Rishi Laser Limited ($526861)

Ladies and gentlemen, good evening, and welcome to Rishi Lasers Limited Q4 and FY '26 Conference Call hosted by ConfideLeap Partners. [Operator Instructions] Please note that this conference is being recorded. Before we begin, I would like to point out that this conference may contain forward-looking statements about the company, which are based upon the beliefs, opinion and expectation of the company as of the date of the call. These statements do not guarantee the future performance of the company, and it may involve risks and uncertainties that are difficult to predict. We represent the Investor Relations for Rishi Laser Limited. The company is represented by Mr. Harshad Patel, who is the Managing Director; and Mr. Ganesh Agrawal, the Chief Financial Officer of Rishi Laser. I would now like to hand over the call to Mr. Harshad Patel for his opening remarks. Thank you, and over to you, Harshad, sir.

Thank you very much. There's an echo here. Yes, I -- okay.

It might be a problem from your side, sir.

Harshad, sir, we can be a bit lower voice and that would not make any echo sound.

Okay. Is this okay? Hello. Good evening, everyone, and thank you for joining our annual meeting. I think this voice is not so -- hello. Ganesh, can you speak and just see what -- how is your voice coming.

Can you hear me, sir?

Yes. Your voice is good, and it's not echoing. Can you -- you have the statement, you can read it out there. There is too much echo here.

So you want me to read out, sir.

Yes. Yes, please, please. There's just too much echo. It will not come out clearly.

Yes. Good evening, everyone. This is Ganesh Agrawal. I'm CFO for Rishi Laser Limited. I'm joining this meeting from my Pune lab plant facility. And I'm reading this statement on behalf of the CMD, Mr. Harshad Patel. Good evening, everyone, and thank you for joining annual stakeholder meeting. We are here today to review the results of the past year and the way forward. I want to begin by being completely direct with you. We failed to meet the sales target we established 12 months ago. We projected specific aggressive growth trajectory tied to our Bangalore factory expansion, and we did not deliver the numbers. As the company's MD, I take full responsibility for this shortfall. FY '26 revenue came in at INR 160 crores. which was a growth of 7%. Our PAT compares to INR 3.67 crores, a 55% decline year-on-year. EBITDA margins reduced from 9.1% to 8.7%. These are not the numbers we promised you. I own that fully and without qualification. While our market strategy was sound, our execution was flawed. There were 2 failures, both of which are execution, both were leadership failures, neither was caused by the market nor by our customers nor by external factors, we could not have anticipated. The first failure was in capital execution. We underestimated the complexity of commissioning the large format fabrication machinery at scale, the new plant demanded setting up, calibrating and tooling equipment for the Class for depreciation tolerance of our customers require took materially longer than our project time line assumed. The machinery set progressively operational, but not to be fully productive for a substantial portion of the year. That has lost revenue, lost throughput, lost momentum. The second failure was in human capital readiness. We built a facility designed to operate at a level significantly above our historical baseline. What we did not adequately plan for was that operating at that level requires a different kind of workforce in terms of scale, experience and supervisory bandwidth. Our existing team, which has served this company totally and well was not equipped to absorb that step change without significant training, restructuring and management intervention. We have to make difficult decisions about roles and responsibilities midyear that restructuring consumed leadership bandwidth that should have been deployed towards customer acquisition and revenue generation. We did not resource the human capital transition with the same figure we applied to the capital expenditure. These 2 factors running concurrently compressed our productive output window for FY '26. The financial results, you see the margin compressed. The PAT declined. The elevated employee and finance costs are a direct consequence of these 2 root causes. As of today, the Malur plant is fully operational, the tooling required for our target product mix, medium and heavy fabrication for the Construction Equipment segment is in place and validated. Phase 1 of our in-house ops went operational this month, that is June '26. That is a capability we did not have before. It is a capability that directly improves our value proposition and our margin structure on finished assemblies. On the human capital side, the restructuring is complete, a team running Malur today is capable of operating the throughput and quality levels the facility was designed for. We are not still climbing the learning curve, we have climbed it. The ramp-up costs are in our FY '26 P&L. They will not repeat in FY '27 at the same scale. Our balance sheet reflects the investment we made total assets at INR 148.7 crores. Property, plant and equipment at INR 94.7 crores, debt-to-equity a disciplined 0.29. The capital is deployed. The infrastructure is live. The operating leverage is now available to us. The strategy to address the market has not changed. The markets we are targeting are in anything -- are, if anything, stronger than when we articulated the strategy. Construction equipment fabrication, which today represents 53% of our revenue is growing. Our customers in this segment are expanding their capacity and they need a fabrication partner who can handle large, more complex assemblies. Malur was built precisely for this. Our export contribution reached 14.2% of revenue in FY '26, INR 22.83 crores. Malur plant is designed to international export standards, the pathway to growing that number is now unrestricted. We are targeting INR 100 crores in revenue contribution from the Malur facility by FY '29 against a total company revenue CAGR of approximately 20% over the next 3 years. These numbers are grounded in the capacity. We now have the customers relationship we are actively developing and the operational readiness I have described to you. In FY '26 -- '27, you should expect to see the financial profile of a company that has absorbed its investment cost and is now covering capacity into -- converting capacity into revenue, higher throughput, improving margins as operating leverage kicks in. Finance and depreciation costs are -- that are already fully loaded into our base. No further large-scale restructuring expense, no commission in track. FY '26 was a year we paid for our emissions in delays, in costs and in results that fell out of what we committed to. I have no interest in softening that reality for you, but I also will not allow it to define the company's trajectory. We built something real at Malur. The cost of building it is now behind us, the return from it begins now. I thank you for your patience and continued confidence. We intend to earn it back through results, not through promise. Thank you very much. Over to you.

[Operator Instructions] We have a first question from Mr. Dhwanil Desai.

First of all, I really appreciate a very candid overview of what happened in FY '26, not many managements do that. So a real appreciation for that. Sir, coming to questions. Now that our Malur plant is operational and all the commissioning challenges are behind us including paint shop. If we talked about INR 100 crore number in FY '29, but how should we look at not trajectory for FY '27 in terms of utilization, new generation. And also in order to generate that revenue, do we have enough product approval in place from our largest client. I think that plant is largely dedicated to that. So if you can talk about that, how should we look at that number?

Please go ahead.

See, FY '27 in terms of revenue from that plant, we are looking at INR 60 crores for this year itself. And we want to ramp it up to INR 100 crores by FY '29. Of course, that looks a little longer, but maybe we'll achieve that number before FY '29 itself. All the product approvals are in place. And the billing has been -- the invoicing from that plant has also started. We have started producing from that plant and the segments have started from that plant to the largest customer.

So should we pencil in INR 50 crores, INR 60 crores from that plant.

Yes.

Okay. And that is in addition to the INR 160 crores, right? Because earlier, we were moving some of the projects from the existing facility to the Malur. So even though -- so should we do a simple addition of INR 160 crores plus INR 60 crores or some part of the business will go down in the existing Bangalore plant.

No. actually, some of this business were also earlier part of INR 160 crores. So it will not be a simple addition of INR 160 crores plus INR 60 crores kind of thing. Some part of it will go down.

Sir, can you give us what is the overlap because we have no outstanding or visibility of what business was already built in to this.

See, earlier, we were doing entire supply to this customer from our earlier Bommasandra plant, okay, the earlier plant. Now we have shifted entire thing to this place with an increased turnover, means increased business visibility and all that. I think out of that INR 160 crores, INR 25 crores, INR 30 crores, we should take out for this year.

Got it. Got it, sir. So sir, in terms of margins, I think last year, we have all kind of costs coming in and hitting us because of the new plant kind of getting capitalized, the cost getting higher. So in terms of margins, is it the right way to look at whatever gross margins that we earn incrementally, cost below that will only grow at an inflation rate of, let's say, 6%, 7%. Is that a fair way to kind of arrive at an EBITDA margin that we will end up with.

EBITDA margin, what we are looking at is from 9% to 11%.

Okay. Okay. So the question I'm asking is, sir, we are currently at 48%, 50% kind of a gross margin and leverage is very high, right? So generally, that gives a very high delta when the capacity utilization starts ramping up and the cost below that, it doesn't increase. So we are currently saying that we'll move from 8% to maybe a couple of basis percentage points. But is there a pathway from moving from 8%, 9% to, let's say, 13%, 14%, 15%, maybe not this year, but maybe a couple of years as we fully utilize Malur plant.

Very difficult for me to answer that. But what we are looking at is in the band of 8% to 11%.

Okay. Okay. I would say that my way of looking at it is like is that we are reasonably confident that our gross margins should remain at these levels. And that is -- that has been the challenge. Fortunately, last 3 years, we've maintained these gross margins. So I think based on that, if we keep -- if we increased 25% compounded as we have been talking about, definitely, a good part of that should slow downwards. And one more thing is that we are giving for large levels of automation in the new plant with robotics in place. So we'll be able to do more volume without adding that much of human resource going forward. So I think I would say that, yes, it should add to the margins. But as Ganesh said, it's still difficult to say what it would be.

No worries, sir. Got it. And last question, sir, and then back in the queue. So in terms of customers other than Caterpillar, we have been discussing with Walworth scaling up, Emerson, Schneider. If you can give some update on what is happening on the utilization side in terms of improving utilization on the Pune and Baroda plant. If you can throw some light on that.

Yes. The Pune plant side, what we are looking at -- Pune plant also last year, if you see compared to '24, '25. Last year, we -- I know the turnover was 12.5% more than what it was in '24, '25. That plant also is looking for -- means the traction there also is very high. And this year, again, we have pulled from customers like Emerson and some export customers, some other customers also look very, very high. So there also, the growth looks very promising as far as Pune plant is concerned. Baroda, I don't see much of this thing has happened, okay, because the major customer there, their business has gone down like anything. So Baroda should be at the same level. That is my view.

And last bookkeeping question. Sir, have we capitalized everything on Malur, any more cost to come from Malur in terms of depreciation and our finance cost has gone up. So do we expect finance costs to kind of gradually come down as we generate cash flows and repay the debt.

Couple of crores more, we'll have to -- the second phase of paint shop is still pending, okay? So that will involve INR 2 crores kind of investment there. And max INR 3 crore of investment spending.

The large part is capitalized that. It's already passed through P&L in Q4.

No, it's not. It is not yet.

No, I'm not talking about the paint shop part. I'm saying the rest of the plant.

Rest of the things, yes.

Got it. Got it. And on the finance cost.

Yes, it should be around the same level as it is in the Q4.

We have a next question from Mr. Viraj Mehta.

I have more philosophical question. On the capital that we are using at the firm level. Sir, [Foreign Language] utilization both at Pune and Baroda is low. [Foreign Language] for a company of our size, [Foreign Language]. Hello. Was my question heard or...

Yes, it was heard. Ganesh, please go ahead.

[Foreign Language] further business [Foreign Language]

My understanding is existing facility is good enough to do INR 500 crores sale now. [Foreign Language] in spite of having 50% gross margin, [Foreign Language] Sir, even as a long-term shareholder [Foreign Language] So something is wrong with our expenditure. That is my only question to you, sir.

Sir, again, paint shop requirement [Foreign Language] customer requirement [Foreign Language]

[Foreign Language] overhead expenses [Foreign Language] utilization [Foreign Language] company capital [Foreign Language] as a promoter, we could really think is it the efficient use of capital to just keep putting more CapEx or [Foreign Language].

Actually, Viraj, you're on an official level, what you are saying is correct. And the Baroda plant investment is not really pulling down. The other big -- our biggest facility is used to be at Pune. And Pune was a large facility, which was not pulling its weight enough. Now there are 2 issues here. Plants are not being put just to show off that we have capacity. This particular plant has been put with proper strategic reasons why this is being put and it will kind of facilities were put also to see that we could get new business for domestic as well as export. Now these kind of facilities are not available at the other locations and neither can we supply from another location to this particular southern part of India. So the crux was the problem, which you have correctly identified is that the plants which are idle have either to -- or rather which have idle capacity have to also improve their capacity utilizations or they should not be there and they should be closed down. That is, I think, the message you are giving and which is partly valid. Now in that context, the Pune plant facility also we had been focusing on exports over the last 2 years, and it has been a long haul for that export business to rectify. But over the last 12 to 18 months, a good customer base has been added. Those customers initially were giving much slower business. And this year, even the Pune facility utilization will be at a reasonably high level as much as maybe 80% or so. In fact, that plant is likely to be fully sort of busy and full capacity utilization by as early as third quarter of this year. So those assets, which are idle, which should be sweated. Your point is absolutely well taken. But it is not that we are having all kinds of assets and spending money without expecting any return. If you see our fixed asset turnover ratio is also very good in comparison with the other industries because we have built capacity at a very, very low cost compared to the other companies within the space. So it is not that, that is particularly dragging this whole thing. The main point is that for the size of the -- size of the capacity, this INR 150 crores, INR 160 crores is too less. And once you start crossing INR 200 crores, INR 210 crores, you can start seeing the difference. The other point you are making is very correct that idle capacity is a big issue, and that should not be sort of carried on for long. But that is now not the problem. Pune has also crossed the hurdles, and it is also going to contribute a reasonably good amount of the contribution in profit. And there is one more thing about these capacities. Though most of these equipment are the same but the knowledge level in each factory and the type of work which is done, for example, somewhere you may be doing heavy engineering, somewhere you may be doing light work, somewhere you are doing stainless steel work which requires certain different kinds of skills as well as certifications. So that is also one of the reasons why these plants are in place. Otherwise, there is -- I mean, we completely understand where you are coming from. But there is no frivolous CapEx, which is being done, which is adding to the burden. So I think those -- and the tight management of finance, you can see from the way the current assets are also maintained, the whole debt ratio, debt level for this kind of size of operations, everything is fairly tightly managed. So I think saying that the company is not managing assets properly, I think is a complete misunderstanding of what is happening in the company. I hope I could clear it, but I mean, if you're not convinced, there's nothing more I can say.

Sure, sir. I understand. Sir, last 2 question, [Foreign Language] INR 60 crores in Malur plant we'll do [Foreign Language] and INR 30 crores from existing Bangalore plant will go away. So sir, INR 160 crore to INR 190 crores, [Foreign Language] so INR 30 crore addition by age. [Foreign Language] and it is already now at 70%, 80%. So sir, [Foreign Language] and that is assuming Bangalore [Foreign Language].

Ganesh?

[Foreign Language] So we are a little conservative on that side.

Okay, sir. Sir, last question is, [Foreign Language] quarter pass-through [Foreign Language].

Majority clients [Foreign Language] average price [Foreign Language].

My only humble request is, [Foreign Language] disparity. INR 190 crores [Foreign Language] 80% plus INR 30 crores, Bangalore [Foreign Language] INR 210 crores, [Foreign Language] internal target [Foreign Language].

We have our next question from Mr. Rahul Jain.

First of all, sir, I really appreciate your initial commentary and initial statement, both Harshad and Ganesh sir giving a very candid, honest kind of revert on what went wrong. And as one of the participants mentioned, I have not come across managements being so candid about not doing something or something going beyond your control. Coming to the question part, sir. My first question is, recent Caterpillar commentary has been quite good. The Caterpillar reported good numbers for the first quarter of the calendar year '26. And even their commentary seems to be quite strong on the construction business. And Caterpillar being our prime client, the #1 client, major client. So what are our discussions with them in terms of increase now since your Malur plant is also operational. And as you mentioned earlier, that all the approvals are also placed. So do we understand that compared to, say, last 2, 3 years, when probably our largest customer also was -- compared to the situation last 2 years, this time, the situation is much better with our major customer. So can we get advantage of this and much increased business? What are the talks going on with Caterpillar as such.

Yes. So the talks are -- I mean it's very, very positive and very promising basically, okay? And all their verticals are talking good ramp-up for this year, at least for the first 6 months that we are talking to them. So we should see a significant jump from Caterpillar in terms of business volume this year.

And what kind of increase we can see? So if you could share some numbers, what kind of increase we can see from Caterpillar itself compared to, say, FY '26 and FY '27 and FY '28?

My view should be 15% to 20% at least.

Sorry.

15% to 20%.

Yes, I didn't -- some of -- I think your voice was not audible sir.

15% to 20% jump is what I'm seeing at least.

Okay. And power sector is also one of the sectors which we cater to. And we have been hearing commentaries from other managements, seeing the situation on the ground. The kind of feedback which we are getting, what did not happen in power in the last 10 years, things have really changed in the last 12 to 15 months both globally as well as domestically also in a large area, commentary from BHEL, commentary from Larsen, commentary from the transformer companies, switchgear companies, the transmission companies, a lot of activity being there. So -- and power is one of the segments which we cater to. So how do you look at this kind of opportunity? Is there some -- I'm talking about numbers. Do you see some increased kind of pipeline or forecast or some customers who were doing ex business, ready to do, say, 50% more 2x kind of business. How do we see at this sector because it has come up after a long time.

[Foreign Language] Harshad.

So power, you're right, absolutely, that the segment is into a boom just now, but it's a little bit of a mix bag in the sense that there are some sectors, some parts at the power equipment, which are really booming, number 1 being transformers. And transformer is booming big time because of solar capacity is coming on board. And therefore, the distribution, the way it is done requires more and more transformers to be put so that it can handle this kind of power, which is intermittent, every time solar comes or night when there is no solar. So for that the distribution network and all needs to be changed, it is where large investments are being made. We are -- our #1 customer in that segment is Schneider. The other customers, which are smaller are ABB and Siemens. But Schneider who is our biggest customer in this sector, unfortunately, has gone down drastically from last -- fourth quarter of last year. I think the product that they supply, which is also medium voltage switchgear, which -- it's part of the distribution network. So I was also -- I mean, I've been actually very shocked and surprised at the low offtake on fourth quarter of last year. And we are not getting any proper explanation. What I feel is that they are not in certain sectors, which are really booming. Or rather the segment to which we are supplying, are not in those sectors. So we may not get much of a benefit as of now, I don't see power sector growth is benefiting us much. But besides this, as far as you talked earlier about Caterpillar. See, I look at Caterpillar a little differently because in my opinion, you absolutely correctly pointed out that they've had a fantastic year. In the U.S. also, if you've seen it was a record year, and their stock is at an all-time high. And they are talking a very big business, even outside India. So the big opportunity in Caterpillar is to get into their global supply chains. Of course, the Indian business is also absolutely booming and it's going really places. And I think if some of these bigger items, which we moved into now, initial orders are smaller, but if those click, I think the growth there will be far, far higher than 20% or 25%, which Ganesh just mentioned. And in power, what is happening is that Caterpillar is now -- Caterpillar makes engines, as you know. And they've now bought over Perkins which was a British company also making engines, that plant is in Aurangabad. Because of this whole boom in data center, globally, Caterpillar is now hugely focused on energy on production of power using their engines. So their engine division globally is going to have the highest growth, even higher than their yellow goods and earthmoving. And something similar is also likely to happen here in India with their engine division with Perkins and their plant in Hosur. So we've started getting some initial inquiries from that division also where we were hardly -- I mean we were not even doing any work until last year. So in Power, I would say the -- again, the scope if at all, I see it is more coming again from the engine division of Caterpillar rather than from the switchgear divisions of ABB, Siemens and Schneider, which we are supplying to. The switchgear, some of these divisions, medium voltage switchgear primarily where we supply, that is not really booming into that extent. And power generation also, there is not much of a boom coming. I think in the distribution sector, there is a major boom. And that, I think, primarily is impact in the transformer industry, which is absolutely red hot and everybody has order backlogs of anywhere between 2 to 3 years today. That's the kind of order backlog. And most of them are being even getting export orders. But for us, electric is not really -- nothing much is happening in the sector where which we are sort of engaged with.

Okay. Sir, a couple of quantitative questions now. On the Pune plant, sir, see, we have gone up from about INR 32 crores to INR 37 crores, INR 38 crores in the current year FY '26. So typically, at 80%, what kind of revenue can we do and what can be the optimum revenue from this plant?

So that should be anywhere around INR 50 crores to INR 60 crores, around INR 50 crores, at least from last year's INR 36 crores we should target at least INR 50 crores from Pune.

For current year FY '27.

Yes.

And INR 50 crores would mean roughly 80% utilization.

Yes. From INR 36 crores to INR 50 crores is what is being targeted. And there, there are some other, again, new businesses in export in a completely different sector in construction, which also are a little early days with 2 or 3 major MNCs with whom we are working and some initial trial orders have just come last month. But if they fruitify, that would start doing business somewhere in the third quarter of this year, big business. Small business will happen now in the second quarter, but we have to see from where it goes. And that is not really included in this INR 40 crores, INR 50 crores, which we are talking about.

Sure. That's nice to hear. In your presentation, you have talked about exports going up to now almost 14%, 15% at around INR 22 crores. And you have alluded to that with Malur plant coming in. And now you're also talking about Pune. it looks like you can see a much better growth in exports. So from about 15% or INR 22 crores active number, what kind of export number we are seeing. And also I think in one of the previous calls, you had mentioned about export margins being better than the domestic margins. So given today's environment with regards to freight rates, with regards to the labor cost and everything. We continue to maintain that export margins are 3 to 5 percentage higher than the domestic margins.

I'm sure, Ganesh, do you have anything on this? My feeling is margins should remain, but you're right, freight cost is a little bit of a concern. But the other side of the story is that in the West, their costs have gone absolutely haywire. So as Viraj was earlier speaking that -- I think Viraj was speaking that overseas people are listing for a lot of things from here. So I think margins, in my opinion, remain better than domestic margin. It will also depend a little bit on the complexity of the work. We recently just last week, fortnight back, we bought our first export orders at our Baroda plant also. That's going to the U.S. But those are little -- not very complicated products. So the margins there are I mean, of course, higher than India, but not very high. But if there are a little bit more complicated products then the margins are very, very for export.

In Robotics, what kind of revenue we have done in robotics in FY '26. And what is the kind of pipeline, what is the kind of margin in robotic business?

Last year, we would have done around INR 2 crores of business. Good part of that -- I mean, not this INR 2 crores but the total business last year it was very early days, and we were still trying to make expectations in the market. So it is the first 6 months or so, there was hardly any business. Last 5, 6 months, we have done some business. But from March onwards, the kind of inquiries in the pipeline has gone up by something like 300%, 400%. So our target was this year, current year was to do about INR 5 crores of business. But I think very soon, the way it is going, if Q1 or let's say, by June, July, if all these orders, which are in pipeline fructified, then we may revise the target to about INR 10 crores this year in that business. It's -- as far as margins are concerned, again, our earlier -- we were working only mainly in the SME sector. Because still, we have not got any breakthrough for bigger companies. But now we have got a very, very serious inquiries from some good construction equipment companies, automotive Tier 1 companies as well. And those are complex automation systems in which the margins are better. So I think margins there also good margins and volume, both would increase as they go forward. I think this year, in my opinion, it is a year for I mean, ways to be established because from here, if this year goes as from my expectations, I would say that growth from here over the next 5 years can be absolutely spectacular. And one of the things you may be also covering in some of the con calls of even very good large companies about the shortage of manpower and how much big companies are struggling for that Tier 1 vendors to supply to them and they've lost the output. And these are all problems which are very -- getting very, very serious as we go. And so I think the inflection point is coming in this career, in my opinion, which will give a very, very good traction going forward. So I would say anywhere between INR 5 crores to INR 10 crores is our current year target.

And one last thing, sir, with regards to margins. See, sir, on gross margins, we have actually done a very good job. If I look at the numbers over the last 3 years, gross margins have moved up in last 3 years from about 44%, 45% to roughly 49% from March '24 to March '26. And within that, but our operating margins are down, that is majorly because of the labor cost. Even other expenses have not moved up that sharply compared to the labor cost. So the employee cost, which was roughly about INR 20 crores in March '23, went up to INR 23 crores in March '24. And from INR 23 crores in March '23 is currently at INR 33 crores for the current year ended. And the previous quarter by -- the exit quarter was roughly around INR 9.5, INR 10 crores. So one, in last 2 years, what has been the reason for the sharp increase in employee cost. And how much of it is front loaded with regards to our new plant at Malur? And how do we see the employee costs going ahead? Is it now that this will be the INR 9.5 crores, INR 10 crores will be the quarterly run rate for the year FY '27.

I cannot tell you in percentage-wise, but definitely, last 2 quarters of last year, employee cost has gone up disproportionately because of duplication of work where some work was being done in the older plant and also new plant people have to be employed. And a lot of new systems that we are trying to put up, those employees were in place and output from that was also not in place. So last year, employee cost has been disproportionately higher than normal. But on the other side, I have to say that employee cost control is going to be one of the biggest challenges for us going forward. Because some of the states like for example, Karnataka is looking at increasing minimum wages by as much as 30%. And that is really huge. Other states are still not living in that direction. But wages is going to be one of the -- it is going to be an area of concern. And that is some -- that is going to be a big challenge. And that is the reason why it is going to be very, very imperative that this automation work that we have taken up and the aggression with which we are investing in robotics in our own company is I think the only way I feel this challenge can be sort of handled. So we ourselves have -- last year would have I think installed something like 5, 6 robots. And this year, it will be more than another 8 or 10 robots across our facilities. So of course, robot is only a partial solution, but a lot more work needs to be done in planning and many other ways by which you don't have idle people sitting around. One of the other reasons why labor cost sometimes grows up drastically is that if the flow of business is not regular. So you have people there -- and some of the people are not fungible in the sense that I cannot move those people from one particular sort of manufacturing cell to another because of the skills that they have or the type of work that they are doing. So if the work flow is not regular also the employee cost is not right. And last year, also, that was one of the reasons. But I think looking forward, that doesn't appear to be. I think going forward, workflow seems to be much better now, at least now in this current month and the next 5, 6 months, we have enough in the pipeline to ensure that all the divisions are -- I mean -- or not divisions, but within a factory, the different cells are all working to its proper capacity. So people cost is a big challenge. And one will have to work on that seriously. If I have to say the #1 challenge today in our business, I would put it as having right quality of people and being able to manage that cost. That is the #1 challenge in my opinion. So target is to make that percentage to stay lower than what it was last year. Last year was an aberration, it was much higher. But if we keep these costs same and the turnover is increased by about 20%, 25%, then I think the personnel cost will be not that much higher. It will be manageable. But that has to be done.

So sir, just to clarify because I've still not got my answer. I was looking at...

Ganesh, you can answer little bit better.

Regarding what.

Regarding personnel cost, I think Rahul had something about the percentages have gone up so much...

No, not for percentage. What Ganesh was asking is labor cost -- sorry, the employee cost, which was roughly around INR 23 crores 2, 3 years back, today, it is at INR 33 crores. And for the quarter ended last March quarter, it is INR 9.5 crores.

Rahul ji, I will request you to join back the queue since we have limited time from the management.

We can connect later again.

I request participants to stick their questions to 2 at a time. We have a next question from Mr. Manoj Luwa.

According to your guidance after 3 years would be around INR 285 crores, INR 300 crores sales. My question is a little bit of longer perspective. And at that time, maybe export sale is around 20%, 25%, then around INR 50 crores, INR 60 crores is exports. How to think what trend do you need or what capability or you take more wallet share from the customer that we can go to INR 600 crore sale or exports of INR 200 crores or INR 250 crores because INR 300 crore is also very less for the size of capabilities you have built and the kind of customer you have. So give us a little bit of longer path how can we be a very much bigger company from INR 300 crores. What is needed in terms of trends, what is needed in terms of your capabilities? And what is needed in terms of your customer acquisition? Hello.

Yes. Ganesh, please. Ganesh not joined. Hello? Okay. Let me I think my voice is echoing too much, but I'll try. See, the -- for us to go beyond this level, I think the market -- the commodity markets continue to boom as it is expected. And the kind of -- beginning which is going to be required, earthmoving industry where it is going to go. Globally, it is likely to be one of the biggest booming sector going forward. So if we have to increase our market share, I would say, export to that sector will have to be sort of focused on to be able to go much higher. In case of domestic market, I would not know really whether this much large growth takes place because my last 15 years experience has been that it has always been up and down and the cycles have been very short. Whereas the global cycles are much longer. So if we have to go to those levels, I think export share will have to be increased more, that's my feeling.

Okay. And do you believe that the kind of customers you have presently have that potential for a higher export from you?

No, I don't do so. I think we need to -- we are -- as I said, we have been ideal customers regularly, and we've added some more. Out of this, one of the -- 1 or 2 industries are really booming. But those companies so far it's a little early days, but if those mature, then yes, that would give this kind of growth.

Okay. And we were talking about making tubes also, if I remember last maybe some con calls back, what is the status of that?

Actually we kept cash aside for the moment because last year, we were struggling so much our bandwidth of management with all these moving parts and projects and we had to ramp up and do a lot of new customer work at Pune, this Malur shifting and all that. So that is a new industry and we did another set of team and other people. So we've just now for the time being kept it aside. And once things stabilize, then only we will start working on that. And one of the export industries I was telling you with lot of potential is also tied up to the tube industries. It is sort of parallel to the tube business. So that -- as on today, we are doing -- we have started doing that business but only from the welding side, not yet on the farming and other things, which we were earlier planning to do. So to answer your question, I think for the next 12 months, we are not looking at anything from that front. It's only once these things stabilize, then we'll again take a relook whether we want to really push there or whether we have enough business or there are other areas which we can focus and grow our business much more.

My last question is, I know that you got wrong in the guidance last year. But you have to understand from that point that even now being conservative also, most of the purpose is to show the information to the shareholder. If we are not getting to 13 and 14 -- as a shareholder, we all are boding bands. So if that conservative also confuse us. So for in the longer term, if we are not able to achieve 13%, 14% EBITDA margin, what's the point of having the most esteemed clients and the most -- facility. This confuses us. Can you give -- we may go wrong and come back, okay, what was the problem. But I want to understand if I have to be a shareholder for 5, 7 years, I own around 3.5%, 4% of the company. I have to understand that where is path to above 13%, 14% EBITDA margin. Otherwise, it becomes difficult to understand the capabilities of the company.

I agree with you actually on this. Absolutely. You are absolutely correct. And I think both these things are tied together, the higher -- because last 3 years, if we see that there is a good kind of double-digit growth, which should have been coming. And that's the reason these EBIT margins have remained at this level. But I completely agree with you that you must have those kind of -- you must be in double-digit EBIT levels. And there is definitely a possibility that can happen and that we have to try and we have to make it happen. I tend to agree with you. And your earlier point also is correct that because of having taken a beating last year, I think we've also become a little bit conservative in guidance. But I mean, at the same time, it's not that there is no push being done to sort of go to the next level. And obviously, when having taken a bold decision to put such a large facility with a certain tactic and strategy in mind, we are obviously looking at that kind of growth and margins. So yes, I agree with you that this is -- this is what we should look forward to. And if we don't do that, I would also treat it as a failure. I agree with you. Yes, Manoj?

Due to time constraints, we will now take questions from the Q&A box. So we have a question from Mr. Ansh Khinawat. So he has a question. First question is what would be our strategy to tackle the human capital problem? And second question, in today's market, do we see any new opportunities which we are pushing for.

Yes. So human capital, as I have also maybe mentioned in my earlier some talks also that, that is the area of concern. Capital, not just by way of cost. But by having trained kind of right kind of people. And also since we are getting into higher different kinds of components, we needed different scales. And also automation level so we are working very seriously on skill development. We have -- we are also investing a lot in training. And a good amount of interns from last year, we have started employing lots of interns straight out of college and passing them through the training programs and then getting them on board. And this year, there's going to be ramped up still further. So I think that is what we are doing on the human capital side. New opportunities. There is the big opportunity appears to be in this construction industry where there's a lot of work going on in the scaffolding space and this metal forming. I mean, where they make these aluminum forms into which cement is stored. So that is an area which is doing very well in India. That is where some inroads have been made and some new orders have come. So that is a new opportunity which is looking to come on board.

So as there are no further questions, I would now like the management to give the closing remarks.

Yes. Thank you so much for your patience in attending and then taking so much interest in the working. And yes, the concerns of some of you all will definitely -- are sort of understood. And we hope to work to see that those are overcome and we will definitely work on that and it will be done. I think I'm very positive for a couple of reasons. Number one being that in the last so many years, maybe for post COVID, I've not seen the kind of traction which is coming from the some of our dealer customers. So that is a very positive point. And yes, there are some concerns about cost of other things. But I would say on closing that I'm quite optimistic going forward at least in the next short period, next 2 years. And of course, to build for the long term as we say. So thanks very much.

Thank you, everyone, for joining Rishi Laser Limited Q4 and FY '26 Conference Call hosted by ConfideLeap Partners. Participants may now sign off.