Kaynes Technology India Limited ($KAYNES)

Ladies and gentlemen, good day, and welcome to the Kaynes Technology India Limited Q4 and Full Year '26 Earnings Conference Call hosted by Axis Capital Limited. [Operator Instructions] Please note that this conference has been recorded. I now hand the conference over to Mr. Nikhil Kandoi from Axis Capital. Thank you, and over to you, sir.

Thank you. Good morning, everyone. On behalf of Axis Capital, I would like to welcome you to the Q4 and Full Year FY '26 Earnings Con Call of Kaynes Technology India Limited. We have with us management today represented today by: Mrs. Savitha Ramesh, Chairperson; Mr. Ramesh Kunhikannan, Executive Vice Carman; Mr. Muthukumar Narayanaswamy, Managing Director. Participants are requested to note that Mr. Jairam Sampath, Whole Time Director and Chief Financial Officer, would not be available for the call due to health concerns. Now I'll hand over the floor to the management for the opening remarks, which we'll open the floor for Q&A. Thank you, and over to you, sir.

Good morning, everyone. On behalf of Kaynes Technology team, I would like to welcome everyone to the earnings call of Q4 FY '26. Mrs. Savitha Ramesh, Chairperson of our Board; our Managing Director, Dr. Muthukumar Narayanaswamy; Mr. Sumit Verma from our Investor Relationship, and MUFG IR, our Investor Relations partner, are with us today. Let me begin this with a brief of overview of our financial performance for the consolidated year FY '26 period. Our total revenue stood at [ INR 3,626.4 crores ], reflecting a year-on-year growth of 23.2%. Our EBITDA for the period FY '26 was [ INR 5,741 million ], registering a growth of 39.8% over the same period last year. This translates into an EBITDA margin of 15.8% for FY '26, while profit after tax came at INR 3,639 million, representing a PAT margin of 10% per year FY '26. I'm also pleased to share that during FY '26, our Mysore facility achieved significant milestone by crossing INR 10,000 million in revenue. It was not only the scale and maturity that the unit has attained over the years, but also strong customer confidence, [ acquisition ] capability and manufacturing that Kaynes has built across its operations. This quarter and the full year reflect a period of consolidation as we continue to strengthen execution capabilities and prepare the company for the next phase of growth. Over the last few quarters, our focus has remained on driving consistent improvement in top line growth by maintaining healthy bottom line margin. That said, our near term top line performance did not fully meet market expectations, primarily due to...

Sorry to interrupt, sir. Your voice is a bit muffled.

Near-term top line performance did not fully meet market expectations, primarily due to geopolitical disruption, especially the West Asia conflict, which led to last-minute customer deferment, supply chain delays and product timing shift. Similar to the earlier Russia-Ukraine situation. These events created temporary uncertainty in execution timeline, even though the underlying demand environment remains strong. Since our revenues are closely linked to customer project readiness and approval cycles, some revenue recognition has shifted despite the orders remaining valid and executable. While these factors have had a temporary impact on near-term revenue timing, our strategic direction, customer engagement and long-term growth road map remains firmly aligned, and Kaynes has continued to demonstrate resilience in execution strength through this period. The company has not seen a structural deterioration in demand, order book, quality or customer relevance. Our order book remains healthy, diversified and noncancelable in nature, and we continue strong engagement across multiple strategic sectors. Over the last few years, Kaynes have grown rapidly and, in a relatively short period of time, that growth has created significant expectations from investors, customers, partners and suppliers. We respect those expectations. We are conscious that when a company scales at the pace we have scaled, execution has to mature equally fast. That journey of institutional strengthening is underway, and we remain fully committed to improving consistency, predictability and delivery against the confidence placed in us. There has been some top management restructuring and role realignment in Kaynes. Such transactions naturally takes some time to settle, particularly in an organization that is expanding across multiple technologies, manufacturing and strategic platform simultaneously. However, these changes are to sharpen accountability deeper execution ownership and build a resilient operating architecture for the next phase of Kaynes. The organization is adapting quickly and the leadership team is fully aligned to match with the market expectation. In core EMS as well, our diversification strategy continues to hold strong. As discussed in the earnings call, growth is increasingly broad-based across automotive, industrial, aerospace and railway-related segments with lower dependence on any single business line. This diversified vertical mix gives us confidence that near term, volatility in one area will not define the long-term trajectory of the company. I am pleased by the trajectory of our two new growth engines in OSAT, Unit 1 is fully operational and Unit 2 is in commercialization by Q2 '26. This business strengthening came further by deepening backward integration, adding technology depth and expanding our presence in high-value manufacturing. In OSAT, the order outlook for both the current year and the medium term remains strong with revenue visibility of over INR 25,000 million over the next 5 years. Similarly, in PCB, we continue to see a robust and confirmed demand pipeline for the next 5 years with several customers already indicating requirement for additional capacity expense. One important point that defers acknowledgment is that certain areas where market expectations moved ahead of actual delivery were driven not only by execution pacing, but also by the broader operational complexities associated with managing the core EMS business amid global uncertainties while simultaneously scaling new strategic platforms such as OSAT and PCB. Going forward, our focus remains clear improving execution in [ BMS ], moving towards product-driven revenues, ramping up PCB and OSAT with discipline and delivering growth with stronger top line and bottom line growth and capital efficiencies. We value the trust placed in us and recognize that credibility is built through consistent deliveries. With that, I would like to hand over the call to Dr. Muthukumar, Managing Director of Kaynes. Over to you, Muthukumar.

Thank you, Mr. Ramesh. Good morning, ladies and gentlemen, and thank you for taking time to join with us today. It's a privilege to all of you as we continue our journey of building Kaynes into a globally recognized technology-driven manufacturing enterprise. Under the leadership and vision of our Executive Vice Chairman, Mr. Ramesh Kunhikannan, Kaynes has built a strong foundation of customer trust, execution excellence and sustainable growth. Over the last few quarters, the company has continued to deliver strong financial and operational performance, supported by a healthy order book increasing the customer engagement and growing presence across all the high-value sectors. For Q4 FY '26, our total revenue stood at INR 12,426 million, reflecting a year-on-year growth of 26% for this quarter. And overall for the year, we've grown at 33%. While the operational EBITDA for Q4 '26 came up to INR 1,937 million, translating with an EBITDA margin of 15.6%, reflecting our continued operational resilience and expansion. The profit after tax for the quarter stood at INR 912 million. Our debt-to-equity ratio stood at approximately 0.2 in FY '26, reflecting a prudent disciplined capital structure even during the phase of significant expansion. At the same time, our organization is able to give the earnings per share has grown from INR 30 in FY '24 to INR 54.9, reflecting the company's consistent growth trajectory and long-term value creation for all stakeholders. We realized our working capital days stood at around 122 days in FY '26, primarily reflecting the business model preparement of the smart meter segment, which has different working capital cycle when compared to the core EMS business. On a like-to-like basis, we would like to bring it to your attention. The ODM business has demonstrated a significant improvement in the efficiency, as committed earlier, with the working capital days reducing from 83 days in FY '24 to 53 days in FY '26. We remain focused on further strengthening the operational efficiencies and improving project execution cycle and optimizing working capital, and we continue to scale the business. One of the defining milestones in the journey have been the inauguration of the OSAT facility at Sanand by our Honorable Prime Minister Shri Narendra Modi. It is not only the matter of pride to Kaynes but also a strong validation of our company's growing role in India's semiconductor and electronic manufacturing ecosystem. What Kaynes has achieved in relatively a short span of time reflects the sense of our vision, execution capability and the commitment to our teams across the organization. As we enter the next phase of our evolution, our focus will continue to be on strengthening the foundation and scaling the organization to greater speed, agility, innovation and operational excellence. Kaynes today stands at a very important inflection point. The industry is evolving rapidly. Customer expectations are keeping more demanding and our global manufacturing landscape is increasingly shifting towards high-value technology-intensive position. The environment of our aspiration is not only to grow in scale, but also significantly enhance quality and value of our business. One of our key strategic priorities in the next few years will be to accelerate that transition from a traditional EMS-led organization to a differentiated ESDM and product-driven enterprise. A critical pillar for this transformation will be strengthening our new product development capabilities. We believe that innovation-led manufacturing will define our future of the industry, and our goal is to steadily increase the contribution of [ NPD-led ] and value-added solutions to nearly 30% of the total revenue in the coming years. To achieve this, we are investing on our engineering capability, customer co-development model, a digital infrastructure and a R&D infrastructure and an integrated product realization platform that allows us to engage in the early phases of the customer product development. This will not only improve the margins of the company but also the customers' confidence and position Kaynes as a strategic technology partner on original design manufacturing company rather than a manufacturing service provider. At the same time, operational excellence will remain at the core of our execution philosophy. As we scale consistently in quality, delivery, productivity and reliability becomes even more critical, our focus will therefore be on building deeply a process-driven organization powered by enterprise-wide digital systems, automation and data-driven decision making. Quality in particular will be a defining theme for us going forward as we all know that quality is no more a differentiator than basic expectation. What differentiates the company now with the ability to deliver superior quality consistently with the speed at a competitive cost and reliability and, of course, intelligence. With artificial intelligence coming in, we are introducing artificial intelligence in various processes to make sure that we are ahead of the market. At Kaynes, we are committed to building a culture where quality is evident in every process, every product and every decision across the organization. We're also driving the company initiatives with total productive maintenance, advanced quality systems, Industry 4.0 integration. And 2 of our plants have already done their kickoff and moving into the next phase of implementation. These initiatives across the organization are not just about improving the manufacturing metrics. These are about creating a culture of ownership, discipline, a continuous improvement and a customer-centric across all our facilities. As the manufacturing ecosystem become more competitive globally, automation and digital transformation become essential enablers to long-term competitors. Our focus will, therefore, continue to be on improving productivity, reducing process variability, strengthening supply chain integration and enhancification. Other important thing change is the quality and diversity of experience. We continue to bring in our leadership and governing. Our Board today brings together and expertise across technology, finance, law, engineering, manufacturing, automotive and electronic and cable operations. Leaders such as Mr. G Murali, who brings deep financial leadership experience, including a tenure at the group CFO at TVS Motor Company; Mr. Koshi, who had extensive experience in finance and public sector electronic, including serving as Direct Finance with Bharat Electronics Limited, brings significant strategic and operating destination; with [indiscernible] with extensive legal and governance experience, we're guiding principles in people development and in our legal framework. Dr. M. Annadurai with his deep experience of India space and technology mission is joining our Board will strengthen us to take it to the next level of technological upgradation. Mr. Rajesh Mittal with a strong expertise engineering and automotive operation is joining our Board, and I'm sure that he strengthens our supply chain capabilities and penetrating and getting it more into an automotive operation. Their guidance, along with the addition of strong leadership in various functions, in Kaynes continues its journey towards becoming a stronger design-led technology focus and a box build solution. Most importantly, none of this is possible without our people. At Kaynes, we strongly believe that people define our strength and future of the organization. We'll continue to invest in leadership development, capability building and creating opportunity for our team to innovate, grow and lead. At the same time, we are consciously building a strong pipeline of future leaders who can carry forward their values, culture and long-term vision of the organization as we continue to scale in the [indiscernible]. Our focus remains very clear: customer focus, innovation and quality and people. These four pillars continues to guide our can journey as we build Kaynes into a world-class manufacturing organization that will be a new benchmark for the industry. With this commitment to our team, the trust from our customers and strength of our strategic direction and Kaynes will continue to play a defining role in shaping the future of Indian manufacturing in the global stage. With this, I complete my initial remarks, and I would like to thank at Capital for hosting this earnings call. I would also like to thank all the participants for joining us today, and I'll hand it over to Axis Capital and looking forward to answer your queries. Once again, thank you very much for taking time to join this call. Over to you, Axis Capital team.

Shall we open the floor for question and answer, sir?

Yes, please.

Yes, please.

[Operator Instructions] We will take the first question from the line of Viral Shah from Enam Holdings.

My first question is on guidance, sir. At the start of the year, sir, we had guided that we are looking to close the year with revenues of INR 4,500 crores, which was subsequently toned down to INR 4,000 crores, and we end the year with close to INR 3,600 crores of revenue, sir. Sir, so how should, as investors, we look at this guidance? And what is the sanctity of the guidance that we are providing, sir? Because there is a very large variance between what was expected versus what is delivered, sir.

Thank you very much for asking this question. We fully understand and appreciate your question. We did an aggressive top line growth in the year based on the order book and because the electrification of the vehicle and, of course, the government projects where we are working is going to be at the faster pace. Giving a guidance of INR 4,500 crores is almost 55% growth over the previous year. In the third quarter, I think we have turned out saying about INR 4,000 crores because of the few delays, and one of the largest electric vehicle OEM manufacturer has completely dropped by about 90% of their revenue, wherein we were the single supplier, which has dropped our numbers. But we were quite confident in the last quarter of getting 2 government orders where the products have been done and the product testings have been approved. It's going to be done, but there is a delayed project. I think these are the two things that have put us -- while we have delivered about 33% growth in revenue and 39% growth in the bottom line, we sincerely understand and appreciate that the guidance, what we have given, we could not meet. Having said that, I think while we are looking at strengthening our execution capability, ability in manufacturing and delivering the product on time, there are certain cases where it's beyond our situation where the customers pull and thus makes us to hit the numbers. And that is one of the reasons that why we say this time that we'll be outgrowing the market and we'll be doubling the market further our penetration much more. But we fully understand and we are aware of the questions that you are asking and the implication.

Sir, I appreciate this answer. But sir, 75 days into the quarter, we would be aware of how the quarter would be looking like. But the management comes on the television and holds on to the guidance. Additionally, even apart from the P&L side, the guidance was also that we would be just about marginal negative on the OCM side, sir. Sir, both of these guidance 75 days into the quarter is actually a bit concerning when the actual numbers reported will be way off. Sir, how do you look at that, sir?

I think the intent behind committing those numbers in the last quarter saying that is, we have based on the product samples that have been approved. We entered and started our [Technical Difficulty] Sorry for the interruption. Can you hear me well?

Yes, sir.

Yes. See, what happened is that while we have got the indication of the invoice no from the customer, we started ordering the material and, in fact, if you ask us, we have started even the premanufacturing activities of this, which gave us the confidence that ES will be able to deliver. If you see more than 50% of the manufacturing of those activities also has been on the pipeline. I think it is not a denied order. It is a delayed order. We sincerely apologize that this has happened. But I'm sure that we all trust we see that it is beyond our control. And going forward, we will take this input in terms of committing for the future numbers. We are committing for our growth based on what market can pull in. And one of the reasons that you will see that going forward, we will be better like what Executive Vice Chairman said. Our dependency on every vertical, we are bringing it down. So we are taking into many other verticals so that the impact on one business will not have an overall impact. But we will definitely keep this in mind and make sure that in future, we will be better prepared for mitigating this. Our type of business, we also depend on customer insights and accepting it. I hope you will appreciate that.

Sure. Sir, which is a fair enough point for the P&L side of view. But sir, OCF, INR 600 crores of negative. I think that is a bigger disappointment, especially when you kind of guided that you will be just about neutral or slightly negative, sir. So you would have not guided, sir, why have we not been able to turn that around, sir?

Okay. I think it's a fair question. The operational cash flow, I think there was a little, maybe a misunderstanding. I was also in the call during this time. The two cash flows that we are talking as a stand-alone EMS business, I wanted to bring it to all your notice that in a stand-alone EMS business, our cash flow was INR 250 crores positive when compared to INR 66 crores last year. However, as a consolidation increase -- see, 65% of our revenue today comes from EMS business, where we are cash flow positive. The metering business which is a specific model. This is the first full year we have taken, and we are getting matured into the business. One of the things that happened is this business model is a strategic acquisition for Kaynes in order to make ourselves getting matured towards the product-based company rather than an EMS assembly company. I just want to bring it to all your notice that [indiscernible] company, we have been supplying them the EMS business. So the entire revenue is not new to us. At most 50% of the revenue as an EMS business, we have been supplying there. But when this a unique [ position ] where not only making the meter, but also installing the meter and also maintaining the operation maintenance of providing the software. We are the only company which has got a unique combination of all the three, and that's the reason for why Kaynes has submitted and moved into this acquisition, which has definitely brought back the good amount of insights on product development as converting ourselves, Kaynes, into a product company and putting it, maturing into launching no more new products in that segment like whether it be a water meter or gas meter on the pipeline. Having said that, we should have anticipated this well. There were a lot of government delays when the payment comes based on the inflation with various activities at the various state governments really being the tender for coupling the meter, installing the meter, going to go out and installing earning, there was a little delay. I would request to you all to appreciate that as a stand-alone Kaynes EMS business, our net working capital has come from 64 days to 54 days. However, the total number has gone up because of this. 65% of our revenue comes from the EMS business, where our receivables is only 35%. Whereas 25% of the business comes from EMS where the receivables are 67%. We have worked out the strategy as a management team on how to mitigate this. We've been working with various organizations to see that how this business model can be mitigated. Rest assured, ladies and gentlemen, we'll be able to bring it back at least to a level of reduction. I think the influx point has stopped and will come into the reduction, and we will come back in 3 quarters with the positive results specific with entity. But on EMS business, we have demonstrated the ability of how to bring back the next phase by both working on supplier side and also on the customer side and brought it back. The numbers are available. I think you can see from our opening receivables of about INR 399 crores in the EMS business. By end of the year -- sorry, INR 379 crores. For the end of the year, they come to INR 399 crores, even though we've grown the EMS business. But then, our outstanding or receivables have gone up only by INR 20 crores. It clearly shows how we could be able to manage this business efficiently. In the years to come. we will manage the metering business and demonstrate our ability to manage product development, which is going to be a strategic shift in the Kaynes organization from moving an EMS provider to a product provider and, at the same time, manage working capital back to efficiently. Added to that, if you are retailer, our main EMS business, we will be cash flow positive this year. Whereas the entire company, we will not be able to do that. So please appreciate we have done and honored what we have said. So from INR 65 crores, I want to bring it to your attention of a cash flow positive our EMS business. And last year, we have migrated to INR 250 crores plus, which is a significant improvement in a year where there were a lot of uncertainties, including the escalations on one end, supply chain disruption in the last quarter and, of course, customer pulling of the material. And our customers and suppliers have really supported Kaynes initiative in taking this commitment and moving forward.

We will take the next question from the line of Nitin Arora from Axis Mutual Fund.

Just I think the call is all over the place. So going forward given, I think, we are not giving guidance, in the same business when you articulated, it's a customer-driven business. And when you're saying demand is very good what is stopping you of giving you the guidance? I mean, is it you see more deterioration in working capital, which will erode the revenue growth from here on also? So we are very confused. If you can throw some light how the direction of revenue and working capital improvement will happen because it has not happened so far. And you're not giving any guidance. So it's very confusing for the investors. so if you can throw out some aspects of both revenue and working capital.

Okay. And thanks for asking this and giving us an opportunity to explain our position. It is not that we are not giving a guidance for the revenue. We are not only giving guidance for the revenue number. When we are saying that the industry in India, the GDP growth is at 8%, the EMS space where we are playing has grown at about 18% last few years or expected to grow in this year, 16% to 18%. We say we'll outgrow the market. We'll penetrate into each and every segment, and we'll double the growth of market versus what commitment that we have done. I'm sure that we'll be able to do that. But exactly, we don't want to put the number because, see, for example, the December projection of automotive industry was a mid-double-digit growth for this year. Whereas the latest pace, it will be a single-digit higher or lower double digit, which may impact on the offtake of the product. While we are trying to mitigate it by getting into the various verticals like, in fact, we are going to be getting into defense and of course, space business and others thing, but at the same time, we want to be a little conscious because the market is in highly volatile conditions. Nothing to do with our ability to deliver. Our capacity and capabilities is always was available. So we are counting at doubling the growth of market growth, which we will be definitely coming back in every quarter to say that how the market has grown and how we have grown. You can rest assured that Kaynes will continue to focus on delivery efficiency and meeting the customer demand and, of course, making the investors calculation. Sorry if we have made you to put it in a confusing state by not giving the exact number. Having given the exact number, we think that there are a lot of uncertainties, which is beyond our control. And rather than coming and telling it and apologetically saying that it is because of this reason, we don't want to be providing a reason. But we wanted to be a sufficient provider in this. That is on the first revenue. In terms of working capital management, we will continue to be efficient on this area. You can rest assured that Kaynes stand-alone, the EMS business, will continue to be cash positive, and we'll be improving it actually by about 8 to 10 days in the years to come in this segment. Having said that, the metering business, we compete with a full year, we started the metering business with about INR 521 crores -- sorry, from the receivables of -- INR 521 crores to INR 1,300 crores. We are putting our execution team to go and install in every area. We will reverse the trend. That's what we can say. We have a very clear road map of bringing it back in 3 quarters to track this metering business also. We are also working out various business. The current business model. I'm sure that most of you are aware, the business model of metering business is completely different from the EMS business. These are all some of the things. The positive thing is getting into the product a new technology and, of course, an expanded margin product, and the other side is on the working capital management. But rest assured that Kaynes management has got the capability, and we will ensure that we reverse the trend in this quarter. And quarter after quarter, you would see. within 3 quarters of this year, we have a very clear strategy on how we are going to come out of this cash flow issue in the metering business. And at this point in time, we want to bring to your notice. The working capital management will not have any impact on our growth trajectory or in terms of our execution capability. Our order book continues to be stronger at INR 9,000 crores plus. What we have been talking about and executing the new product in 12 months to 18 months, today, our ability to launch the product in 9 months, the full product has come because of the acquisition of new technology and new teams that we have got a product technology thing. We will be able to see and you'll be able to hear more and more of our product launch in the electric vehicle base in every spectrum that we are going to work in, wherein you will see that is an ability to launch the product and, of course, improve the margins. We are also committing 30% of the revenue in the years to come will come from the new product, which means it gives us an opportunity to leverage our technological excellence, at the same time, getting into a better standardization of the product to bring working capital management and, of course, expanding the margins. Our idea was not to give a guidance. What we are trying to tell is we will better our growth of this year next year. We do not want to attach a number to that. That is our only [indiscernible]. I hope I have clarified that.

Sir, I don't want a number. The question was more what will change suddenly which will get your INR 600 crore negative cash to breakeven? Our business remains the same. Even Iskraemeco, you moved out, which I think you have 2 more quarters to go. Correct me if I'm wrong. The rest of the business is a negative working capital. So what will take this INR 600 crores was the question?

The INR 600 crores by end of the third quarter will come to around -- we will try to work on the positive, but at least 70% to 80% of this will come down for sure. And by end of the year, we'll be positive. We have a very clear strategy quarter-on-quarter. I'm sure that the next earnings call when we are going to be together, because it's almost 40 days have gone in this quarter, and the team is working to put this into effect. We took a little time on this business because more of a product is what we were focusing, and we didn't anticipate this much of delay in the execution of the [ Election Commission ].

We will take the next question from the line of Renu Baid Pugalia from IIFL Capital.

A few questions from my side. First, if you can help quantify what was the share of leasing-related revenues in our consol revenues for fiscal '26 versus '25. And how does the growth look ex metering portfolio? That's first question. How are we scaling up in terms of new applications on the power supplies and other aspects, including EV within the industrial business? Third is if you can share updates in terms of ramp-up of the rail portfolio with respect to [ coverage ] solution. And do we see any headwinds on government offtake, given that government finances this year are likely to be under stress?

Thank you very much for listing it out. I will answer the first 2 questions. One is on the metering business. The metering business contribution to our total revenue is around 20% to 25%, okay? Having said that, it is not that the entire 23% of the revenue has come because of the metering business. I'm sure that you would be able to recollect that we have been supplying the components and the PCB for the metering business, which is around 60% of the revenue has already been coming. That's why when people say, oh, your growth is -- is it only because of the metering business, 60% of our EMS business, which we have done, and we have added the box build software and ODM business on to this. So the growth is like that in that business. The second question which you asked is, yes, the company is now launching the EV segment. And you can see our growth in the EV segment this year is about 28% growth despite the fact that one of our largest customers in 2-wheelers has dropped the production significantly by about 90%. That means had that been in full, our penetration would have been much higher. This is one segment which is growing, which continue to grow. And rather than supplying only PCB, we'll start working on the assemblies and products which will make our value addition much higher. Every segment, as we said, we are going to diversify to make sure that our impact because of one business will not be there. Having talked about the first two of your questions, I will leave it to our Executive Vice Chairman to talk about our progress, what we are doing in the rail business.

Regarding the rail business, our Kavach product has received the initial approval and we have got the trial orders. We are in the execution space. We have done field survey and everything. We are expecting this year in the first half to complete all approvals and the second half to get a large portion of orders. Execution-wise, yes, we will have opening order in a big number, but a small portion will be out of that completed. So this is the status as far as Kavach is concerned. We are developing another two more products for the global requirement for 1 of the OEMs in the rail sector, that also. So rail business, I am expecting this year to grow by around 20%, 25% because of these coming in. And the margins are going to be north of current 30% plus. I hope I have answered this.

We take the next question from the line of [ Singhania ] from [indiscernible].

Yes, First thing is if you can share details about your metering subsidiaries. What is the revenue for the full year and EBITDA? And what is the total [indiscernible] in this subsidiary?

You're asking about the metering subsidiary?

Yes.

Can you repeat the question? Sorry, can you repeat the question?

The metering subsidiary, what is the revenue, EBITDA and receivables at the end of the year for this period.

Okay. Metering subsidiary, yes. As far as the metering subsidiary is concerned, out of the total INR 3,626 crores, we normally don't -- okay, the subsidiary is coming in. It's about INR 971 crores is the metering subsidiary revenue, which is 24%, 25%.

And the receivables?

The metering revenue is INR 971 crores.out of the total INR 3,526 crores revenue.

Yes. And how much is the receivables in this?

Okay. On the receivables of the metering business,is about INR 1,365 crores, including the total receivables on this business. It is more than because the first 2 quarters of this year, we could not be able to execute the -- while the meterings we have supplied, the installation got hugely delayed, particularly in the rural towns where the government has given business. Our pickup that happened only in the last quarter where our installation is going. It's going to take about 1 or 2 quarters for us to complete the inflation. That is why I have committed that it will take up to the third quarter for us to complete it. I'm sure that this is not only with us. Overall, the ecosystem of this is creating a problem. But we have created a pipeline of team and pipeline of equipment to make sure that these installation takes place on time. The availability of people -- the availability of the location is the concern.

Sir, just a clarification on this. If I'm correct, last quarter con call, you mentioned that metering subsidiary receivable was somewhere around INR 1,100-odd crores. and we were proposed to receive INR 250-odd crores by securitization itself. Whereas when we are seeing now it has gone up. If you can help me understand was there any securitization done. If not, why not? Because we have committed that it is almost done in the last con call? And secondly, what has led to this kind of receivables on the metering business?

See, the securitization, we have just started with 1 bank. And the first loss that the installation is completed, banks have started accepting it. Bank would like to have the first month complete building and realization. So we have sanctioned everything, but we have only discounted to around INR 40 crores or so.

I think this exactly thing coming to in last quarter continue call. So there is no spot in this quarter on this?

No, no. Apart from last time, this quarter, again, we have discounted some INR 40 crores extra. see the, installation and all report, after that securitization takes place, and they are willing to disburse the money. Our key challenge is on the installation now, which is what we are working with the various organizations, public sector enterprises and the end customers and the PV -- the DISCOM to see with how we can speed it up. We understand you are concerned of why the revenue as in the last quarter is INR 380 crores, you almost added businesses. It's basically because of the delay on the installation.

Sir, just wanted a better clarity in this business going forward. Are we going to continue to executing this kind of revenue with this kind of working capital? If not, then what is the factors which are giving you confident that you will be able to reduce the [indiscernible] in this business? And if you can please quantify something, it will be helpful for us to understand.

No, no, in the past, we have already agreed we are not going to take any orders like this. We are only going to take meter our orders, and we will be supplying to the project teams who are taking up orders for the entire execution like that. So it will be our EMS component only we'll be taking orders. See, the current business, what we have taken is about 35 lakh. We 35 lakh meters is what we have taken, which is the order being executed and all. While I fully understand working capital is one of the key concern and we are working on, this is dropping a lot of other strategic advantage to the organization in terms of our product development capability, software capability, which no other EMS business has and, on top of this, our ability to execute the projects like this I think these are the strengths going forward is going to come up. And you all know that this comes with a better margin than the standard EMS product. The company then is going to migrate from a service provider to a product company, you know the benefits of this. When we are going to be in a B2C, our brand is going to get strengthened. The people are going to look for our brand. And as I said, it's going to have a lot of strategic advantage. Having said that, you can rest assured that we will come back with the quarterly progress on this and see how -- last year, yes, every 4 quarters, we have added up the number, almost more than 50% of the revenue that has come. But now that we have created an ecosystem of our ability to install the meters in the location, we will get into that. And you also know that when we are doing it with the public sector enterprises and doing this, the process is taking a little more time than in normally a Tier 1 OEM or other business. But having understood the business, we are pretty confident we're going to come. And like our Executive Chairman say, we'll also be cautious of taking such a huge business of 34 lakh rather than on this model to only just supplying metering supplies and giving it to HPV companies where they will do the installation commission. Hope that answers your question. But it's a very, very valid question.

We will take the next question from the line of [indiscernible] from Axis Mutual Fund.

I have two questions. Firstly, this 35 lakh-odd meters is broadly a INR 1,400-odd crores order. So how many meters or if you can give some quantum in terms of how many meters are pending from this order? And secondly, like you highlighted, the smart meter business this year did roughly INR 971-odd crores of top line that implies that there is another contribution of INR 740-odd crores from subsidiaries. What is the breakup of that, if you can help us understand?

Okay. Sir, in terms of the metering, we will take another 2 to 3 months to complete the entire pending order of this, which is what we are also putting into our calculation.

The whole extension of this order, as per the continuation, it may or may not come. That is another 3.5 to 4 lakhs.

So that is why we are pretty confident in 3 quarters from now, we'll be able to reach up this, and the new businesses will be in a different model. That is on the metering business. And the other subsidiary which is very prominent is the [ NPL ], which is exactly the EMS business only. And we are committing the EMS business, and there, almost -- if you see our EMS receivable, the start of the year, we started with INR 379 crores. The EMS revenue, I'll just talk about it. The EMS revenue is about INR 2,655 crores with INR 442 crores in the quarter 1, INR 683 crores in quarter 2, INR 667 crores in quarter 3 and INR 862 crores in quarter 4. We started the year with INR 379 crores of receivables and we ended up the year with -- we went up to INR 466 crores in quarter 2 and INR 437 crores in the quarter 3, and we brought it down to INR 399 crores in the quarter 4, which means that we have exceeded did only be INR 20 crores for a revenue growth of about 26%, which means that our prudent management of receivables and our short-term lead time -- actually, basically, it is about how fast you can manufacture and ship it out of the plant and ensure it gets into the factory and start consumed by the customer. Out of the INR 2,655 crores [indiscernible] there are two foreign entities, which put together on an average about INR 300 crores.

But they are also a EMS company.

They're also company in the North America and Canada. Thank you very much for Gavin us an opportunity to clarify this question. I fully understand your concerns on this, but the business model of the metering business is completely different from the EMS space. While we're putting a stress on to the working capital management, ladies and gentlemen, believe us, it gives us an enormous ability to do the product development launch at the time, not only with the product development, but building our capability in direction commissioning on these type of projects and, of course, the software, which is going to really help us not only for this contract, but beyond this contract. The money is going to come back for a long term for us until the meter is up and running.

We will take the next question from the line of [ Jigar Shah ] from HSBC Mutual Fund.

Sorry to harp on it again and again on smart meter business. But the communication from your side seems to be very off since last 2, 3 quarters on smart meter business and has created a lot of confusion. And if you see your commentary has been that this year, smart meter business FY '26 would be INR 800 crores. But it has come at almost INR 1,000 crores. And going forward, you will not be taking business and, hence, the receivables, which is current but not due spending in other current assets or noncurrent which is around INR 250 crores will come down. So that was not also done. In fact, revenue has increased, receivables have increased. And in FY '27, I would like to know that from AMISP model, how much will be revenue and incremental other current effects but not due incremental, what will be the situation for there?

Okay. Sir, I just wanted to let you know, while we were at INR 800 crores when we got an opportunity to grab to offset some of the business that there was a delay in automotive business, there is delay in something, we grab every opportunity. And that is where we have grown in this. For the next year, while the INR 971 crores of sales, what we did this year, in numbers, we may remain same or slightly up or down. That's not a question. But almost 50% of the business will be in the old model and rest will come in the new model. As the Executive Chairman side, we have to finish some more, and there is a contract like that the government has got asked for more, we may have to continue to supply. So we will be definitely taking prudence, but rest should be worked the business model for this year. In next investor call, we will just make sure that we start the presentation with this past 5 minutes or something and giving these numbers to make sure that we completely keep you all with transparency on how the business is going and how we are going to collect it. We're also working out on a couple of more strategies to make sure that how the noncurrent assets, what we are talking about, is setting up for a long time how we are going to mitigate that risk and at least get 50% immediately, We will get back to you in the days to come on this strategic project. But rest assured that this is on top of agenda and top of working to make sure that how we can reverse this and then get into towards positive.

[indiscernible] Improve our working capital.

Please, please?

Just one more thing on receivables. You mentioned that subsidiary is INR 1,365 crores. So how much will be this long term and short term?

I think you already estimated about INR 250 crores is the noncurrent assets. I think that will be there. Rest on the current. I think our ability to now do the installation is going to be the key. There are four states where our team is working, and it is taking extremely high bank for more than 6 zones. We are working on this. But we have put enough infrastructure and team to do this. And we now got a clearance from them to do the almost from morning, 6 to 12. I think our team is putting effort, and we'll see this progress. We have been traditionally a manufacturing company. So we worked on improving the efficiency and productivity of the plant. And we really understand the new model of how it takes time to do the installment at every site location or every house.

We will take the next question from the line of Sumant Kumar from Motilal Oswal.

In balance sheet, the intangible asset in FY '25 was INR 238 crores. And in FY '26, it is INR 536 crores. So what was the INR 300 crore increase? What was changes for that?

I think if you back to the 2 quarters before, we did the 2 acquisitions. One is in Iskraemeco and second is August Electronics, which is in Canada and supplying in the EMS space to the big players in the North America. The intangible asset that has been capitalized on B2 is about INR 320 crores, and there was a clear thing and what is the order book and it's based on the current accounting standard. And we did INR 320 crores. For all of your information, even though you're not asked for this question now, I think we have committed that how we are going to do the amortization of this. Our policy was once in a year. So in the last quarter, we amortized these intangible assets and that has added to our depreciation and amortization to a level of about INR 32 crores. That is why the PAT in the last quarter has come down, PBT. But maybe we believe that the full year around 10%. Going forward, I think we'll be doing the amortization on every quarter. This is basically from the order book and other assets that's available from acquisitions of Iskraemeco and August Electronics.

We will take the next question from the line of Sameet Sinha from Macquarie.

Sir, apart from the smart meeting business, I think everyone is trying to get their arms around guidance. Mr. Muthukumar, you are on TV talking about [indiscernible]. I wanted to get a sense of when do you get to that double the market rate? Is it from starting now? Or is it going to be the third quarter is what you're referring to? And would that include OSAT and PCB as well to get to that sort of double rate? Or is that just a pure EMS business? And then I have a follow-up.

Okay. Sir, to the double growth, I think we have launched 3 products, which is already in production now, also we started. So we will be continuing to penetrate into every customer. And when the automotive business is growing at around 30%, share of business is the key driver for this business, and we'll continue to focus on not only introducing the new product but also expanding our share in the business. And that is why we are confidently telling we are getting into this. The aerospace business is another one where we are substantially growing last year and we continue to grow in this year, like the Executive Chairman in another call. So as I said earlier to some of you when we are talking, the industry is growing at 6.7% in India. Our market space is growing around 15% to 16% and we'll be doubling the growth. [ Being ] in the Middle East, even in the last quarter, we have performed much, much better and our [ top line ] agility was good. Our strategic stocking has really helped us in this. So we will be doing the 2x growth from the start. When I say 2x growth, it's not the 2x growth of our last quarter comparison but on the market growth and our growth. I just want to make myself clear. And the market is growing to grow at 15%, and we are doubling until we are there at number. Okay. On work-site and PCB, I'm sorry, I missed the question. See, what has [indiscernible] a very, very strategic product. We are also evaluating how much of that is going to be consumed internally and how much we are going to give it outside. For all the products that we are making, where we are making design specifics and where we are going to offering solutions with the Kaynes product, we may be using our own products because of the technological advantage and the competitiveness. At the same time, we'll continue to focus on end customers. There is a pipeline of customers that's coming in. And you know the ecosystems and PV systems, we are [indiscernible]. But at the end of the year, yes, the overall growth from those segments, you can see that either it will expand in bottom line or on the top line, depending on how they strategize and use the product. Through our own product, by expanding the margin, are sending it to other customers. It will be a strategic product, and be moving forward will be an integrated business.

We will take the last question from the line of Achal Lohade from Nuvama Institutional Equities.

Extending the...

Sorry to interrupt in between, Mr. Achal. Can you please use the handset mode, please?

Better? Yes. Sorry for that. Am I audible?

Yes, you're audible. Please proceed.

Sir, just to expand the previous question, if you could talk from a production value perspective the earlier guidance of INR 1,000 crores for OSAT, INR 500 crores for PCB. Does that stay intact? Or is there any risk to that number? That's my first question.

We have not given any guidance like this. This is our first year. I'm sure and certain we will do a good number of PCB of around INR 300 crores to INR 400 crores and OSAT of around INR 250 crores to INR 300 crores. How much of that we are going to consume locally, how much of them we are going to be selling outside is a strategy that's being worked out, and it will be communicating to you at an appropriate time to all of you. But OSAT business and all, locally, there will be nothing to start with. It will be always an export model.

Thank you very much. Ladies and gentlemen, we will take that as the last question, and with that concludes the questions I now hand the conference back to the management for the closing comments. Thank you, and over to you, sir.

Thank you very much, ladies and gentlemen. I think we appreciate really the opportunity that is given to us to explain about our initiatives and some of concerns that you had. We hope that we have answered most of your queries. And if any one of you have any queries, please do reach out to our Investor Relations, and we are here to show you. We also welcome you to visit our plant and see those facilities. Seeing is believing, and I'm sure that -- thanks, everyone, for supporting us in this growth journey. I'm just handing over the phone to our Executive Vice Chairman for any closing comments.

Thank you very much. I'll be shortly meeting in some conferences. So if there is any clarification, please reach out to us. We will be happy to clarify all points. Thank you.

Thank you very much.

Thank you, members of the management. On behalf of Axis Capital Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.