Macpower CNC Machines Limited (MACPOWER) Q3 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, on behalf of Kaptify Consulting Investor Relations team, I welcome you all to the Q3 and 9 months 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; Mr. Vishal Mehta, Chief Financial Officer; and Mr. Kishor Kikani, Company Secretary. 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 detail us about the business and performance highlights for the period ended December 2025, the growth perspective and vision for the coming years, post which we will open the floor for Q&A. Over to the management team.

Thank you very much, Vinay-bhai. First of all, good afternoon, everyone. First of all, I earnestly welcome you all to Q3 FY '26 post results 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. I would quickly run you through the quarter 3 FY '26 result highlights first, then we will discuss more about our business. So in quarter 3 FY '26, the company delivered its highest ever quarterly performance in history of Macpower in terms of the EBITDA, in terms of the PAT, in terms of the revenue. So I would like to give you some figures. Revenue stand at INR 86.15 crores, which has grown Y-o-Y at 43%. EBITDA stand at INR 15.5 crores, which has grown Y-o-Y at 99% with EBITDA margin of 18.8% is also highest ever. And PAT stand at INR 9.79 crores, which has grown Y-o-Y 119% with PAT margin of 11.37%. This quarter -- this 9 months our CapEx is also increased by INR 12.41 crores compared to last 9 months, INR 7.81 crores. So that's why our depreciation is also increased by INR 1 crores, then also we achieved a good PAT. Machine average price also increased last increased from INR 18.28 lakh to nearly INR 20 lakh Y-o-Y. NEXA, which we had discussed so many times in 2, 3 con calls that we are focusing on NEXA product. So I think I'm happy to announce that the contribution of NEXA product is also 39% in our order book because we are focusing on those NEXA product area. Strong order book, pending order book is also increased by INR 375 crores compared to Q3, it's now 17% growth in the order book also. Domestic bid is also submitted by INR 639 crores and tender bids, defense and aeronautic bid is INR 319 crores. So total bidding is INR 958 crores. So in quarter 4, we are expecting more strong order book and more delivery. We developed a few new products also in our product basket. The name is DCM 4222. That is the double column series machines. Weight of this machine is approximately 30 tonnes and the value is approximately INR 2 crores. Turn-Mill center with Y-axis, this one is our new model, nearly INR 1 crore market value product. And product is GX 100 Super. These 3 new products in this quarter, we recently developed according to the market need. And as part of ongoing capacity enhancement strategy, the company has recently taken the 10,000 square feet industrial set space on rental base, so we cannot stop our growth journey for coming 1 year or 2 years. And secondly, we are looking and discussing for another 50,000 to 100,000 square feet rental base new sets to increase our production, our process, and we are shifting some of the process in this new ready available rental-based sets. So once we start the new plant, we don't have to suffer for next financial year. Update about our new land. We have already paid a primary token advance amount and all the government side, almost 18 type of the different, different approvals we received. And now everything is clear. We have to just sign the agreement with the government, but we are waiting for the government new policy, which is maybe in this Gujarat budget or maybe in February end. So maybe I'm hopefully expect that in March, first week, second week, we received our new land for the new project. And significantly, we increased our export business also. As you know that, we participate in the EMO exhibition in Germany. And from this exhibition, we received a few orders from the few dealers we appointed. And gradually now we are entering into the export market also. This is a brief about the business and performance. And I request Vinayji to start the question-and-answer.

[Operator Instructions] We take the first question from Arnav Sakhuja.

Rupeshji, congratulations on a strong set of numbers. So my first question is just regarding this rental area that you just spoke about. So this is different from the land that you are acquiring, which you are in the process of deciding with the government how much land they give and those various terms. And that land, correct me if I'm wrong, will have a 10,000 machine capacity over the next 5 years. So what will the purpose of this rental area of 50,000 to 100,000 square foot be for?

This new land for rental, we are just discussing because it is readily available with a very nominal rental base. So in '26, '27 financial year, if we receive the land on March, then also minimum 12 months, 1 year, we have to wait for the infrastructure, plant and machinery and expansion of the capacity. So meanwhile, for '26, '27, this land is available for short period. So we are deciding that, if we utilize this land, then we can smoothen our production and production capacity also, we can, I think, improve.

So if we get this land the 50,000 to 100,000 square foot rental area, then we will still go ahead with the new land that we are trying to get for the 10,000 machines or then we'll just use this existing space for that CapEx?

No, this new 50,000 to 100,000 already we shifted 10,000 square feet area. Some of the process we are shifting in this new 50,000 to 100,000 because what we feel is that, if we want to achieve 2,500 machines capacity, we need to shift some of the process. So we are planning to shift some of the process in this new rental area for a short period, maybe 1 year or 1.5 years. After new building, new construction of new plant will be in operation, we'll shift this rental area and we'll be totally focused on the new plant and new building, where we are keeping another 2,500 machine for Phase 1, yes.

So this will just be temporary, and it won't be an additional capacity enhancement. It will be the same capacity moving to that area?

Same capacity, but we are -- we have to struggle to achieve this 2,500 capacity because of the shortage of the areas. So we decided as a safer side, it is not that much costly also. So we'll shift some of the process to smoothen the 2,500 capacity for next financial year.

Okay. Understood. And my next question is, so last year in quarter 3 FY '25, we -- you spoke about some bank realization issue and payments regarding those issues, which affected the performance a bit. So did we face any similar bank realization issues this quarter? Or was that a onetime thing?

No. I think now we have some kind of the financial scheme also available with some of the NBC, and that is why our payment and financial realization issue is almost sold out. So that's why we make the one good strategy also with some NBFC. And now we don't have that much problem for the realization. So that issue is not, I think -- and this quarter 3, quarter 4 are always highest ever for every machine tool builder or capital goods manufacturer. And that's why we feel that quarter-on-quarter also, we will achieve the good numbers.

And just one last question. Are we sticking to our guidance for performance in FY '27? Or is there any revision in the guidance?

No, I think as I discussed, Arnavji, that every year, we'll achieve 25% to 30% growth. So same journey we are expecting for next financial year also.

And this is revenue and profit growth?

Everywhere.

Congratulations again on strong set of numbers.

We'll take the next question from Dhaval Shah.

Rupesh-bhai, congratulation, good set of numbers. So my question is regarding the various models. We have given a lot of information about the new products in the presentation. So where do we stand in terms of our complete offering to the market? At this stage, how many more products or which other new platform are needed for us to have a complete set of offering to the customer? Say, for example, if our competitor is having 10 products, so do we have all of those 10 products or we have reached 8 products and the other 2 we are working upon. So my question is from that side.

Yes. I think about product basket worldwide, we -- all the 6, 7 players are neck to neck. I think I have a 5% plus than some of the company. And some of the model we are not focusing. So I think almost every manufacturer have a 90%, 95% similar product. So product basket-wise, I think, I am proud that we are in top 3 in India. So then also every quarter, we are adding the new, new product. So product basket-wise, we are the 100%. As I told in my last con call also that we are suffering for the plant capacity. And that's why we are not focusing on the certain area like Tier 1 customer. But now we are focusing Recently, we got good numbers from Kirloskar, like big companies. So we are focusing on that area. But what we have to do for the next financial year is some of the, I think, area, Tier 1, Tier 2 customers, we have to separately make the separate team for them. And some of the segments which we are not focusing because of capacity. So we are gradually focusing on this area where our presence is almost negligible because of our plant capacity. But now we are increasing the presence in the segment-wise and area-wise also. And that's why if you can see last year, our NEXA contribution was almost negligible. In these 9 months, we increased by 39%. So we are sure that next financial year according to our capacity, we'll get the good numbers from the booking and good numbers for the billing also by maybe 20% to 30%, we are expecting the growth for the next financial year.

Okay. So this NEXA segment is for catering to Tier 1 customer?

No, NEXA is for the higher-end products.

Higher-end products, yes. Okay. But does that mean that the Tier 1 customers will be more on the higher end side or even your current MSME customer will also...

No. Right now, our regular team is handling the Tier 1, Tier 2, but we already appointed a few people. And maybe in new financial year, we'll active the Tier 1, Tier 2 -- our new team for the Tier 1 and Tier 2.

Okay. Got it. Second question is on the margins front. You've written about 25% margin vision. So this gap from 18% to 25%, and another 7%, 8% this is going to be possible because of backward integration or a mix of more better, higher products and backward integration?

I think it is for the backward integration and we have a fixed cost. Once your revenue will increase, your margin will definitely increase. If you can see the revenue, once revenue increase, the margin is increased by 1% or 2%. So that is the one area. And second area is backward integration. And third area is we are focusing on NEXA product, which is premium product where our margin level is a little bit high compared to other baskets. And third is the defense business where our focus is slightly more right now, and the margin level is highest ever in defense area. So that's why I believe that we can achieve this 25% in coming 3 years in new plant.

Propose the new plant. So the current plant, like what maximum margins you can do from the current plant?

It depends on the revenue. If your revenue is increased, then definitely your EBITDA margin will increase. And if we are not participating in the big exhibitions or not doing anything else, we can keep the cost remaining same, then also the margin will increase. So there are the 2 aspects. So if my revenue is increased by INR 10 crores, then margin -- definitely, EBITDA margin will increase.

Okay. So you are -- okay. So from here on, every incremental machine you sell, all your costs are there in the P&L, and it is going to directly go to the EBITDA?

EBITDA. Yes.

Right? Every additional revenue will go to EBITDA?

Go to EBITDA.

Yes, with very little bit increase in your cost. Okay.

Right. Yes. We have a fixed cost. That's why.

Fixed cost is there. Yes.

Yes.

Sir, we'll take a question from the chat. Actually, there are 3 questions by Hitesh Jain. One of the questions is the time line for the 25% EBITDA margin guidance. So I think you just...

After I think fully operation of new plant, we can achieve 25%.

Okay. And what were the number of machines sold in this quarter, in the last quarter?

Number of machines, we are not disclosing because of some of the strategy and competition are watching everything. So number of machines, I will not explain.

Okay, sir. And his last question is what is the capacity utilization expected in the next quarter?

I think next quarter capacity utilization is not for the quarter, but the entire year. So we are expecting, I think in the terms of capacity utilization is the terms of the production. So almost 85%, we are expecting capacity utilization.

Sir, we'll take the next question, which is also from chat. It's from Naman Jain. He's asking, if we compare with world's leading CNC machine manufacturers, margins of those companies, can Macpower reach those margin levels? This quarter, we reached 18% levels. How much room is left on the margin front?

No, margin will increase gradually. It is not an overnight journey. But with the new plant, I had given the clear projection that we are trying to achieve the 25% EBITDA with the new plant capacity and new investment in new backward integration. So we are expecting maximum 25%. After that, I will give you the new guidance, but there are lots of opportunity in this business to increase the margins. We can start the new vertical also. There are lots of -- but right now, we are focusing on 25% with new plant.

His next question is, are we looking for any technological or R&D partnership with world's leading producers to become the top 10 or 20 companies in the world? Is there anything in your agenda?

So it is already in our agenda in quarter 2 con call meeting, we had discussed about the joint venture or the technology transfer and some of the product we will produce in India with their technology. We already met 5 companies in last Germany exhibitions, and we are almost in the finalization stage. But we are waiting for the new land. Once we receive the new land, I think we'll start with the one company.

We'll take the next question from chat. It is from Aniket Jain from Yes Securities. He's asking, what is the impact of trade deals with U.S. and European Union on the CNC market in India?

I think U.S.A., we don't have anything. We are importing from U.S.A. or we are exporting from India to U.S.A. But European machines are -- maybe they can, I think, sell in India, but their prices right now almost doubles and the tariff in Europe and India is just 7.5%. So it will reduce only 7.5%, if the tariff is 0. So it will not give that much impact because their price is almost double without custom duty. So logistic cost is also a significant role for them also because logistic cost is also 25% to 30%. So it will not give any impact. But we have a good chance in their country, our tariff rate in the European market is, I think, too high. So it is a good chance where we are focusing right now. We had supplied the many machine to European market after EMO Germany Exhibition. So yes, it is beneficially to the Indian company.

We'll take the next question from Mahek Talati.

Sir, just wanted to understand when we say 25% to 30% growth from in FY '27 and going forward, so is it in volume terms or revenue terms?

Everywhere, I think for the revenue terms also and EBITDA terms and PAT term also.

But sir, when -- but then we are also expecting the margins to improve going forward. So our EBITDA and PAT should be higher than revenue, correct?

Yes, yes. It is relevant to the revenue. Once your revenue will increase, your EBITDA margin definitely will increase.

Okay. And sir, what was the average realization in this quarter for machine revenue?

Yes. I think I had given the figure is INR 20 lakh average price compared to last quarter 3, INR 18.28 lakh. So it has increased.

Okay. And Q2, what was in Q2, last quarter?

Q2, I think nearly INR 20 lakh. So same in Q2 versus Q3.

Okay. So going -- but now since we are focusing on the defense portfolio, so this INR 20 lakh will increase going forward with new, right?

Actually, we have a huge pending order from defense, and we are going to realize this order on quarter 3. So definitely, quarter 3 will be -- average price will be increased.

Okay. Understood. Okay. And land will be in Feb end or March first week, correct?

I'm expecting because we have to just sign -- nothing is pending right now. All the approvals is clear. But right now, they have an old policy. And they say stop and wait for the short time. We are giving you the new policy and which is very, very good and very beneficial to the sectors. So that's why we are waiting.

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

Congratulations for good set of numbers. And obviously, the number is quite stronger this time, and we hope that the company will deliver in future also. So my first question is about the orders that are under evaluation, around INR 380 crores, INR 18 crores tender are under. When do we see the results flowing in?

I think for the tender business, there is no timeframe for them. There is one rule [ Foreign Language ]. There is rules for GeM Portal that after 90 days, they have to pay some of the fees for tender uploading. So normally, they have to complete the tender process in 90 days, but some of the department is not, I think, following this SOP. So maybe it depends on how many tenders. But in almost the trend is quarter 4 is the maximum opening of tender. And right now, one HAL tender is open of INR 3.5 crores. So now tender will open quickly in quarter 4. After that, how much tender we win. That is up to the, I think, luck our background calculations, what price we had supplied, what price some other people are quoting. So according to me, average ratio is 10%.

And Overall bid pipeline is around INR 958 crores. So 10% is kind of conversion ratio for us. Is it right?

Yes.

So in INR 958 crores, INR 319 crores is from defense segments. remaining is INR 639 crores. So where is the major orders coming from, which sector?

I think everywhere right now, they have a huge budget, mainly HVF and recently, this engine factory, HAL and BHEL, they are, I think, uploading the maximum tenders.

So currently, I mean, as you mentioned, there are 6, 7 players having similar kind of product portfolio. So what is the competitive intensity in these biddings from the existing players?

I think average -- everybody is getting 10% to 12%.

Okay. I mean that 10% to 12% kind of...

Some of the small machines or basic machines tender, we are not filing because of process and the bank guarantee amount is hold and some of the institutes are not that much good for the payment systems. So -- and some of the company is not filing the higher-end machines like INR 5 crores, INR 10 crores, INR 20 crores. So it is company to company, they are selecting the technicals and then they are filing. So average in terms of the value, in terms of the numbers, they are getting 10% to 12%.

Okay. So what is the on-ground status from emerging industries like aerospace that India is trying to have its pie grow? So how much inquiries we are witnessing from that segment?

I have a very good market survey, I think about the segments of our machine tools, CNC machine tools. So I think this year, we'll close with -- exactly figure will come out after this quarter 4 because quarter 4 is highest ever for everyone and especially March. So I think we are expecting 15% to 25% growth in this sector.

Okay, sir. So are we also looking to participate in -- do we have a calendar of any exhibitions coming where we are trying to participate in coming time?

We already participated in last Jamnagar exhibition. Now in this 20th, we are participating in Ludhiana. So every month, we are participating in the domestic exhibition after that exhibition in Kolkata. So this year, our marketing aggression also, you can see. That's why our order, because we had a problem for the capacity, not for the market. Till date, we are covering only 4.5% market share in terms of the value. So I think still we have lots of opportunity. Once we increase the capacity, we will focus more and more on other sectors, other Tier 1, Tier 2 customers. Right now, if we focus more aggressively, then our operating cost will increase. And our order book, you can see it's like a double or triple, but we have a problem for the execution. So that's why we are increasing the capacity gradually and we are increasing our marketing and distributions and new product basket strategy gradually. So we have still lots of room, because our market share is just 4% compared to market value. So we are participating right now in each and every exhibition.

Okay. Sir, as we have seen we are very R&D-focused company launching so many new variants of new variants, new models. So have we added recently a good team of R&D members? Or how is the total strength of the R&D team? And have you added further into the team?

Right now, we have -- almost compared to last year, we have almost 2 times bigger R&D team. And we don't have that area. We are not feeling that, that area is challenging for us because we are in this field since last 27 years. So our team is capable to manufacture any kind of the machines. And some of the import substitute machines, we are going to make the one collaboration also in coming next financial year. So right now, we are not struggling for the product, I think, or product development. Maybe automation, robotic, it's the upcoming product also that we already produce and supply to our client. So our R&D team is almost 2 times compared to last year. So we don't have that area. Right now, our challenge is only land. Once we have a land, we'll build up the new setup and then when -- we'll start and we'll show the more aggression like other players in market.

Okay. So do we have any certain kind of internal policy of R&D budget that we are going to spend every year? Is there anything like that?

No, I think we decided at least 1% or 2%, minimum 1%, maximum 2% is the R&D budget. But for R&D, right now, we are not facing that much product. We have lots of new product is readily available with our basket, but we are not going to launch because if we launch, then we are -- we have to face, again, same problem for the capacity. And it is like in one machine, we have to utilize 1,100 components. So we have to modify our machining process, our fabrication process, our product process. So right now, we don't have that much capacity and space. So we are not launching this product. Once our new plant will start, we'll keep the product to product assembly area separately, we'll focus on that area. So R&D team is, I think, 1 year ahead than our future requirement.

Sir, we'll take a question from chat from Mr. Abhijeet A. He's asking what is the price difference in NEXA order book and non-NEXA order book, trying to understand the margin difference?

I think average price for the non-NEXA book is INR 15 lakh to INR 16 lakh average price. And the NEXA product, there is a INR 30 lakh machine also and INR 1.5 crore machine also.

Okay. So his next question is that good order book this quarter after a sluggish growth in the last few quarters, how do we see then order book run rate in the next year, FY '27?

I think as I discussed in my previous con call also that we'll try to get the minimum 25% order -- new orders against executed and the new orders. So we'll increase the 25% order book on each and every quarter-on-quarter.

Okay, sir. His next question is how much is the contribution from exports? And where do we see this number in FY '27?

I think recently, we supplied a few numbers in the Gulf and the European market. So gradually, we don't want to start aggressively for the export market. As I told you, we are facing the problem of capacity. So gradually in a trial base, we are focusing on the few countries. But with the new plant, we separate -- we'll set up the separate export division also in manufacturing. Right now, market is not that much problem for us. Our problem is execution. So gradually, we increase our export market share once we establish the capacity.

Okay, sir. He's asking that are the margins better in export? And if yes, how much?

Margin is better in terms of 5% to 7% because of some of the incentive from the government also and pricing also.

And his last question is how much can the average realization increase in FY '27, considering higher contribution from NEXA?

I think it is not important, I think, for the average realization because right now, we are working with the same plant with all the mix product basket. So say, for example, if I manufacture 20 lakh one machine and 40 lakh one machine. So the area of the assembly area utilization, so one INR 40 lakh machine take 2 days and INR 20 lakh machine take 1 day. So the average realization will, I think, effective once will shifted into the new plant. But right now, average realization expecting in next financial year that will increase by 10% to 20% in focusing on more high-valued machines.

Okay, sir. And he's asking one last question. Sir, you mentioned our R&D is 2 times of last year. So will this lead to an increase in the employee expense and other expenses in the coming quarters?

No, I think it will not increase that much. We gradually increased the double team compared to last financial year to this financial year. And we are upgrading the team. It is not that much higher valued cost. But compared to last year, we increased the R&D team. That's why our revenue and new models are coming quickly, but it is not that much compared to our entire salary cost. It's negligible cost.

[Operator Instructions] Sir, we'll take a question from chat from Naman Jain. He's asking, since you are making import substitution product, so how much percent of import you think can come down in terms of percentage in the next 5 years? Any PLI scheme government is planning for this sector?

I think it depends on the government policy. I think it is too early to predict how much percentage we can reduce. But yes, we can increase our percentage. That I am sure that, this sector will grow by 20% to 30% Y-o-Y every coming 5 years because still we have lots of room. We are not exporting. India's export is less than 1% and world market is open for India. And India's companies are ready to serve the world market right now. But same as I told you that they are busy with the domestic order book. That's why nobody is that much focused on export market, except 2, 3 companies. So I think we cannot reduce the import. It depends on government policy. But with the joint venture, technology transfer and acquisition of some of the company in Europe and other countries, we can increase our market share. But to reduce the market share is, I think, difficult. In terms of the numbers, we are higher, but the import machines are coming with the higher price. The average price of import machine is more than INR 1 crore. So I think India has to focus on that segment. But in coming 5 years, definitely, we'll achieve that area where right now, what I'm feeling that 45% to 50% is import and 45% to 50% India is -- 55% to 50% India is producing. So if you can see the 10 years back story, the import was 60% to 65%. And gradually, we, I think, reduced the import product. Right now, we are focusing on Double-Column. India is focusing on Double-Column. We are also 5-axis and HMC. I already purchased in 2012, I purchased from Hyundai, Korea same machine now we are selling to India. I purchased lots of Double-Column machine from the Taiwan and Japan. Now we are manufacturing same kind of the machine. So India is developing a new product basket, which is import substitute. That's why this segment is growing by 50% to 25%, which is the highest in the manufacturing industry.

Sir, we'll take a question from chat. It's from Ayush. He's asking, is it safe to assume a 25% growth in revenue for FY '27 and FY '28 and EBITDA margins to sustain at 18% or even higher based on the contribution from NEXA?

'27, I think, I'm sure that we can increase the EBITDA margin. '28 I think EBITDA margin will be also increased once your new plant will -- but pre-operating and preliminary expenses cost will be added in new plant. So '28 EBITDA definitely will increase.

And what about revenue, sir? He is asking the revenue growth will be around 25%, you can assume?

No, it is after completion of new plant and fully operated. So I think '29, we can achieve the 25%.

Okay, sir. Okay. We'll take a follow-up question from Abhijit A. He's asking, are we planning to participate in new exhibitions in FY '27?

Yes, we are planning, as I just now discussed that in each and every month, we are participating in exhibition. After this Ludhiana, we have Kolkata. After that, we have exhibition in Pune. So every month, we are participating. It is ongoing journey, and it is the regular process of business. Last year, we don't have a capacity. That's why we are not aggressively participating. In 2023, we did not participate in exhibition. '24, we started gradually, we are increasing. And now aggressively, we are participating in all the exhibition.

Okay, sir. Abhijit is asking, sir, what was the primary factor behind the increase in finance cost this quarter? How do we see the trajectory going forward?

So I think, we launched scheme for our customers, and we had tie-up with one NBFC. So this is our internal, I think, scheme with the NBFC company, which has helped to realize the financial disbursement immediately. So that is why this cost is increased. But we'll cover with our sales price. So it is indirectly cost, but it is not directly cost because our margin is improved, and we are, I think diverting that percentage to the NBFC company.

Okay, sir. So we'll take another question from chat. It's from Keshav Tantri. He's asking, I assume we import the controllers from FANUC any impact on the cost of these components due to European Union freight deal?

FANUC is not -- I think it is -- we are buying with the yen. So it's yen effect is, I think, applicable for us. And we are buying this FANUC from FANUC India. So they are giving us with the Indian rupees only. And the factor is every 4 months, we have to see the yen. So right now, FANUC in last 2 quarters, the yen is decreased. So it is benefit to us.

Okay, sir. We'll take the next question from Ronit Kapoor.

So first of all, congratulations on the great set of numbers. So I want to know like how is the competition you're seeing from this imported machine, these fabricators from China who are bringing in parts and assembling the machine? And secondly, I want to know like when is the BI expected to come to stop this?

I think Ronitji, right now, we are not that much -- we are not facing that much process problem with the China import and their assembly here because the quality of these kind of machines is just like Chinese toys. So within 1 year, within 6 months, 2 years. So initially, 2, 3 years back, people buy these machines who are just as a new entrepreneur, they wanted to start their start-up. But after this experience, our machine's life is minimum 5 years. And if the good maintenance and good service they are doing regularly, then they can utilize for 10 years also for the roughing purpose. But the Chinese machines is only 1 year. So I don't think so it will affect our Indian market. But I think new rules of [ BIDIC ] is, I think, applicable on next financial year, September, October is the deadline. So maybe after that, almost this kind of the import from other country and from the China will stop. But our import is from China is very, very less in the entry-level machine.

No, imports are like, I mean, mainly of parts and a lot of these unorganized sector, they are fabricating it and making it, right?

No. But unorganized sector, I think not in this sector, this segment. They have to organize. If they wanted to assemble and they wanted to test the machine, then also they have to establish the full capacity plant. So there are 2, 3 players are just doing this kind of -- but they are buying CKD, all the machines, but it is entry-level machines. The cost of that machine is just like 50% than Indian machine and the capacity is half. Our machine capacity is 2 time than Chinese machine and reliability is 0. So I think now people realize that we don't have to buy these kind of machines. But the Chinese market share is in total terms of the value is not more than 5% also. So it is not the threat for us. And our threat is to develop the -- for Macpower, our threat is or our opportunity we are missing is the plant capacity. So next financial year, once we receive the new land, we'll increase our capacity. And the second is the import substitute product. So I am sure that we are fully capable to deliver the import substitute product in coming few years. So China is not a big threat. But yes, October, November, now this is the last warning from the government for this standard. So after October, November, I think September, third quarter, China machine will stop.

Okay. And lastly, like any update on when you will be finalizing the joint venture with foreign company?

We have a -- I think we have a nondisclosure agreement, but we are ready from the both sides, slowly with some of the things, we'll start once we receive the new land. Meanwhile, we are doing some of the things jointly right now, we are selling their machines. We are focusing that we can give the market survey, and we are working on that area. Once we receive the land, we'll announce the one joint venture.

So this joint venture capacity would be just the new land or like the other capacity also.

New land, because they have a certain kind of the criteria. With this plant, if we start the manufacturing of their product, I think we'll disturb our own setup right now. So we'll make the separate setup for them.

So your new foundry is supposed to come up in the land, right?

Yes, new land. Yes.

Okay. And lastly, like in terms of the joint venture, like you will be having a 50% stake or like majority stake?

It's not like a joint venture. It is the word I'm using, but it is like a technology transfer and buyback systems. They are not investing. They want to invest, but I deny them for the investment. So it is one kind of the business opportunity that we produce some of the machine for the Asian market in our new plant. And some of the import substitute product, they will guide us to produce in our new plant, and we'll give some kind of percentage royalty to them.

This would be like a contract manufacturing like somewhat?

No, no, no contract.

Okay. That seems like a technology transfer agreement as such?

Only technology transfer.

Sir, we'll take a question from chat from [ Zubin C ]. He is asking, how would you compare the quality of Macpower machines versus other Indian competitors?

I think we all are neck to neck because we have to follow the Indian IS standards. Everybody is following the IS standard. Everybody have a Laser, Ball Bar, NAST-ZZ which are the international norms, which we have to follow to deliver the machines. So I think all the top 5 players are following these standards. And I think we all are capable to follow this standard. And equal to other top 5 player, Macpower is also in same cube. There is no 1, 2, 3, 4 because everybody have to follow the same standard of quality. So in the terms of quality, yes, we are different in the features. Our length is higher, our feet is higher. In some of the model, we are #1. We are getting the -- some of the segment market share is almost 30% to 40%. We are very strong in that focus in some segments. So quality-wise, we all are neck to neck. Macpower is also, you can say, #1.

Okay, sir. He further asked that how would you benchmark the quality against Italian or German CNC machines?

I think our machine, Indian machines is capable to compete them. But what we are manufacturing right now, we are neck to neck. That German and Italian, what they are manufacturing, we don't have that product in India. So what they are manufacturing, we don't manufacture in India. But if you can say HMC, if you can say vertical machining center, we are neck to neck with the German and Italy because everybody is following same standard, which all the world is following.

Okay, sir. We'll take the follow-up question from Mahek Talati.

You mentioned that you will not be taking any investment from the tech partners. So then how are we planning to fund the CapEx once the land is transferred to us?

Right now, what the percentage they are asking is too high. We are discussing. So maximum for 5%, we offer them. But after that, if we not agree, then we'll not give more than 5%. But about the new plant fund, we'll borrow some short-term loan. And right now, we have some of the reserve fund in our bank also. So this is a temporary short fund we'll utilize. And if our foreign partners is ready, then we'll give the 5%, not more than that.

[Operator Instructions] Sir, since there are no further questions, would you like to give any closing comments?

Okay. Thank you very much, Kaptify, team Kaptify, Vinayji, and Vinayji's team. And thank you very much to participating. And I promise you that we'll keep this journey for the '27, '28, '29 coming 5 years, we'll give you the significant growth. And with our robust order book, you can see the quarter 4 also, we will achieve the good numbers more than this. Every quarter-on-quarter, we'll try to achieve more and more growth. And thank you very much to joining the con call of Macpower quarter 3. Thank you very much, everyone.

Thank you, sir. We thanks the management team and all the participants for joining on this call. This brings us to the end of this conference call. Thank you.