Pritika Auto Industries Limited ($539359)

Ladies and gentlemen, good day, and welcome to the Pritika Auto Industries Limited Q4 and FY '26 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Harpreet Singh Nibber from Pritika Auto Industries Limited. Thank you, and over to you, sir.

Thank you, ma'am. A very good afternoon, everyone, and welcome to Pritika Auto Industries Earnings Call for the fourth quarter and the full year ended March 31, 2026. I would like to begin by expressing my gratitude to you all for taking the time to join us today. I have with me on call today Mr. Narinder Kumar Tyagi, Director of Finance and CFO; and AdFactors P.R., our Investor Relations team. We have shared our results updated and updated the presentation and media release. I hope you all must have received it and gone through the same. I would like to share a brief insight about the company's performance for the year and our strategic outlook going forward. At Pritika Auto Industries, we have established ourselves as a robust and reliable brand specializing in manufacturing of machine castings and automotive components. With the history dating back to 1974, our journey has been guided by the visionary leadership of Mr. R.S. Nibber. Over the past 5 decades, we have grown into a prominent player in our market, supplying high-quality components to leading final equipment manufacturers, primarily catering to tractor and commercial vehicle segments. Our manufacturing facilities at Derabassi, Hoshiarpur, Mohali and Tahliwal continue to operate at healthy utilization levels with total consolidated installed capacity in excess of 72,000 metric tons per annum. Production volumes for Q4 financial year '26 stood at 14,193 metric tons, taking the full year F '26 volume to 52,620 metric tons, the highest in any single financial year in the company's history, underscoring the consistent capacity ramp-up and operational throughput improvements we have delivered across the year. Our focus on low-cost mechanization and targeted automation has allowed us to expand effective throughput by approximately 10% annually without disproportionate capital outlay, keeping us agile and cost competitive. The high-weight casting segment known as large castings like gearboxes, transmission cases, differential carriers continues to be the primary driver of our productivity improvement. High-value products carry better realization and margin profiles, and we are directing incremental capacity additions in this direction. Our core OEM relationships remain intact with M&M, M&M Swaraj, TAFE, Escorts Kubota, Ashok Leyland, Case New Holland and Kion continuing to anchor our order book. The Tractor segment, which is our largest served market, saw healthy retail demand through financial year '26, supported by favorable monsoon, rural income stability and GST rationalization by the government. Our ability to reliably service large repeat volumes requirements of our top 5 OEMs remains our most durable competitive advantage. On the railway diversification, which we have discussed in earlier calls, product development and qualification work against continues. Revenue from these segments is not yet material, but we expect initial contributions to begin occurring in financial year 2027. This vertical remains an important medium-term growth lever -- medium and long-term growth lever and we will meaningfully diversify our customer base beyond the traditional automotive OEM universe. I would like to update shareholders on a few corporate developments during the year. In April 2026, our subsidiary, Pritika Engineering Components Limited, completed the first tranche of an investment in Omnia Engineering Inc., delivering entity acquiring 100% stake for USD 50,000. This represents the initial tranche of a Board approved plan to invest up to USD 100,000 in Omnia, which is a newly incorporated company yet to commence operations. The strategic intent is to establish foothold in the U.S. market and to explore engineering sector opportunities over time. This is in an early stage initiative, but it marks the company's first step towards dedicated international market participation. As we enter financial year 2027, the medium-term revenue target of INR 600 crores remains our reference point. We believe it is achievable through a combination of volume growth from existing OEM customers, scaling high-value products and railways begin to contribute meaningfully. The company has outlined strategic CapEx program for financial year 2027, focused on capacity expansion, product development and efficiency improvements. Guidance on phasing and quantum will be provided as plans are firmed up. Our capital allocation philosophy remains unchanged. We will invest where the returns justify deployment, and we will not pursue growth at the cost of balance sheet discipline. The macro backdrop remains constructive. Tractor demand fundamentals are intact for financial year '27 with monsoon outlook being a key variable to watch. Government infrastructure and CapEx spending continue to support CV demand. On the EV front, our South segments, tractor and commercial vehicles operate on a materially longer electrification horizon than passenger vehicles, and we do not see any near-term structural disruption to our core business. With that, I would like to hand over the call to Mr. Narinder Kumar Tyagi, our CFO, to share with us the financials for the quarter and year ended.

Thank you, CMD sir, and good afternoon to everyone. Now coming to our financial performance for the period. For quarter ended March 31, 2026, the company reported consolidated revenue from operations of INR 138.46 crores. reflecting year-on-year growth of 36.20%, driven by healthy demand from our key OEM customers and improved production volumes. EBITDA for the quarter stood at INR 16.64 crores with an EBITDA margin of 12.02%. Profit after tax came in at INR 4.77 crores with basic EPS of INR 0.26 for the quarter. For the full financial year 2026, consolidated revenue stood at INR 482.95 crores against INR 356.89 crores in FY '25, a growth of 35.32% year-on-year supported by volume growth and a better product mix. EBITDA was INR 71.03 crores at a margin of 14.71% and PAT for financial year 2026 was INR 23.20 crores. We are pleased to note that FY 2026 represents our strongest annual revenue performance since listing. Though the first 9 months, the company had already demonstrated consistent delivery, 9 months FY '26 revenue was INR 344.48 crores, up 34.97% year-on-year with EBITDA of INR 54.39 crores and PAT of INR 18.43 crores. Q4 has built on this foundation, and we enter FY 2027 with a healthy order book and stable customer relationship. That's all from our side. We can now open the floor for questions. Thank you.

[Operator Instructions] We will take our first question from the line of Udit Sehgal from PinPoint X Capital.

Maam, will you repeat the name?

It is Udit Sehgal.

Udit Sehgal.

Yes.

Yes.

Sir, what exactly is the installed capacity? And what is the maximum utilization we can go up to? Also, our EBITDA margins have been falling. So I mean, what's the reason for that?

Installed capacity is 72,000 metric tons annually. And at present, we are doing roughly 70 -- maximum, we can go up to 80%, 85%, we can go up to maximum 80%, 85% we can go...

So we are already doing around 56,000 metric tons. So there's not much room to scale it up further?

We are doing roughly 52,000 metric tons. We are around 73%, 74%, and we can go up to 80%, 85%. And we are planning expansion this year. We plan to add around 7,800 metric tons this year.

Okay. And do you expect this 80%, 85% utilization to come this year, sir?

Yes, hopefully, yes, if market remains good, whatever the indications are as on date, we should achieve 80%, 85% this year.

Okay. And sir, regarding our EBITDA margins, they were in the 16%, 17% range. They've come down to 12% this quarter. What's the reason for that?

Basically, raw material prices have increased tremendously. And in month of March because of gas and other things issues, it just took off.

So are these not like a pass-through? I mean, when we'll be able to...

It is normally done in -- with a gap of 1 quarter.

Okay. So from this quarter onwards, should we will revert back to the normal or it will take another quarter?

It will revert back and we should rather improve on that because capacity utilization -- as the capacity utilization improves, the margins will also improve.

And with respect to this U.S. entity that we have acquired, sir, what is the thought process? And how do we see that scaling up?

Thought process in this is -- what happens is now all the major OEs, they have their offices in -- India operations, they have Indian offices are there. So I mean, when we contacted them, they said, if you want to deal with the U.S.A. directly, then you need to have the U.S. entity. So for that reason, because the margins over there are much better than what the Indian offices are giving. So to deal directly with U.S. customers -- potential U.S. customers, we are opening entity over there.

So we will be doing the manufacturing there or we'll be doing the manufacturing here? I mean what...

We would be manufacturing here and take it over there. And then we might -- there is a thought process on that also. We might start acquire or start a manufacturing facility over there.

Next question is from the line of Zuber Hawaliwala, an individual investor.

My first question is how is the demand shaping up from the tractor 3 OEMs such as M&M, and Swaraj for FY '27 and how we are seeing any changes in ordering trends or customer outlook?

As far as outlook is concerned, customer is expecting a low single-digit growth around 6% to 8% for this year because H2 will have a very high base. So -- but for ourselves, considering whatever new products, new projects we are having in hand, we expect to grow by around 15% this year.

15%?

Yes.

Okay. And my second question is like what is our plan for the CapEx for upcoming years like FY '27 and FY '28? And how is this investment road map support the company's long-term target of achieving 1 lakh tons of capacity?

This year, we plan to add approximately 7,800 metric tons between -- in H1. That is what we are planning, 7,800 metric tons in foundry. And for that, we will need to add machining capacity also. So after this, I mean, so this will take our capacity to roughly 80,000 metric tons. And then as you know, around 2 years back, we ventured into a new technology in casting LFC. So we have got a very positive results in that. And then next year, financial year '28, we will add another 20,000, 24,000 tons in LFC technology so that our capacity -- our overall will cross 1 lakh tons.

Okay. And this is through LFC technology, right?

Yes. So this year, it will be by green, 7,800 metric tons. Next year, we will add 2,400 metric tons in LFC.

Okay. And are there any plans to increase the content per vehicle through more complex and engineered components?

Yes, yes, because we -- around 30, 40 years back when we ventured into Foundry business in 1997, '98, we started with the small castings. Then slowly, we gradually move into medium castings. And now we have started moving largely mainly into large castings where the competition is less and valuation is higher.

Okay. And my last question is what is our current mix between the machine casting and plain casting? And how do you see this evolving over the next few quarters?

We do 100% machine castings. We don't give raw castings, yes.

[Operator Instructions] Next question is from the line of Manas, an individual investor.

Good set of numbers. I think we delivered partly on the revenue side. And I think you said the margins is some kind of temporary pressure we went through. So just some question on the margin. So next year onwards, we go back average 15%, 16% PAT level margin, 5% next year, is it a...

We should worry. If the war doesn't create much more disruption, then we should go back.

In the first quarter itself, we'll be able to see...

What has happened, everything related to crude, all the chemicals, everything, gases, everything has become cost. If there is no further disruption, then I think that we should revert back to that.

Because I think I felt we should have got some operating leverage. Last quarter, the sales growth was too good. So it should have...

It was our highest ever sales growth.

Yes. So I felt it should have resulted in some operating leverage, but somehow we got stuck up in...

Because I mean raw material increased by around 4% to 5%, 6% and other expenses, all the gases and manpower costs, everything labor contractual, labor cost, whatever we were doing, getting outsourced, everything increased, there was a huge impact on that.

So now at the current run rate where we're expecting, similar run rate in line with the last quarter, we had INR 138 crores, we might -- the first quarter will also be in the similar run rate?

First quarter will be similar to that.

Similar to that. And margins 15% to 16%.

Margin would improve, definitely improve.

From here. And one more thing I want to check out, we did around INR 70 crores of -- INR 67 crores, INR 70 crores CapEx, whatever cash flow we generated, we had put some CapEx. So where is this actually sitting? Is it for the 7,800 tons? Or is it separate?

Some is for 7,800 tons, some is -- yes and machining and some is for new product development and some for railways, whatever, 3, 4 products...

So this year, what will be the CapEx requirement there?

This year, CapEx will be roughly around INR 25 crores to INR 30 crores, INR 25 crores, not more than that.

For 7,800 tons we require how much? INR 60 crores to INR 70 crores in total?

7,800 tons, we require roughly INR 35 crores.

INR 35 crores. Okay. Got it. Got it. And one more thing I wanted to check for next year onwards, where are we -- I think I heard somewhere INR 600 crores and then 15%...

Yes, we -- for next 2 years, we plan to grow at around 15%. So I think, sir, with 15% growth in next 2 years, we should touch INR 600 crores.

So INR 600 crores next 2 years, sir?

Yes.

Okay. So now this year onwards will be around 15% growth. with better margins.

Yes, with better margins.

Next question is from the line of Chaitrika Deshpandey, an individual investor.

Sir, could you please provide an update on the Hoshiarpur land acquisition matter and its current status? Also, does this development impact company's expansion or capital allocation strategy in any way?

Pardon, I didn't get the second part of the question.

Does this development impact the company's expansion plan or capital allocation strategy in any way?

No. The status of land was that we acquired the land under this -- from ARC in auction by High Court. But then we found -- then there was some litigation on this. So then we withdrew ourselves from the auction. So that -- you know how the auctions go, I mean, they take 10, 15 -- how the litigation goes 10, 15, 20 years, recent developers have been there. So we thought it is better to withdraw ourselves from the auction. And this won't impact our immediate plans for next 1 or 2 years. Yes. Beyond that, we are looking for land, and we might acquire a fresh land -- new land somewhere near in another 2 to 3 months.

All right. And sir, any refund initiation process?

We have received the refund, refund has been received.

Next question is from the line of Akash Sharma, an individual investor.

I have a few questions, sir. First one is that our EBITDA per ton stood at around INR 13,500, while realizations per ton improved to around INR 92,000. So just want to know that which segment or products are driving this improvement?

Which segment?

Which high-value product segments are driving this improvement?

See, if you see, we are primarily -- general tractor industry has 3 category of castings. One is small castings, which we say 0.25 kgs to, say, 20 kg. Then we get medium casting, which is say 20 to 80 kgs, then above 80 kg is considered large castings. As we move in this segment from small to medium, large, the value addition and the profitability keeps on improving. So -- and we have been consistently moving from small to medium. Now we have started moving from medium to large. Large, -- reminded large is one more, the number of players in India is very less for large castings. especially for giving to tractor Industries, number of players is hardly 8 or 10 players are there who produce large castings in India. So we are -- so there, it's a slightly niche market, difficult market and competition is less. So we are moving in that direction. That will improve our margins and everything.

Okay, sir and have we gained any market share with any major OEM?

Yes, yes. We have gained market share with almost all our customers. If the market has grown by 16%, 17%. We have grown by 34%.

Okay. Okay, sir. And what is the -- I mean, approximate revenue contribution from our top 3 customers?

From top 3 customers?

Top 3 customers, yes.

Top 3 customers would be roughly 50%, 55%.

Okay, sir. And is this going to change post we are shifting from medium casting to large casting?

No, no. This will not change because they are primarily the same customers with which -- we are moving ahead with same customers only, and we are increasing our share of business with existing customers. Because you see our top 3 customers are M&M, Swaraj, TAFE, Escorts and these are our major customers. And these are top 3, 4 tractor manufacturers in India. So they control almost 60%, 70% of the market share, and we are majority growing with them only.

Okay. Okay. And sir, my last question is that are we preparing for some EV-related opportunities or that's out of picture right now?

No, EV also, I mean, as of now, if we see tractor EV, [Foreign Language] everybody is developing, and we are also developing components for them also. But as of now, there is -- we don't see any major EV platforms coming in tractor for next 2, 3 or 5 years. I mean they -- I mean there is small -- in a very small way, all the companies are working on it, but not in a big way.

[Operator Instructions] Next question is from the line of Yash Parker, an individual investor.

Can you repeat the name?

Yash Parker.

Hello, am I audible?

Yes, you are audible.

Congratulations on good set of numbers. So you mentioned that the rising costs were nearly 4% to 5%. And we also saw that there was a lot of increase in the steel prices and power and energy costs in the last quarter. So how do we see the cost environment evolving going forward for FY '27?

See cost -- that I told earlier, if there is no major disruption because of war, then I think the cost should stabilize. Only thing is now with the diesel prices now increasing slowly and steadily. So that will have some impact on the freight part on the other things, incoming raw materials and all those things. So -- but good part with Indian OEs, I mean, it is -- everything is passed through. I mean there can be delay, but it happens. So raw material is already on a pass on. Other things like freight and other things. I mean they do pass on and maybe with a delay. So I mean, I don't see a very, very major impact of these cost pressures for a long term. Yes, the short-term impact will be there, but not on a long-term basis.

Okay, sir. Another question would be, sir, regarding the EBITDA and realization, they have improved quite a lot in this year. So is this because of some value-added products that has contributed to such a good improvement?

Two reasons. One, value-added products. Then number two is better utilization of the capacities and these are the 2 major reasons.

Also, sir, what would be the comfortable leverage ratio for our business over the medium term? Right now, I guess the net debt to equity is somewhere around 0.65 or something. So how comfortable is the management on debt part?

Debt part, we are -- as debt equity is concerned, we are pretty -- sitting on a comfortable position. And I mean, for future expansion also, we see -- I mean, we will keep it below 1, we'll keep it below 1 in any regards.

Okay, sir. And also, sir, regarding the future opportunities. So you have mentioned that infrastructure spending, the commercial vehicle demand increase and even the vehicle scrappage policies are going to be a growth driver for us. So out of which, which segments or applications do you feel would drive major growth for us?

See, as of now, we see major growth in tractors. EVs because of a lot of regulation disruption has been going up and down. EV has been more volatile than tractors over the last 5, 7 years. So we see a major growth in tractors as now because all the government have a lot of focus on rural income. Rural income, everybody -- I mean, right from central to state government, they want rural incomes to grow rural people and you know how the -- I mean, election machinery has become now. So government has a lot of focus on rural economy. And we see another for next 4, 5 years, good growth in tractors. There may be a year or 1.5 years of a dip. But on a long-term basis, we see a good growth in tractor industry.

Sir, last question, you also mentioned that we will be starting with production in the U.S. So could you quantify what would be the -- what can we expect as in the margin difference between India operations and U.S. operations, please?

I mean what we have studied till now is that if we work at 14%, 15% EBITDA margins, and if we -- I mean, do a major -- like manufacturing over there means not full product manufacturing, only a part manufacturing or a finishing kind of thing, finishing operations like something like that only. So we expect that margin -- minimum, say, EBITDA margins of 18% to 20%.

Oh, that's great. Last question from my side, sir. You mentioned that tractor so far is not -- adopted for EV. But how about commercial vehicles and off-highway equipment segments? Like are they adopting the EV thing around?

No, no. heavy commercial, there is some very slight movement. That is only in buses there is there, but not in commercial vehicles, heavy vehicles [Foreign Language] Tractors [Foreign Language] they have just started a development or maybe a very small and very small man. And for off-road vehicles like construction equipment, I have not seen any movement in that towards electrification.

We'll take our next question from the line of Vishal from Swan Investments.

I have a few questions regarding the CapEx details which you have shared. 80,000 metric tons of capacity you plan to achieve this year where you are adding 8,000 metric tons plus next year, you plan to increase it to 24,000 tons. So what kind of investment you plan to do this year and next year, if you can share some data and what -- how will it be funded?

This year, it will be -- we are planning to invest around INR 25 crores to INR 30 crores. And next year, when we go for a bigger project, about INR -- at that time, we are looking at an investment of, say, around INR 60 crores to INR 70 crores and that we will try to fund it by a combination of debt and equity. This year, it will be by debt only. And next year will be by debt and equity.

Okay. Okay. Because sir, debt is quite -- has increased quite meaningful to this year around INR 190-plus crores.

INR 180 crores, this year is INR 180 crores.

And our interest cost is also around INR 22 crores. So that will add extra burden to your...

Yes, I agree we will -- this year, we will do by debt only, next year by a combination of debt and equity. And maybe we'll see what kind of equity we are able to raise. It will depend on that, but that is the plan.

Okay. And the increase is 2,400 tons will be only through LFP, right, if I'm not wrong?

Pardon?

The increase in the capacity for the LFP products, right?

Next year would be LFP.

Okay. Okay. So after this increase, what will be the share of capacity between the normal conventional casting and the LFP?

After next year, it will be around, say, 70%, 30%.

Sorry, sir, you're sounding a little distant. Can you come closer to the mic, please?

Yes, it will be 70-30. Next year, it will be 70-30.

Okay, 70-30.

Yes. When we add this 2,400 tons. So it will be roughly 70-30, 65-35 -- anything between -- it is between 70-30 and 65-35.

Okay. Sir, what is the current share of business or the share of revenue between the convention and the LFP currently?

Currently, LFC is roughly, say, 15% -- 10% to 15%. 15%, yes.

Okay. Okay. And we were planning to add certain more customers in the LFP. It was a few of the OEMs were testing our products. So there are...

We are under discussion with customers in India and abroad. Last year, we added one customer -- domestic customer in India for LFC, which was Kion India. So that was an import replacement product. And then we added one customer in South Korea for LFC product for which the consignment is going this month for Korea. For Kion the Indian customers, we have already started the supplies.

Sir, in terms of your order book, which you have currently, so what is the proportion of LFC products?

As of now?

Yes.

Order book, if we say LFC is almost 20% order book what we have.

Okay. Okay. What is the size of order book currently? What is the overall size of the order book currently?

Order book is -- we are fully booked. All 70 -- rather we are overbooked as of now. What demand is being generated by customers, we are overbooked on that.

Okay. So it will be over like INR 500 crores, INR 600-odd crores of order book currently we have?

Yes, yes, easily.

Okay. And sir, what is the margin profile of LFC generally we envisage?

Generally, say 1% or 2% -- 1% or 2% higher than the normal one.

Okay. Okay. And sir, what is the like-to-like basis in terms of CapEx between the LFP and the conventional in terms of per ton basis? Does the LFP CapEx are far lower than...

Yes, for a -- if we say for a greenfield project, not a brown -- greenfield project, like for the categories where LFC is used. LFC is used basically in large castings, which are a high core part. So their minimum -- I mean, capacity credit is 3,000 tons. For that minimum, you need INR 120 crores to INR 150 crores depending on the land and automation you add to that. Whereas same 3,000 tons in LFC, you can put in INR 75 crores. It's almost 50%.

Okay, okay, okay. Just one more last question. Sir, do share some details on how the funding would be there for the next leg of CapEx that will have some clarity on...

I told you it will be a combination of debt and equity. We will raise some equity and debt also. I mean it depends -- we will prefer if we can do it fully with equity and as much as equity as possible less of debt.

[Operator Instructions] Next question is from the line of Manas, an individual investor.

Yes. Sir, I just had some follow-up questions. So I just want to understand, are we doing some ex poke model? Or is it like we take -- so some companies, they have or model, some companies because then they don't -- they are not bothered about their -- these pass-on costs. Are we looking to move to a transform model?

Who are far away like M&M and TAFE, we have exworks and some customers who are nearover like Swaraj is there, ex works is there. We give them on free delivery basis. And secondly, the diesel component, the freight component, which you are considering is not only on ex works also on the digital. It is also -- it impacts the incoming raw materials also. So that is how it impacts. Incoming raw materials also become costly because the freight part increases.

So now how do you feel -- still the prices are there. Now in the upcoming quarters, we feel that the margins will be better. So on what basis we feel that we'll be able to come back to the...

Margins will be better...

margins.

Other than the freight part, most of the raw material will be passed on by the customer in this quarter, whatever increase was last quarter, it will be passed on. So only freight component because that started -- the diesel started increases this month only. So that we have to see with our customer how we go about that. What is the -- but still it is not close. I mean every day it is increasing. So once that stabilizes, diesel, then we will start discussing with our customers.

Okay. So you're saying majority part will be passed on. So it's like quarterly, you're passing on. Monthly, now at this point, how is it -- are we able to -- how are we doing it at this moment?

At this moment, it is different for some customers, it is quarterly only. For some, it is -- we have moved to monthly. We are moving to monthly. It is under discussion. That is...

Okay. Okay, so -- and the second question was, I see last 2 quarters, just the last 2 years, I've been noticing March onwards our margin dips, maybe by 2% or something. I've seen for last 2 years. And again, this year also, we had a hit. Obviously, there is some element of raw material cost. But also, I think in the press release, you hinted for the product mix. So my question was how much of an element of -- this is the product mix? March quarter where a particular customer we are serving where we have less margin or because last 2 quarters -- last 2 years, I've noticed the March quarter, the margins are down 2%.

Normally, what happens is by the end of year, the raw material prices start going up. So that is one part. Or maybe in 1 -- last year was that it was lower capacity utilization was there. So it depends on various factors, raw material prices, capacity utilization and then.

No, on similar iron ore also we are ahead, suddenly the margins took a dip like 16%, 16%, 16%, then suddenly it goes to 13%.

Raw material prices, product mix, sometimes the products which are old products where the value addition is less. So those their volume increases, but tractors have now a lot of product mix is there, different type of products are there.

But since you're only doing machined components, the margin profile should be very similar. It will be like a base product mix should be very, very.

So what happens is the components which were settled, which are, say, we call legacy components. So there, the margins have over the years reduced. But in new components, the margins are better than the old ones. So that is one of the reasons.

Any idea you know a percentage, any idea just -- I mean, just to understand like...

What percentage...

Any percentage means legacy versus the new components, at least you have some idea over that -- any idea -- any numbers you have?

As of now, we see almost it will be a ratio of 60-40. 60% would be legacy, 40% would be new. Legacy components take long time to -- I mean, to move out of the system, the product will -- customer also, the tractor models take long time to come to...

And it might be to the particular customer as well...

Yes, yes, particular customers also.

Yes. And sir, and the last question, I think a little bit -- I understood the structure, Meta casting is there, Pritika Engineering component is there. Pritika Auto also does some machining. So Pritika Engineering and Meta casting is there. I just wanted to understand is Pritika Engineering and Meta Casting give the job back again to Pritika Auto to do some machining or it's bill from entire 3 different entities to the final customer?

They give raw casting and Pritika Auto does the machining. Some they do the machining and just bill it to Pritika Auto.

So the billing is happening from both the ends, through Pritika Engineering and Pritika Auto. Earlier con call, I studied that earlier it was like different. So I just wanted to understand that.

No, no. Billing is done by both ends.

Okay. So sometimes the casting comes from Pritika Engineering and goes to Pritika Auto also.

Yes, goes to Pritika Auto, machines it. Sometimes Pritika Engineering does the machining and bills it to Pritika Auto.

Okay. So both ways it happens.

That is both ways.

But is there any -- like is there because of operational reason it's like this or...

Operational reason we like Pritika Auto is more into small and medium castings and Pritika Engineering into medium and large castings. So sometimes the medium castings go to Pritika Auto and they are machined over there.

So the margin discovery happens then at the Pritika Auto then because when you bill it there, then the margin discovery happens there. Am I right?

Yes, yes, you're right.

Sir, last question, I remember you told now next year -- see, we are generating INR 70 crores cash this year. If I assume next year also, you generate INR 70 crores cash and INR 25 crores, INR 30 crores, INR 30 crores, you want to do some CapEx. And the remaining INR 40 crores will end up going in some interest cost and INR 20 crores, you might repay some debt. I don't know. I'm just trying to guess. And debt might come down to INR 170-odd crores. Then the next year following that, you want to do INR 70 crores CapEx. I assume you will also generate similar cash flow, INR 50 crores to INR 70 crores. So is there a real need for debt? And I mean, is there like some -- like you might need some debt, but I don't think the debt component should go up disproportionately.

That, we will -- yes, I mean, we'll see the cash flow and how we are placed, then I will take a call on that.

But I'm assuming this cash flow trend will continue in the...

It would continue.

Next question is from the line of Rohit Mehra from SK Securities.

I joined later, maybe I will be repetitive. I just wanted to know so margins were gradually increasing from FY '22 to FY '25. And this year, we saw a decline in EBITDA margins. So may I know the rationale behind that?

Basically, it has been in Q4, and it was because of increase in raw material prices and then a disruption due to war in March because in gas and other things, there was a lot of disruption was there in whatever the chemicals, crude-related products were there, there was a lot of disruption in that because of that.

Okay. So is it fair to assume that so we will maintain the margins around 15% to 16% going forward?

Yes, in coming years, this year. And if there is no further disruptions due to war, we should reach back to our original margins.

Got it. Also, the company has invested in lost foam casting technology from Mita casting, obviously. So could you elaborate on the strategic advantage of this technology and the expected business contribution going forward?

At present business contribution is around, say, 10%, 10% to 15% because this is a new technology, and it has taken some time to establish it at our end and at the customer end. But now it has been fully established, and we are ramping up our production. The basic advantage of this casting is that if you see this is primarily used for large casting or with the other casting, the core work is very high. The core content is high. So for that kind of a product line, whatever investment required is minimum is INR 120 crores to INR 150 crores. But with LFC, we can produce same products with same quality with almost 50% investment and in the smaller blocks. So that is 3,000, here we can start with 400, 500 tons, 1,000 tons, 1,500 tons that way we can create the capacity in that. It is much easier with lesser CapEx, you can start this technology. And then you get the same quality, same product and slightly better margins in this...

Got it. So going forward, is it fair to assume that this percentage that you told me that right now, it is 10% will go upwards to 2025 or maybe more?

Yes. That is a long-term to take this to 30% in the next 3 years.

Got it, sir. Okay. And apart from the U.S. market, are there any new export customers or geographies currently under discussion?

Yes, we have recently started exporting to South Korea also. We have sent 1 lot and 1 lot more is going. And we are exploring Europe also in this regard.

Okay. So how are we competing in this market compared to the Chinese and European foundries?

See, whatever advantage they had because of low-cost thing, low-cost manufacturing because of the labor cost and other power costs. Now they don't have that advantage. Only advantage they have now over above this, number one is the financial cost. And number two is productivity-wise. Otherwise, their labor cost is higher than us, their power cost is higher than us. So India as of now is -- India can compete very easily with China, which was not possible, say, 10 years back or 15 years back.

As there are no further questions from the participants, I now hand the conference over to Mr. Harpreet Singh Nibber Near from Pritika Auto Industries Limited for closing comments. Over to you, sir.

Thank you. In closing, I want to acknowledge the sustained effort of our teams across manufacturing, quality and supply chain. Financial year 2026 performance has been delivered through disciplined execution. I also thank our customers for their continued partnership and our investors for their engagement. I would also like to say that our company, I mean, we are on route to far to fulfill our vision of 1 lakh tons, and we plan -- we are very aggressively following that our vision. And we plan to grow, we have that by 15% for next 2 to 3 years, and we will be continuously adding capacities and customers. And our focus would be -- for next 2, 3 years would be exports. I know it's a long process, 4 to 5 years. So we will be focusing on exports so that our margins can improve. And second would be railways, which again, we are very aggressively working on 2, 3 products, and we hope that another 2, 3 years, so that will also give us a good revenue and bottom line. So financial '23 has related to the operating model we have built consistent revenue growth, improving product mix and broadening strategic agenda, we will carry that forward in coming years also. Thank you, everyone. Thank you for your time. Thank you. Have a good day.

Thank you. On behalf of Pritika Auto Industries Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.