Pennar Industries Limited (513228) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Pennar Industries Limited Q2 FY '24 Results Conference Call hosted by PhillipCapital (India) Private Limited. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinion and expectation of the company as on the date of this call. These statements are not guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions] Please note that the conference is being recorded. I now hand the conference over to Mr. Vikram Vilas Suryavanshi from PhillipCapital (India) Private Limited. Thank you, and over to you, sir.

Thank you, Akshay. Good morning, and a very warm welcome to everyone, and wishing you all very happy Diwali. Thank you all for being on the call of Pennar Industries Limited. We are happy to have with us the management of Pennar Industries here today for question-and-answer session with the investment community. Management is represented by: Mr. Aditya Rao, Vice Chairman and Managing Director; Mr. Shrikant Bhakkad, Chief Financial Officer; Mr. Manoj, Vice President, Corporate Affairs; and Mr. K.M. Sunil, Vice President, Investor and Media Relations. Before we start with the question-and-answer session, we'll have opening comments from the management. Now I hand over the call to Mr. Aditya for opening comments. Over to you, sir.

Thank you so much. My thanks to the moderators and to our stakeholders, and I thank all of you for taking the time to participate in the investor conference call for Q2 FY 2024 for Pennar Industries. Also, I wish all of you and your families a happy Diwali. As per new now standard agenda, we will begin with a breakdown of our quarter performance covering our profitability, our liquidity and our growth plans. And after that, our CFO, Mr. Shrikant Bhakkad, will give us his analysis of our financial performance. And after his presentation, we will open up the line for questions from our stakeholders. For the summary, the second quarter of FY 2024 saw us achieved net sales amounting to INR 814.13 crores and the PBT was INR 29.73 crores. This represents a percentage increase of 38.1%. Now our cash profit for the quarter was INR 38.92 crores. And this reflects a growth of about 22%. This is as per our forecast, and we are confident of further profit growth in the remainder of the year. And one point to note is that the revenue was flat or perhaps fractionally lower than the corresponding quarter last year. Now this is as per our stated intent to replace our low-margin revenue with higher-margin products and services. We had guided to this in the previous few quarters. Specifically, our water EPC, our solar EPC, our retail revenue, and this is well over INR 100 crores for the previous quarter in the previous financial year, has been replaced with higher margin and sustainable revenue from our pre-engineered buildings division, tubes division and our process industry equipment business and also body in white. So for the financial year in question, we do project revenue growth. So while this year will be our highest-ever revenue, do bear in mind, it's a combination of an increase in higher-margin revenue streams and an exit from revenue streams that will not be growing. This, of course, doesn't apply for next year. On the profitability metrics, our quarter 2 PBT of INR 29.73 crores was at a margin of 3.65%. As we both replace lower-margin revenue and also scale the hydraulics, engineering services and PGI businesses, we will continue to see margin improvements. Our cash PAT was 38.9% (sic) [ INR 38.9 crores ] and the margin for that cash PAT was about 4.78%. Move on to working capital. September 30 working capital days were at 76 days. The annualized ROCE was at 21% and our target ROCE for the year is 24%. On previous calls, we had a comment on the calculation of the ROCE, and we have gone back and reviewed it. And we believe our calculation is to be accurate. We effectively take our EBIT and divide that by the capital employed to arrive at our ROCE. Our target working capital days is 72 days. And by the end of this year, we are confident we will achieve this target. However, working capital days in September at 76 days is a little bit higher than what we would have ideally liked to have been at. This is because of delays in liquidating some of our current assets in the revenue streams that we are closing. We consider this to be a short-term issue. And we will fully liquidate our current assets and the revenue streams that we are closing by the end of the year. And this will bring our working capital back to our target levels. On to growth. Our major growth drivers for this year and beyond are pre-engineered buildings, our U.S. subsidiary, PGI, hydraulics, large-diameter tubing and engineering services. Now all of these businesses are currently implementing their CapEx growth plans. And once these assets are commissioned, they will strongly drive revenue and PBT growth. That concludes my discussion on our financial performance for the quarter. I will now request our CFO, Mr. Shrikant Bhakkad, to provide his analysis. Shrikant, go ahead.

Thanks, Aditya. Welcome to the shareholders on the second quarter for FY '23 (sic) [ FY'24 ] earnings call. The key metrics, as we see revenue, revenue is at INR 814.13 crores. There has been substantial improvements in our gross margins by 213 basis points, increase in EBITDA by 194 basis points. Cash PAT has grown and PBT also has grown consequent or year-on-year by [ 1% ]. In terms of absolute numbers, profit after tax is at INR 22.36 crores compared to INR 16.38 crores in Q2 FY '23. It is up by 36.51%. With our continued focus on improvement of the margins and cutting down on the sales with the lower margins, you see the increased profitability of these businesses. Though we are doing better in terms of overall metric tons in terms of perspective, but the revenue that you have seen has been flattened also because of the raw material prices in one of our subsidiaries. Whenever you are growing and investing for the growth, you tend to have a certain increase. And this is one of the things that we are seeing the change. Because of the low-margin businesses, whatever we are cutting down, there are certain current assets which we need to collect it back and there are higher-margin businesses for which we need to fund the growth. So that result of the combination of both these things and with also the increase in the overall interest rate cost from last year to current year, there was an increase in the finance cost. So this -- so we agree that there has been an increase in the working capital cycle. And we expect this to moderate over the next 2 quarters once we collect the old receivables and once our revenue ramps up. So this is in line with our expectations. In terms of salaries, these have been decreased due to the one-time bonus that we had in one of our subsidiaries last year. And we expect that the salaries to stay relatively at this level or increase slightly from here. Profit in subsidiaries has continued to increase over the last year. And with higher revenue coming in the future quarters, we expect this to further grow. Because it's a balance sheet quarter, I'll just explain some of the balance sheet items that we have. The increase in the capital work in progress that you see, the total amount, this increase has been towards the two main businesses that we are deploying further capital, which will help us increase our revenue. There has been an improvement in our short-term liquid funds. And that's where you see the increase in the short-term liquid funds by INR 18 crores. There has been relatively increase in the receivables and inventory, as I've explained earlier. This was due to the funding of the projects that we are growing our revenue. Overall increase in terms of the net worth of the company is INR 45 crores. This is relatively due to the profit that we had in the last 6 months. The important thing to note is our long-term borrowings are reducing. And this is reduced from last March to now to close to the extent of INR 22 crores, where we have done the repayments. Increase in short-term borrowings and trade payables and decrease in the advances, this is a combination of again the working capital cycle that we have been funding for this project. Detailed presentation has been given to the investors. We'll now hand over the call to the moderator for moderating the questions of the investor community. Thank you.

[Operator Instructions] The first question is from the line of Madhur Rathi from Counter Cyclical.

Sir, I wanted to know, how are we on the progress of making a net profit margin of 5% and EBITDA margin of 10% going forward? And when can we achieve this?

Thank you. Net margin will continue to increase quarter-on-quarter as for the reasons that I mentioned, which was higher-margin revenue replaces low-margin revenues, which we are allocating. In relation to that, as revenue growth kicks in, in the next -- this quarter and the next -- in Q3 and in Q4, both of those will tend to lift our net margins. From an EBITDA point of view, I think Q3, our EBITDA margins were at 9.67 -- no, consolidated is 9.35%. So as our -- for the same reasons as I mentioned before, one is the margin mix improving and also the revenue increasing, we expect that this should happen very soon on a quarterly basis.

Okay. Sir, what would be your guidance for top line and bottom line for the second half of this year and the next 2 to 3 years as we see getting out of the lower-margin business and growing into the better-margin business for us?

Okay. I hope my voice is clear. If it isn't, please let us know and we'll repeat our answers. We don't provide guidance on revenue for the years. What I can say is we expect our revenue to keep growing from our current base. And for the financial year in question, we expect our revenue to be our highest ever.

Okay. Sir, on the U.S. business front, sir, I can see our order book has been constantly in the range of $40 million to $50 million. So sir, is there an issue regarding our capacities in the U.S.? Or is there an issue in the market that our order book hasn't grown in those regions?

We predict that our order book in the U.S. will be growing. We are expecting several large order closures soon. So the U.S. pre-engineered building market and the tubes market are much larger than our markets in India. So there's no reason for any long-term nongrowth of order book. But as you have said, we are adding capacity as quickly as we can in the U.S. Unfortunately, it takes time for projects to be added. But we're in advanced stages of what we call Phase 2 and Phase 3 of our CapEx plans in the U.S. So within the next couple of quarters, you will see our U.S. capacity go up and consequently, our revenue and profitability also turning up. That is what we are currently expecting.

So sir, are we running at an optimum capacity in the U.S. business?

Yes, we are. From a tonnage point of view, we are higher by -- in the U.S. compared to last year by almost 30%.

Okay. And sir, what would be the increase in capacity that we are looking forward in that segment?

Could you repeat that?

Sir, what would be the increase in capacity that we are planning in the U.S.?

In the U.S., yes. So as I mentioned, Phase 2 and Phase 3 of CapEx plans take us to an ability to near double our production capacity. In addition to that, I think we will be adding more beam lines and a structure line as well. So over the next couple of quarters, by the end of this financial year itself, we will see significant capacity increases.

Okay. And sir, just my final question, sir, what would be our investment for these capacities?

Most of the investment has already gone in. I think additional investment, USD 1.7 million, yes, so about INR 12 crores.

[Operator Instructions] The next question is from the line of Aditya Sen from RoboCapital.

Sir, what would be the revenue potential of the CapEx that we are going to commission by the end of this year?

We typically aim to have an asset flip of 8% on an annualized basis on the CapEx that we spend. So the revenue to asset flip is about 8%, and that's what we're adding. And the vast majority of our CapEx is at that level.

The next question is from the line of Deep Gandhi from Astute Investment.

My question is related to your PEB business in India. So the order book for us is down quarter-on-quarter, which is slightly down. So are we seeing some a little bit slowdown in India business, if you can talk about that?

No. I think right now, as of right now, our current order book in our PEB India business is about INR 660 crores. Unfortunately, right now, our revenue potential in that business per month is only INR 72 crores. We are commissioning our Raebareli plant in the north of India by February of this financial year. That should take us up to at least INR 88 crores. So as per that, we are ramping up our order book. The reason you see a slight decline in order book is because we ourselves have declined some orders. Because our order book right now is vastly in excess of our revenue generation, and we need to quickly add capacity, which we are at Hyderabad in Patancheru, in Chennai and also in the north of India with a new plant, which is going to be a big boost to capacity. So as these capacities come online, we'll be ramping up our order book. As of right now, we are deliberately keeping our order book back to where it is. But over the next 2 quarters, especially by February for commissioning happens, you will see order book increase, at INR 660 crores, you would see it increase by about INR 50 crores every month until we reach about INR 800 crores, which is enough for us to find -- to get to a revenue base of about INR 88 crores per month. So we don't see any issues on India order book.

That's good to know. And sir, just a related question, can you talk how much capacity are we adding in our Raebareli plant? And do we have any plans for further CapEx also?

We do. I mean, ultimately, it will be a mirror of our Hyderabad facility, which is our largest PEB plant. So we have about five beam lines in Hyderabad. We are starting Raebareli with two beam lines. But the North market, which we don't really tap right now, is as big as the West and South. So we have high hopes for that business in the North. But I think the timing of it is that we had two beam lines by the end of this financial year. So from a monthly run rate point of view, we can move from INR 72 crores to INR 88 crores. And then ultimately, I think even INR 100 crores becomes possible. So there's no cap on this. The market leader in this space has five beam lines in the North plant, five beam lines in their plant in Hyderabad and another plant in Gujarat. And I'm not entirely sure how many beam lines they have, but -- so we'll still be #2 but a strong #2.

The next question is from the line of Riddhesh Gandhi from Discovery Capital.

We seem reasonably enthusiastic about our America business. Just wanted to understand, what is it that's driving enthusiasm out there? And is there any risk of a slowdown if America goes into slowdown? Or are we just gaining actually share from actually other competitors?

Thank you. Good question. So the metal buildings market in the U.S., now these are all numbers which are reported, which are nonresidential construction in the U.S. is a sector that has mapped out quite well and quite to a very large level of detail. So reviewing those numbers shows that the market size in the U.S. for this, for metal buildings, for our product is about $7 billion. So it's about INR 50,000 crores, INR 60,000 crores. Now our revenue there right now is only about $70 million. So we are at a very low capacity market share. So our ability to add market share is quite strong. Plus because we do the engineering of our products in India, our cost base also is lower than our competitors. So the combination of our presence in the U.S., our manufacturing capacity increasing in the U.S. plus some of our costs being lower on a sustainable basis puts us in a position where we can grab market share without compromising on margins. So getting to even a 3% or 4% market share in the U.S. means that we will become hundreds of millions of dollars in the U.S. So it can quite literally exceed the size of the entire company right now just in the U.S. So we are not worried about our ability to scale in the U.S. And as far as the U.S. recession is concerned, there's been talk of that. But for the same reasons, because we have a cost advantage and because we also have very low market share in the U.S. right now, our ability to have an impact on us because of a general slowdown would be less. As of right now, we are diversifying our customer base. We are diversifying our regional quote activity. So we do not anticipate that you will see -- I mean, this year, was more revenue in the U.S. than last year. And we expect that to continue indefinitely. So no, we are not concerned about the U.S. slowdown right now impacting PGI's revenue or margins.

Got it, got it. Understood. And the other question was around CapEx. So just wanted to understand your actually internal hurdle rates that you're looking at CapEx in terms of either incremental ROCE or payback period or equity IRR. How do you evaluate CapEx and if you could just run us through your rough thresholds as you look at incremental CapEx?

So we typically look at putting capital investments into large sustainable businesses. Right now, the four core businesses for Pennar are our pre-engineered buildings business unit, our tubes business unit, hydraulics and engineering services. There are other business units, but the bulk of the CapEx goes into these businesses. When we deploy capital, we try to achieve a payback period of about 3 years for us on a PBT basis or a PBDT basis as it's more relevant depending on the kind of where we are putting the capital into, what is the depreciation that's applicable. So effectively, we try to get out a pretty high IRR, get our money back in 3 years. And that allows us to actually invest into these businesses. Tactically speaking, we have a CapEx efficacy of about 70% to 75%. So we're effectively getting not 3 years but 3 to 4 years on our payback period. So that counts to a 25% IRR. That's effectively our -- so we target 30%, but we get 25% and above usually.

So then as our effectively increment CapEx comes on stream and we are diversifying away from our lower ROCE to higher ROCE business, we'd expect maybe that the blended ROCE at a company level to be the north of 20% over the next few years.

I would say north of that. A longer-term plan, so we just conducted an exercise with BCG on what our next 5 years is going to look like, we have -- I mean, it would be perhaps not appropriate for me to tell you exactly what we're targeting. But I can tell you that where we are right now, which is a 21% ROCE and equity IRR of about 10%, 11%, our goals are to be substantially higher than that to improve that quarter-on-quarter, year-on-year.

The next question is from the line of Hari Kumar, an individual Investor.

My two questions, sir. Can you -- am I audible, sir?

Yes, please go ahead, Mr. Kumar.

Yes. Can you throw some light on the Tech Pennar business unit? And the other question is regarding Trichy boiler business. How is it turning out, sir?

Okay. So Tech Pennar is our engineering services arm. What we provide is process equipment, design services, plant automation services, building information modeling and also structural engineering services. It is doing quite well. From a run rate point of this year, we expect it to scale to about -- and it includes structural engineering, everything, it's about INR 70 crores. And the margin on that also -- it's our highest margin business as well. So it's quite scalable and it is doing quite well. We expect in the next few years for it to cross INR 100 crores. And we consider it one of the core capabilities of Pennar from a product development point of view. The boiler business has also started doing well. It comes under process equipment. It has now breached INR 100 crore run rate and it's achieved 3% PBT. But we expect that to increase as scale comes in. The kind of boilers and process equipment we are targeting would put us in competition with Thermax and Cheema and others. So the business can grow to multiple hundred crores. And we expect that to happen over the next few years.

Okay, sir. And one more question, sir, regarding the trade receivables in noncurrent assets of INR 30 crores, can you throw some light on that, sir?

Which one?

Trade receivables in noncurrent assets, INR 30 crore.

Noncurrent, other noncurrent assets are predominantly the amounts which we need to receive, what the long-term deposits that we have given for various government and the other facilities part of it. That's INR 22 crore, right, other noncurrent assets.

No, this trade receivables part, sir, in that.

Trade receivables part, those are retention monies, which are not due now. As and when those monies are due, this will -- we will classify from noncurrent assets to current assets.

The next question is from the line of Dilip Kumar Sahu, an individual investor.

Yes. Am I audible, sir?

Please go ahead.

Yes. So basically, two questions. One is regarding the stand-alone business. In the last, say, the 8-odd quarters, the stand-alone business was around INR 550 crores to INR 650 crores per quarter and INR 2,000 crores in a year. Now the profit after tax in the first quarter was around 1.7% and the best quarter is around 2.5%, 2.6%. And we know for sure that the services business, engineering products business, tubes business and some part of the water business are double-digit margin, which is around 3%, 3.5%, 4% kind of PAT. In fact, it will be around, say, INR 1,000-odd crores. So the other INR 1,000 crores by the back-end calculations will be around 0 to 1% kind of a profit after tax business. Is this, I mean, my correct understanding? And can you just elaborate on what kind of business that gives us 0 to 1% PAT, which is almost INR 1,000 crores, 1/3 of our business? So if you can just comment on this.

Okay. So if I understand your question correctly, you are saying that some of our businesses are higher margin. So you have derived the net profit projection from that. And you have taken the remainder of the business and you have then applied a differential profit, the differential profit you've allocated to that business. And you have said that is at a lower margin. Therefore, I'm not sure that would be the best way for us to understand our business. What does happen, however, is that we are a company that's divided into nine business units. Each of them have their own capital allocation. Each of them have their own revenue profitability. And our goal is to work with our major business units to drive their revenue and profitability margins onward. Once that is done also, however, there is a corporate cost involved, a capital allocation costs involved, other fixed costs that we have at -- which are not allocated at the BU level. So those are the ones that are perhaps bringing on the overall net margin levels down to where you see them, where we have a PBT of about close to 4% in this quarter. However, as we add scale and as we retire low-margin revenue, what does tend to happen is that your EBITDA margin goes up -- your contribution margin goes up, your EBITDA margin goes up. And ultimately, the same fixed cost that you have at a corporate level gets allocated on a much larger base as the revenue grows. So the combination of these two factors tends to drive our PBT margins up. So while, yes, engineering services is very high margin, I speak at the BU level profitability. At the corporate level, these costs that we are not allocating would bring down margins uniformly across all of the BUs. So our job right now is to make sure that we scale well enough and add enough high-margin products so that our -- there's a lot more drop down from our operating margins to our net margin. So any revenue we add, our contribution or our operating margin should drop directly to our net margin. So do take it as a blend. Prospective margins in any one BU and then subtracting that and assigning the remaining profitability and seeing the others at 1%, 2% would be not the best way to look at this.

No, I'm basically looking at the stand-alone business. You have given the numbers here in all quarters. And I'm saying stand-alone business as a whole has been between 1.7% to 2.6% profit after tax for last 8 quarters. So even if I don't want to get into the business unit level, as a stand-alone business, which is around INR 2,000 crores, and that I'm sure has a lot of transaction with the subsidiaries in the U.S. and Germany, but even if I take that into account, it's 1.7% to 2.6% PAT for the last 8 quarters. And that's where the question comes that as a whole if our objective is to go to 4% as you have stated in the last couple of calls, 4% PAT, and INR 2,000 crores of business is at 2.2%, 2.3% average margin, how will that happen? That's what my question was.

When we say that our overall margins would grow, that would be impossible to happen because the stand-alone margin is also growing. So stand-alone margins and our consolidated margins have both grown over the last 8 quarters. I'll check on the rangebound nature of what you mentioned. As of right now, the overall margin, net profit is about 2.75%. And the net profit margin also is about 2%. Both of those will grow. And the reason for that is, as I said, whatever revenue is being added and whatever revenue is being replaced are at higher margins, are at an operating margin of about 15% to 20% or even beyond that. So you will continue to see margin expansion. And over the next few years, you will see net profit margins also cross about 4% and you would see consolidated margins also cross more than that. As it stands right now, our U.S. business and our international business is at a much higher margin. And we are working to get our stand-alone margins up as well, which will happen. So overall, you will see stand-alone and consolidated margins into quarter-on-quarter. It's already -- the consolidated is already above 4% for the quarter. You will -- this is PBT percent, sorry, not PAT. But we are quite certain of the continued margin growth on stand-alone and consolidated.

Sure, sure, yes. If you look at the annual report, also the Pennar Global margin contribution to the overall INR 75 crores, INR 80 crores that you did, then you'll get to get the number. But I understand what you are saying. Essentially, you are saying the scale and the quality will improve the PAT. And so how is the direction -- the business mix direction, if you can just elaborate a bit, in terms of -- because you don't give -- you have nine divisions, but you don't give nine division numbers because it's very hard to make operating level how each business is doing. So if you can just give a qualitative color on how the mix of business in the stand-alone -- I'm not worried about the U.S. or German business. I have seen the Pennar Global numbers, they look excellent. But again, India-to-India stand-alone business, that's what I'm teeing up.

I understand. So as I mentioned, our major growth catalysts, our growth drivers right now, you can think of Pennar mostly as four verticals, which are going to scale and scale strongly. One is our pre-engineered building line, which includes our India and U.S. business. But let's talk about India alone standalone for right now. In the stand-alone business itself, the four verticals that are going to scale is pre-engineered buildings, our hydraulics, large-diameter tubing and engineering services. All of these businesses, as I mentioned, are currently implementing CapEx growth plans. And we are quite confident that these revenues will scale quarter-on-quarter. And you will see, for example, Q3 standalone will be better than Q2 standalone. Q4 standalone will be better than Q3 standalone. So what is driving growth in the stand-alone business? Well, the revenue growth mostly will come in, in our pre-engineered building line, in our hydraulics line, large-diameter tubing and our engineering services. There are some impacts of body in white and boilers also growing. But these four verticals are what you should look to for sustained long-term growth, which is high margin. And as this growth comes in, operating profit increases, contribution, operating profit increases, drops down to EBITDA, drops down to PBT, ultimately getting us to north of 5% from a PBT point of view very soon, we're already at 4%, and beyond that as well over the next few years. That's our base operating plan.

Great, great. Coming to the U.S. business, we have been doing INR 150 crores, INR 170 crores per quarter. I'm just forecasting and kind of deducting from the stand-alone and consolidated number. So this number is likely to grow in the future? If I remember, you were talking about around $50 million of order pending in order book if I remember correctly. So how is the outlook for this?

So we will not be -- let me try to answer that without giving guidance. Our U.S. business will keep growing. As for the reasons that I mentioned that our addressable markets there are high, we are deploying capital to increase our capacity. And the combination of good markets and good assets will always result in revenue growth. Whenever you have a problem with revenue growth, it's because either the market is -- addressable market is not where it needs to be or is bad or the assets you have are not enough or not good. That's the only reason for revenue not to grow or even decline. Both of those are taken care of. I think we have a high quality, not just in terms of equipment capacity, even the people we have there, some of -- most of them would be considered industry veterans. So they're mapping on the growth of this business. I can certainly tell you that our current revenue base of about $80 million for the year is very low for PGI in terms of its long-term potential. You will see that grow. Now you may have quarter-quarter fluxes because the U.S. tends to be a very -- yes, raw material prices up, down, quarter-quarter swings and even cyclicality in terms of the fourth quarter for the U.S., which is the third quarter for us, tends to be a little muted. But year-on-year, you should absolutely expect strong growth in the U.S in PGI. And that's true of PIL as well, but yes, definitely of PGI as well.

Can I ask a few questions if -- or I have to come back in the queue?

I don't have a problem, you can go ahead.

Yes, yes, sure. So in the related party transaction, your U.S. subsidiary business from, let's say, standalone to the U.S. subsidiaries is some INR 25 crores, INR 26 crores for 6 months. So I understand you had some engineering component business, which you used to do. So it used to be INR 24 crores, INR 25 crores per quarter. So the U.S. business is completely sourced locally in the U.S. now. Is that the right understanding?

So for our metal buildings, it's completely locally sourced. We manufacture everything in the U.S., and there are no intercompany transactions. For our tubes business, we do supply from India to the U.S.

Which is it is some INR 25 crores for 6 months, so it's not a very small number.

Yes, it will scale also. There's also a hydraulics business, which is also scaling quite well. And that, too, will be -- is your question that will India to U.S. revenue increase? Is that the question?

Yes, I mean, there is -- everybody is talking about a huge tailwind in terms of export of capital goods and components. So I'm just wondering whether...

It's a great question. I just want to make sure I understand it properly. So I can assure you that our hydraulics, our tubes business, our engineering services business, all of which are India to U.S., will continue to grow. They have -- I can't comment specifically whether INR 25 crores is less or more. But I can tell you that based on what we're seeing in order booking in hydraulics, based on what we're seeing in new customer addition in engineering services, I have absolutely no concerns on India to U.S. revenue growing. And as you would realize, that's also a high-margin business. So it's also something we are consciously growing.

Okay. And the last question is about solar business. And I'm not too knowledgeable about that business of yours. But if I have read it correctly, you had invested in a large solar panel thing around 5, 6, 10 years back. And it was a big -- a very hopeful story. Is there -- can you just give some light on the solar panel business? Are we really being priced out? Is it really a profitable business? Are we focused? Including the large solar EPC deals that we had done some time back, I think not done, we have got an order from one of the public sector companies. That's my last question, sir.

Okay. So solar EPC is not a sector that is identified as a major growth area for us. We have strong capabilities in that business, and we have a strong order book in that business as well. But the businesses that we would want to grow year-over-year, 5 years from now, make them -- build them into multi-thousand crore business, each of them, that would be the PEB business, our hydraulics business, PGI, tubes, engineering services and the process equipment. I mean, all of those have the potential to all be multiple-thousand crores. And if we focus on them, we'll be able to scale. Solar is a very good market opportunity. To your question of whether it's possible to be profitable there, absolutely. Especially if we are exporting from India to the U.S., there is a tremendous amount of potential in that. But I think there's a lot of people building up a lot of scale in that business. In fact, we are part of -- a lot of our customers in pre-engineered buildings are building up their scale as well. This includes Reliance, it includes Tata Solar, it includes several other companies as well. So we're talking 20 gigawatts for Reliance, right? So there's massive capacities coming online. So our module capacity will need to be niche. It would need to be very high efficiency, very specific end use. Otherwise, if we just go for the regular TOPCon or mono PERC solutions, then, I mean, economies of scale will be difficult to achieve. Because there are lots of people building on massive capacities on that. So that's our strategy. But as of right now, we have not grounded that. For the next few years, we will be focusing on growing these opportunities. And there's enough on our plate and that is enough for us to realize our growth aspirations, our margin expansion aspirations. And so as of right now, that's the situation. We have revenue streams in all of these businesses, but we don't intend to grow them substantially.

No, that's great to hear, great to hear. Because finally, focus is what delivers results. And we are just in too many arenas. So this panel business is now just on its -- no, you are just putting that on the sideline. Is it the panel -- there was a fantastic video I saw about the Pennar panels. So that facility in that business is just on the side burner?

We do make modules, solar modules. But our capacity will be quite low. I mean, we will be at around 500-megawatt of capacity. So as I've said, we don't -- we will not be a consumer of a lot of capital. And as I agree with you, we're in many different kinds of businesses, we need to start focusing on four or five growth -- massive growth opportunities and scale those opportunities. And we will be doing that. But as of right now, yes, we have existing solar module sales and we have existing solar EPC revenue, yes.

Ladies and gentlemen, that was the last question for today. I now hand the call over to Mr. Vikram Vilas Suryavanshi from PhillipCapital (India) Private Limited for closing comments.

We thank the management for giving us an opportunity to host the call and taking time out to interact with the stakeholders. Thank you all for being on the call.

Thank you. Thank you for hosting. On behalf of the management, we are signing off.

Yes. Thank you, sir, and happy Diwali.

Thank you, Vikram, and happy Diwali to you all.

Thank you. On behalf of PhillipCapital (India) Private Limited, that concludes the conference call. Thank you for joining us, and you may now disconnect your lines.