Menon Bearings Limited (523828) 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 Menon Bearings Limited. Today on the call from the management team, we have with us Mr. Arun Aradhye, Whole-Time Director and CFO; and Mr. Aditya Menon, who is a part of the promoter group. 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, the growth plans and vision for the coming year, post which we will open the floor for Q&A. Over to you, sir.

Okay. Thank you, Mr. Vinay. So good afternoon, everyone. And I wish you all the best for the next year that is somewhat here. I hope you must have enjoyed the Diwali vacations. And now I will start with my opening remarks. So it's my pleasure to welcome you all to the Menon Bearings investor con call for the second quarter and half year-ended September 30, 2025. So thank you for joining us today and for your continued interest in the company. We are pleased to report that Menon Bearings has delivered another quarter of consistent performance, backed by steady demand across domestic and export markets along with strong operational discipline. During the quarter, revenues grew at INR 63.85 crore, a growth of about 7% year-on-year, while EBITDA was rupees INR 11.1 crore and PAT stood at INR 6.8 crore, reflecting 18% growth in H1 FY '26 over the same period last year. EBITDA margins for the half year stood at 18.8%, while PAT margins improved to 11.6%. Our bimetal division continues to be the major contributor supported by increasing demand for large bimetal bearings and new product development. The Alkop division also showed a healthy growth driven by export orders and the Brake division maintained stability with aftermarket and OEM demand. We continue to innovate in our capacity expansion plans. Bimetal capacity will rise from 486 lakh to 530 lakh units. Alkop -- can anytime double the capacity from 4,940 tons to 2,880 metric tons, and the Brake division will scale up from 18 to 24 lakh pieces over the next few years. These expansions are strategically aligned to capture the growing domestic and international opportunities with a total planned CapEx of about INR 25 crores to INR 30 crores. On the sustainability front, we implemented a 570 kw solar power system and the several energy efficient measures that will reduce long-term cost and carbon footprint, reflecting our strong commitment to ESG practices. Apart from that, we'll be installing solar panels --rooftop solar panels, and with the capacity of 2.5 megawatts, and that is being completed within a period of, a couple of months from now. So that will definitely benefit us so far as electricity consumption and expenses [indiscernible]. Looking ahead, we remain optimistic about growth profits. We're already entered into the EV component segment through Eaton [ port ] supply to Porshe and expect that EV business to contribute 8% to 10% of Alkop revenue by FY '27. Exposed currently account for around 30% of total revenue or little more than that and that -- that has been increased up to 35% by the end of this year considering the export orders that we are already having in hand. And are projected to reach 40% by FY '27, or mostly between 35% to 40%, led by strong traction from the U.S. and emerging African markets. With virtually debt to balance sheet, strong order book and robust customer relationship, Menon Bearing is well positioned for sustainable profitable growth in the year ahead. Apart from that, what I would like to tell you that considering the business that we already started with one of the prominent TSA customer that is Allison, which we already started from the last month, which is to the tune of 2.5 -- more than INR 2.5 crores a month in bimetal division. Apart from that, addition and orders of around INR 3 crores by the --which will be productionized by March -- sorry, January 2026. Coupled with increase in the production capacity and order book position of Alkop, the parts in respect of John Deere and other customers, which are more than 51, which have been already tested, samples have been tested, and those will be all productionized by the fourth quarter of this year. So considering that, we are absolutely sure that we should be reaching to almost on a consolidated basis to the tune of more than INR 280 crores to INR 290 crores in between somewhere by the end of this year, with 18% to 20% increase in the next year considering the business that we are already secured. So thank you, and, we once again, thank you for joining. We will now look forward to addressing your questions. Thank you once again.

Thank you, sir. We will start the question and answer sessions. [Operator Instructions] We'll take the first question from [ Bhargav Buddhadev ].

Yes. So my, first question is that, if you look at your export growth this quarter, it has been a fairly strong performance led by Alkop. So given the several headwinds which are there in the export market especially given the fact that we are increasing our exposure to U.S. where there is a tariff. If you can give some thoughts that post the tariff scenario, how is the business evolving over there? Because both in bimetal and Alkop, the incremental growth is likely to be contributed from U.S. So if you can share your thoughts as a starting question, sir.

You are right. Maybe, in the month of September, there were little confusion about the business with U.S.A. because of the tariff and sanctions imposed by U.S.A. But now the confusion is over. Most of the customers who we are having so far as [ VSE ] is concerned for exports, our trends of supply are [indiscernible] or FOB Mumbai. Maybe whatever business that we have started out more than INR 2.5 additional crores of business is addition U.S.A., that is duty delivery paid. In respect of which the tariff will have to be paid first by us, 50% which will be reimbursed to the extent of almost 10% to 12%. That calculation is being going on considering their foreign trade zone for which they get exemption on certain raw material imports. So instead of 50%, we'll be having around -- we'll have to consider about 10% to 12% of the total custom duty, but that business will continue without any issues. Similarly, in the position so far, Alkop is concerned, Mr. Aditya will tell more about that.

Just to make it more easier, with most of our customers, our terms of delivery is FOB Mumbai. So our responsibility is only till Mumbai. After that, the customers their delivery partners do the delivery. They pay the duty. So we are not, what do you say, affected that much. But like Mr. Aradhye said, Allison's few customers where we have to deliver to the facilities in the U.S., where we are -- the tariff is we have to be pay the tariff, but these big companies are helping us, means they're helping us with the tariff. So imagine if 50%, if we are paying, they are passing it on. Right? Let say, they are also sharing the burden. So the full burden is not beard by us, just to make it in easier terms.

So if we assume a scenario where maybe, say, in a couple of months' time, if the trade agreement with the U.S. is reached and if the tariff is reduced to, say, less than 20%, then is it fair to say that we will be on track to make about 20% plus EBITDA margins on that less than 20% tariff scenario at the consolidated level?

Yes. Irrespective of whatever trade deal happens, we don't know about that. But I am absolutely sure considering the order book position which we are having at present, we will be reaching to more than 20% EBITDA margin this year.

And if the tariff falls, it should help us even more, right.

Secondly, sir, if you look at the second quarter, we have seen some decline in terms of EBITDA margins to less than 16%. So if you can share your thoughts what led to this? And despite this, you are confident of achieving 20% EBITDA margins for FY '26. Is that correct?

Yes… I would like to begin with last first quarter of this year was the best quarter in Menon Bearings history. So if you compare the second quarter with last year's quarter, we still done better revenue wise. EBITDA margin is a little lower because this year -- the second quarter very uncertain. So I don't want to say again, but the raw material prices were again higher. So this time, it didn't get passed on to us. So that benefit in the third and fourth quarter, you will see. So this main reason why EBITDA -- to fall was because of raw material prices, which we had to bear. So the next second -- third and fourth quarter, you'll see a better -- more, better time for Menon Bearings and Menon [ Valves ].

So in this quarter, we'll be able to pass on that burden to them as per the pre-decided formula, that what we're sharing.

And lastly, sir, on the railway business, we were supposed to get approvals also in the brake business, we were supposed to get approvals from the railways and we were awaiting the dynamometer to get that approval. So if you can share some updates on that because there we are targeting about INR 100 crores of revenue, that's a big jump. So if you can share your thoughts. And that would be my final question.

Yes. Actually, the second quarter was the planning, but there have been a few technical delays. So maybe third quarter or fourth quarter, we'll get the dynamometer. Dynamometer is very complex equipment, not many manufacturer are there in India. So the current manufacturer has some technical issues. And so as a management team, we are all working on it. But as soon as it gets, we have done all the other railway registrations and all the other audits have been conducted. But we are just still waiting for the dynamometer to come in. So we are being as transparent as possible. So as soon as the dynamometer is there, we should, the process will begin. But the next 2 quarters for even brakes, we will see a growth because we are expanding our product. We have entered 2-wheelers also now. So because railway is getting delayed, we're looking at other avenues to enter. So for 2-wheeler Pulsar bikes, we're doing brake pads. So that's another product we have started in. But as soon as railway comes, you will see a growth in the brakes division also. But currently -- management, we are working on it. We are supposed to get it in the second quarter and third quarter, end of second to third quarter, but there have been some technical issues. So technology is changing, we're trying to get one side railway, one side OE for the dynamometer. So we're -- still figuring that out. So as soon as that happens, you will see some -- we will have management update you on the same.

In the meantime, what we have done, we have started the business for Bajaj that is for Pulsar as we've already… Pulsar bikes, and eventually their requirement per month is around 5 lakh to 6 lakh of pieces which now we are supplying to the extent of 1 lakh and gradually by the end of year, we will be reaching above 5 lakhs per month for brake pads to the Pulsar.

And just one last clarification. So if you look at revenue growth, there was some slowdown as compared to the first quarter. So is it that in the month of September, there was some slowdown in terms of revenue because of this uncertainty?

Yes. Second quarter -- actually, first quarter was the best quarter in Menon Bearings history. Second quarter, little bit uncertainty, even in order book. Before we had a little more positive forecast, but even all bigger companies, they also are in uncertainty, right? So a lot of export tariffs and imagine for bearing is a small commodity, right, for average priced at INR 100. But for a big tractor, big, there are parts with -- their parts are even bigger. So 50% tariff for that. So these company must have taken a more aggressive call. For Allison we are paying the tariff because we have a big long relation and we have to help them when they need us. And they're helping us with the -- they're also taking the burden. But for bearing a small part. Piston is for INR 10,000, engine block is for even more. So bigger customer. Other players it's more tough for them to go ahead with the tariff. So lot of uncertainty in the market but this October looking very good. Next quarter, you will see October...

Probably we'll be recording highest sales ever in the history of Menon Bearing during this month.

October. One month, single month, highest ever. So last 3 months are a little slower than the first quarter, but…

Particularly in the month of September, apart from tariff confusion, people were waiting for the revision in GST also. That has also impacted the business of September.

Sir, we'll take the next question from chat. It's from Akur Tripathi. He asking Menon Bearings has set a sales target of INR 300 crore for FY '26 with Q1 revenue at INR 67 crore and Q2 revenue around INR 62 crore. Is the company on track to achieve this target?

As I already told you that we will be reaching between INR 285 crores to INR 290 crores during this year, '25, '26 considering order book position that we already have.

So his second question was about order book. What is the current order book, sir?

Current order book position is for this year, it is INR 290 crores and for the next year, it is INR 350 crores.

We'll take the next question from Sagar Sarah.

Congratulations for posting some decent set of numbers. Now my first question was that you highlighted that one of the reason was this GST confusion actually, and that led to a weak September and that led to something like a lower revenue offtake in this quarter as compared to sequential…

GST along with tariff confusion.

Okay. Tariff confusion. But my question was related to the domestic front. On the domestic front, also we increased our capacity also actually. In the Q1, we had the ready new capacity also. So was there some sort of a delay from domestic customers regarding the order offtake, sir? Was that sort of from Bajaj or some other customer? Was that also a reason?

That is not only. Because of GST, the [ sugar ] where to some extent decreased which has been compensated by this month.

Now it is for us, they give us a 3-month rough forecast, like 8,000 pieces, 12,000 pieces for example. So in September because of tariff GST, we have a small part. They have to check their inventory with all the big parts like one tractor or one engine has maybe, I don't know, 8,000 many of them -- x number of parts. So they are a little bit of confusion little bit, you know -- it was little pessimistic -- the market has pessimistic. So this quarter, they have shifted it to October. And like Mr. Aradhye said October we are having the best month. Next quarter, we'll, of course, give out the results, but October will be the best month ever in Menon Bearings history. So maybe [Foreign Language], I don't know. I don't know what the company's logic is. But this time forecast, it was a little lower than forecast this last 1 month -- 1.5 months.

Okay. So is it safe to assume we'll be supplying to this Bajaj regularly 5 lakh to 6 lakh pieces we are in a position now with the new capacity…

That will be so far as brakes -- Menon Brakes is concerned, we expect that by the end of this year, we'll be able to reach 5 lakh to 6 lakh of pieces per month in brakes so far as [ what they're discussing ].

And we just started the business 2 months ago. So even when we ramp up, we want to make sure because they are replacing us with the existing customer of theirs because of our quality and better pricing. So we also make sure that we are doing sustainable growth, right? Just because this time order [Foreign Language]. So they'll also have doubt with us. So we are doing a sustainable growth where we are a sure short replacement for the years to come.

Right, right. Makes sense. Makes sense. So what is the capacity utilization as on date for all 3 segments? Can we please know?

That is around -- between 70% to 75%. Maybe in Alkop, we are having greater capacity so far as foundry melting is concerned. Only what we have to do that we have to increase the capacity so far as machines are concerned, matching the requirement of the customers.

Yes. Because Alkop we are doing critical parts, so we're not investing in the machinery like the machine shop yet because every machine requires 3 axis, 4 axis, 5 axis. So depending on the productivity, what kind of part -- job is going to fit on the machine, we get the machines. But for the foundry where the melting and high-pressure die casting is there, we have around 60% utilization. So 40% is still -- spare capacity is still there.

Okay. So in the bimetals, the capacity has increased to 5.30 lakh. So is it safe to assume that 70% utilization, I think, would be on the additional capacity that you had built, right, in the industry…

You see on an average from the last month or particularly in -- this month onwards, additional quantity of 6 lakh has increased so far as production is concerned, per month.

Okay. So basically, the capacity will be utilized from in H2 actually, the new capacity of bimetals, correct right?

Yes.

My next question, sir, was regarding to this progress of the 63 parts that -- have gone for approval. So basically, are those customers still basically wary of the tariff situation or there is some kind of progress on the approvals also of the 63 parts of Alkop?

No, these Alkop parts are approved, but we are just telling you -- like saying some parts are FOB Mumbai. So export tariffs are not affected. But where tariffs have been applied to us, we are having healthy discussions with the customers because customer knows even what we are facing through. If someone are adding 50% tariff, customer hardly gives us 18%, 20% margin. So if someone is giving 50% tariff -- so till what extent we are in negotiations -- till what extent they are going to bear the tariff, like reimburse us with the tariff. So all that is in place. But from quarter 3, quarter 4, you will see a rise in exports in Alkop too, because what all parts we have been submitted in the last couple of -- last year, the year before, they are getting -- start-up business is happening from quarter 3, quarter 4. So they are getting…

So that are out of that 63 parts that you are telling the supplies is…

Yes. All the 63 parts are being productionized by the end of this quarter.

This year third quarter?

Yes, third, fourth quarter already means they're getting forecast. So they also ramp it up. They also ramp it up 5,000 monthly [Foreign Language]. So we are now this last 2 quarters the next year, we'll, what do you say -- bear the fruits of the labor we have done for the last 2 years developing these parts.

Exactly because last 2 years, you have been -- basically supplying these products for approval actually. That we have been hearing on the con call.

Yes, for this quarter. Quarter 3, quarter 4, you will start seeing the growth in the revenue and margin.

So basically, what has happened, all these parts are for exports. And where this --all the people we have to send the samples to the U.S.A. at certain destinations. They are having many more destinations in U.S.A. also. So after we submit the samples to them, their team comes here for feedback. Once they approve, then it is sent back for viability, feasibility and testing again. And after that, it is a long process. As I already told you many times that it takes almost 9 months to one year for testing of these samples. And according to their projections and project when they are going to start that particular project, they are releasing the [indiscernible] accordingly.

And even for example, these new parts of John Deer, Honeywell, they are not only from Menon Alkop, they're getting from buyers from India. Because of this tariff confusions, maybe other players have held back. We are ready to support. But other customers, I don't know how much other suppliers, how readiness of that is. So if you don't have all the parts we don't -- they just don't take our part and keep [Foreign Language]. So a little bit delay in confusion, it's just taking a little bit of time. But quarter 3, quarter 4, we are already seeing new product forecast coming in. So we as management are planning the production. We are also keeping readiness [Foreign Language] so we should not be in a position that give us 3 months to like supply. So we are also already starting the production and keeping it our end.

And this Allison contract of INR 2.5 crores per month, that has already started or…

I'll just give you a basic idea. When we start a new business, it's called 3PL system. When you do any export, 3 months for -- at least in our --what customers we have, 3 months of stock we have to keep in warehouse in their facility. Then now, because of -- transit used to be 35 days before, it takes around 2 months now. So it's 5 months of like the business. Billing will start in Jan, Feb. But last 2 months, we have already sent Allison the material. So when -- January when they start like with -- switch to Menon Bearings, so they have enough stock in their warehousing. So last month we have dispatched, October we are dispatching. So whenever December, Jan, whenever they decide to start the business, they will already have enough stock in the warehouse.

So at least we can see is -- or in the INR 62 crores, none of the Allison revenues...

The earlier ones.

Revenue has not come, but we have already sent our -- what you say. Production has gone -- billing is -- samples -- no, the first batch as such has already left from Menon Bearings. We manufactured and the first 2 batches, in fact, have dispatched. So it takes around 45 days, 50 days to reach U.S. They will check, have it in the warehouse. Once they start billing, then it will happen. And one starts taking the batches, then the billing will start happening from Jan, Feb. So January, February, you'll see the revenue impact of the parts.

Okay. Okay. So, just regarding the margin guidance, actually, the margin guidance -- the EBITDA margins that you clocked at around 15.6% for this quarter, which are at actually a record low actually. So the cost impact that I'm largely seeing is not much of a -- because of gross margins, but because more it's related to your higher OpEx costs, especially other operating expenses. And I believe these expenses are because of the new CapEx that you had done last year of INR 30 crores. Is it safe to assume? Because I'm not seeing much of an impact of a gross margins. So, is it safe to assume that operating, once you actually clock more revenues out of your existing new plant, that will be a driver of your incremental margins and not your gross margins?

You see what has happened actually during the last quarter, one thing is that input material costs have gone up, along with the consumables, which are considered in the other operating costs, right? And apart from that salary, wages, et cetera, because of increase in the DA and because of increments and because of bonus and et cetera, that have also gone up during the last quarter. Apart from that, electricity rates have also gone up. So all those expenses, we will have to pass on that burden along with the raw material to the customers in the next quarter, that is from October onwards. So we'll be -- preparing the charts as to what were the average rates of these items during the first quarter and how much they have increased in the second quarter. And whatever increase is there on first quarter, that increase is being given by rise in the prices by the customer. And that benefit will accrue during this quarter so that our EBITDA margins will go up drastically.

But like you said, when the new plants are also at a more optimum operating levels, these margins will be better because CapEx, what do you say -- getting the building machinery is one thing. But -- at the same time, I have to get manpower. Like today's world, that also is an investment. So we have to prepare already. You don't get readymade people like, [Foreign Language] I can't go and hire one professional. So already, we are starting hiring people looking at the future. So that also must have -- that also is adding on, like it's a combination of both.

Now what you are saying is also correct to the extent of -- certain extent. There is increase in the OpEx because of increase in the CapEx to the tune of almost INR 30 crores. So the fruits of which will be enjoyed by us by the end of this fourth quarter.

Electricity unit rate also has increased, plus when you do a new plant, the basic electricity charge increases when the building is not 100%. It's basic operation cost also that like you've seen.

Yes. That's what I was referring to that those kind of cost when they are amortized actually over in the next 6 months and when the revenue goes up, definitely, that cost will be absorbed and we will see higher margins. So can you guide us with the approximate EBITDA margin range for the entire year FY '26, which you would be closing on, sir?

For the entire year, it will be between 19% to 20%.

Sir, we have a question on the chat from Akur Tripathi regarding the margins. He is also asking for your margin expectations for FY '27, if you can guide?

FY '27 margins are between what we have forecasted is more than 20%. Though the forecast is about 22% for the year '27, what we feel that on a conservative side, we should take it between 20% to 21% to be on conservative side.

Actually our calculation is higher, but it's always better to be conservative.

We'll take the next question from Kunal Tokas.

First question is, sir, you said the raw material costs increased. So can you give us a amount? What was the increase rate?

We see in the first quarter, if the rate of copper per kg was INR 745 to INR 775, which has gone up to INR 875 during September. And now in this October, again, it has gone up to INR 940. Similarly, tin was almost INR 2,250 which has now gone up to INR 3,250. Steel rates are more or less constant, a little bit of increase of INR 1 or INR 2 per kg.

Similarly, for aluminum average price is around INR 205, INR 210.

INR 190.

INR 190, some alloys. So you can take around INR 200, INR 205, reach up to INR 245. So it's a significant increase. So now we are making charts where the -- with our customers where this last quarter where we have beard September, even October now. So we are sharing with them. So they are also discussing internally. So maybe third quarter or fourth quarter, they'll pass down - pass the benefit back to us.

The reason I was asking was that I wanted to sort of find out what the contribution of price increase would be to this year's guidance of INR 270 crores to INR 280 crores? So you already had a price hike in Q1 as well, and now you'll have another in Q2.

Yes. But what happens now, Q3, Q4, we will tell and they'll reimburse for Q1, Q2. Then Q3, Q4 next year we'll get reimbursed. So there's a formula where the company will, what do you say, give us the price increase because how we do our costing, the raw material price is counted in the -- the company gives us the raw material price. The costing, how it works for our production, the raw material is, what do you say, it's -- we have given -- give them how much margin we make to all our customers.

It has passed on. For second volume, volume terms, what would be the growth for FY '26?

No, no, I can't say exactly the volume -- we cannot identify exactly what it can be. We are working out the same, and it will be completed. Exercise will be completed by the end of this month. And, maybe about 15 days we will require for that. And then the percentage will be about 5% to 6% that we are going to benefit from that.

And for the -- what would the contribution of the freight segment be in FY '26? Does that depend on getting the dynamometer on time?

Yes. So that is what because of some technical matter that has been delayed to certain extent, those railways I've already --we are registered with railways. They are waiting for the dynamometer to come and for, they will come for an inspection and they will approve as a source and we'll start discussing to them, supplies to them. But it may take little more time because of this delay in procuring of dynamometer, which is costly as -- as good as INR 3 crores to INR 3.5 crores of rupees is the cost of that dynamometer along with that railways. Our own business will also get into our fold after we install that.

Okay. So brakes so what would that --what it's point of vision be to this year, top line?

Around INR 13 crore to INR 15 crore -- INR 13 crore to INR 15 crore…depending on how last 2 quarters goes.

You can say about INR 13 course.

Yes. Total.

Okay. And for the brakes business again, when you have entered the 2-wheeler business with Bajaj Pulsar, what value proposition are you sort of offering them to switch their vendor?

See, even if we go up to the extent of instead of 5 to 6 lakhs, their requirement if we go up to, say by the end of March, we reach up to 3 to -- 4 lakh of pieces per month. That additional business will be around INR 80 to INR 85 lakh per month.

And actually, this business value proposition means -- they are having troubles with the current supplier. So that's why they were looking for another supplier. That's how we got into the picture. We have open orders, but like I told before to Mr. Shah that, we want to do a sustainable growth [Foreign Language]. It's a safety product. So we are making sure our procedure are bulletproof. We do we go with 0 PPM. Do give timely delivery, timely order. So actually now they have even given for the another model [Foreign Language]. So as management deciding should we even invest in that.

Once we reach to the optimum level, we can say that monthly business will be around INR 1.30 cores to INR 1.5 crores a month. For that, we will have to have additional CapEx…

Capacity, of course.

Okay. Got it. So just last question, what are your plans for Africa and what is the sort of indicative time line?

Indicative time line is that, from the month of December, we'll be having a business of around INR 50 lakh of rupees per month to start with from December.

Which segment would it be…

So yearly impact will be around INR 6 crores in bimetal.

Thank you, Kunal. We'll take the next question from [ Arnav Sahuja ].

Thank you for taking my question. So my first question is, so in our PPT you mentioned that there are some strategic investments that we've been doing from a cost saving perspective. So would it be possible to quantify, what kind of cost savings we could expect from these ventures in the next one or 2 years?

You see, only with the help of installation of rooftop solars, we'll be saving around INR 2 crores per year.

So that's one. Another, we are also doing an efficiency of toolings. We're getting more advanced tooling where we'll there -- which are better life. So it's all operating efficiencies we're trying to maximize those. So those also will in the long run give us savings, increase our margins, operating margins also. So one was a big, we have done around INR 10 crore to INR 11 crore investment in solars. All our rooftops are getting, solar panels. One is for cost saving, another one is all our customers are big customers where their goals -- their company goals are to have a better carbon footprint on the world. So how we have quality, when you do a product there's price, of course they check the quality, then the price. Now they're getting a carbon sheet as well. So we're doing --so one main reason we had solar was to get carbon footprint approval also because that's going to be a parameter for these big customers to choose between suppliers… for global customers for export, especially EU and U.S. So EU starting to have a carbon footprint on this big John Deere and x, all other customers. So if they don't fit the carbon footprint, there'll be extra tax. Taxes put on the comp -- like those parts.

If we implement it, we'll get better price.

Yes. So we're getting better prices also. So that was one big reason why we went for solar also, a big investment.

Thanks. And, so my next question is, is there any update on our business in the bimetal segment that we're doing with Canada?

Canada, that is - you see because of certain uncertain -- because of certain uncertainty, because of tariff and all these things, the people there with a certain company with whom we can have better business. We cannot tell the name of that company. But what we have decided that I'm going to have a meeting with them in the month of April, and that alone business will be to the tune of almost INR 50 crores to INR 60 crores per year. And they've already approved our pricing, et cetera, and quality as well. So how to take it forward, that we will decide in the month of April where even we'll be meeting in the U.S.A. They will come from Canada. I will go there from Kolhapur from India, and we'll complete that deal by the end of April next year.

Just for our better knowledge, many of the U.S. companies have their manufacturing units in Canada also. So in the long run, just to be safer of the tariffs they are trying to reroute us from Canada and Mexico also. So we're just working out how the costing, pricing everything will work out.

And this should be in the after sales segment. Right?

No. No. That is OEM.

OEM, OEM segment.

OEM. Okay. OEM segment. And, just one last question. So you're mentioning earlier about some business from Africa, I didn't catch that number. Could you please repeat that number?

Actually, we have got few inquiries from few companies in Africa. So they have given big numbers. So we're planning to start with a small quantity first. That's INR 50 lakhs per month business for bimetal product.

Eventually that will increase.

Yes. And that will increase. We are just not skeptical. Just want to make sure the payment cycle, everything is on time because back in the day before I was born, we used to supply to a few countries in Africa. So that time, we had some bad debt situations there where in 1930s -- 1994, '96 where INR 30 lakhs, INR 40 lakh just -- we couldn't get the payment back. And what can you -- you can't fight an international court and it all sounds fancy, but in reality, when you go to do it, it's very difficult. So, we are starting with INR 50 lakhs per month. Eventually, that should go up, but we'd just want to make sure it's good customer, everything going smoothly.

So, when couple of days back, customer from South Africa was here, I already had a meeting with them and I insisted upon them that we should get 100% payment…

Advance payment..

In advance before the dispatch and they've agreed for that.

[Operator Instructions] We'll take the next question from [ Manav Mehta ].

Sir, I see that this time you've excluded the slide on capacity expansion. Can you throw some light on the CapEx plan and where we are on CapEx that we have guided for division wise that is bearings, brakes and Alkop?

I'd like to answer. Last 2 years, we have done around INR 30 crore -- we finished around INR 30 crore in CapEx total. So, like Mr. Aradhye said we have already -- done the most of the CapEx. Now only what where machinery is required part, specific. When the order is there only that time we'll have to do. So, in CapEx wise, 2026 is not much like it's not on a very higher side.

So -- whatever CapEx that we have done so far as bimetal division is concerned, we have incurred about INR 20 crores. In Alkop, INR 12.5 crores, we have already incurred and additional INR 8 crores is being incurred during this year. And in brakes, we already incurred cost to the extent of INR 9 crores and additional INR 3 crores on account of equipment for inspection that we are going to procure during this year.

And we won't need significant amount of CapEx till 2027 and half -- first 2 quarters of 2028. So those revenue values, we should be able to achieve with the current CapEx done in all the 3 plants, all the 3 divisions.

And my another question is, what are you doing to mitigate risk from tariff slowdown since we saw some growth in Q1, but again, the growth has softened in Q2?

As I already told you that during this month, our export to U.S.A. are highest in the history of Menon Bearings, and that will continue further…

October.

Continue there -- hereafter also. We don't feel any issues. We will have any with U.S.A… Actually it is on the rise.

Yes.

We'll take the next question from [ Sagar Shah ].

Just 2 questions. Actually, first question was on brakes business. Brakes business in this quarter also hardly -- it's hardly INR 1 crores or INR 2 crores of revenue that we have earned in this quarter, actually INR 2.1 crores to be precise. So collectively, H1, we have just clocked around INR 4 crores of business actually. And you have guided for almost INR 13 crores to INR 14 crores of business for this year. And you said that dynamometer will be coming in the third or maybe even the fourth quarter. And then the partnership with the railways will come in FY '27. So first of all, this brakes -- this will be totally - will this order will be totally led by Bajaj or have you found out some new customers also for this business, sir?

See, apart from Bajaj, that will be eventually go up to 3 lakh to 4 lakh of pieces per month. Apart from that business, we have finalized one deal for African countries so far as brake lining is concerned, and that will be around INR 50 lakh per month. And from next month, we will start that business.

Africa, okay. So that will be basically on the brakes business...

Yes. Aftermarket, yes. Merchant exports.

Aftermarket. Merchant exports. Okay. Fine, sir. So my next question, sir, was related to the thrust washers actually. In the thrust washers business means we have -- I guess, we have started the commercial production also. So can you highlight some features about this business about new customers that you have identified? What is the progress regarding that business? What is the commercial -- what is the utilization in that capacity?

You see, we have increased the capacity by almost 7 lakh of pieces of washers per month apart from the existing facility. We have already started that business with Allison U.S.A. from the month of September. We have already shipped 2 consignments of washers to Allison U.S.A. And the total volume per year will be around INR 30 crores, apart from their existing business.

But that will be of a lower margin, sir, as compared to…bimetals?

Why? Who said that, that is lower margin?

Okay. No, no, I'm just asking, sir.

No, no.

No, no. Absolutely not…

Similar margin.

Okay. Similar margins.

Yes. These are confirmed orders. At the same time, our marketing team like this quarter, last quarter, we are still having prospects. [Foreign language] confirm orders they are still like 6, 7 guys -- we are going ahead. We have given sample pricing. They are coming here for audits. We are doing quality check. It's - it's a big process. So we have to get a vendor code. So those processes are going on. We are identifying new players to get from 2027, 2028, what answers we should give you all also. So we have a very aggressive marketing also happening, identifying new players. But for us, we are doing high margin. We don't go for any customer. We go for a very lucrative business. So we're trying to find good players who give us the good rates where they're focusing on value addition, higher quality. We are not into mass production kind of. We're doing high volume, high value addition parts.

Apart from that, from one of the global companies into Menon -- into bearings, we have received as many as more than 800 samples for development from U.S.A. We are skeptical about that. They want that entire aftermarket should be looked after by us so far as U.S.A. is concerned.

And they're one of our big competitors. So we are in -- management is taking the decision, should we go for it or no? It's a call from the management what they have to take.

So the total volume of that business is around INR 80 crores. But maybe some part of it, we will start, maybe to the tune of INR 8 crores to INR 10 crores yearly, we can accommodate that.

So my last question, sir, that is present --that is there in your investor presentation that you have basically developed some few components for one of your tractor clients actually and 50% approval has already come. And these components, actually, the business is worth INR 55 crores. So is it a U.S.-based customer? Or can you highlight about something like -- some things about…

That is domestic as well as exports. You see for John Deere also and for Escorts and one of projects of international tractors also, that is TAFE project. TMTL is another project.

How it happens? Escort also is taken over by Kubota, like the joint ventures. There are some orders which they do for India, some orders which they do for Africa, some orders that go to Southeast Asia.

European countries.

European countries. So it's a mixed batch. So companies, Escort Indian company, but they are, what do you say, some part go to the Indian mix, some part go for the foreign mix. So it's for TMTL, international tractors. It's similar for all these tractor manufacturers. So it's a mixed bag.

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

Yes. With the hope that we should be growing at a rate of between 18% to 20% year-on-year, and we strongly feel about that. Maybe September was a little less, but we will cover up during this quarter as well as in the fourth quarter, and we'll see that we clocked a turnover of more than INR 280 crores to INR 290 crores with EBITDA margins about 19% to 20% -- 18% to 20%. And similarly, we hope that margins in the next year will be more than 20%, and we are absolutely sure about that unless something drastically negative happens. And thank you for that. And also I request many of you to come and visit our plants. We are having 5 plants, 3 plants in Gokul, Shirgaon MIDC and 2 plants in Five Star MIDC that is Kagal. You are all welcome. And thank you for joining us. And we look forward for your visit to our facilities in future -- in near future. Thank you, everybody.

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

Thank you.