Jash Engineering Limited ($JASH)

Good evening, everyone. I am Siddesh Chawan from Ernst & Young, and I would like to welcome you to Jash Engineering Q4 FY '26 Earnings Conference Call. [Operator Instructions] Please note that this 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. Now I would like to draw your attention to 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 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. Thanks for attending this call of Jash Engineering Limited. We will present the figures for the last financial year. We have already uploaded on the stock exchange this presentation, which we are going to run now. I would like to start with a brief overview and the message regarding the year on record. As you can see, we have done consolidated income of INR 757 crores over last year income of INR 746 crores. It is according to me, quite disappointing as far as growth in revenue is concerned. However, we were helpless in this situation because it was on account of -- in the beginning, it was on account of the tariff, which was increased in January to 25% and then in June to 50%. And that really affected our thinking and strategy in U.S. because we are not sure as to where these tariff increases will go and stop. And as a result of that, we had slowed down on production for U.S. orders until some clarity had come. Later on in the year, there was this war in Middle East, which ensured that no delivery of projects done in Middle East could be done. It not only affected delivery in Middle East, but it also affected dispatches to Far East as well as Southeast Asia because of sudden unavailability of ships and containers. As a result of both of these two, our growth was affected last year. However, the very good point was that in the domestic business, we did excellently well. We had a growth of 18% in domestic business. And this somehow met the shortfall of close to INR 50 crores, INR 60 crores, which we had in the export business. And the point which I would like to make here is that this domestic business was done at relatively good profitability because of which our stand-alone profit after tax has fallen only by 1%. That is from 14.38% to 13.38%, which shows that this company is not only reliant on export business, but it is also the domestic business, which is so strong that the drop in PAT is not more in spite of a lot of export business, which has gone away and in spite of growth, which was not there. To sum it up, I would say the U.S. tariff situation is quite stable now. We are not worried. I would like to reinforce once again, we are not worried about the percentage of tariff. We are worried about the variation in the percentage of tariff. If it is 50%, we are happy with that 50%. However, it should continue at that. Variation results into our estimating at lower tariff and then when the higher tariff comes into play, it results into losses for us. So we are not affected by tariff. If the tariff situation remains stable, we are quite okay with our business in U.S. Similarly, we hope that the Middle East war is coming to an end soon. And if all this works out as expected, then we are quite optimistic about FY income. Our order book is at INR 899 crores as on 1st May. We have already achieved revenue of around INR 40 crores, INR 45 crores till now. So looking to that, out of INR 940 crores or INR 950 crores to project INR 875 crores for the next year -- for the current year revenue is not something which is highly optimistic. It is possible. And if we are able to do INR 875 crores, then our profit guidance would be in the range of 12% to 13%. Here also, I'm conservative because the raw material prices are increasing. And so I would not like to be very optimistic on the profit guidance. But 12% to 13% is quite conservative and is easily possible. This slide shows the way we have been growing over the years. This year, we are at INR 757 crores. I said next year, we are projecting growing to INR 875 crores. However, our 5-year plan is to double the revenue from INR 757 crores to upwards of INR 1,500 crores. Coming to our financial snapshot of the year. Our total revenue has only grown by 1%. The gross profit margin has grown also marginally. The reason for that growth was our depreciation of rupee to a great extent. On the EBITDA level, because there has been no growth, it has come down. Our profit before tax and profit after tax has also come down, and that is one of the reason was no growth in the year. Whenever there is growth lesser than 3% or 4%, in a company like us, overheads always grow 7% to 10% annually. And when the growth is less than 7% to 10%, you will see that or observe that the profit after tax and before tax comes down. And that is what has happened with us this year. On the stand-alone basis, you can see that in the financial year '26, total revenue of Jash Engineering has come down. However, this is because of export business going down. The domestic business, as I said earlier, has gone up by 18% year-on-year, and that has been a very creditable performance on the domestic business front. And that also was done with good margin of profit. The biggest hit was at Rodney Hunt. We -- in the few months -- first few months, we were not clear what to do. However, finally, we had gone ahead and started executing projects. And from December -- October, November, December, we have started taking orders also in America. As a result of that, we have a quite healthy order book position now. And whatever shortfall we had met last year, we will more than make up in this year. The profit has also come down because the revenue has come down. However, the same we hope to reverse in this year. In case of Waterfront, we have had a minor increase in revenue and reduction in losses. However, Waterfront also this year, as you can see in the slides to come, we are expecting to double the revenue. So all the 3 companies, Rodney Hunt, Jash and Waterfront, which are the major revenue-generating companies, all the 3 companies in this financial year -- current financial year will show enhanced growth as well as outstanding profit after tax position. As can be seen about revenue composition, the revenue composition is quite heavy on the water control gates side, which is still our biggest business. Screens and valves are #2 and #3 and all balance equipment and hydropower and pumping, et cetera, is around 8%. This product contribution is quite balanced, I would say, even though the gates are dominant, but this is quite balanced and this ensures that we are not overdependent on gates to a great extent. Our market share worldwide also is good. We have 44% business in India, 44.5% and all around 55 and so percent is out of India. This market share keeps on varying, but the good part is that business outside India is more than business in India. When we come to order book, as on 1st May, our order book is INR 899 crores. And this, along with what we have already achieved till 1st May, will ensure that the projected target of INR 875 crores can easily be met. This shows the breakup of consolidated order book of INR 899 crores. Our orders outside India in INR 899 crores is INR 627 crores. Orders within India is INR 272 crores. And this year, we don't see any turmoil as such. And so it should be easier for us to execute and achieve INR 875 crore order book. All the companies are doing good as far as order book is concerned. You can see Rodney Hunt is quite strong. The order book is close to $38 million, $39 million. The Mahr Maschinenbau also is strong. Waterfront order book as of now is more than the turnover, nearly $3 million -- EUR 3 million is the order book, which was what we had achieved this year as the revenue. Jash Process Equipment also WesTech, which is -- earlier was WesTech is at INR 32 crores. So I would say all the performing companies of the group have stable and good order book position as of date. Our order pipeline also is good. We have already negotiated orders worth INR 28 crores and further orders worth INR 80 crores are under negotiation, which we expect to negotiate within next few weeks. As pointed out before, we have kept a sales -- consolidated sales projection of INR 875 crores. I told before, we have INR 899 crores order in hand and around INR 45 crores worth of billing we have already done. Hence, achieving INR 875 should not be a problem. Waterfront Fluid Controls at INR 60 crores would be close to 75% to 85% of what we achieved last year. Same in case of Rodney Hunt, it is more than 25% what we achieved last year. We have been conservative on showing the growth at Jash at INR 530 crores, but that also is easily possible. So I'm quite optimistic about meeting the projections given by us and achieving the type of PAT percentage, which we have given in the guidance. This shows quarter-wise and financial year-wise income statement. As you can see, our last quarter, FY '26 Q4 was quite outstanding. One of the reasons, as I said, was also that we could improve our gross margin because of high gain in foreign currency because of what we had estimated during quoting and when we billed what rate at which we billed, there was a lot of gain. This is the consolidated balance sheet. I'm glad to inform that the acquisition of Penstocks (UK) is finally completed in early April. We have now taken over the company, and we would merge the operation of Penstocks (UK) with Waterfront Fluid Controls. We are putting in the right team in place at both the companies to ensure that the company's combined revenue grows to close to INR 125 crores to INR 135 crores in 3 to 4 years' time. Some of the new products which we made in this year were the Dual Leaf Gate, which is shown here as well as the big isolation gate for Bombay project. We also did quite a few good projects like the Blanchard Hydroelectric Station for Minnesota Power Company in U.S. Also for Bangkhen treatment plant, the traveling band screens were supplied by us and the 235-kilowatt Archimedean screw turbines to be supplied near Pune in Maharashtra. One of the most prestigious job, which we are currently doing is the project in Chennai, which is a desalination plant done by VA Tech. We are supplying more than INR 35 crores worth of equipment in this project. Similarly, most of the Bombay projects we are doing where we supplied large-sized Knife Gate Valve for the Ghatkopar treatment plant. And same we are doing in Saudi Arabia for the Al Haer sewage treatment plant. We are supplying our gate screens, Knife Gate Valves and all the products for this project also. With this, I would like to bring an end to my presentation and take all the questions that you have.

[Operator Instructions] We take first question from Ankur Agarwal.

Hello, sir. Am I audible?

Yes.

Thank you for being so candid about saying that this was a tough year. So sir, my first question is, in PPT, we are saying India business was 44.5% of last year. So that comes to INR 327-odd crores. And in FY -- next year, we are expecting INR 320-odd crores. So like are we expecting a flat domestic side business for the coming year?

See, we are focusing more on export. We are not saying that we will not do, we already have good order book position. But when we are giving the projections, we are balancing out export business and domestic business. So as if you had seen in the last years also, we had enough opportunity in the domestic front. We choose the business which we want to do in domestic front. We would like to do business with higher potential of profit. And so we have presently balanced out. However, while during the execution in the year, if we see that there has been some drop on the export front, then we will take over more and more domestic business and execute them.

Actually, I was asking this, sir, because you said domestic was a better margin for this year. So what is our economics?

Domestic is generally better margin because we do not take orders with low margin in the domestic front. However, the export margin is more than domestic margin. It is proven. What I wanted to reinforce in my statement earlier was that our profitability will not come down drastically if we are doing more domestic jobs.

Got it, sir. Sir, next question is on this -- we update this monthly volume data, monthly order book data on BSE. So I was looking at order book, it was INR 899 crores at the end of April, and it was INR 827 crores at the end of March. So like INR 72-odd crores of increase in order book. And we also said that order book, we got INR 72-odd crores new order this year. So does that mean April was like 0 revenue booked? Or am I reading it wrong, sir?

No, I don't think we have mentioned the number of -- the volume of order booked in that letter in April also.

Yes, sir, you mentioned INR 72-odd crores increase in order. And our total order book also increased by INR 72-odd crores. So if I calculate revenue from those numbers, it is like coming at very negligible revenue booked in April. Am I reading it wrong?

Yes, revenue booked in April would be very low, yes.

Because Q1 is like generally the lowest quarter for us.

Yes, yes. It is not no revenue. There is already INR 36 crores is overflow, means INR 36 crores worth of material was dispatched in March, but was not considered under revenue recognition. This will come in April or first week of -- first or second week of May, if it is going to America plus whatever was booked in India.

Sure, sir. And sir, on this Q4 gross margins have improved quite a lot. So are you saying this is only because of the Forex improvement? Or are we seeing some better pricing at all?

Forex improvement leads to better pricing. Suppose I had taken a $10,000 job 6 months back. At that time, I had estimated dollar and rupee rate at INR 82. When I'm dispatching it, if I'm realizing INR 92 at the invoice level, then this INR 10 is going into margin improvement.

So Q4 margins can we consider sustained or like it will...

Sustain. Because if the dollar is not coming down, then it is sustainable. But another reason for Q4 margin also and that is increased revenue. Suppose the dollar value has remained same, but the revenue has come down, then you will see margin also coming down because overhead in Q1 remains same as Q2, Q3, Q4.

Asking about -- sorry, sir, asking about gross margins only. Gross margins only have improved.

Gross margins...

[ Majorly ] for foreign exchange.

Yes, because of foreign exchange.

So for coming year, what kind of gross margin can we expect?

See, we are -- the PAT margins, I have said would be between 12% to 13%. Gross margin would be between 50% to 55%.

Sure, sir. And last question would be on your shareholding pattern, sir. I'm seeing that quarterly, there is some variation, some additions, sometimes reduction. So maybe I wanted any color on that front, sir?

As a shareholder, I have only purchased, we have never sold. So if you are seeing some variation, it would be because of our earlier -- one of the earlier promoters who are no more promoters, Amin family, if they are selling, you must be seeing variation. Otherwise, in the Patel family, which is the promoters of the company, there is no variation.

Only last quarter, there is a warrant which is due on the February, I think which is exercise. So promoter holding will be increased...

We'll take the next question from Kunal Mehta from InCred.

Sir, my first question will be the WesTech acquisition. I think we have renamed it Jash Process Equipment Private Limited. And this will not be a part of stand-alone. Can you just explain me how the structure? Because I think Shivpad, we have merged with the Jash Engineering Limited. And I think Shivpad also is more process equipment and WesTech also has process equipment. So what are the products overlap there? So can you just explain this to me?

So first of all, WesTech, we have -- has contributed a very small percentage to the revenue because the acquisition was done sometime in the end of February, mid-January or something. So the only whatever was executed in last 2 months has come. Two, between Shivpad and WesTech, the major difference is Shivpad is process equipment for municipal business. And WesTech is process equipment for industrial, paper and pulp, metal and minerals, alumina, et cetera. So they are completely different type of businesses, though the equipment name may be same, but the design of equipment is much sturdier and stronger in view of the high density in metal, mineral or paper and pulp.

Okay. So you are saying that the product might be same, but design would be different in both?

Exactly.

The margins would be eventually higher in the industrial one, in Shivpad, you are saying, whereas municipal...

I would not talk about margin today. We have acquired the company now. We are going through the process of standardization as well as improvement in strategic costing, manufacturing, vendoring. So once all these things are done, then only we'll have a better grip over margins at WesTech.

Okay. And sir, can you -- would you be having like the breakup in terms of how much have we improved in terms of volume versus value for this year, value as in the dollar appreciation benefit versus how much volume appreciation benefit have we got versus...

We can share this data. Can you please put this on an e-mail to us, to Mr. Dharmendra Jain, we can share this.

And just one last question on the product end. Sir, we have acquired Mahr quite a long time back. We are not seeing much improvement in the order booking. The order booking is sub INR 20 crores only. And that is one of the product recognized globally. So are we not pushing hard? How are we seeing the demand in screens? I think valves, we have improved in terms of mix from 10%, 11% to 13%, but screens have almost remained the same. So any take on that?

So Mahr screens are manufactured today everywhere. It is not only produced in Mahr. So whatever is built through Mahr is reflecting in their revenue. However, what is built from Jash Engineering does not reflect in Mahr revenue. And now we have also got orders in U.K. for screens. And those orders are also not going to reflect in Mahr revenue because they will do only the designing and manufacturing would be done wherever we have taken the order.

Okay. So the INR 60 crores, I think waterfront also has screens in it?

Yes.

Okay. Okay. And sir, Southeast Asia, you had mentioned, I think some Vietnam order dispatch was not done. I think last quarter, you had mentioned.

Now it is done.

So is the Far East Asia problem kind of solved because from 16% mix, it's gone to 10%. Do we see that improving back?

See, I have been informing on and again that we are in projects type of business. If certain year project in certain countries does not come, we cannot increase revenue every year. So the mix would always change. Mix of product and mix of markets will always change depending upon which projects are coming where.

But sir, you have also mentioned that there has been rising sea level problems in Indonesia. Also Singapore sea level is rising. We have filled some tender. So any view on how far is because you're saying because of rising sea level, how will water control gates, valves, how will they play a role? And how can Jash increase their percentage there?

So again, in this, let me give you a caution. Rising sea level is projected at 2100 year, right? So each country, depending upon its financial position has started planning and executing projects. The first off the bench has been Hong Kong. We are doing a Yuen Long Barrage project, which is around INR 35 crores plus other miscellaneous small gates and valve for the same project. So totaling to around INR 40 crores. This is the first project which is off the mark. It is one of the most prestigious projects now for Hong Kong. In the month of June, next month, 14 people from Hong Kong, including 6 video crew members are coming at our plant to video and photograph and inspect and test part of that job. So they have already started. I think in Singapore, where we have quoted more than $900 million worth of projects, Singapore could start tendering out. Today, it is at design stage with the consultants. They will start tendering out from '28 onwards. So every country, depending upon what is their cash flow situation or fiscal situation, will take up these projects and execute it over the next 20, 30 years.

Okay. And sir, what is the status on the Rodney Hunt new plant that we are developing?

I was in America a week back. The problem with Rodney Hunt new plant is the cost has gone up tremendously. We had called various offers. We are meeting with them. We have asked them to revise based on whatever was our understanding between what we need and what they thought we need. And so once they give the final offer, then we have to take a call when to go ahead with it. However, Rodney Hunt in Houston, the new plant in Houston as well as the plant in Saudi Arabia, the target is now to have it commissioned before December '27.

We'll take next question from Samartha.

Congratulations, Pratik, sir, to you and the team for a very resilient year. So Pratik, sir, just a couple of questions. CapEx question is already answered. Just wanted to understand that we have done a lot of acquisitions, sir, very recently. So for the next 2, 3 years, are we looking at more acquisitions or we would be consolidating the business as it is? So what -- some color on that?

First of all, the acquisition which we have done have not been too stressful financially. They were not big companies. So if another opportunity comes, we would be open to it based on how good the opportunity is and whether we can scale up with that.

Understood, sir. And sir, this INR 1,500 crore guidance, so is it fair to assume that with the kind of capability that we have built in, we can achieve this guidance and this is a conservative number and the PAT margins would be somewhere around 13%, 14% as we pursue this. Fair to assume that?

It is fair to assume that.

Okay, sir. And sir, on the...

Current manufacturing capacities, I would say if we do on 3-shift basis, we can achieve INR 1,200 crores. When the Rodney Hunt plant in Houston as well as in Saudi Arabia is online and working well, I think in 5 years' time, we will have capacity to produce more than INR 1,500 crores. Then the marketing has to rise up and bring the business, but it is possible.

Got it, sir. And sir, one final question. So with the kind of acquisitions we have done and so many companies are now part of us. So anything on the leadership front? Are we hiring more people or something of that sort or we are able to manage the operations? So some color on that, sir?

We are able to manage the operations. As I said, in case of U.K., we have 2 companies now, which will be merged into one. So once it is merged into one, we will not need the top management team to be replicated. Same in America with Rodney Hunt, we are already well set. In India, we have acquired a company which already had a complete management team in place. So we are not stressed as far as inducting people to manage all these companies is concerned. And you would have also observed that what we are trying to do is reduce the number of subsidiaries by merging companies of similar businesses. So ultimately, we will not have too many subsidiaries.

Understood, sir. And sir, because of this war, et cetera, so are we seeing any slowdown externally, I mean, in trade -- in certain countries like Asian countries. So are we seeing any kind of slowdown in the order giving? Or it was only because we wanted to take lesser orders. So that problem is sorted now. So just some color on that.

So war had nothing to do with lesser order. Lesser order was in America because of tariff issues, unclarity or non-stability of tariff percentage. In Southeast Asia, Middle East, Far East and Europe, we are still taking orders. However, dispatches to Middle East is still a problem.

Sure, sir. Understood. So that's it from my end. And I think -- congratulations on a very resilient year, and we just hope that we'll continue to do well. So that's it from my end.

Resilient year was not very good for us, but okay, thank you.

So sir, I have invested in the company for 3, 4 years now. And I mean, whatever you have committed, it has been very transparent and you have delivered on that. So nothing of that sort. So we are fairly confident that whatever you commit, so you exceed that only. So it's very heartening to see that.

We'll take the next question from Sahil Doshi from Thinqwise.

Just firstly, I want to check since we merged Shivpad, could you possibly...

Can you be a little louder, please?

Am I audible now?

Yes.

Okay. So thank you for the candid responses. Just on Shivpad since we merged this year, could you just give us the comparable number for Shivpad for full year? That will just make it easier to compare the 2 companies.

Because it is merged, it will be difficult for me to tell like this. But if you can write us an e-mail, we can give you all the details of the merged entity.

Not a problem. I'll do that. Sir, secondly, on the WesTech business, which is around INR 35 crores, we said a lot of revenue for WesTech is outsourced and there is an opportunity to ramp up this once it comes into the fold and there is synergy between WesTech and Shivpad. So could you talk about your plans for that over the next 1 to 2 years?

So see, we have recently acquired WesTech. Even next week, I'm going to Bombay to visit them. So we are -- one of the reasons WesTech, when we see about WesTech and we see lower profitability at WesTech, the reason is they outsource everything. They don't manufacture anything themselves. Now they will be using the infrastructure of Jash to manufacture some of their equipment to start with. This activity has already started, and we have seen that when we manufacture within the facilities of Jash, they would have significant reduction in their costs, which will help them improve their profitability. But we have just started. It will take 1 or 2 years to understand everything and get everything produced as much as possible within Jash infrastructure.

Sure, sure. That helps. And I was just referring to the con call transcript 2 years back, May '24. When we acquired Waterfront, our target was in 4 years, it will be INR 200-odd crores. And...

INR 125 crores.

And I'm just referring to the -- the aspiration was somewhere of that much is what we had shared. But possibly, sir, now when you're saying INR 125 crores, INR 135 crores with Penstocks as well, are we being a little too conservative? And over the last 2 years, do you think Waterfront has not performed as per your expectations? And maybe some comment you would add.

I can give you some idea. See, in U.K., there have been OfWat, is 5 years period during which the water industry has given a target to improve and do the carry out the expenditure, which is set by the government. U.K. is undergoing some problems. First of all, whenever this framework period starts, the first 1.5 years is very slow because it is all done in planning. And then next 3 years is in execution and last year is again slowdown. So we are in midst of that presently. But we expect a huge growth from second half of this year. In fact, if you see what we have projected this year is GBP 5.5 million to GBP 6 million. It is equivalent to INR 65 crores to INR 70 crores. So when we acquired Waterfront, the revenue was around GBP 2.2 million. okay, from GBP 2.2 million in 3 years' time -- 2 years' time, we will reach something like GBP 6 million. And in next 2 years, we expect to double it from GBP 6 million to GBP 12 million. So yes, what we projected was to do in 4 years, that may happen in 5 years now.

Sure. Understood, sir. That helps. And just lastly, sir, when you say you had some Forex benefit, possible to quantify how much would it be this quarter? And how much of this is sustainable in the coming year because as...

All the orders which were taken with low rupee value and to be executed in future, we will get that benefit until the dollar doesn't come down.

Sure. Any ballpark number, how much of the unexecuted orders would be there at the end of the year?

We can give that data if you write to us, but I will give you whatever is the export order in hand today. So I said INR 675 crores or something like that, right? Whatever is the export order in hand today, more than 75% will qualify for that.

Sahil, I request you to get back in the queue. We'll take the next question from [ Naved ].

Hope I am audible?

Yes.

Yes. Sir, my first question is on the guidance. If you see -- look at the guidance, we have INR 40-odd crores coming from WesTech and INR 35-odd crores is the spillover from last year. So net of that, aren't we growing -- is the projection on a very conservative side because rest of the operations, we are projecting to grow by just 10%.

WesTech, we are conservative because we still do not have a handle over everything. As I said, we have just taken over WesTech. We are still trying to understand that business model, still trying to evaluate where we can improve, et cetera. So in the first year, we will be conservative, trying to unplug all those unknowns and then have a strategy in place to take it forward.

Sir, my question was net of WesTech and the spillover our guidance is on the very conservative side. That is what I...

It is. If you have control over Mr. Trump, I cannot move all the guidance. We don't unfortunately have that. So out of -- as I said, INR 45-odd crores, we must have billed.

Right.

INR 899 crores is the order book. So put together is INR 945 crores, INR 950 crores. When INR 950 crores is our situation today, and I'm projecting INR 875 crores, it is conservative. But last year also, we were conservative and see what happened. We never planned for America, we never plan for the war. So I would rather remain conservative and try to achieve whatever I say rather than being too optimistic and then failing again and again.

Understood, sir. Sir, my second question is, earlier, we have highlighted our intent to reduce our dependence on U.S., which was contributing close to 45% of revenues. So which other geographies are you seeing stronger traction and incremental investment to diversify this revenue mix?

We said U.K. and Saudi Arabia, and we are working on it. The acquisition of Penstocks was because of that. And same in Saudi Arabia, setting up our plant is because of that. Plus acquisition of WesTech was to strengthen the market offering in India for process equipment in industrial sector.

Understood. Sir, my third question is on Shivpad. We had -- in the last quarter, we had some labor issues because we are just starting operations there. Is it behind us? And are we making any incremental capacity additions there?

No, we are not making any incremental capacity addition. And it is wrong to say we had labor issues. We had quality issues because the type of labor which we wanted, we did not get. And so we had brought a team to Indore, trained them and have sent back. And I think we have nearly overcome those issues.

We'll take the next question from Dilip Sahoo.

Pratik Ji. This is -- this question is regarding Rodney Hunt.

Yes.

We started, I think, in 2018 or so when I think I met you, you were doing around $2 million. And we could ramp up quite rapidly from $2 million to $30 million in 6, 7 years. And currently, even if I take a 2025 base of around $34 million or $33 million, our numbers this year looks -- ignoring for a moment to 2026, which has been a very unpredictable turbulent year. Our numbers look slightly subdued in terms of planning-wise. And I completely agree with you, Trump is uncontrollable, unpredictable. But given all this turbulence, my question is that do we have the capacity on the ground to say, grow at 25%, 26% that we have grown in the last -- between 18% to 25% in the first 7 years, the way we've grown at 25%, 30% CAGR. Can we grow at 20% CAGR from here to next 5 years? Because if you forecast that and say, assume that we will be a $100 million business by 2015 (sic) [ 2030 ] , do we have those things on the ground?

So let me clarify one. We are targeting in next 5 years to reach $75 million. So this year, we are around $30 million from $30 million to $75 million is the target in next 5 years. This year, we are targeting $38 million, which I also agree is quite conservative because my order book and execution put together is more than $40 million as of today. So I would say I can plan $75 million easily, $100 million, I'm not planning because there are a lot of factors not in our control. Mr. Trump is still there for 2.25 years. You do not know what he is coming out with. Just to cite an example, in February, the Supreme Court gave a decision that he cannot put country-wise quota, country-wise tariff. Recently, last week, many products which we make for -- with the percentage of tariff had reduced has now been shifted to Section 232, which is under national security. Now I'm sure a valve or a gate is not a national security item. But he has shifted it. And in national security, Supreme Court cannot do anything. So things like this are day-to-day ground realities, which are changing and it's not under our control.

Sure. I understood that. Pratik Ji, my question was more like, say, when we're doing -- in 2025, when we did $33 million, $34 million. And this year, I suppose we are doing $38 million, say, $40 million. And next year, it will be around $50-odd million. But the employee cost hasn't changed much in Rodney Hunt. So my question is that are we really preparing for next 3 years, assuming that we will not have any hiccups like what we had last year? Or are we being ultra conservative and saying that, look, let's not scale up the business development sales on enough factory people. That's what my question was.

Yes, conservative. As I said, see, I had placed an order for the plant, new plant at around $4.2 million. The quotes which are coming now is $7 million to $8.5 million, nearly double, right? So this is a very strange situation that all of a sudden in America, everything has become so expensive, so costly. So until there is some stability of thought working, it is so difficult to commit everything in America. So I would say that presently, we are on track to reach around $30 million to $75 million in 5 years' time and are planning execution accordingly. But we are not going that aggressive like we were going before.

And you said the employee cost, if you see that it is a growing regular basis, not stable.

And it has grown because we increased the employees and then this turbulence happened.

Exactly.

So we have not removed the employees. Considering that we can still with the same employees, achieve this $38 million, $39 million revenue.

Sure, sure. Sure. No, I was just assuming that had there been no turbulence, we would be doing from $34 million to $40 million to, say, $50 million by '27, right? But $50 million, I don't see...

It's not for $50 million, I would say $45 million to $46 million.

Yes. But I don't see the equivalent amount of employee cost as of '27. So maybe you have taken into turbulence. My only request to you, Pratik Ji, is that we know that there's a lot of pain, but we all live in the hope of a good days. So not to cut down on capacity that if tomorrow you get a huge opportunity, you are not able to address it. That's my only.

But the risk also is too great because there is so much of uncertainty today going on in America that if you are in a project manufacturing environment, not mass production, a project manufacturing environment, you never know what would be the new policies.

We'll take the next question from [ Ruben ].

I'm just new to the company. So I have a few questions. You were talking about the Singapore order, and it was a quite sizable order, that's around like maybe INR 5,000 crores to INR 6,000 crores worth. Can you give me an update on it? And if you were to get the order or -- when do you expect it? And if you were to get it, would you have enough manufacturing bandwidth currently to do it? Or would you be stretching out your resources because you have other orders within India itself, right?

So let me clarify first. It was not an order. We have submitted offers worth $800 million, $900 million in Singapore for rising sea level. Now when would this be executed? This would -- the plan of government is to execute these projects over the next 20, 25 years, not in 1 year, point number one. Point number two, I am not sure I will get all the $800 million, $900 million orders. Okay. So this -- first of all, our market share may be 20%, 30% or 40% in these cases. Two, this would be spread over 20, 25 years. Three, the starting year would be '19 -- sorry, 2028. Starting year of awarding the projects. So once the projects are awarded in '28 and award will be done not one project of a few billion dollars, it would be -- every site to site specific projects would start coming out. So by the time it lands in our -- if we get those projects, if it lands the first orders will start coming in '29. So it is still far way off.

Okay. Okay. And before you were -- before accelerating into Houston, Rodney Hunt used to have around INR 600 crores, INR 700 crores of revenue, right?

Yes.

So do you see it going back to those levels without Houston? Or it's -- you're not looking at expanding or...

We are going to Houston because we are not getting people in Massachusetts, production people, people at our plant in Orange, Massachusetts. It is a very small town. Young people do not easily want to work there. They are all moving towards cities. So we are already facing problem of delays in execution because we do not have enough people. That is why we are setting up a plant in Houston. We have land, we have sheds. But without people, that's of no use. And so that is why we are going to Houston. So to say that we can reach that level at Orange, yes, it is possible if I get people and I modernize in Orange. If I'm not getting people, why should I modernize in Orange.

Okay. Okay. And my one last question is about -- so recently, over the last 18 -- 2, 3 years, we've been seeing a lot of acquisitions, new management now coming in. How -- don't you feel that things might be a little more constrained? Would you be able to execute at the same level that you are executing right now in India across these different, be it U.K., be it Middle East? Do you see that as a concern?

I don't see it as a concern. Whenever you acquire, the first 2 years are challenging because you are trying to establish your systems, your strategy or policy as well as evaluating existing manpower to see whether they can cope up or not. So first 2 years are always challenging. It doesn't matter how good or bad a company is. And once you have overcome those challenges in the first 2 years, thereafter, the phase of growth comes. And so we are not much bothered. And please understand every company which we have invested in or we have taken over has been small in size. So it has not affected our day-to-day working or concentration in other businesses.

We'll take the next question from [ Sanjay Jha ]. Since there is no response, we'll take the next question from Yash. Yes, Sanjay go ahead.

Yes. Sorry, I'm extremely sorry. Sir, Pratik, sir, I have a question for you is that, in your opening remarks, you highlighted about the potential in U.S. and you are not worried about the tariff side of that. But is the uncertainty which is drawn, so now what is the -- what are the points to be understood from that, that what -- if at all there is a rise in cost, if there is a rising inflation in U.S. and then how we see that opportunity coming to us in U.S. in spite of this rising inflation?

So Sanjay Bhai, let me clarify one thing. There is a tariff. Now tariff, every government has a right to implement tariff. You cannot say no to it. Our concern is not the right to implement tariff or the percentage of tariff that they have implemented. Our concern is that you implement 25% in January, then increase it up to 50% in June. So all those orders which I have taken between January to June, now I'm going to pay 50% tariff, but it is estimated at 25% tariff, so this is where company loses money. However, when tariff was increased to 50%, as I have said before also, most of the American manufacturers because if the steel becomes costly by 50%, the imported steel, then the domestic steel mills increase the price by more than 50% so that they can make money. That was exactly the purpose of increasing the tariff, right? So competition is not an issue because the steel prices in America today is more than 50% of the prices in India, competition is not an issue. However, when we want to produce in Rodney Hunt, we also have to buy American steel and that steel is coming expensive. And so it does not only affect Jash, which is exporting to America, the difference in tariff, but it also affects America because America also estimates sometimes on 25%, sometimes on 50% and then they get steel, which is more expensive because the new tariff is higher. So stability of tariff is what every company desires. We have no full respect for the Trump administration to put whatever tariff they want to put. But please decide once for all what we want to put and maintain it.

But sir, my point was that after this inflation growing high, irrespective of tariff also, after this global uncertainty war and all, so how that impacts our order flow, that impacts the...

Order flow will not get impacted Sanjay bhai. If you need water, you need water. But companies will be affected because of EPC contractor has taken a job now everything has gone up. Manufacturer has taken on a job, everything has gone up. Employees are affected because their salaries are fixed for a year and the costs have gone up. So this is something which brings unrest. Other than that, there is no problem.

Okay. Sir, my second question was regarding first time I've heard you being certain -- bringing certain optimism on Indian business. So what is the rationale of that optimism doing more business in India? Are you seeing any green shoots over there?

Sanjay Bhai Indian business was already there. We were always bullish about it. Is the Indian business big enough for the country of India size? No, it is not. I have always been telling the Indian business is very politically motivated. The biggest business we are in the biggest type of equipment which we supply is for wastewater. Even today, I would say the central government focus on wastewater is not to an extent which is desired. It is likely so because first, we have to supply drinking water. The new INR 4 lakh crore budget for Jal Jeevan mission will ensure that by 2028 or '29, all the water supply all around India would come to an end. Once that happens, the water which has come to your house, 80% of that will be converted into wastewater. Once it is converted into wastewater, someone has to think of treatment. We are waiting for that period to come. Already, a huge number of projects in wastewater treatment are coming. And in spite of that, most of the metropolitan cities of India does not have more than 70% treatment capacity. So even today, I would say millions and billions of investment is required to be done in wastewater treatment. And the next problem is after wastewater treatment, reuse. Water scarcity is happening. In Indore, we have everyday issue now today of water scarcity. So this can be mitigated only by reuse. So treatment, reuse, storm water, desalination as well as rising sea levels, all these are problems of the future, which every government will have to address. India will also have to address. And I say for our type of business, huge potential will unlock after '28, '29.

We'll take the next question from Sahil Doshi from Thinqwise.

One, just quickly I wanted to check on the other expenses. We've seen a sharp increase in this quarter, meaning even if I see it as a percentage of sales, it's much higher than usual. So is there any one-off related to freight, insurance, et cetera, in this quarter?

It is a bid charges from the U.S.

Okay. So how much of that would be one-off, sir?

INR 10 crores...

INR 10 crores.

Yes.

Okay. Because -- and also the other income has increased in this quarter to INR 9 crores versus INR 3 crores normally. So...

That is mostly foreign exchange.

Foreign exchange, mainly.

Understood. Understood. And just secondly, on the Saudi, sir, you said December '27 -- '26 is what you look to commission the plant.

December '27.

December '27, okay.

Earlier was December '26. Now after the war, everything is gone haywire. So we have not been able to make the visit to Saudi Arabia. We plan to do it sometime in the end of June, July and then take the land and start the work and execute by December '27.

Okay. Sir, because the question comes from this -- like we see VA Tech, Wabag, et cetera, being very aggressive yet on Saudi. So just what's your view on Saudi given the entire political -- meaning the entire war crisis? And are we yet optimistic? If you can give some feedback, it would be really helpful.

I would say the war has to come to an end. Once the war comes to an end, they don't only have to rebuild capacity, they have to grow. And for that, they had huge plans of so many additional cities and this and that, et cetera. And they are welcoming many manufacturers like us to go into Saudi Arabia, which will result into huge capacity demand of water. So it would happen, but it would only happen when there is stability. Without stability, no country would be able to plan and dedicate resources towards any growth.

Sure, sure. And just to reiterate, sir, you said the Houston U.S. expansion as well as Saudi, both by December '27 is what your new target is?

Yes. In case of Houston, I already have the land. The drawings are approved, everything is in there. Only the problem has been the cost increase. And that the company to which we had given the job, the owner expired, so they decided to close down the company. In case of Saudi Arabia, we still have to acquire the land. We have just set up the company, which is the first step. We have to acquire the land and then go ahead.

We'll take the next question from Kunal Mehta from InCred.

So usually in the presentation, you also mentioned what is the potential from every plant. So has it not changed from like the previous quarter? Like how much is the potential revenue that Jash can do?

So INR 1,200 crores, I think I told today, INR 1,200 crores is the potential revenue from all the 5 plants put together plus Rodney Hunt and U.K. existing facilities. Once we are able to bring online Houston plant and the Saudi Arabia plant, we would reach capacity of INR 1,500 crores plus.

So you are saying as of today, we can easily manufacture up to INR 1,200 -- we can equipment for INR 1,200 crores of...

Exactly.

And Houston will be INR 300 crores. So that's how you...

Houston and Saudi Arabia.

Okay. So that's how you are saying INR 1,500 crores by FY '31.

Yes.

And you said a 16% CAGR for like from FY '17 to '31. '17 to '26 has been almost 18% CAGR. So are we saying that we'll be growing at a lower CAGR going ahead?

Yes, because the base has increased. It cannot be that you -- the smaller base, you still increase at the same rate which you are doing at a smaller base.

Okay. And sir, margins is something that we will always be cautious of. We will be making similar level of margin. We'll not be -- because usually in FY '25, we -- the margins were a little -- so there was a -- you had mentioned that we went for revenue versus margin. So we had a 40% revenue growth, but margins had kind of declined a bit.

Yes. But if you see -- see, there are -- let us talk of margin in 2 aspects. Margin on stand-alone basis and margin on consolidated basis. So if we look for margin on a stand-alone basis, '23 was 14.52%, '24 was 14.21%, '25 was 14.39% and '26 was 13.38%. This is stand-alone.

Stand-alone, yes.

Right? What does it reflect that we have a standard policy. We are not -- there is no big huge differential in the margins. This is PAT margin I'm talking about, right?

Yes.

Same way if consolidation, we are around 12...

Yes. So same way consolidation only when there is any big acquisition or big turmoil like we had today -- this year, last year, then it may get affected. Otherwise, our standard strategy has been focus on margins and moderate growth. So I would say any growth between 13% to 17% is welcome and margin minimum 12%, going up to 14%, 15% is what we desire at that growth.

And also, sir, if I think you had mentioned previously that you will be giving stand-alone and console working capital separately for us to understand the working capital scenario. So will that be...

Yes, we can share that with you.

But can you also make it like a practice of sharing it in the PPT or will that be done?

We'll talk to E&Y. If that is the industry standard, we'll do it.

No, no, industry standard just because our goods in transit is quite long because from here to dispatch it to, let's say, U.S. or somewhere, it takes a lot of time. So we just want to understand how fast we are on the working capital, how optimized we are in the domestic versus what is the situation in the overseas when it...

We have no problem giving this. Whether to make it part of this presentation, I would have to think about it. Because...

If you have some queries, definitely write us, we will reach out to you.

Sure, sir. I will write to you, sir.

We'll take our next follow-up question from Dilip Sahoo.

Yes. Pratik Bhai, our pending order in Rodney Hunt around $28 million, $29 million came before February tariff revision. So is it fair to assume that we would have factored a 50% tariff in those orders because they came before...

Over 80% of those orders are with 50% tariff. So some orders may also be quoted in February to June period. So that would have been quoted with 25%. And they may still not have been executed today. But most of that, what you said is you can say 50% already estimated.

So we can say in those portion, we are fairly high PAT margin of 18% to 20% can be doable if there is no other change of escalation or inflation in steel price.

There is already escalation in raw materials.

Yes. But we have delivered 18%, right, in Q4?

No, but in India itself is a 20% rise in the raw material price.

Even in America as well.

America...

So it is all subjective. Some orders we may be able to give some orders we may not be able to give depending on what is the material of construction of that order and what was the price rise in that material.

But definitely, it will give more margin as compared to others, which we have booked on the 50% tariff.

We have that buffer. That's a good thing to know.

There is one question in the chat box. This is the question from Amit K. Can you please provide what is the CapEx incurred during FY '26? And what is the guidance for FY '27?

So the CapEx incurred during '26 was more than...

INR 37 crores in plant and machinery and INR 30 crores for the acquisition. So total INR 67 crores approx.

And this year would be something like INR 15 crores.

Yes, for the India plant.

For the India plant, for the America and Saudi Arabia, we still do not know how we are progressing. So I will not be able to tell about this. But the 5 Indian plants, around INR 15 crores to INR 16 crores is the CapEx planning.

Okay. That was the last question for today. I will request you for closing remarks.

Thank you, everyone, for patiently listening to me. Though we try our best to give as much data as possible and to be as exact as possible, sometimes things beyond our control, ruins everything for us. That is what has happened last year. I hope the world is at a very stable stage in this year. And if it remains so, I'm sure whatever we have given the guidance, we will be able to meet and ensure that all the investors remain contended with our performance. Thank you.

Thank you, sir. Thank you, everyone, for joining us today. 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. Thank you.