we keep on growing like this, we would be able to deliver on the expected lines. Next, the earning per share, also EPS, earnings per share also has increased significantly. Last year, it was INR 43 per share, now it is INR 55 per share. This is a consolidated balance sheet. You can see that our shareholder funds also is increasing significantly nowadays. Coming to next. Coming to our business outlook in the next year, our order book position is quite strong. All the 3 companies of the group, Shivpad, Sureseal or Rodney Hunt and Jash are in strong order book position. Our combined order book is INR 816 crores, of which, business outside India is INR 551 crores and within India is INR 265 crores. This INR 816 crores does not include the current order booking of Waterfront U.K. If this current order booking is close to INR 30 crores and we hope that when 80% of this is -- order book of Waterfront is added to the combined order book, we are looking at something like INR 225 crores or INR 230-odd crores as INR 35-odd crore as our combined order book, including Waterfront. Consolidated order pipeline is good. We have a lot of orders under negotiation, and we have also lot of orders which are already negotiated. As on 1st May, our orders which we have already negotiated and which we expect to receive are around INR 31 crores. And orders under negotiations are also around INR 33 crores. This does not include market big orders which are under negotiation. The reason we do not enter very big orders which are in the negotiation is a single order would be more than INR 30 crores to INR 50 crores, and it will skew what we have shown here. Even it goes ahead by a month, it would show that instead of INR 80 crores, we have got only INR 30 crores or INR 40 crores order book position. So, what we show in order pipeline is generally moderate-sized order, not large ticket orders, which are under negotiation. Next. Coming to our consolidated sales outlook for '24, '25, I'm pleased to inform you that we are expecting close to 30% growth this year and achieve a combined revenue of INR 675 crores. This, in case of Jash Engineering, we are targeting INR 460 crores, including the revenue from Shivpad. Shivpad is being merged with Jash Engineering, the merging date permission has yet not come. But when the permission comes, it would be from 1st of April, 2024. So the combined revenue of Jash Engineering along with Shivpad is projected to be INR 460 crores, that of Rodney Hunt is projected to be INR 280 crores, which also is close to 30% over the last year. And Waterfront, we expect INR 40 crores revenue. The overall revenue of the company, Waterfront is expected to be INR 50 crores. However, since we own only 80% of the company, we have shown INR 40 crores. During the year '23, '24, media have done a lot of activities as well as lot of activities under our CSR. We made a canteen with dense forest along with the water recharging bond of more than 40,000 square feet. And I'm glad to inform you that this facility has become very good for the industrial sector where we are located and has become one of the key points where all industrialist, all workers staff can come, eat and have a good time. We also were awarded the National Energy Conservation Award for our foundry in 2023. So subsequent to that, we had lot of interaction with the government. And I'm pleased to inform you that based on those interactions, the government has now in their new hydro policy, a small hydro policy, approved our technology for all the hydropower plants. This should bring to us great revenue growth in our screw generator business in future. We are doing a project with TATA Project for Nuclear Power Corporation in Chennai and TATA power has -- TATA Project has awarded us for the best quality on this project. Coming to highlights of '23, '24, we have inaugurated the new plant for making and assembling stainless steel products. This was commissioned in September '23 and came in production sometime in December '23. This year would be the year when we would be able to harvest a full potential of this plant because we will have the plant in operation for 12 months. Next. One of the trademark of Jash has been that we are investing in facility enhancements every year in each of our units. We have invested in CNC machines, in cranes at various places so that we are able to rapidly as our business expand. Next, I'm pleased to inform that a company like Jash is able to grow only because of our employees. And in view of that, we keep on building infrastructure within the campus so that our employees feel committed to the company and feel that the company cares for them. In line with this, we have invested on our sports turf at Unit 2 in which we have a turf league season also and this same turf is used for any for our Jash female league, which now has entered season 6. Next. Under our corporate social responsibility, we are investing 2% of our profit under CSR. And every year, we personally ensure that the money invested is taken care of by proper supervision by company employees. We are helping in education of weaker students, tribal students, infants and orphan students. We are also helping engineering college, BVM by building a digital lab, which would be costing more than INR 1 crore. Every quarter, we are commented to give INR 11 lakhs for this plan. One of the key parameters of our growth over the years is that every year, we aim to develop or add 2 to 3 new products. This year, we have already added -- last year, sorry, we have already added vortex mechanism with grit classifier. Next. The combined spinning and grid removal system. This is for small treatment plant, we don't have to go on civil work, and we are going to have a completely small package plant to remove grid and screening. And this is the first such plant which we have made. And we hope to further do a lot of development in this business. We also made our first set of bladder vessel, which is required for water control. Next, and also the complete new design of disc filter. This disc filter was developed by -- co-developed by Invent and Jash and the first concept this filter was made completely in India. This would be put into the screen for trials and once the trials are done, this would be then launched in the world market, but just in India and by Invent, outside India. The production is going to be done in India only. Next, you'll see a few slides showing some of the prestigious jobs which we have done throughout the year. This is a travelling band screen, which is for the nuclear power plant in Chennai. The whole markup is to show how the screen would be installed at site and to show the screen in operation to client who had come for inspection. Similarly, this is another type of screen for the same project, we have to supply 16 and 16, 32 such screens to TATA projects or NPCIL project in Chennai. What is very important is that NPCIL as well as TATA projects appreciated our quality of -- appreciated the pace at which we delivered and this has opened doors for us for future screen business in NPCIL. As you may be aware, the Government of India is focusing a lot on growing nuclear energy and huge investment is planned. So this goes well for the company since we have done this project now. In case of Reliance, Jamnagar, we have given the first 1 millimeter opening traveling band screen in India and once this is installed, Reliance aims to go for 7 further screens like this. We also made some of the biggest revenue that biggest ZV valves, zero velocity valves of 3.25 meters for NVDA project of Kalpataru in MP. This was 2.2 meter diameter valve, which we produced for Bhandup Influent Pumping Station in Mumbai. This was done for SMC infrastructure. For the coming year, I'm pleased to inform that we are inaugurating on 31st May, a new manufacturing facility in Glasgow. The hall which you are showing -- which you are seeing presently as an empty hall, all the machineries have reached now in U.K. and is in the -- on the way from port to facility and by 31st May, most of this equipment would be dissolved and this slide would be commissioned in first week of June. As I've said, that we give a lot of attention to our employees, we are setting up along with the tuft cricket ground, a restaurant which would be run under lease where our staff and employees can eat at a discount and the lease rent would be used for various employee engagement activities. This is not a business activity for us. We are looking forward to the lease rent which can not only help our people with the employee engagement activities, but also help our staff to relax and enjoy in the evening or help the company in taking the guest visiting for lunch or dinner. The Shivpad manufacturing plant is at an advanced stage now. We have come over the ground and the installation of PBS started, we expect this plant to be commissioned in December '24. Most of the equipment required in the plant has been ordered and this will start arriving from September, October, so that we can commission the land in December '24. As I said before, this year, we have achieved 60% revenue outside India. We are going fast in export market and have already run short of manufacturing facility in SEZ. We are now building -- planning to build next year one more plant in SEZ so as to increase the capacity of Unit 4, we have already been allotted the land just in front of Unit 4. And once the documentation and everything is over, we will -- we plan to start construction by end of this year and have the plan ready in '25, '26. In the end, I would like to inform that we have had overall improvement at every parameter. Our revenue has grown by 26%, our profit after tax has grown by 29% and our mainly for share has grown by 28%. However, what is most important is that whatever we have promised, we have achieved. Not only we have achieved, but we have exceeded on the guidance given by us. Also, what is very important is that Rodney Hunt is finally in a position to deliver as what I had projected many years back, I had always maintained that Rodney Hunt would be the main savior for Jash in the long term. And today, it is coming true. Due to improvement in Rodney Hunt, we have been able to give consolidated PAT margins of 12.8% in this year itself. As Rodney Hunt improves further, this year we did $26.5 million revenue in Rodney Hunt. Next year, we are projecting $35 million revenue in Rodney Hunt. We already have order book of $43 million in Rodney Hunt. So it means that next year also Rodney Hunt would grow by more than 30%. Hence, improving profitability of Rodney Hunt will lead to improving consolidated PAT margins for the company. And in years to come, I'm quite confident that we are investment in companies like Waterfront or new plants in Chennai or new markets within U.S.A., the confidence of the U.S. plant to go with us, et cetera, et cetera, as well as my very strong order book position of more than INR 815 crores would enable us to easily achieve the projected revenue of INR 675 crores while maintaining the PAT margins in the range of 12% to 14%. Sometime back, I'd also informed that we have new drivers for growth. These drivers are new markets and countries, which we aim to enter, new products which we are launching every year and a very strong order pipeline on account of environmental and weather disasters taking place worldwide and the rising sea levels, which is a big threat to many countries. All these should enable us to grow fast in the coming years and we aim to now double our revenue to over INR 1,000 crores by financial year '28, that is in 4 years' time. We are quite confident about achieving this and also, we are confident that we will keep on improving on the margins. Thank you.

[Operator Instructions] The first question is from Mr. Navin.

Pratik sir, congratulations on very good set of numbers. Sir, historically, we have been guiding for around 15% to 20%. For the first time, we are guiding for more than 30% revenue growth. So what is giving this confidence and what do you see as a risk to this growth number?

Navin, INR 817 crores order book is already in hand. So even if I do INR 675 crores, I will be making many clients unhappy because I will not be able to deliver to them. So ideally, I would say the company should be targeting for more than INR 700 crores this year. I would say, conservatively, INR 675 crores is targeted. This is conservative according to me. If everything goes right now, see, most of the clients, we are dependent on EPC contractor. We may produce and he may not take delivery. So in spite of having orders, we will not achieve the desired targeted revenue, but the difference between what we have today, that is INR 815 plus, say, around INR 20 crores of Waterfront and what we are projecting, INR 675, it's so great. The difference is close to INR 150 crores. So the possibility of not achieving INR 675 crores, I would say, is very rare and can happen only if something goes wrong worldwide, like a war or something, some other global crises, et cetera.

Sir, my second question is, there is now a lot of talk of reuse of water, especially in India, like cities in Bangalore, which went through a bad phase this summer. So how are we equipped to cater to this demand? And how is this demand? Outside India also, is there a market for the product like this?

In Singapore, we have water reclamation project, I have already informed we are doing more than INR 100 crores business. That is a water-reclamation project where [seawater] is converted into drinking water. Bangalore is the first city. You will see over the years many cities joining Bangalore in the same situation. Reuse is going to become a critical parameter for India and many cities of India in the next 3 to 4 years. You will be surprised at the type of crises many cities in India would be facing and all of us would have to think of reuse putting aside past dogmas of using waste water for process or drinking.

Do we have equipments catering to this?

The Invent product line -- the existing product line also caters to that, but the Invent product line specifically caters to that. So I believe that the reuse business, I have been projecting all the time that the market for Reuse will become very exciting by 2027, '28 -- for '28, '29. By that time, we would be well established with these products, and we aim to be a market leader for reuse business.

The next question is from Mr. [indiscernible].

Yes. Can you hear me?

Yes.

Yes. Congratulations, Pratik bhai. I think the guidance is superlative and I'm sure we will achieve it. I have basically 3 questions, Pratik bhai, one is regarding U.K. If I remember last quarter, I think you had a business meeting, the U.K. team was here. So can you give us some brief about how the marketing momentum in U.K. we are trying to build id because they had their own share of problems and we have gone through now I'm sure the whole reorganization part?

So in U.K., we started projecting 4x growth in 4 years. So something like this year, they have done some GBP 3 million, and we expect it to do GBP 12 million in 4 years. Well, that is old news. Now we are at the verge of resetting their targets and instead of 4 times in 4 years, we are talking of 5x to 6x in 4 years.

Okay. So 5x to 6x is around INR 200-odd crores in 4 years?

Yes. We are planning GBP 18 million to GBP 20 million, it's like INR 200 crores in 4 years time.

Sure, sure.

So from INR 30 crores to INR 35 crores today.

Yes, yes. So around INR 250 crores 3, 4 years back to around INR 1,000 crores 3, 4 years from now. So that's it, 4x, 5x jump Jash will have in a matter of 6, 7 years. If I remember, the first time I met you in 2019, we were actually doing a INR 250 crores, INR 270 crores, if you remember. So it's a big jump. And in the process, we have built manufacturing assets outside India, we have created financial assets outside India. So for INR 1,000 crores, truly multinational, multi-locational company, how do you think the organization will look like? Like what is that you're going to have in Indore, obviously, the management team is in Indore, but apart from management team, both in terms of the engineering skill, design, engineering pool, manufacturing competencies in non-Indore location. So how do you think INR 1,000 crores out of this INR 600 crores, INR 700 crores coming outside India will look very different than the Jash we knew 5 years back, right? So how is it going to look like?

See, we are not growing suddenly. We are growing gradually year-on-year. We are gradually adding manufacturing facility. We're also gradually complementing our team by recruiting people. As the company grows and becomes more profitable, our capacity to pay and capacity to address talent improves. And so I do not see any big issue. Yes, manpower is a problem in India today. But it is also due to COVID, but I believe that from next year onwards, all the new batches coming out from engineering colleges would again have good people and the talent pool available will improve. So we do not expect any big issue in manpower or capacity planning, et cetera, in the coming years to be an irritant to our achieving INR 100 crores. Market is not a problem. The problem is only going to be the talent and capacity. Capacity needs to be built because we have money. But talent is something we have to attract, and we are doing everything to do that. [indiscernible] restaurant, employee engagement activities, good campuses are all part of that.

Yes, yes. And talent has been our core focus area for such long every time I talk to you. So is there something like you're looking at some place like Bangalore or where talent is in abundance to have a center of excellence or something like that?

No. Unfortunately for the type of the business we have, the talent has to be where the plants are.

Yes, sure. My last question, Pratik bhai is, we have been basically against valves, screens company and you have in this presentation, shown a lot of products which are very different. So how much do you think apart from gates, valves and screens which is 90% of our product line today, how the product mix could change and how is that going to impact the profitability?

10% to 15% new products will conclude once they get stabilized. See, for the new product to launch is very easy. To do new -- products to capture the market and become a dominant player takes time, 4 years, 5 years. So all these products which we are launching in years to come become a dominant product on their own and we hope that all these new products will be able to get as close to 10% to 15% of additional revenue in next 4 years' time.

And you are going to launch it across the globe, both in the U.K. and U.S.?

Some of the products, yes. Not the Invent product because we have demanded only for Indian. Invent will be buying from us and selling it themselves globally.

The next question is from Mr. Rahul.

Yes. Sir, thank you for a comprehensive presentation. My name is Rahul Jain. I am from JM Financial. So my first question will be, so your current capacity has a potential of doing around INR 800 crores of turnover. So you've already guided for INR 1,000 crores of turnover by FY '28, right? So how do you plan to achieve this level of revenue on a current manufacturing base, especially the growth for FY '26, '27 will be crucial on your current assets?

So Rahul, in this year, in December, one plant will come online in Chennai. And in May, a plant will come online in U.K., which means, I have 2 plants being added this year and one plant which will be added next year sometime in October, November. So with these 3 plants, we will exceed INR 1,000 crore manufacturing capability.

Sir, the plant you mentioned, which will be coming in next year, October, November, which one is that?

The SEZ plant. The extension of Unit 4 in special export zone, Indore.

Got it. My next question is, sir, who is your competition in India and overseas, if you can just mention and highlight few of them?

Rahul, there are so many products and each product has different competitors. So for gates -- by the way, gates have more than 70% market share in India. So there are very small companies turnover-wise who are our completers. However, my request to you would be because of the time constraint that we have our frequently asked questions which is on our website also and if you go there, you will get all these details which you are seeking, like who are the competitors for various products in India, outside India, what is the potential revenue from different products, et cetera, et cetera. Everything is in that FAQ. So that would help you to know more about the company also and also, at the same time, answer your question.

Sir, my last question is, what is the current capacity utilization?

Rahul, we are not a mass production company. We are a screen manufacturing company. What it means is, there -- the same plant can deliver much more provided, I can produce and someone will buy. If you see our revenue quarter-by-quarter. Generally, in the first quarter, revenue is 10%; in the first half, the revenue is 30% totally first half; in the third quarter, the revenue is 60% and in the last quarter, the revenue is 100%. So 10, 20, 30, 40 quarter-by-quarter, this is how we grow. Now, I would love that every quarter have 40%, then my same plant would be having capacity of 160% instead of 100% today. So by just adding people, I can increase the capacity of the plant, but if no one is going to take the delivery in quarter one, what would I do with all those people. So in case of companies like us in discrete manufacturing, you cannot just say what is the capacity. The capacity is dependent on my utilizing all the 3 shifts throughout the year. Is it possible? Yes, it is possible. Can I do it? No, I cannot do it because the EPC contractors and everyone, the whole system is geared for taking delivery in the second half of the year.

Got it. What are your CapEx plan for FY '25, '26? In terms of amount, how much you will be investing this next 2 years?

We would be investing every year somewhere between INR 20 crores to INR 25 crores. So every year, we will be investing INR 20 crores to INR 25 crore to add some facility. And this will keep on happening for the next 2 to 3 years.

[Operator Instructions] The next question is from Mr. [indiscernible].

Congratulations on a great performance. I have 2 questions. The first question is, we have grown really well in the Southeast Asia market. So just wanted to know what is -- what do you think is the outlook going ahead? And how does the order book look in accordance with Southeast Asia?

Yes, we see great -- more than INR 100 crores orders for Southeast Asia.

And do we envisage more orders coming? Because you had spoken about Singapore kind of having...

So we are planning to enter Vietnam. Last month, we got $1 million order. I had just completed a tour of Thailand, Singapore and Indonesia. We are entering Indonesia, Vietnam, Laos and Cambodia this year. And I expect that these markets would also open up for me. In Thailand, this year, we are projecting revenue between $2 million to $3 million. So yes, we are now going and becoming aggressive, but since the capacity buildup is taking place, we are becoming aggressive and trying to enter more and more new markets in Southeast Asia.

Okay. Understood, sir. My last question. You spoke about the disc filter. So just wanted to understand with the total invent portfolio that we will have or we will develop, what kind of market are we targeting if that's possible to give a number in India, particularly?

I would say, if we do everything right, we are looking at anywhere between INR 75 crores to INR 125 crores.

Okay, understood. And when we do develop some products going ahead with Invent, will we be manufacturing some of their products for them to sell outside India, like you mentioned?

We are already doing it. This year, our export to Invent has been close to INR 9 crores, INR 10 crores.

The next question is from Mr. [indiscernible].

Just wanted to understand that you are giving the guidance on revenue for approximately 30%, right, for the FY '25?

Yes.

But then, coming back to the fact that for FY '28, you are giving a guidance of INR 1,000 crores. Does it mean in any way that we are looking at a slowdown somewhere in '26, '27 because if that 30% has to continued in terms of revenue growth, we would be talking more than INR 1,000 crores by FY '28. So just wanted to get a sense on that parameter?

You cannot grow 30% every year. So next year -- this year, I'm growing 30%, doesn't mean that every year, I'm going to grow 30%. However, we are quite confident of maintaining growth to achieve INR 1,000 crores in 4 years' time. It is also possible we might do it in 3 years time, but it is better to be conservative in your guidance than failed in eyes of investors.

So is there anything specific that is leading to a 30% growth in FY '25?

Order book. Order book, Waterfront addition, so many things.

So you don't see the continuity of the same in FY '26 and '27. That's what I wanted to understand?

I did not say that. What I said was, we expect to reach INR 1,000 crores by '28, but it could also happen in '27 because our order book is strong. But if I could predict the world 3 years down the line, I would be a genius. I cannot predict it. I do not know what may happen, what may not happen. So that is why we give long-term projection. But in the short term, I will give year by year growth projection.

The next question is from Mr. [indiscernible] Patel.

Yes. So I have 2 questions, sir. The first one is regarding the [indiscernible] industry side. So for example, sir, referring to your...

Can you be little louder?

Yes, yes. So is it okay? Yes. So sir, I was saying referring to your investor FAQ, it is given that total market for our equipment is around INR 800 crores to INR 900 crores in India right now and probably 1,500 -- INR 14,000 crore to INR 15,000 crores ex India. Sir, what I'm trying to understand is like is the market really small because of the given current market size of the year, wastewater and the water sector as a whole and the increase in CapEx in the water sector itself. So what I wanted is more clarity on what will be the total water and wastewater equipment market in India? And out of that, what is our addressable market and the growth rate that you are expecting in it?

So INR 800 crores to INR 900 crores was our addressable market in India. Now it can increase if government increases the spending on water wastewater. My belief is that we will have built enough roads, we will have built enough Vande Bharat trains and train stations by '27, '28. And one fine day, the government would have to really, really focus on investing in water as well as wastewater. Investment of water is going on, Jal Se Nal, et cetera, et cetera, these 2 should be taken down by '27, '28. So I believe we are at 30% of the total capacity required in India today, 30% in wastewater treatment, 70% is still to be invested. So the day state governments, cities, center decide that now we have to focus on this, the market size will be -- will increase many folds, but the projection of INR 700 crores, INR 800 crores, which is given in my effect is based on the way the market is evolving today, not for future.

Okay, sir. I get your point. But sir, now like -- I mean, there are a lot of equipment used in water and wastewater, like for one of that is membranes, right? So what I'm trying to understand is...

We are not doing membranes.

Yes, yes. I get it. But sir, what I'm trying to understand, out of the total equipment, what percentage of the equipment are we delayed in?

Close to 40%, 50%.

Okay. Okay. And sir, I also wanted to get your view on how was the -- I mean, if you look at, let's say, 5 years back, how was the CapEx going on in water? And how do you see it now, right? So do you see more projects coming in now, do you see...

It has increased at least five folds and still it is very low for the need of the nation.

Okay. And sir, one last question was, sir, I think our gates goes in dams also, right, if I'm not wrong?

Very few. We don't focus on dam gates in India. We do that in America, but we don't focus that in India because the projects never get completed in India.

Okay, okay. And sir, what will be the replacement cycle for our equipments?

25 years to 35 years.

The next question is from Envision Capital.

This is [indiscernible] from Envision Capital. Sir, 2, 3 questions, actually more like clarifications. You mentioned CapEx of INR 20 crores, INR 25 crores every year. Will this number be slightly higher this year because there will also be incremental investment will have to do in Waterfront?

In Waterfront, the investment is already done.

We were supposed to make some investments to expand their capacity, we were taking some share...

Done. It is very less. And the machinery has already been dispatched from India, Indore. So that is our room to commission the plant on 31st May. So the investment is not critical. And fortunately, we also got 75,000 grants from [indiscernible] enterprise, and that will take care of more than 30% of our investments. Cash grant, we have already received.

Okay, understood. And what is the kind of margins Waterfront is doing currently?

The margins at Waterfront are not great because the revenue is not great. But we expect margin profile of Waterfront to improve over the years and come to the same level as Jash and Rodney Hunt in time to come. I would say, now the margins are close to 3%, 4% and year-on-year, we expect 3%, 4% growth so that in next 2 to 3 years' time, they have more than 10% margins.

This 3%, 4% you're saying, is at PAT level?

PAT level.

PAT level, understood. You mentioning -- in the presentation it says that the Waterfront order book currently is INR 30 crore. So are we expecting very significant inflows this year because we're talking of revenues going up 4x, 5x in 4, 5 years. So...

Already, we have -- every day, we are getting big orders.

Okay. And like U.S., will this also require bonding giving any kind of guarantee or anything like that, which is limiting our growth in Rodney Hunt a few years back? Will there be similar -- are there similar conditions in U.K. or Waterfront?

It would not be a problem because Waterfront is already a profitable company. Rodney Hunt was not profitable company, that is why it has problems.

Okay. And there was some shares that we had of Jash Engineering that we were to issue the Waterfront. Will that -- is there a time line defined to that?

It was done in April 2024.

Okay, I will check that.

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

There is one more in person. If required, I can give that answer so that everyone is satisfied. I think Navin has raised his hand.

Sir, we were expecting a large order from U.S. Any update on the same?

So we are, as of now, working on 3 large orders; one in Hong Kong, one in Canada, one in America. All the 3 orders put together, we are talking of more than $50 million, $60 million. Since these are large orders, they're taking time. What is our possibility of getting these orders? I would say, we have more than 75% chance of getting all the orders. However, when will we get all these orders? I would say, we'll need anywhere from 2 to 4 months' time.

Got it, sir. And final question is regarding tax rate. If you could comment what would be the tax rate going forward because we have seen a significant jump this year?

Yes, this year only we have 100% exemption [indiscernible]. After this, we have 50% of the tax exemption. So at present, our tax [indiscernible] but later on, it's around 24%, 25% and in U.S.A also, we have already [indiscernible]. So next year onwards, 100% tax [indiscernible]. So it will be 25% plus approx from next year.

[Veena] has put some question on chat box. Can you elaborate sustainable EBITDA margin? Veena, are you there online?

So going ahead, what would be the drivers or the margins to go to the level of 25% plus?

I didn't say 25% plus. I said between 23% to 24%, 25%. See, we are in discrete manufacturing. What does discrete manufacturing mean is, we have higher overheads until a certain level of revenue is not reached. At Rodney Hunt, that higher overhead used to put me in losses. Now that we have reached a certain level of revenue, we have been able to improve on our profitability. The same team would be there, the CFO, the Vice President Engineering, the President, the Head of Manufacturing, they would be there, but revenue will still be going up. The addition of people would be more on the lower salary level. And that is why as the revenue starts growing for Rodney Hunt, for Jash, for Shivpad, for Waterfront, our EBITDA margins would start improving if we have the same policy for taking orders. So we don't go very aggressively try to take every order, et cetera, et cetera there. You will see that as the revenue increases for a given company, its EBITDA margin will improve because fixed costs would be covered faster. On the working capital cycle, what I can do is, send a small PowerPoint presentation explaining that our working capital cycle is not more. But in a minute, if you want to understand, I can explain that when 40% of your revenue is done on the last quarter, then we can also send this or we can load it on our website or in the FAQ to explain that really [sitting] the working capital cycle is not high. But for the general guidance, I can tell you that 40% of your revenue is in quarter 4, then it would always look like our working capital cycle is more. But if you average it out throughout the 4 quarters, then you will realize that our working capital cycle is not more than 100 or 110 days. This you can load on the website or you can also add in the frequently asked questions so that you can get an idea.

That was the last question, sir.

Thank you, everyone. Thank you for patiently listening me out. If you have any questions, you can write to me or to Dharmendra. I would be embarking on a 20-day tour, but in my absence, Dharmendra is there and he would reply to all the questions which you have. Once again, I assure you that we are steadfast in our result to meet whatever we tell or project or guide. And so do not expect any great surprise if we do whatever we have told because we have a history of achieving whatever we have said. With that, I would like to bring this meeting to an end. Thank you, everyone.

Thank you.