Macpower CNC Machines Limited (MACPOWER) Earnings Call Transcript & Summary

Ladies and gentlemen, on behalf of Kaptify Consulting Investor Relations team, I welcome you all to the Q2 and H1 FY '26 Post Earnings Conference Call of Macpower CNC Machines Limited. Today on the call from the management team, we have with us, Mr. Rupesh Mehta, Chairman and Managing Director. As a disclaimer, I would like to inform all of you that this call may contain forward-looking statements, which may involve risks and uncertainties. Also, a reminder that this call is being recorded. I would now request the management to brief us about the business and performance highlights for the period ended September 2025, and their plans for the coming year, post which we will open the floor for Q&A. Over to the management team.

Good afternoon, everyone. First of all, I honestly welcome you all to quarter 2 FY '26 post result conference call. We appreciate that you have taken out time from your busy schedule to attend this call. Thank you for being in this call. The financial results and presentation have been posted on the company's website and hope you have had an opportunity to go through the same. Vinay, congratulations this presentation is the best I have ever, just like Macpower performance. So I would quickly run you through quarter 2 FY '26 results highlights first, then we'll discuss more about our business. This time, your company reported its revenue, EBITDA and PAT in quarter 2 FY '26, which is over time, highest ever in any year-on-year, or any quarter in history of Macpower. So in the history of Macpower, this quarter 2 is the highest ever in terms of the revenue in terms of the EBITDA and in terms of the PAT. So revenue stands at INR 85.71 crore. Growth in quarter-on-quarter at 40.45%, and Y-o-Y 20.55%. EBITDA stands INR 14.16 crores, grown by quarter-on-quarter 78.76%, and Y-o-Y 11.11%. PAT stands INR 9.38 crores grown quarter-on-quarter 105%, almost double, and Y-o-Y, 12.95%, nearly 13%. So this time, CapEx is increased on quarter-on-quarter instead of INR 4 crores last year. This quarter, we added INR 8 crore in this quarter for the CapEx. Therefore, depreciation is also increased by INR 3,200,000 on Y-o-Y due to CapEx. Machine average price is also increased by [ 20.19 ] compared to last year Y-o-Y [ 18.4 ], just due to some iron product. Now products and capacity has also increased from the 10th November, instead of 2,000, now we have a capacity of 2,500 machines. And this time, if you can go through the presentation, we already mentioned this data. Pending order book is INR 350 crores. Defense and aerospace tender business is also this year highest ever in this financial year, will book the revenue highest ever in this financial year. Domestic bid is also submitted INR 627 crore. Tender bid under revolution is INR 360 crores, and total bids submitted INR 987 crores. Some of the key points, I would like to give you the information about the new development by our R&D team. We developed the TOM turning cum milling machine with Y-axis, 1.5 meter big machines. We already launched in the market. MONO 400 XL we developed; GX 100 Super, we developed; 1066 APC, Automatic Pallet Changer, and second machine of Y-Axis machines we developed in a different design. About the German exhibition, the name of the exhibition is EMO, where Macpower is first time after long years, we participated in international show and we displayed our machines and technology. So we successfully focused and sold a few machines in the European market. Some orders also we received, and from our new foreign dealers. And we are actively in discussion with the other dealers for different countries to expanded global presence. Meeting with some foreign players during the Germany exhibition, for the technology transfer and collaboration, I would like to announce you that we already met and did the MOU with more than double-digit companies from the various part of the world like Europe, Japan, Korea and Taiwan. So in double digits for technology transfer and collaboration from this, we selected five companies offering diverse product portfolio in sectors such as medical, semiconductor, EMS, die and mold and electronic parts manufacturing. Out of these 5, we already signed the NDA with the 3 companies and the 2 companies from this out of 5, 2 companies delegation has already visited Macpower. Now we are waiting for another 3 companies. After that, we'll select some company from this. So we have right now good options for the various parts of the world and various product basket. Our selection strategy focused on achieving multiple objectives, introducing import substitute products for sales and service in India through our sales and service network, and exporting our products to other countries, and the manufacturing the some of the product which India is not producing. Update about the new projects. I informed during the quarter 1 con call that payment would be made shortly. So now I would like to happily announce that we have already paid the token money for the land acquisitions and almost all the formalities from the government side is completed. I informed in my quarter 1 con call, we expect to acquire the land by end of December. Now major approvals from the all relevant department have been obtained. So same thing in December end, maybe we'll receive this land. So these are all the major highlights. Now Vinay, if you have any questions, we can discuss.

[Operator Instructions]

Sir, until the question queue assembles, there are 2 interesting points that you have spoken about in your initial remarks, right? One is about the EMO exhibition that you attended in Germany. And the second is about talking to international players collaboration and subsequently, your expansion. Can you throw some more light on how this will change the dynamics of your business going forward?

As we already discussed and you already mentioned in your presentation very nicely that now our capacity is 2,500 machines. With the new land, we required a 30 acre minimum, but our demand is more than 30 acre to the government. So definitely, we'll get the minimum this much land. Maybe we can get some more. So in Phase 1, we are starting some backward integration like foundries and some of the component which we are buying from our suppliers and supply chains. So Phase 1, we are adding another 2,500 machines capacity. So total 5,000 machine capacity will have from this new plant. And now we have our foreign technical collaboration and joint venture types of discussions going on. So maybe we will add the separate line for our foreign partners for their products. So these are the ideas in Phase 1. And Phase 2 is another 2,500 machines. And in Phase 3, another 2,500. So totally, we are planning 10,000 machines capacity, we are planning in coming 5 years. And according to the demand and according to the requirement of our foreign partners, we'll construct and we'll establish the facility. These are the major development after new land development.

We'll take the first question from Mr. [ Dhaval Shah ].

Yes, Rupesh bhai very good results. Am I audible?

Yes, you're audible.

Yes, yes, yes. So now we are going for a big expansion plus event collaboration. So -- and we have developed newer machines, higher-end machines. So if you can help us understand, how have we progressed in terms of newer client acquisitions? Some -- if you can name some clients, or without naming which industries have we got into? So what I'm trying to understand is that a lot of investors I speak to and who do the plant visit, they generally say that a lot of large companies like to use machines, which are made out of -- which are imported machines. So -- and given this CNC machine is, from an investment perspective, it's a story of import -- replacing the substitution of imports. So which are the clients whom we have gained, whom we have signed up? The bigger names, all the midsized SME names, which we have signed up, and we are expanding our client base. To understand that how we are progressing, going ahead in terms of our capability? How will we be -- what are our plans to sell such a large capacity, which we are building going forward? So 2,500 capacity we have now, we are building another 2500 next 5 years, you want to take it up to 10,000 machines. So if you can just give us what is your strategy to sell machines? Whom are you going to sell so much -- so many machines? And everything around it?

Yes, Dhaval. First of all, selling strategy and selling technique should not be discussed in public platform and we are focusing as in my last con call, you, I think, attend all the con calls. First of all, we don't have capacity. So we are focusing on Tier 3 and Tier 4. And our market share is just 4.5% right now. Previously, it was just 4%. So we are not focusing the segment. We are focusing on the area and client right now. But now we are starting, in last con call, I had, I think, mentioned that we supplied and we got the good numbers of orders from the big players, like the one biggest tire company. Second is the Kirloskar and Graphite India. So we are -- I think it is not good to discuss about the customer in this call. But now we are focusing in Tier 2 also. Previously, we are not focusing because their requirement is huge. Their requirement is bulk. And they are asking for some credits and some discounts also. But we have a sort of production capacity. So now we are focusing and we have a good client base with the MNC also. I had given you the few names. So we developed the graphite machining because now India is developing the graphite also, and their machining is a different type of capabilities required to machine the graphite. So we already supplied the level of this series also. And mainly, we are now focusing on the defense and aerospace. And right now, our major client base is Tier 3 and Tier 4. But for the sampling now every month, we are supplying Double-Column, VTL, HMC by 4 to 6 machines. That's why compared to last year, our average price is gradually increasing. So with this new plant about your import questions, the -- some of the manufacturers told you about the imported machine they are buying. But right now, India is producing turning machines just like a 2-wheeler, VMC machines like a car. So HMC, VTL, and Double-Column, these kind of machine is not that much import. Turning machine almost 90% India's production compared to consumption. VMC is almost 80%. HMC is 60% now Indian players are supplying. 10 years back, our market share of Indian player was just 5%. So it will take time, 2 to 3 years because -- so still, we are importing 50%. But the 50% we are importing in India is not produced. Out of 50%, 40% import is India is not produced. In terms of the numbers, India is producing 30,000 machines and import is just 4,000. But the value of these 4,000 is too high, maybe INR 5 crores, INR 10 crores, INR 3 crore, INR 2 crore like that. So my idea is to produce these kind of machines, which India is not producing because of technical gap, technology gap and some kind of good brands. So we are adding these new names from foreign partners and will manufacture with their design, their technical capability with the new plant. Right now, I'm not worried till that about that.

Rupesh sir, this 30,000 machines which India is producing, what will be the average selling price of those machines?

Average selling price, I don't have that much idea, but in terms of the -- there are so many machines because -- if we are not manufacturing this, somebody is not manufacturing these, but almost in the terms of the consumption we are just producing 50%. Till date, we have lots of opportunity. If we develop the import substitute product, then market is open because of the duty and logistic cost. The imported machine price is almost 2.5x. But India developed this kind of machine. That's why this foreign partners are also eagerly looking at India manufacturing. They don't trust the China. And they are also facing the same problem because of the cost and the European and Korean and Japanese manufacturing cost is 3x, 4x higher than us. So that's why they are also looking the good partners in this country. And out of these top 5 players, almost everybody is busy with someone, either acquisition or collaboration or something. So we are only available right now for this kind of thing. In our development history, we never bought any design. We never do the collaboration and everything we develop with our own R&D team. So these are the ideas.

Yes. And last question, Rupesh, sir. Growing capacity and bigger customers, do you think the receivable days will increase for us going forward? So if we see last 2 years, there is an increase from 33 days to around 45, 46 days for March for -- so in FY '25, they were around 30 days in March. In '25, they have gone to around 45, 46 days. And as you mentioned, the bigger client wants credit, and the payment terms are -- they want more relaxed payment terms. So going forward, should this be the normal or we can come back to 35 days of receivable days?

I think once you focus on the defense sector, the payment terms is -- margin is good, but the payment terms is almost 90 days. So it may increase, but I'm not worried about that because right now, we have a surplus. I think if you can see, we are not utilizing our cash credit also. So this quarter, we are planning to give some kind of -- against LC some credit to the big clients. It is a normal practice for these industries.

Great. And wish you good luck as the order book is very strong, and you only have at INR 130 crores of inventory, and it just 1 month into the third quarter, so shows that the growth is going to be very strong for the second half of the current financial year.

Yes, it is -- I mean, Dhaval, as we discussed many times, 40-60. First 6 months 40, another six months 60. This is the trend of this industry.

Yes. I mean you have done the -- in second quarter, you have done the sales which you did in the fourth quarter.

[Operator Instructions] We'll take the next question from [ Ronit Kapoor ]

Congratulations on the great set of numbers. So I want to know like an order received has decreased 5% year-on-year. Like last year Q2, we received INR 93 crores of order. This year, we received INR 88 crores. And like I think we have held quite a few exhibitions in quarter 1 and quarter 2. So what is the reason for that?

We executed some more compared to last quarter, if you can see our execution. So this time execution is more than in last quarter.

I'm not talking about execution. I'm talking about the order received, like the new orders which came in, order inflow?

Maybe sometimes it's because of holiday, it may be forwarded to -- if you can go through the 6 months versus 6 months, then it increased by [indiscernible]. So I think because of this, I have to check this, I will come back to you after checking the data. If you have any second question, I will answer.

So I just want to understand one more aspect of last year in Q3, we had still seen some degrowth because Diwali holidays came and then you are not supplied for the Bangalore exhibition was there, so you were not supplied to certain customers. So this year, are we expected to see the same or like?

I think quarter 3, are you asking about this quarter?

Quarter 3, yes.

I think this -- trend of the industries first quarter is a little bit down. Second is up. And third is also a little bit up. So as I told you, first 6 months is 40%, 45% business. Second is 55% to 60% business. So this quarter 3, I think, will prove same kind of the figures. And quarter 4 is all-time high. So this time, I think we are expecting INR 50 crore EBITDA, and we'll achieve this, there is no any doubt about it.

Quarter 3 is usually better than quarter 2, right, in terms of...

Maybe because of some holidays, maybe it's equivalent or maybe plus, but not down.

And lastly, to understand like if I see the industry right now, there's a demand supply shortage right now because if I see Jyoti is coming up with capacity, we'll take 1 more year. Lokesh Machine has been sanctioned. So despite that, I feel like a company has a great capacity, but we are being too conservative in our growth mix. So why aren't we taking like moving to Tier 1, Tier 2 clients because player like Lokesh Machines was dealing directly with auto companies rather than auto ancs. So I mean, the company has so much capability. So why aren't we doing that? Like if we give credit, we can focus more on growth?

These are the biggest headaches to collect the payments from the Tier 3 and Tier 4. And sometimes without margin, if you are just growing the production that is also a not good strategy according to my experience. That if you are not earning a good margin, then why to supply the machine to just let the top line. I'm focusing always on the bottom line. And the credit system we are giving right now, but not directly, through some partners. Just like some financial company they are giving the loans to the customer and they will pay us after 3 months or 2 months. So this kind of systems, we are working right now and we already executed. But to give the credit to -- directly to the customer, this is a very dangerous thing. So that's why you can see my 5 years balance sheet, there is no bad debt.

Balance sheet is very strong, but I'm saying if you focus on Tier 1, Tier 2, like we can gain more market share right now because we see there's more demand and supply. So I mean, in terms of like will help us gain market share at Tier 1, Tier 2 would -- we don't have a current borrowings also. I mean so if you see like we can take a sort of working capital and gain a market share for the short term, that would help the brand image in the long term, I feel that.

No, there is no issue to give the credit to Tier 1 and Tier 2 with the letter of credit, and we are giving right now because that is the primary demand. We can encash this LC anytime. But to Tier 3 and Tier 4 also, we are working with some financial institute. There is no problem for the orders. The problem is for the execution, payment. Because right now, Tier 3 and Tier 4 customers is getting the loan from the PSU and bank because they are getting 25% subsidy and interest subsidy. That's why this month billing jumps to next month, next month billing jumps to next month. So that's why we create the one kind of the facility for our customer, that finance institute will give the loans. And finance institute loan is lesser than bank loan. For example, 7%, 8%. And what they ask, they will ask that finance institute will give us the PDC check for 60 days, 90 days. So we are working on this to increase the billing because right now -- previously, we don't have that much capacity. But now we are adding the capacity and that is why you can see the results. In Q2 unexpected result in our all-time history in year-on-year and quarter-on-quarter. And this history and journey will be continuing in coming years and coming quarters.

The last question is what is the NEXA order book? And how much NEXA order was executed in this quarter, right?

We have 27%.

So the current order book of NEXA?

Already we executed -- 27 executed.

We'll take the next question from [ Khush Nahar ].

My first question is what would be the first time lines to close the transaction with the JV partner? And consequently, what would be the time lines now since you are more confident on the new CapEx, till when can we expect revenues from the additional 2,500 machine capacity that we will add, so timeline on that. And sir, second, the recent addition that we have done 500 machines. When can we -- so considering the demand and the order book, when do we expect this to be fully utilized?

First -- your first question for the JV pushback. We don't have that much rush to sign the JV right now. These all are the activity we are doing as the primary exercise for the new plant. Whatever the facility, they're required to produce the machine in plant, we don't have that facility in existing plant, and we don't have space also. So we are doing everything too early because next EMO is in 2027. So that's why we participated. Our objective was to meet the few foreign bidders, foreign players for the joint venture. So we are on this way. We don't have that much hurry to complete this agreement. We are comparing all the products. We are comparing the terms and conditions, what they are thinking about investment, products, everything. So maybe we can finalize these things before we have started the new construction in new plants. From the new plant production, I think if we can start, what comes first, from the next financial year in April or May, we can start the construction. It will take 1 year to complete the project. So after 15 to 16 months, we can start generating the revenue and adding the capacity.

Right. Sir on the new capacity utilization, when do we expect the 500 units which we recently added?

500 we already added. That premises is also in working condition right now and all the CapEx and the recruitment is already completed. So from the 10th November, we are in -- we already added the 500 machines. From 10th November, our -- according to last 5 months, you can calculate our plant capacity for this year is 2,200 or 2,250. And next year is 2,500 because already 7 months is passed.

So in FY '27, we expect that optimum, we can use this entire 2500?

Yes, 2500. And the top line may be the INR 500 crores, we can utilize.

It will be the revenue potential?

Yes revenue potential.

And sir, this average realization, you see [ 20 lakhs ]. So now we expect this to continue considering the order book mix since we are adding more on the high-end machine and execution will be more on that side?

Sometimes right now, we don't have a separate line. So as I told you, Khush, in last con call also that if we produce the [ 15 lakh ] machines, then 10 numbers, if you put [ 13 lakh ] machines, then it is 5 numbers. If you produce the 1 crore machine, then 10 machine capacity is reduced. So that's why -- but right now, we have a good order good from the NEXA. So I think average price will continue in quarter 3 also. And maybe in quarter 4, we'll increase the average price from [ 20.47 ] -- [ 20.19 ]. So compared to last year-on-year, quarter-on-quarter, we already increased the average price, but this journey may show more increment in average price.

Right, sir. Pretty good to hear. And sir, lastly, what was the expenses for the Germany exhibition because I think other expenses have an effect of that, it has increased more than...

That's a good question. It's already in this quarter 2 balance sheet. It is [ 1.5 plus 25 ]. So INR 1.5 crores to INR 2 crores, in between INR 1.5 crores to INR 2 crores is the expense. It's already booked in the quarter 2.

And sir, lastly, any guidance if you would like to give for '26 and going ahead, considering we have the capacity now, 2,500 units, what kind of CAGR revenue and sustainable EBITDA margins we can see, considering order book on capacity?

So same thing as last year, we had already discussed the 20% to 30% growth year-on-year. So same growth we are expecting maybe 25%, maybe 30% in this financial year. And same planning we are doing for the next financial year for 25% to 30% growth. And after that, you can understand once your new project will be in operational, we can add more revenues.

And margins will be sustained?

Khush, may I request you rejoin the queue please?

Margin maybe slightly increased because there is no big exhibitions and the revenue may -- we'll try to keep the remaining minimum sales. And -- there is no other expense in this quarter. So this year, margins will be also increased in the quarter-on-quarter.

[Operator Instructions] We'll take the next question from [ Pratik Kothari ].

Sir, congratulations on a good set of numbers. And so I just wanted to ask you about our bidding pipeline. What is the expected time lines for receiving any awards? And what are we expecting in terms of conversion ratio?

Sometimes, I think average is, I think, 12% to 13% whatever that you have given the quotation. Maybe it is -- another thing is forwarded in the next quarter. But normally, these are the practice to submit the quotation. But sometimes in your Mumbai City, nobody wants the quotation. In first meeting, they finalize. They don't have that much time. They already -- all the companies had all the references, all the job throughout. They've done all the exercise before they are inviting to the salespeople. So some cities are not asking for the quotation directly, they invite and then select model, compare to your competition in your model. And then finally, they discuss about technical, commercial and the deliveries. So whatever the quotation and bid we had submitted, that is not that much criteria to receive the numbers of orders. But whatever the projection, our sales team is giving, region to region, and branch to branch. So every week, we have a weekly meeting where they are submitting the strong inquiry who are in the buying platform. And according to that data, we projected the order received in this month or this quarter.

Right, sir. Sir, and on the -- our capital strategy, I just wanted to understand, given now that we are at advanced stages of receiving the land parcel, plus we are expecting, like you mentioned, the 25%, 30% growth rate, which will also have maybe in the future some defense orders, and defense orders typically 90- to 180-day time line is also there. So how we are expecting -- are we expecting to raise any equity or do some dilution to raise some funds to look at our future growth?

For the working capital, we have INR 30 crores cash credit. We are not utilizing that credit only for the bank guarantee and LC for the import component. So because it's 90 days, 120 days credit. So that's how utilizing the bank guarantee and this LC. We have INR 30 crore CC facility available with us. Maybe we'll use this CC facility if we require the cash flow. And second thing is our renewal is due. So we are adding the INR 20 crores new facility if in this kind of we get the good bulk order and the credit system will be 90 days, 100 days, so we can utilize this working capital. But in this kind of the scenario, many times it happens that your outstanding is more than 30 days or 40 days. That time, our 90% supplier in support to the company that your payment, you can give us after 4 months, 5 months, 6 months, whenever it's possible. But in emergency, we have a good credit facility right now. As you know that your company is debt-free company, and we rarely use our working capital. But to get the growth, as somebody told me that why we are not giving the credit to get the Tier 2 or Tier 1 customer. So we are doing on this thing, but I don't think so, for cash flow, we have any problem. For fundraise also, we are not thinking for the new plant also. In H1, we will get the debt because right now we are zero debt. So first phase, we will complete the -- our first phase from the debt or maybe our foreign collaboration company requires some stake, we'll give it to them as a strategical partner. But right now, we are thinking and creating the project report for the SIDBI or our bank.

And sir, any estimate on the CapEx for this phase?

Phase 1, we are expecting INR 125 crores, including land.

We take the next question from [ CA Garvit ] We'll move on to [ Mr. Tushar Gupta ]

[Foreign Language] How we are looking into demand coming from automobile sector as there is too much sales from automobile?

I think coming to your analysis, people are very well known about the automobile market. After reducing the 10% GST from my data, there is no inventory available with the leading player of auto manufacture and auto component manufactures because you can see the jump in October business in the automobile market. So it's good growth in the automobile market right now. And there is one new policy yesterday government announced for the capital goods and I think, for the industry is INR 45,000 crores for the exporters. So when we are exporting and we already start exporting, so this kind of benefit is government is giving. So automobile industries will, I think, grow by good numbers in this quarter and this year.

Okay, sir, that's nice. And one more thing, you're talking about [ carcass ] business. Is there any update on that?

We are discussing with 2 big giant players for the [ carcass ] business. So we -- when we have extra spare capacity in new plants, so we can supply the [ carcass ]. We'll start the sampling in the quarter 4. And after that, in their bulk requirement, we will fulfill by the new plants.

So we'll take the next question from [ Samarth Nagpal ]

[Foreign Language] only on the order book?

[Foreign Language] Supply chain because we are maintaining more than 19,000 component inventories. So -- and in 1 machine, more than 1,000 components we are adding. So supply chain, manpower and customer funds, the payment system, we are focusing on these. So this year, we are targeting this much amount.

[Foreign Language]. So I think [Foreign Language].

[Foreign Language] So there are lots of seniors already, and we are adding. But mainly [Foreign Language] So these are the normal practice.

And sir, last question. [Foreign Language]

[Foreign Language] they will ask for big fees also [Foreign Language] to hand over the keys. [Foreign Language]

We'll take the next question from [ Shreya Gandhi ].

Congratulations on a good set of numbers. Most of my questions got already answered. But just small color if you can give on the tech transfer, which you have entered into European companies and Japanese company in the exhibition?

Sorry, I'm not getting your voice, it is breaking. Can you please repeat your question?

I just have a small question on the tech transfer, which you have done with few foreign companies in the recent exhibition. If you can share some color on that?

No, that we cannot discuss, Shreya because we already signed the NDA with everyone. And we have not selected any of it. I told you that some of the Japan, Germany, maybe Europe and Korea. We already discussed with the 10 out of that, we shortlisted 5, and 3 companies came forward for NDA and now we are waiting for another 2 companies. Otherwise, from this 5, we'll select 1. And some of the things -- I think it is not good to share in this public platform.

We'll take the next question from [ Arunav Sahuja ].

So my first question is, so I think on the call, you had mentioned something along the lines of 25%, 30% growth as a guidance. So just to clarify, are you talking about revenue growth or volume growth? Or what was it? I didn't fully catch that?

Arunav, this is revenue growth, I'm giving you the indication according to our order book and now planned capacity. And there is no much more extra cost. Right now, there is no big exhibition in this Q3 and Q4. So I think margin-wise, also same growth, we'll achieve. And I can give indication about the EBITDA at INR 50 crores. So compared to last year, if you can go through. So in terms of EBITDA, in terms of PAT because we are adding the more CapEx, so our depreciation cost has increased as our friends suggest about the credits, little bit financial cost maybe increase, but then also 20% to 30% growth we are expecting in terms of the EBITDA, PAT, and the top line.

Right. And you also mentioning that in that additional 7,500 units that you would like to develop over the next 5 years. We are also looking at backward integration with components like foundry. So is there a significant margin saving that we can have through this backward integration?

Yes, definitely because when you are buying from the other suppliers, and when you are manufacturing everything in-house, so definitely, your manufacturing costs and your EBITDA margin will increase, because there is no logistic cost. There is -- we can reduce the rejections and you can save your assembly time also. And simultaneously, your margin will improve. So definitely, we can get the sustainable growth in the margin also after new plant and we can increase our EBITDA margin.

We'll take the next question from [ Sarosh Sethna ].

Sir, I just had a question regarding you're -- now getting into the aerospace and defense sector as well?

Sarosh, you are doing right now for some kind of difficult component from the [indiscernible] industries and the medical industries. For aerospace, I think, for aerospace and aeronautic component, mostly people are using 90% imported machines. They are not using India's machine. This trend in India. When we started manufacturing horizontal machining center. First year, second year, our market share -- I'm talking about Indian place, is just 5%, 10%. Now horizontal machining center, we are almost 60% to 70% domestic. So creditability, reliability and people doesn't want to take the big risks. So this market is growing in coming 5 years. This market is not that much growth for the domestic players. So that's why if we have any joint venture and proper infrastructure, from the new plant, and then and then you have to focus on aeronautics industries. Right now, we are focusing on the Tier 2, Tier 3 supplier for the aeronautic component. But directly, to supply the machines is right now not possible with our capacity also, and with our capability also.

So in the last quarter, you had mentioned that you have gotten to an MOU with the Gujarat government. I just wanted to know if there was -- is there any update on this? Or like what you said, you still -- you can't manufacture?

I already, I think, informed in my speech in some of the questions that we already paid the token charges and now with this MOU only, they are offering. And in December end, I think we'll get the allotment maybe, we can extent to January, they have -- 14 January 15 January, they have Vibrant Gujarat in Gandhi Nagar. So maybe they invite us in the Gandhi Nagar to hand over this document. But I'm expecting in December, maybe they can hand over in front of the thousand of people in Vibrant Gujarat show.

Okay. So production for this will begin when? I'm sorry, I'm a little confused on this that's why I'm asking you about this.

I'm talking about the MOU with Gujarat government for the manufacturing of the defense and aeronautics -- aerospace and defense policy. So they will give this kind of the facility to us. And we already completed all the parameters and we already paid the amount.

So then it will take you about 15 months to set up the facility and then you can start production? Is that it?

Yes, after receiving, I think I'm targeting 12 months, but maybe with this kind of -- our Indian facilities available, it may give us 13 months to 15 months, maximum. But we will give a contract to the contract manufacturing company, who can hand over us in the 12 months.

We will take the next question from [ Kamal Jaiswani ]

Congratulations on the good set of numbers. Sorry, if there's a repetition, I got disconnected in between. What is the capacity utilization of our plant, which is like, I think, 2,500 is the current capacity. So where is the capacity utilization?

And I think with the 2,000 machines, we produced almost 85% machines. And we are keeping some running models in our warehouses in various branches and in our ready inventory also. Because right now, we are getting 10% to 12% customer who required the machine in the same day. So some of the fastest moving model we are keeping in our inventory. We have a more than 100-plus ready machines inventory, and we are refilling that. So in terms of the production, we are utilizing right now 85%.

And secondly, regarding the CapEx of the INR 125 crores, which we are planning. Are we -- how are we planning to fund this through internal accruals or we are going for [indiscernible].

For new planning, Kamal, it's INR 125 crores. And we are going to get the debt from the SIDBI or our bank. And in Phase 1, maybe we completed our strategic partner from foreign global partner. So maybe we can give some stake as a technology partner, as a strategy partner. But right now, we are not planning to raise the fund in Phase 1 for the new expense.

Sir, we'll take the last follow-up question from [ Khush Nahar ]

So could you tell us the number of machines we sold in Q2 and in Q1 FY '26?

Khush, we mentioned this figure in our presentation and in con call also, but it is helping our peer company to mapping the area-wise and total number of machine-wise. So you can calculate the revenue versus average price.

Sir, since that was the last question, would you like to give any closing comments?

Thank you very much [ Mohsin ]. Thank you very much team Kaptify, and Vinay, for making the excellent presentation. I think this time, your presentation for Q2 is same like our results. The all-time best presentation, you, Kaptify team, prepared and thank you very much, everyone, who are joining in our H1 and Q2 results. And I hope that in Q3, we'll meet again for the same kind of success story we discussed. And thank you very much everyone.

Thank you, sir. Thank you for your management team, and thank you to all the participants for joining on this call. This brings us to the end of today's conference call. Thank you.