Nelcast Limited (NELCAST) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Nelcast Limited Q2 and H1 FY '25 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Abhishek Bhatt from E&Y Investor Relations. Thank you, and over to you, sir.

Thank you. Good morning, everyone. On behalf of Nelcast Limited, I welcome you all to the company's quarter 2 and H1 FY '25 Earnings Conference Call. You would have already received the results and investor presentation, which is also available in our filings with exchange. To discuss the company's business performance during the quarter and outlook, we have with us today Mr. P. Deepak, Managing Director and Chief Executive Officer; and Mr. S.K. Sivakumar, Chief Financial Officer of Nelcast. Before we proceed with the call, a disclaimer. Please do note that anything said on this call during the course of the interaction and in our collaterals, which reflects the outlook towards the future or which should be construed as a certain forward-looking statement must be viewed in conjunction with the risks the company faces and may not be updated from time to time. More details are provided at the end of the investor presentation and other filings that can be found on our website, www.nelcast.com. Should you have any queries or need any further information at the end of this call, you can reach out to us at the e-mail address mentioned in the company collaterals. With that, I would like to hand over the call to Mr. Deepak. Thank you, and over to you, sir.

Thank you, Abhishek. Good morning, everyone. Thank you for joining us today. As we review the performance of Nelcast for the second quarter of financial year 2025, I would like to provide you with a comprehensive overview of our current position and our outlook for the future. The Q2 FY '25 results have been modest, primarily due to a contraction in domestic commercial vehicle demand and a slowdown in export demand, particularly from the United States, which is a key market for us and is currently navigating through its election period. This has inevitably affected both our sales volumes and price realizations during the quarter. Additionally, the domestic tractor market has shown a flat trend, which has also influenced our performance metrics. Despite these challenges, I'm pleased to report that the development of our new products is progressing as planned. We are confident in our ability to secure many more new orders over the next 2 to 3 quarters, which is a testament to our team's dedication and innovative spirit that drives our company. Looking ahead, we are optimistic about the prospects for the coming financial year. We anticipate a resurgence in demand as the election phase in the U.S. concludes and new emission norms come into effect in calendar year 2027. We expect this will stimulate the market, especially in 2026. Furthermore, we are actively exploring new export markets that promise to contribute to our growth trajectory. We are actively pursuing efforts to boost our export share from the present 36% up to 50% in the future. FY '25 has been a year of strategic consolidation. We are focused on strengthening our core competencies, optimizing our operations and laying the groundwork for future growth. As we move forward, we are poised to capitalize on the opportunities that lie ahead and are excited about the potential for robust growth in the coming years. I want to express my sincere gratitude to our dedicated employees, loyal customers and steadfast shareholders for your continued support. Together, we will navigate the challenges and embrace the opportunities to ensure that Nelcast remains a leader in our industry. Thank you, and I look forward to the continued success. Lastly, commenting on the financials. The total income for Q2 was INR 335 crores compared with INR 362.6 crores in Q2 of FY '24. The total income for H1 of FY '25 stood at INR 637.4 crores compared to INR 659 crores in H1 of FY '24. Exports stood at INR 227 crores compared to INR 219.9 crores in H1. So it's just a modest growth of 3.5% year-over-year. The EBITDA for Q2 of FY '25 was INR 26 crores compared to INR 36 crores last year. And the EBITDA for the half year stood at INR 48.4 crores compared to INR 59 crores in H1 of FY '24. So this resulted in our PAT for the quarter being INR 9.8 crores and INR 17.8 crores for the half. The equity as on September 2024 stood at INR 536 crores compared to INR 521 crores in March 2024. Long-term borrowings came down in September, and the total debt to equity came down to 0.57 from 0.63x. So I thank you. And I now open the floor to any questions you may have. We can now open the floor for questions, and I'd be happy to address any queries.

[Operator Instructions] We have first question from the line of Saket Kapoor from Kapoor & Co.

Sir, firstly, I just referred to your commenting on the results press release part, wherein, sir, I just quote you, you have mentioned that despite the short-term obstacles, we remain steadfast in our long-term vision. The new product development is progressing as anticipated, aligned with our strategic goals. So if you could just dwell further, sir, where are we in terms of -- when you are alluding to the fact of aligned with our strategic goals? And sir, do we have the material that growth is nearing or are we building on a hope story going ahead? Since in your remarks also, you have mentioned that export has also flattened for the first time. So your comment on the same, sir?

So Saket, I think when we are talking about the challenging environment, I think there's obviously the 3 biggest sectors that we are part of, right, which is the domestic heavy commercial vehicle, the tractor segment domestically as well as the export market, right? So I'll just...

Sorry for the interruption. Participants, the line for management has been disconnected. Please stay connected while I reconnect the management. Ladies and gentlemen, we have management on back with us.

Sorry about that. It looks like there was some technical issue and the call dropped. I'll elaborate on the question that you had asked, Saket. So when we talk about challenges, primarily the 3 segments that we cater to are the domestic heavy commercial vehicle, tractors and exports. So on the heavy commercial vehicle side, we are not seeing a very positive trend for the first half in terms of degrowth in sales. So that is definitely a negative impact. In fact, we were expecting that perhaps by September or October that we would expect to see a pickup post the elections and post the monsoon. We are now starting to see signs of that in November, but we were anticipating to start seeing that in the month of September. So we are cautiously optimistic on that as of now, but that's something that we are -- has a little bit more to do with the market. In terms of the tractor segment, I think we're seeing a relatively flat segment in the tractor even though we have managed to grow in that segment. I think the overall sector appears to be flat completely, right? And in terms of exports, the challenge has been that if you look at the industry, there is a huge degrowth that's happened in the commercial vehicle space, especially in the U.S. market. We believe that this is temporary, driven by 2 factors: one, the election that has just concluded; and two, the potential for interest rate cuts. We believe that there was a little bit of wait and watch to see how that's going to progress. I think part of it is also people don't want to take a loan if they believe that the interest rates are coming down. So there is a little bit of that, that's happening. We are quite confident that, that will turn around. In terms of the new products under development, we have several new products that are under development in various stages. A good chunk of these will be for the export market actually. And so we will -- we do believe that we will see this translate depending on various testing cycles and all of that in the next year or so that the products that are currently under development will translate into actual sales.

So sir, when we look at the H1 export number of closer to INR 228 crores, can you outline where we will land for this year? How should H2 be? And what kind of growth can we expect? And secondly, sir, a lot of protectionism from the -- now the new government is also expected. So how are we insulated from any change in [indiscernible] changes or tariff imposition, if any, on the segments where we operate?

Yes. So I think that's -- I think it might be a little premature to speculate on the tariffs. It does appear though that the tariffs will significantly be higher on China. I think publicly, what was said during the campaign that Trump had said was about 60% tariff on China from the 25% that's there today. If that is the case, then that could certainly benefit Indian manufacturers. The other challenge that's there for them is I don't believe capacities exist for them to even shift away, right? So I think in a lot of industries, the capacity in the U.S. or in North America in general doesn't really exist for them to kind of try to bring back in any significant manner in any business. So we don't believe that tariffs will have a significant impact. Certainly, we'll have to -- other than perhaps impacting inflation and other things. But for us, specifically, we don't believe that we expect to see any such thing.

And on the export part, sir, how should H2...

Yes. So I mean, I think right now, it's a little difficult to project H2 because we are still seeing a lot of volatility. We expect to see softness in the current quarter in terms of export, which will be -- which at this point, we are anticipating will actually be a little lower than Q2 in Q3. But Q4, we expect to pick up and be quite strong. So that is our forecast as of now. But like I said, there's a lot of volatility. But our anticipation is that we will see -- on a quarter-on-quarter basis, we will see a dip in Q3 compared to Q2, but a pickup in Q4. So a little difficult to estimate at this moment.

Sir, on the tonnage front, can you provide some...

Saket, I would request you to join the queue.

Yes, ma'am. I'll join the queue. Sir, tonnage was not mentioned in the presentation. So if you could just give the tonnage for the first half and the second quarter.

The tonnage for the first half was overall 41,801 tons.

And for the quarter 2?

Quarter 2 was, yes, 21,824 tons.

Okay. And what should we end the year, sir?

Let's just wait and watch a little bit, but it looks to be largely perhaps in line with last year, right, as it stands today.

We have next question From the line of Vidit Shah from Spark Private Wealth Management.

First question is on the EBITDA margins, EBITDA per ton. We maintain what we did last year about INR 11.8 per kg but this is largely driven by the other income increase from INR 2.2 per kg to INR 4.6 per kg right? So if I exclude this other income, we've actually seen a drop in the EBITDA per ton despite a higher share of exports this quarter. So could you please help explain how margins are trending for us and how you expect it to trend going forward?

Yes. So the other income that we're talking about here is largely also related to export benefits and deposits on EV and things like that, right? So this is also -- we consider that, that is part of operations, right? So it's not necessarily, I think -- so that's why we combine it into the EBITDA numbers that we talk about. So I -- otherwise, I don't think that there's anything substantially different.

So even then -- so we've seen the share of exports increase from 33% to 39% sequentially. But even despite of that, the margins have been about flat at about INR 11.8 a kilo. So I would imagine given that exports come at a higher margin, this number to start inching up, but it hasn't. So is there any pressure on the margin front that we are facing in exports?

Not -- specifically, I think if you look at margin, one of the things that did happen in the last quarter was that the freight costs have gone up for the export. So in terms of our recovery cycle for the customers, there's usually -- there's a little bit of a lag, right? So that freight cost recovery is something that will happen at a lag. So that's something that did impact margins.

Understood. And you mentioned that you started seeing a pickup in the heavy commercial vehicle sales in the domestic market. Could you please elaborate on whether we're expecting a quick recovery or if it's going to be a slow and steady recovery through the second half? Or do we expect 4Q to sort of bounce back to what it was in the previous year?

So I think what we know at this point is only that it's going to be a volatile recovery, right? I think it's going to be -- it doesn't look like it will be smooth, right? So it may go up, it may come down. And I'm saying this probably with a little bit of a recency bias, right? If you were to ask me what do the production plans look like for the month of November, if you had asked a week ago, I would have said, not looking so good. If you ask me today, I'd say it's looking very good, right? So that's quite a shift in a period of 3 or 4 days that has happened. So I'm -- so what we do know is that there is going to be volatility. The signs that we see in November are very encouraging, the numbers that we saw in October were not, right? So this is -- so it's a little harder for us to project. What we are aiming for is to make sure that we're there to capitalize on it. What we are seeing also is that a big chunk of this, whatever we're seeing in November, the increases, seems to be driven by the tipper segment, right? So we are seeing more of the heavy-duty trucks in the month -- in terms of kind of the improvement that we are seeing of November versus October and perhaps that has to do with infra spend picking up. I think there's been a lot that's been written about the government lagging behind on infra spends. Perhaps they're trying to turn it around. I'm speculating a little bit on it, but that's the only thing that makes -- would make sense to see the kind of improvement we're seeing in the heavy commercial side, especially on the tipper type of vehicles.

Okay. And just the last one for me is on the sale of this land that we've been accruing over the last 3, 4 quarters. How much land have we -- do we still have that we are looking to sell? And if you could just help us with the cash flows estimated from this?

Yes. So the -- we had entered into a deal a year ago and a big chunk of it was sold. And then there were a few bits that was -- of that land that was still pending for sale, which had happened in subsequent quarters, including the last quarter. With that, we have completed the sale of land, right? It was approximately about 50 acres of land that was sold.

Okay. So now there's no more land that will be sold anymore?

No, there is nothing on the anvil here.

[Operator Instructions] We have next question from the line of Priyam Shah from Ind Capital.

So there are some set of questions from my side. Sir, first one, which is pertaining to EBITDA per kg. So this quarter, we understand that it was at INR 11.8 per kg, near about INR 12 per kg. And however, the same EBITDA was, I think, we did close to INR 15,000 per kg last quarter. So just wanted to know like what impacted this thing? And how do we see this EBITDA per kg moving forward?

So if you -- I think you're referring to the same quarter last year where the EBITDA per kg was higher, right, close to about 15?

Correct, correct.

INR 11.8 per kg that we're at now. So if you look at the last year, one of the things where we did benefit on that particular quarter is specifically because there was a reduction in raw material prices, and there was obviously a lag in passing that on as we had seen in the past. So I think that was one of the major factors also that helped us in that specific quarter last year. But I think excluding that, if you were to look at the whole year last year, we were at roughly around INR 12 per kg right, INR 12.5 per kg for last year. So this year, I think we are at about INR 11.38 per kg is the current number that we are at. I think we've said this publicly as well is that our goal in kind of the medium term is to try to push this towards INR 15 per kg number, but that is based on an improvement in our capacity utilization where we will start to see some of the operational efficiencies kick in.

Okay. So just wanted to reconfirm. INR 15 per kg is a target that we would be looking forward in the coming years. Am I right?

Yes. Yes. So I think as we're looking at our pipeline of new products and all of that, so it looks like it will be about a couple of years away in terms of getting to those number of capacity utilizations where the operational leverage will really kick into that level.

Okay. And would there be any change in the capacity utilization? For example, what is current and what would be going forward that you're aiming for?

Yes.

To achieve this EBITDA per kg.

Yes. So currently, if you were to look at our capacity utilization, we are roughly at about 55% or so is our capacity utilization right now. And for us to get to that level, I believe the number that we need to be at would be around 75% of capacity utilization.

Okay. And again, my follow-up question relating to this increase in EBITDA per kg. So for example, if we see -- would this be led by higher export volumes?

The line for management has been disconnected. Please stay connected while I reconnect.

Yes, sorry about that.

Should I repeat my question or you got it?

Yes, yes. I think -- so we are -- we do believe a major chunk of the growth is going to be driven by export. But we are -- there are some specific programs that we are working on even on the domestic side that will -- that we believe can also yield growth here. So -- but to your point, though, I think a significant amount of the growth will come from export.

Okay. And like do we have signed -- have we onboarded any new customers or any talks with regards to that, which we see fructifying in the coming quarters?

Yes. I mean we've got, I guess, 2 new customers that have been onboarded over the last year. Business is yet to start on those, but there's significant really strong potential. And there are some serious discussions that are happening, right? So -- which is where my confidence comes from in terms of where the growth would be. But there are some incredibly serious conversations that are happening that we hope will fructify into new business wins within the next 6 months or so.

Okay. So can we consider for the current financial year as a year of consolidation? And could you just give us the time frame when we see things getting better and state a couple of growth drivers?

Yes. So I think there's a couple of things that are there. One is certainly in terms of the commercial vehicle market, we're hopeful that whatever signs that we're seeing in November will continue until April. That's the case. We hope that we should see our improvement in our domestic volumes happen. On the commercial vehicle side is that. And then I think tractor seems to be relatively flat. We're not really seeing -- I think we see relatively modest growth only even in the long term. But I think, as I said, in terms of export, between the market recovery happening because we've seen almost -- I would say, in terms of demand, we've seen almost -- on the same product year-over-year, we've seen a 30% kind of a drop of the demand. We believe that, that's temporary, that it will bounce back from January. And there will be a real ramp-up probably starting in the middle of next year, and we expect calendar year '26 to kind of be a peak year for the industry there, right? So this is, I think, what our outlook is that we are seeing in that market. I think I've mentioned this on previous calls as well. We're also anticipating a good number of orders to come from Europe. Six months ago, really, I think we started to get the first RFQs in, now we are in some fairly serious discussions. A lot is happening. And we believe that this will fructify into a lot of new business in the next couple of quarters. And given the time line of the development of the new products, the testing and approval and then getting into production, it would roughly be a 12- to 24-month kind of a period that would actually be required in order to actually start seeing those new orders impact revenues.

We have next question from the line of Vidit Shah from Spark Private Wealth Management.

My question was around the European orders that you're talking about. Any specifics in terms of the customers that you are talking with and the quantum of volume that we're expecting to do over the next year or 2 years?

So the customers that we're talking to and having good conversations are all the commercial vehicle OEs, right? I don't want to name specific names, but -- and a few of those are, I would say, extremely serious conversations. I think it's a little premature to put numbers, right? The conversations we're having are very big numbers, but how much will fructify, what will fructify is still a little bit fuzzy. But I expect that it should be hopefully something significant, right? But I think maybe a little premature. I think we'll have clear picture sometime in the next 6 months or so.

Okay. But is there potential to get to what North America does over the next 2 to 3 years in terms of the market opportunity in Europe?

Yes. That is the opportunity that we're working for.

Okay. Got it. And we had a big order on the delivery vans, right, a few quarters back, which was a bit delayed, but we started up -- started production there. Can you just share any update in terms of what sort of volumes we are doing for those delivery vans? And how much have we ramped up from -- of that order that we had won?

Yes. So those vehicles have been launched. They are being produced. We are supplying parts for those vehicles, the electric vans that we're talking about. But I'd say volumes today are perhaps about 1/3 of what was envisaged in terms of -- in terms of the number of vehicles per month kind of thing. So it's still, I would say, in the ramp-up stage. Again, there's a lot happening, especially in U.S. politics. So we'll have to see how that impacts electrification, especially. But I think at least now that it appears that there's a certain direction that will be constant for the next 4 years, I think people who are perhaps dillydallying a little bit will have a clear direction and move forward.

Okay. So -- but we'd expect a ramp-up from these levels only once the industry headwinds subside? Or can we expect a faster ramp-up from this order than the rest of the industry?

No, I think this one should hopefully ramp up. It's a relatively new product, right, that was just launched in the U.S. market. So I think some of the people would have placed the initial orders will probably still want to do a little wait and watch before placing subsequent orders to evaluate performance. So I think, at this point, we don't have any more information than that. I think the forecast that we're seeing for the next couple of months seems to be that it will continue to be at this level. But hopefully, I think beyond that, it will go up.

We have next question from the line of Rakesh Kumar, who is an individual investor.

I just have one question. So what products are we currently developing at Pedapariya plant? And do we anticipate that these new launches will provide us with a competitive advantage in the market?

Yes. So I think Pedapariya, a lot of the products what we are doing are the larger products, especially the cast axles. We are -- so there is some new product development that's happening with a couple of customers on those type of products. There's also a lot of other products also that are well suited for that line being a very unique line in terms of its size. So there's a few more that I think there's good potential that we will win the business on. And we're fairly confident that in the kind of medium to long term that we will have a pretty good growth there.

[Operator Instructions] We have next question from the line of Saket Kapoor from Kapoor Company.

Deepak sir, you were mentioning about some recency bias and you mentioned about what October deliverables were and how November is shaping up. Can you -- I missed your point at that point. If you could just dwell more on the same, sir? What are you trying to explain?

So what I was trying to talk about a little bit more was the kind of volatility that we are seeing in the market. If you look at the medium and heavy commercial vehicle space, we were anticipating that perhaps September, October, we would start to see -- we would see a strong recovery because we are now done with the elections, we'll be done with the monsoon and all of that. However, that recovery did not happen in October, and we didn't see signs of it happening in November either, right, until about a week ago. And suddenly, we've seen the OEs increase their production plans and all of that for the month of November. So I think I was just highlighting that if you'd ask me a week ago, November looked only like a so-so kind of an okay month, whereas if you look at it today, November is looking a lot stronger, right? So I was just highlighting the volatility that is there and the fact that we are actually seeing numbers in November that we expected to see, even though October numbers, we didn't see in terms of demand from the OEs. So we're just hopeful that this November, this trend continues and December, Jan, Feb, March continue to be strong, then I think the potential for H2 looks quite good.

Okay. Sir, are these orders of very short-term delivery schedule, means if they are -- were the orders in the pipeline and only the delivery schedules were changed? Yes. I only wanted to understand that. Things in October were very different, and you got to know about better order placement in November. So the delivery schedules will happen in a month's time in that shorter notice? Or how do these M&HCV order execution planning out, sir?

Yes. I mean it is a relatively short notice on which we have to ramp up and ramp down, right? I think this is a call that's taken by the OEMs based on their sales data, their incoming orders and their process and their decision to build stock or reduce stock or whatever it may be. But it looks like compared to their build schedule, whatever they produced in October, the sales were better than what they had forecasted, and therefore, they believe with the order position now in November that they need to produce more. So that's -- and we respond fairly quickly to such kind of fluctuations in order.

Okay. Sir, can you give me the tonnage for last September quarter, sir? What was the tonnage?

Yes, sure. Yes. So for the last September quarter was 22,953 tons.

And this time it was sub-20,000 tons?

This September quarter was 21,824 tons.

This was 21,824 tons and last was 22,000 tons? I missed the number.

22,953 tons last year second quarter.

22,950?

Yes.

Okay. And sir, the tonnage for H2, sir, what would be the likelihood? What was the last year H2 tonnage, sir?

Last year's H2 tonnage was approximately about 42,300 tons.

Okay. So on tonnage price...

So like I said, this year, it will be a little harder to figure out because we are seeing a lot more volatility right now. But I mean, I think at this point, we think it will largely be along the same lines. We don't expect drastically in either direction.

Okay. But sir, when we look at the cost of raw material consumption also, how was the raw material basket shaping up? And taking into account the EBITDA per kg, even factoring into the volatility, is it -- it is prudent to take into account that we would be in the range of INR 12.50 per kg for H2? Or is it too early to comment on the EBITDA per kg, taking into account how the raw material basket have been moving for the first half?

The raw material basket has been relatively flat. I think the moves have been relatively benign, right? I mean, up a kilo -- up INR 1, down INR 1 kind of thing. So it's been a relatively flat movement in terms of raw materials now, right? Let's see what happens, I think now with the new U.S. foreign policy potentially, I mean, hopefully, maybe I'm being a little too optimistic, but maybe some ramp down in the wars happening in the world and all of that, we don't know how that's going to impact inflation and raw materials.

Sir, what should be the trajectory then, sir? Relatively upward of INR 12.50 per kg that is what should we expect taking into account how you are getting the orders...

I think relatively stable is what we expect, right? I think...

Okay. Sir, on the efficiency and on the cost optimization, sir, what steps are we taking currently? And how are we going to benefit from the same? And sir, sir, you have been very categorical in your first call also when you very well mentioned that this would be a year of consolidation. And this is what the quarter 2 numbers do -- speaks about. So again, taking into account these comments, which you mentioned that we are into this strong growth path that we'd expect from quarter 1 of the next financial year. If you could just give us some more color and the probability of those events maturing, that would give us some more understanding of what gives you the confidence and the likelihood of that happening, sir?

Okay. So I mean, I think the positivity that I'm talking about and new products maturing and all of that, a lot of that, I think, has to do with a lot of the conversations that we're having with customers in terms of RFQs we've received, the quotes we've submitted and the serious discussions that we're having, right? The challenge on some of these is the customer tells you he wants to finalize it by next week, and 2 months later, you're still having a discussion on this and that is there, right? So it's a little difficult to actually project when it's going to happen. But I think the conversations and the sense of urgency that they have also in order to find suppliers and want to move forward on some of these projects with us is very encouraging, right? So that's why I think we're feeling very optimistic about it. And I think I had mentioned this on the last call, right, the volume of RFQs for Europe, especially that we have received so far this year has been higher than probably the last 4 years combined, right? And we continue to receive at a very good pace, new RFQs for new customers as well.

Right. And can you give some color on the tonnage part also just to understand what kind of utilization levels can we expect once these RFQs will mature or materialize going ahead? How will the utilization levels or the tonnages would shape up going ahead?

See, a little bit of that is we have to speculate a little bit on what the hit ratio is going to be, right? If I -- if we win all of the business, then we'll be out of capacity, right? But that's kind of -- we'll be at 75%, 80% capacity utilization, which I would say is very good for the industry, right? So if we win all of it, then we're already going to exceed that territory. So again, I don't want to speculate on what the hit ratio is, but I have a generally positive feeling and a good feeling about that it will be a pretty decent hit ratio.

Okay. And then you will have more to speak by quarter 4 on the same, sir, this European part of the story where you are...

I certainly hope so. I would certainly hope that we'll be able to talk in more detail on what that pipeline looks like during -- by Q4. But like I said, right, sometimes a customer tells you he's looking to finalize within the next week, and you're still talking about it 2 months down the line, right? So I just -- please keep that in mind and don't hold me to these words.

Right. Correct, sir. Only just to end the conversion there, sir, it also depends upon what the customers' requirements are? It may be deferred -- but it may be delayed, but not deferred for permanently. So even if that discussion does not materialize in a few days or a few months, it may culminate in, say, 6 months down the line. But it all depends upon what the nature of the requirement is, that is what my point is. So if you could give us some color on the basis of the discussions you are having with them that -- how will things shape up going ahead?

Yes. So I think that -- see, there are 2 different types of orders that we could possibly win, right? One, they're already sourcing this part from somebody; or two, it's a completely new product that's being developed, right? In the second case, where it's a completely new product that's being developed, they generally, they will have a time line for when they intend to award, when they intend to start. There may be delays in the project based -- maybe they have to go back and do engineering again, reengineer the product based on testing results and all of that stuff, right? So there is some smaller possibilities of delay over there. In the case where they are looking to resource from an existing supplier, in such cases, I think it's more about them feeling confident in terms of capabilities as well as cost, right? So obviously, there's got to be a cost advantage that they're looking at or a risk mitigation that they are looking at, right? So in such scenarios, I think there is a lot of fluctuation that can happen, right? So for example, I already have a supplier, I'm just looking to save costs. I need to get all of these approvals in order for it to work. Sometimes the approvals will take longer and people ask questions, they try to renegotiate with the existing supplier. All these things sometimes take a little bit of time.

As there are no further questions, I would like to hand over the call to Deepak sir, for closing comments.

Thank you, Shilpa. In closing, I just want to reiterate our commitment to excellence and our focus on delivering long-term value to all of our stakeholders. The resilience that we have shown in the face of market fluctuations is a clear indication of strength and stability of our business model. We are just navigating through a temporary dip in demand. We are actively preparing for a future filled with promise and potential. Thank you all very much.

On behalf of Nelcast Limited, that concludes this conference call. Thank you for joining us. You may now disconnect your lines.