MCON Rasayan India Limited ($MCON)

Hi, good evening, everyone. [indiscernible]. It's my pleasure to welcome you on behalf of MCON Rasayan India Limited. Thank you for joining us today for H2 and FY '26 earnings conference call. This call is being hosted by Go India Advisors. Please note that today's discussion may include certain forward-looking statements. Therefore, they must be viewed in conjunction with risks that the company faces. Today on the call, we are joined by Mr. Mahesh Bhanushali, Managing Director; and Mr. Nandan Pradhan, the Whole Time Director. I now invite Mr. Mahesh sir to present the company's business outlook and performance, after which we will open the floor for Q&A. Thank you, and over to you, sir.

Thank you, Rima. Good afternoon, everyone, and thank you for joining us today. I am Mahesh Bhanushali, Managing Director of MCON Rasayan and it gives me immense pride and gratitude to share our performance for H2 and full year FY '26 with all of you. Every year, business teaches you something new. Some years [indiscernible] or resilience, some years, reward your patience and some years widely lay the foundation for the future. For us, FY '26 has been a year that date all 3. The construction chemicals industry continues to evolve rapidly with increasing competition, raw material volatility and changing customer expectations. [indiscernible] all of this what gives us confidence is that MCON Rasayan continues to grow stronger, not only in numbers, but also in capability, reach, relationships and brand trust. When we started this journey, our ambition was simple: to build a company that contractors, developers, distributors and customers could genuinely rely upon for quality consistency and long-term partnership. Over time, that vision has steadily translated into a stronger distribution network, a wider product portfolio, deeper market penetration and most importantly, growing trust across the ecosystem. FY '26 has been one of our strongest years operationally and financially. During H2 FY '26, net sales increased to INR 369 million compared to INR 292 million in H2 FY '25, reflecting healthy growth of 26% year-on-year. Subsequently as well, we witnessed strong momentum of 30% as construction activity improved post monsoon and our distribution network continued gaining traction across markets. More importantly, this growth came alongside meaningful profitability improvement. EBITDA during H2 FY '26 increased sharply to INR 43 million compared to INR 24 million in the corresponding period last year, representing growth of over 80% year-on-year. EBITDA margins improved to 11.7%, up 351 basis points, supported by better operational efficiencies, improving product mix, disciplined cost management and stronger capacity utilization. Profit before tax during H2 FY '26 stood at $25 million, up 125% compared to INR 11 million in the corresponding period last year, while profit after tax increased to INR 18 million versus INR 10 million in H2 FY '25, reflecting growth of 76%. On a full year basis, FY '26, revenue stood at INR 652 million compared to INR 507 million in FY '25, representing growth of 29% year-on-year. EBITDA increased to INR 76 million from INR 59 million last year, reflecting growth of 31%, while PAT grew to INR 30 million, up 34% compared to INR 23 million in FY '25. PAT margins also improved steadily to 4.7%. Beyond the numbers, what makes us particularly optimistic is the quality of the foundation we are building for the future. Over the last few years, we have focused deeply on strengthening our distribution network and market presence. Today, MCON Rasayan has built a network of over 188 plus distributors, nearly 1,800 dealers and retailers. 7 focal model partnership and [indiscernible] And 26 towns spanning 10 states. [indiscernible] distribute added every dealer relationship strengthened, and every market enters represents years of trust building and disciplined execution on the ground. We have also continued strengthening our institutional business by engaging more deeply with real estate developers, contractors, infrastructure player and government-linked projects. During the year, we received important approval under CPWD linked ecosystem across Maharashtra, Goa, Delhi NCR and Gujarat, which significantly strengthen our credibility and open access to larger institutional opportunities going forward. In addition to this, we also secured approval for participation in the Chennai Metro related project ecosystem, which is expected to contribute approximately INR 4 crores to INR 5 crores annually over the next 5 years. These developments further validate the growing acceptance of the AMCON brand in technically demanding and large-scale infrastructure projects. And at the same time, we remain focused on building a stronger and more recognizable brand through dealer engagement programs, branding initiatives and stronger market average anchored around our industry [indiscernible] We are steadily improving visibility and recall in a highly competitive industry. Another important area of focus for us has been improving operational efficiency and overall business quality. One of the most satisfying improvements during financial year '26 has been our progress on working capital management. Through sharper inventory planning and rationalization of our product folio we reduced the number of active SKUs from over 100 products to nearly 60 focused and scalable offerings. This has helped us improve operational efficiency reduced inventory complexity and optimize working capital management with working capital days improving to nearly 164 days. Simultaneously, we are continuously working towards increasing contribution from value-added products, optimizing logistics through decentralized hubs and improving manufacturing efficiency closer to key demand centers. The Poco expansion model also continues to perform encouragingly and gives us confidence about scaling in a more asset-light and efficient manner. As more franchise partnerships become operational, we are seeing benefits not only in faster market penetration and dealer onboarding, But also [Audio Gap] as we move into financial year 27, our priorities remain very clear deepening our distribution reach, strengthening institutional engagement continuing expansion to the Poco model, improving product mix and maintaining disciplined profitable growth. Based on the opportunities visible ahead of us, increasing institutional traction and continued distribution expansion, we remain confident of delivering revenue growth of nearly 35% to 40% over the medium term. while targeting EBITDA margins of around 12%, supported by higher contribution from value-added products and improving operating efficiencies. India's construction and infrastructure opportunities remain extremely large and with increasing presence for branded reliable and technically superior products. We believe companies with strong execution, capabilities and trusted market relationships will continue gaining market share. At MCON Science, we remain committed to building not just a larger company, but a stronger and more respected institution for the long term. Before I conclude, I would like to sincerely thank our employees, distributors franchise partners, customers, investors and every stakeholder who has supported us throughout this journey. Your trust motivates us to keep improving every single day. The foundation has become stronger. The opportunities ahead are exciting, and we genuinely believe the best chapters of the MCON Rasayan journey are still ahead of us. Thank you once again. for your continued trust and support. Thank you very much, everyone. We will now open the floor for questions. Thank you.

[Operator Instructions] We'll take the first question from [indiscernible]

A couple of questions from my side. Firstly, what is the current utilization level?

Manufacturing capital that you are talking about?

Yes, yes.

So in manufacturing capability as far as our mother plant is concerned, so there in the powder plant, we are doing almost 65% utilization, and the liquid plant stands at around 35%. And apart from that, we have got enough spare capacity available in our franchisee model plants because that is where we have just started utilizing. So there, we are roughly anything between 15% to 20% deterioration levels.

Okay. So in terms of our growth that you're guiding for 35% to 40%, so capacity is for sure, [indiscernible] for us.

Not at all.

So other than that, what do you see -- what is giving us this confidence of being able to guide for this 35% to 40% growth. If you could just highlight 2 levers that you see going ahead?

Right. So see, there are 4 to 5 factors that are very important for us. Number one, which was the most critical was creating a network and the supply chain management for the same. So that has been done with help of the distributors that we have created and also with the help of the franchises that we have created to supply to those distributors. So that first phase over. Second part is getting the relevant approvals so that water, government infra projects that come into various regions, we can be part of that. So again, there, we have got enough government approvals to suffice the growth demand that we are looking forward to. Number 3 is the team, technical team as well as the sales team to support this growth engine and take it forward. So again, today, we have got well trained. And I would say, a sustainable sales team which is with us since long and around 60-plus people that are spread across India were helping us to grow further. Number 4 is the products that are relevant and that are needed. So due to the R&D capability that we have got, you've got the entire range of products that are needed for various kinds of projects may be building infrastructure, road projects, bridges, floors or any other such structures. And of course, the most important of all this is the quality that we offer to the market and the acceptance of the market for brand employment. So that is also there. So this all will ensure that is the growth can happen and the market that we are talking of. So currently, we have not even captured 1% of the total market share. So the market is enormous vis-a-vis switch, we are not targeting that [indiscernible].

Okay. Okay. Fair enough, sir. So we spoke about improving the share of our value-added products. What was the share current FY '26, sir?

FY '26, it's around 12%.

Well, this -- in our PPD so we mentioned the guidance for the 2028, we've seen EBITDA margins inching up towards to 18%. We're currently at 12%.

That is a period of next 3 years.

Right. So in the PPT 2028, correct. So over the next few years, how do you see the share of value-added products evolving, sir? And what sort of EBITDA margins do we expect for FY '27?

So see, the share of value-added products, again, it's will interest gradually. The overall, the ratio that we plan should be 60-40, 60% of the volume products and 40% should be the value-added products. That will be a fair thing to ensure the top line as well as the bottom line. right? And maybe another 1%, 1.5% we are expecting to add to the EBITDA in the coming year.

So this 40 to 60 can be seen in 2020 -- by next 3 years on the line can be...

That's a conscious step that we are taking.

Okay. Okay. And just on the impact of the Iran war, so you've seen sharp increase in the petrochemical prices. How do you see that? And will that hinder ability to achieve this margin improvement?

No. See, it's slightly the impact is there. The major impact is on the lability of the raw material itself, okay, and due to which, because of the scarcity, the [indiscernible] have increased. The good part is that we were holding a good amount of inventory. So we could sell through these tough times. Again, no one can predict what is lying ahead of us. So it's very difficult to gauge what will happen next.

Okay. But -- and how is Q1 win show paper as sir?

Q1 is good. So far, so good. Because the demand is there, the markets are there, and we are growing at a fair pace.

Next question is from Mr. Parag [indiscernible].

I wanted to understand, there's been a big increase in the distributors from the last presentation. Can you explain where this -- in which regions this increase in distributors have happened and what are the terms with these distributors in terms of receivables -- receivable days?

Yes. So the increase has happened across India. Okay, because since in the last 1 year, we have ensured the penetration to various geographies. And also, we have put in lots of team members to add on to ensure that more distribution network is created. So if I talk in terms of ratios, then almost 50% of the restriction network is in Maharashtra. And second in line is UP and Rajasthan and then comes the South region. So these are the major regions where major distributor network has happened, addition has happened, I would say. Gujrat has been fairly stable in terms of distribution network. But the major growth in distributors has happened in these 3 major regions. And the southern part of India, where in Karnataka and Kerala has got good amount of distributors.

Understood. And what are the credit terms with these distributors?

Credit terms, see, for all the distributors, the policy remains the same. On paper, it is 45 days, which is leveraged up to 60 days. So that is how we have the credit terms.

Understood. And one extension on the question that the previous participant asked what promotion of our revenue is linked to crude oil? And what -- have you already taken the price hike to cover the RM price hike?

Yes, we already done the price right. So basically, the exit started in the month of March, and we have successfully increased the price from first week of April itself. And as far as the impact on the EBITDA or on the margins of the raw material price will not come. Almost 70% to 80%, I would say that we have covered it up with the price [indiscernible] that we have given to our customers.

And the guidance for the year is INR 90 crores, INR 95 crores revenue?

Roughly around that 35% to 40%.

And margin of 12% EBITDA margin [indiscernible]

Yes, Yes. Yes.

We'll take the next question from Sri Nagesh, sir.

Congrats to the great number. My question is...

So you're not audible. So maybe I can take you after the next participant. So we have the next question from the line of -- we have the next question from the line of [indiscernible].

So how should investors think about the case of between aggressive geographic expansion and capital efficiency.

Okay. So see, there is always a challenge when you go for aggressive geographical expansion that the pressure will always be on the working capital. So if you see in our case, we would not call this aggressive geographical expansion. We are going for a phase geographical expansion, like number one, until now we have not explored the external zone of India. Again, in the southern zone, we are focusing mainly on 2 states -- on the North Zone, again, we have slowly grown like we started with Rajasthan, then UP, than Delhi NCR and Punjab, Hariana. So yes, [indiscernible] geographical expansion will always have a challenge on the working capital requirements. So we are growing gradually phase lie, and that also select you about the market segment or the customer segment that we focus on.

Okay, sir. Got it. And also what percentage of receivables today is linked to government projects infra contractors and retail distributors?

In the terms of receivables, maybe around 12% to 13%.

So there's one question in the Chat Box. So Mr. [indiscernible] asking, are you considering mainboard listing.

Anyone who comes in on the SA platform, we will always consider a [indiscernible] listing so RV. Exact time lines are yet to be defined, but yes, we do consider that.

We have the next question from the line of Mr. [indiscernible] Shah.

Congratulations on a good set of numbers. If focusing on the mix superior, why a consolidated EBITDA margin still largely standing around 11% to 12%.

Can you just repeat the first 2 words, I did not get.

Well, the focal [indiscernible] are superior, why are consolidated EBITDA margin still largely [indiscernible] around 11% to 12%.

See, [indiscernible] is still in the transition phase, okay? Like we have started the focus, but the product-wise development and sales from the [indiscernible] is currently still standing only at 12% to 15% of the total sales. Okay. Other 80%, 85% is coming from my mother plant. So due to that, the impact on EBITDA will be seen in the coming financial year, the impact on EBITDA from the [indiscernible]. But yes, that's a successful thing, sure. Of course, the first year was [indiscernible]. Secondly, there is the last financial year. It was more on the development stage. Now this year, it will be the growth stage of [indiscernible] model. It's matured the way we wanted it to mature. And I'm sure that we will benefit greatly from that.

Okay. and receivables have grown materially faster than that over the last 2 years. How confident is management that there is no hidden stress in the channel?

See, yes, we are very confident because it's a well-distributed receivable. It's not on 1 single customer. So the risk is not that much, number one. Number two, whenever we go into a new geography, then there is always a trade-off between getting a good distributor and giving him slight rate exposure rather than a small distributor with faster payments. So that trader that balancing, we need to do, which we are -- we keep on doing. So there is no stress as such. But yes, we are trying to control it further we are now looking at various avenues like bill discounting and all those things so that the receivables come -- become more better and better. And of course, we have got a good credit control team with credit rating agencies for the distributors to ensure that we don't end up with any bad distributors.

Okay. And what is the sustainable steady state ROC of this business model once expansion stabilizes?

See, roughly, I would say that once we cross the INR 90 crores to INR 100 crore mark, then it's a very sustainable business. And currently, we are not planning to further invest much on any capital equipment or any capacity expansions because this [indiscernible] model is there to help us on those things. So that way, I think we have already been -- become a sustainable organization as far as the capital investment is concerned.

Okay. And how differentiated is MCON technologies versus larger incumbents like bed light industries or Asian [indiscernible]?

Technology-wise, number one is, we have got a better technical know-how of the products that we are talking about because of that right from the directors to the R&D team at all, or you can sell like [indiscernible] and brought up with construction chemicals. So we know the subject matter better. We have been in this -- like for example, I [indiscernible] with the construction chemical industry since last 25 years. So I have seen the industry grow from nothing to such a big thing. So that gives an added advantage. When we think of a product or imagine a product that can be the next big product for the market. So that helps us in giving the right products to the market at the right time. Second part, if I talk about technology, then the decision making is faster because we are competitively quite small. So we don't get embroiled in various long-term corporate decision-making. So getting in a product or phasing out a product depending on the changes in the market or changes in the construction practices is easier for us, and that helps us and the customers in the big run.

Okay. And what percentage of distributors added in 2 are already meaningfully contributing to our revenues.

Maybe 15% to 20%.

Okay. Just last question. What are the top 3 operational milestones investors should monitor over the next 12 months? Could you just judge whether execution is on track.

Operational milestones, number one, of course, is the government contribution or government infra contribution to the total turnover, that has to increase gradually because that is where looking at the current economy, that is 1 particular segment, which is unstoppable as of now. So that is 1 thing that can be monitored, and that is one thing that we are also focusing upon. Number 2 is growth in certain product segments like water puffing and [indiscernible] repairs which, again, are value-added product segments. So that will also ensure that we are doing the right thing and also ensuring that we are doing it with [indiscernible] and third, of course, is the top line, the sales turnover.

We have the next question from the line of [indiscernible]

Congrats for the good numbers.

I think we have lost you.

Sir, I think he just wanted to congratulate you.

No, no. I think yes, you've got some network challenges.

I'll take the next participant in the meantime. We have the next question from the line of Mr. [indiscernible].

Congratulations for this good result. And yes, it was a very nice interactions during the plans just recently conducted by you? Is it was excellent in interest [indiscernible] and have we come to know what different kind of products which we are manifesting. Otherwise, you do not have to what what exactly we are doing. And your -- everything looks very optimistic. But just -- and now no more questions. Just one question is, going forward, what is your plan on fundraising.

Fundraising, yes.

In that meeting also, you got clarity on this fundraising? Because could plan demand will be required next. [indiscernible] But it struck up on the fund raising.

Yes, So sir, see, fund raising is always a necessity. And we are also looking for for the same. Currently, we are going for the debt model much like we are focusing on the brands. But in near future itself, we will have to come to the capital market and maybe pay for QIB or something or the other we are planning to have. So that is something which is in the offering in near future.

Sir, Nagesh, sir, will you want to ask your question now, if you are [indiscernible]. [Operator Instructions]. [indiscernible], you may go ahead with your question.

So sir, this EBITDA margin increase that we said from 12% to 18% in the next 3 years, so given this year will see a 1.5%, so it will be around 13%, 15%. How do you see the overall then improvement for FY '27 and FY '28? So I just want to get a sense of the glide path that you see towards this 18%.

Right. So see, what happens is that we have invested in terms of capital and in terms of people to ensure a INR 250 crores to INR 300 crores minimum revenue. So once we cross the INR 100 crore mark, then the EBITDA will increase faster because the cost on increasing the further turnover is not that huge. So that will take care of our fixed expenses and the EBITDA will improve faster the more we crossed the INR 100 crore mark. So in the next 2 financial year, you will see at least more than 2%, 2.5% increase in the EBITDA, and that's how we'll reach the 18% EBITDA mark.

Okay. And sir, how should we look at the share of value-added products for FY '27. Well, like I told us, see, gradually to increase anything from currently at 12%, we are expecting another 10% to 15% increase. So that is how it will increase.

I'll just take one question from the Chat Box. So your government and infra projects are kind of scale drinks up, but do these segments dilute your margins in longateyour working capital cycles.

Not always so. In a few cases, yes, like a few product categories, I would say, like [indiscernible] sale. If you talk of product like admixture concrete I had a mixture then [indiscernible] to enter into that particular product segment in the government infra projects, there is a slight dilution in terms of margins. But then, of course, there are other value-added products in the government [indiscernible] projects itself, which offset this kind of deficits and offer better margins. So it's always a combination that works there. And as far as elongated outstandings or receivables are concerned. In few projects, we do have to involve like that. But slowly, the things are improving. See, get unless and until something really goes wrong, things are always on track even in government infra projects. If at all, some unstability happens, then it is affected everywhere, it will be private project or a government project.

Got it. I hope we satisfactory answered your question. So we have the next question from the line of [indiscernible].

So my first question was that regarding the logistics savings, what would be the approximate percentage of those savings that actually stays with us on the Foo model after we are -- after we share with the franchisees or distributors?

Yes. So see, Currently, I give you a classic case, they're currently for certain power products because product products are because we are talking in terms of percentage. So order products are having a higher percentage of logistic cost when I send it from a mother plant to location vis-a-vis the franchisee. So there, the savings in terms of gross savings, it's around 4% to 5% that happens. When I changed the model from sending from a [indiscernible] plant to -- from a [indiscernible]. So that's the kind of thing that we are talking of. When we go for liquid product, then the savings are not that big maybe it will be, I would say, 00 also, but the service ability is faster. So there are 2 different logics. For powder products, it's saving on the transport cost, which directly come to our pockets. In liquids, the savings gets offset by the margins that we provide to the franchisee. But at the same time, the service is faster.

Understood. Got it. On the receivable stress that we had discussion. So what would be the early warning signs that we look for in order to identify if there is any stress and what are the things that we do to mitigate that?

Okay. So the early warning science is like normally, we check on the aging analysis of the receivables and ensures that the -- anything above 180 days is not crossed. That particular barrier is not cost. So that is something we really focus on even at the management level and take actions on the same -- and to mitigate this kind of risk already, we have started certain steps in terms of increasing the amount of security deposit, ensuring more stringent credit leverage to new distributors and also resolving any dispute related to laser balances within 15 days of the closing of any quarter. So all these small and big actions we are taking, plus having tie-ups with certain NBF sales for build discounting models. So this is all we are doing to counter these kind of challenges.

Understood. So basically, my question was on that front only that out of the current growth that you have experienced, how much of that would be dependent on the fact that we are extending higher credit to newer distributors in the newer markets?

No, no. It's not dependent on that. I would not say anything is dependent on that. The credit is not something that we negotiate for business. Credit is something we offer as a convenience to the distributor.

Understood. Understood. Okay. So on the distribution front also, when we say that distributors are currently choosing MCON, what would be the primary reasons that you would describe like product quality or commercial terms or pricing advantage? What would be the main factors that they think of and look of [indiscernible].

Okay. Number one is you all like the -- because you are a public limited company and we have got a good shareholder base and all that. So that is one that creates the trust. Number 2 is, like we ensure 1 region for 1 distributor, -- so kind of the kind of exclusivity, which normal is not available with bigger brands. So that's where they get to on the margins. So these are the 2 major factors or parameters due to which the distributors get attracted towards MCON. And then, of course, then all other things follow like the product rate that we have got, the pricing that we offer the sales team that we offer, the technical know-how, the backup, the connect with the management directly, all these other factors are there, which also add value to the distributor.

Understood. On the bigger brands that you talked about, so you must be having competition with the beta giants as well [indiscernible]. What would be the common ways in which we are able to counter and help it, how do we compete against them? Because why high we offering lower margins than us, the distributors much as some other factors also to consider, right?

Consider for us are considered for.[indiscernible]

Sir, secondly from distributors point of you, how do we compete against them? So how do we view [indiscernible]

So see, number one is, of course, that in our case, the margins are better compared to our competition. So that is the most attractive point for a distributor, okay? Secondly, like I told that because he's excuse in his region, so if some project is there pitches for that project, then MCON product is the only 1 to offer other brand products are offered by 4 or 5 people. So there is internal competition and internal price war. Whereas in the case of MCON product, there is no price war for the distributor. The price is MCON versus other products. So that helps a lot for distributor to keep these margins intact on the places where he has got a good relationship.

Understood. So he basically has a better control over the product as well as the margins that a government.

Correct. Correct.

Understood. So last question from my end. By the end of FY '27, what metrics would you consume about it? Do you know that the focal expansion model that you have followed right now. has been fully validated and it is going on the right track on the longer term as ever.

Right. So see, first of all, the ratio of manufactured versus traded. So that we are expecting that 80-20 ratio to happen in the coming financial year. So that first -- that will be the first step to ensure that the ocular model is working really well, okay? Second is, of course, the transportation cost to the sales. That has to come down at least 3% to 5%. So that is second key point that we are looking forward.

And third is adding to is more we are mitigating risk of not servicing customers. Like if 12% we say as a number of supply to other regions, that 12% is also high never. So revising those customers is very important because sending a vehicle from here to southern part of India, either northern part of India. It almost takes 4 days, 5 days. And from [indiscernible], my franchise partner, it takes only 1 day. So the all orders increase in orders is possibility then if we supply material on time.

Understood. So we're improving the frequency as well as this period of delivery that improves the experience for the customer Got it.

We have the next question from the line of Natasha wing. You may go ahead with your question, ma'am.

I just have a couple of questions regarding the product mix and value-added product side. So my first question is the wall finish and paint, that is 8% of the revenue in a category dominated by large players like Asian brands and [indiscernible]. So what is MCON differentiated strategy here? And do you see this segment becoming a meaningful revenue contributor?

Yes, all finishes and the basic strategy is, number one is our focus on Tier 2 and Tier 3 in the wall finishes and paints, our focus is on Tier 2 and Tier 3 cities. We are not focusing on metros and Tier 1 cities where the large players are already dominating. So that is first factor. And there, the acceptance is good enough. Like we launched it in the UP market. And today, we have got more than 150 dealers selling McOnpats in the UP market alone. Okay. So that's -- there is a good slow but gradual growth in this partial segment. Number 2 is, yes, it will be a meaningful contributor in days to come. But it's going to take time, and we are also not in a hurry for this particular segment because you rightly pointed out that this segment is having more big brand was compared to any other product segment that Amcon is having. So that's why we are going slowly and gradually into this segment.

Okay. So got it. So my second question is regarding the focal model. So what is the typical investment and payback period for the focal franchise? And what are the financial commitment, if any, does MCON make such each [indiscernible] partners over year? Okay. So number one is that the investment commitment from the focused model is anything between INR 1 crores to INR 1.5 crores. That is the initial investment needed for the plant and machinery. Of course, the land has to be is grown. I'm not including the land price into that or land or the construction of the shade and all those things. That is something which is -- which has to be already there, okay? Number 2 is, as far as the commitment from MCON is there, we commit 3 years ROI like within 3 years, the investment will be back to him. That is what we have our commitment and water manufacturing capacity that will tell him to create, okay, we ensure that in the first year itself, more than 20% to 25% of its capacity has to be utilized. So that are the 3 things that we will do. And of course, in the first year of operation, whatever inventories are there were than on the last day of the financial year, those all will come to MCON books. That is one more financial commitment that we give him. So these are the major things that we offer to him.

Okay. So got it. So can you please just quantify the R&D spending as per percentage of revenue in FY '26, and what is the commercialization pipeline? How many new products are in development and what is expected to launch by FY '27.

Okay. So Honestly speaking, we are not heavily invested in R&D. We do a gradual investment and R&D is working in 2 major ways. One is, of course, new products. Second is improvement in the existing products. because value addition has to happen on a daily basis in [indiscernible] construction world. So like when the certain kind of raw material price hike is there, then we need to find alternate raw material to ensure that we can negotiate and leverage that kind of price hike. So that is there. But yes, if I talk in terms of percentage to revenue, then maybe not on 1.5% to total revenue, that we are spending on R&D. And yes, there are 3 to 4 products which are in pipeline for commercialization, which we are expecting to launch in FY '27.

Okay, sir. So in the presentation, there is a mention of 3D pen of binding and preconstruction as emerging application area. So are you actively developing products for this segment? And what is the revenue opportunity and the time line over you?

3D printing?

Yes.

No, we are not into 3D printing or we are not even planning to go into anything like that.

And sir, regarding R&D center in away Mumbai. So just any -- and the manufacturing is in [indiscernible], how do you manage the geography gap between the formalization over year.

No. So we have got 2 R&D centers. One is in November and one is in our factory also. So there is one R&D person sitting in the factory, and he has got a team under him. And then there is this exclusive R&D center in [indiscernible]. So the [indiscernible] R&D center works on saw special formulations. And when this reach to a mature stage, then auto, the entire thing is moved to the factory and then the commoditization process starts at the factory level. And of course, the travel time between Humayan the factory, it is only 4.5 hours. So it's not that big a geographical distance that cannot be coped up.

Okay. So are you any planning for any CapEx in 2017?

No, nothing major.

I think there are no more questions. Over to you, sir, for your closing remarks.

Yes. So Mahesh bhai, you would like to take it?

Yes. Okay. So first of all, I would like to thank all the people who joined today's call and it was a fantastic and really interesting interaction. It gives us an opportunity to give you an idea of the insights of the management. And what are the strategies that lie ahead. And also, I hope and I literally wanted that you should instill good confidence in contain and in the management to ensure that we are going to take this company and everything to the next level in terms of applying and bottom line both. We are doing all the necessary steps to ensure that the capital invested is not going to go in any other action and a company having a great brand name in India and abroad. So that's all, and thank you so much, and we are more than happy to be in touch with you all and to answer your questions and queries even during the entire financial year, if at all, there are and looking forward to your support in [indiscernible] to come. Thank you.

Lastly, I would like to say that MCON is participating in our conference on 24th of June at St. [indiscernible]. We'll open the registration shortly so you guys can register and meet the promoter and Nandan sir as well. Thank you so much, everyone, for joining.

Thank you.

Thank you. RECONNECT