Salzer Electronics Limited (517059) Q3 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Salzer Electronics Limited Q3 and 9M FY '26 Earnings Conference Call. [Operator Instructions] I now hand the conference over to Mr. Vinit Agarwal from Aditya Birla Capital.

Thank you, Kartik. Good morning, everyone. On behalf of Aditya Birla Money, I welcome you all to the Q3 and 9 months FY '26 Post Earnings Conference Call of Salzer Electronics Limited. This conference call may contain forward-looking statements, which are based on the beliefs, opinions and expectations of the company as of the date of this call. These statements are not guarantee of future performance and involve risks and uncertainties that are difficult to predict. I now invite Ms. Savli Mangle for the opening remarks to be followed by a question-and-answer session. Over to you, ma'am.

Thank you, Vinit. Good morning, everyone, and thank you for joining us today to discuss the unaudited financial performance for the third quarter and 9 months ended December 31, 2025. I have with me Mr. Rajesh Doraiswamy, Joint Managing Director; Mr. P. Sivakumar, Assistant Vice President, Marketing; Mrs. R. Menaka, General Manager, Accounts; Mr. K. M Murugesh, Company Secretary; and Mr. Jitendra Vakharia, Non-Executive Director, Kaycee Industries. I shall now take you through the consolidated financial performance for the quarter and 9 months ended December 2025. During the quarter, our revenues increased by 24% year-on-year to INR 424 crores from INR 341 crores in the previous corresponding period. This growth was mainly driven by higher demand for Industrial Switchgear and Wire and Cable businesses, particularly in products like 3-phase dry type transformers, wire harness, relays and new products like contactors, et cetera. The EBITDA, excluding other income, was INR 37 crores, a year-on-year growth of 4%. The EBITDA margin for the quarter stood at 9%, while the PAT was INR 13 crores in Q3 FY '26. Coming to our 9 months financial performance. In the 9 months ended December 31, 2025, the net revenue was INR 1,284 crores, a year-on-year growth of 23%. This was largely driven by higher demand in both Industrial Switchgear businesses as well as Wire and Cables. The EBITDA, excluding other income, stood at INR 116 crores as against INR 105 crores in 9 months FY '25, a year-on-year growth of 11%, while the margin stood at 9%. The PAT was INR 43 crores, a year-on-year growth of INR 45 crores. Coming through to our business divisions. The Industrial Switchgear division contributed to 56% of the total revenues in this quarter and 58% in 9 months. This business grew by 12% year-on-year in Q3 and 22% year-on-year in 9 months, while the margin in both Q3 as well as 9 months, the EBITDA margin stood at 12%. Coming to Wire and Cable, this business contributed to nearly 39% this quarter and 37% in 9 months. There is an increase in 49% year-on-year during the quarter and 26% in 9 months FY '26. The EBITDA margin for this business in both Q3 and 9 months stood at 5%. The last business, the Building Products contributed to 5% to our revenues in this quarter as well as 9 months and with this 8% year-on-year growth in 9 months FY '26. Coming to exports. For the quarter and 9 months, the export revenue stood nearly at 21% in Q3 and 23% in 9 months FY '26. With this, I would like to now hand over to Rajesh to take us through the business development and the way ahead. Thank you, and over to you.

Thank you, Savli. Good morning, everyone, and a very warm welcome to Salzer Electronics earnings conference call for the third quarter and 9 months ended 31st December 2025. Thank you all for taking time to join us today. We have already shared our results update presentation and media release. I hope you all have received and gone through the same. I would like to share some key highlights and recent developments and our outlook for the future before we open the floor for questions. Before I discuss our quarterly performance, I want to highlight that convergence of policy tailwinds we are witnessing at present. Just this past week, 2 significant developments have improved the operating environment for Indian businesses and particularly electrical equipment manufacturers. First, the U.S.-India interim trade agreement announced on 6th of February has reduced the tariff on Indian goods from 50% to 18%. This restores our export competitiveness and at 18%, India is now more favorably positioned than many of our other countries. As you know, we had flagged U.S. tariff exposure in our previous calls, approximately 7% direct export and 3% to 4% indirect export. That overhang is now substantially lifted, and we're already seeing renewed inquiry levels from U.S.-based customers. While it is early to quantify the revenue impact, we view this as a structural positive for our export earnings. Second, the union budget 2026-'27 continues with the government's infrastructure push with INR 12.2 lakh crores in public capital expenditure, the highest ever allocation so far. Importantly, the RDSS allocation has been increased to INR 18,000 crores, directly supporting smart metering deployment and DISCOM modernization where Salzer has a strategic positioning. The budget also introduces a national manufacturing mission with a focus on clean technology, solar, EV batteries, motors, controllers and high-voltage transmission equipment. Our core switchgear market continues to grow at 7% to 9% CAGR. India has crossed 50% non-fossil fuel installed capacity and EV charging market is projected to reach USD 1.6 billion to USD 1.9 billion by 2030. In summary, export competitiveness is restored, domestic investment is reinforced and our addressable markets validated. Salzer's diversified portfolio across switchgears, wires and cables, smart meters, EV chargers positions us well to benefit from this environment. Now coming to our key updates and the recent developments. I'm pleased to announce that the appointment of Mr. Raman Krishnamoorthy as the Chief Financial Officer for Salzer Electronics Limited with effect from 1st of April 2026. His appointment reflects our continued focus on strengthening the leadership team as we prepare for our next phase of growth. With his extensive experience and strong financial achievement, we are confident that he will further enhance our financial governance and strategic planning capabilities. During the quarter, we also witnessed an unprecedented increase in key input costs, particularly silver and copper, which had a marginal impact on the margins to the extent of approximately 2 basis points. [Technical Difficulty] We strengthened our capital base across key associates and subsidiary entities to support the ongoing and the future expansions. Specifically, Effilume Private Limited, an SPV floated specifically for executing Bengaluru energy saving project. The project execution is going on as expected, and we will start to see revenues coming in from September 2026. Salzer Saudi Arabia Limited, our 100% subsidiary in Saudi Arabia, where we have started to install machinery, and we are expecting to start commercial production from June 2026. These investments align with our strategy of scaling both domestic execution capabilities and international operations for the long-term growth. On smart meters, we continue to execute our existing orders and engage actively with multiple AMISPs and DSOs. While we are yet to secure a large-scale order, this is primarily due to industry factors such as stringent eligibility criteria linked to the past execution, scale, evolving tender conditions and also aggressive pricing dynamics. Smart meter revenue for Q3 stood at INR 1.25 crores, taking the 9-month FY '26 revenues from smart meter to INR 25 crores. Our technology is validated, manufacturing capacity is ready, and we remain well-positioned to participate meaningfully as the rollout gathers pace and qualification barriers ease. Our subsidiary, Kaycee Industries continues to perform well. Kaycee's top line grew 22% year-on-year in Q3 FY '26 to INR 14 crores from INR 12 crores in Q3 FY '25 and 14% year-on-year in 9-months FY '26 to INR 43 crores from INR 38 crores in 9-months FY '25. EBITDA was at INR 2 crores and PAT was at INR 1 crores in Q3 FY '26. In 9-months, EBITDA was INR 6 crores and PAT was at INR 4 crores. The healthy margins at Kaycee continue to contribute positively to our consolidated performance. I'm pleased to share that we have been granted a patent for High-Voltage Disconnecting and Earthing Device designed for the railway's locomotive applications. This water switch offers enhanced safety features, reduced size and cost advantage compared to the conventional solution. The patent reinforces our commitment to innovation and import substitution. On the temperature sensor product, which is currently under validation with Tier 2 automotive OEMs, we are targeting commercial supplies by Q4 FY '26. This product has application across automotive, HVAC, home appliance and medical equipment. This opens a new addressable market for Salzer. On EV chargers, through our partnership with Ultrafast Chargers Limited, we offer DC fast chargers ranging from 60 kilowatts to 360 kilowatts as well as AC slow chargers. We continue to build our presence in this market, which, as I mentioned, is projected to grow at around 30% CAGR for the next 2 to 3 years. Looking ahead, we remain very confident in our growth trajectory. The policy environment with the U.S.-India trade deal restoring export competitiveness and the union budget reinforcing domestic infrastructure spend is highly supportive. Our diversified business model across switchgears, wires and cables, smart meters and EV chargers provides multiple growth levers. For FY '26, we reiterate our guidance of 20% revenue growth with a gradual margin improvement as operating leverage plays out and higher-margin segments like switchgear scales up. Our focus area for the coming quarter includes accelerating the smart meter order execution and securing new orders, commercializing our temperature sensor product, scaling up EV charger sales, progressing the Bengaluru BBMP project and leveraging the improved U.S. trade environment. Before I conclude, I want to thank the entire team at Salzer Electronics for their dedication and hard work. I also thank all our stakeholders, customers, suppliers, bankers and the shareholders for their continued trust and support. This is all from our side for now. We can open the floor for questions. Thank you all once again.

[Operator Instructions] First question comes from the line of Arun and individual investor.

Sir, my question is regarding the Wires & Cables division. So we have -- we are like working towards 5%, 6% EBITDA margin. So, I just want to understand how much of the bank facilities we are using for this particular business out of our entire borrowings. I just want to understand whether we are throwing some PAT level in this particular division, or we are still PAT negative?

On the wires & cables, we are still PAT positive, though the margins are at 5%. I think there, the volumes are -- it's a volume game. So that's why I think the margins are down. But irrespective of that, I think the margins still have to be a little bit higher. On the borrowings, we use close to 50% of our borrowings for the wires & cables. Another point also I want to add, we have to see the pricing of the copper. I think that's also another reason you see a lower EBITDA margin because the copper price used to be at around INR 800 a kilo, and now it's around INR 1,300 a kilo. So, this additional difference is why the margins have come down as a percentage.

But do you think that we can scale the wires & cables margin to 10%, 12% EBITDA?

No. I don't think we will be able to reach 10%. I think we will be able to improve this by around 1.5% or 2% over the next 1.5 years.

So 6%, 6.5% or more than that?

Yes, around 6.5% at this price level of copper.

Yes. If you are using INR 200 crores, INR 250 crores of your borrowings for your Wires & Cable division, so interest itself, you are paying like INR 20 crores, INR 25 crores for this particular division. And so, what kind of PAT percentage do you expect from this division? Because today, our market cap is INR 1,200 crores and our sales are around INR 1,400 crores, INR 1,450 crores. So, I don't think it's not -- it's creating any shareholder value at the PAT level. It's just throwing the revenue and bumping up the numbers, but it's not throwing any value to the earnings.

I agree partly to an extent. I think we have to scale up the volume of the wire and cable business to see a better PAT margins and EBITDA margins.

And sir, regarding all the smart meters since last 1, 1.5 years. So almost we are talking about smart meters from October, September 2024. And in last 15, 16 months, everybody -- that our data, everyone knows that how much revenue you have made in smart meters and something. Do you feel that we have misguided investors in the smart meter? Because we have made INR 1,000 crores, then INR 700 crores, then INR 500 crores. Now we are not even able to make INR 100 crores. And everybody knows that it's all about smart meter implementation by the government. So, do you think that you have actually misleaded investors with very big guidance on the smart meter division?

Okay. It was unfortunate for us also because we expected that things will roll out in a specific manner, which is not happening. So, to say that we have misguided, that's -- I don't agree with that because we have invested and we have set up a facility, created a capacity of 4 million meters, which is live here. And we are in discussion with various AMISPs who have all visited our factories and seen what the facilities we have. And we have also got approvals from various DISCOMs. And getting an approval from DISCOM for the meter is not an easy job, which we have done from Gujarat, from Maharashtra, from Andhra Pradesh, from Tamil Nadu and Karnataka. These are some of the states that DISCOMs we have taken. So the expectation that we've had also has been -- has not happened. So that is the reason that we are not able to execute.

But even in the last con call, in Q3 con call, you were telling that even INR 300 crores, INR 400 crores is -- there is a visibility for this particular year, this financial year. And I think we have missed it by a big margin. And if you remember from the last 4 con calls, no analyst is interested about our wires & cables or other businesses. Everybody is talking only about smart meters in our investor calls, which clearly indicates that our investor community is more enthusiastic about smart meters because that was actually that entire episode was created by management. Sir, completely because nobody is interested about the existing business, which are growing 20%, 25%. Everybody are interested that what are going to be in the smart meters because that was the area where you pushed all the investors and share prices have crashed from INR 1,600 to INR 600. And the investors who are sitting in your share price for the last 2 years, we are completely destroyed.

I don't want to speculate on the share price. I think that's something that we don't talk about in the con call. On the business, as we think what is the futuristic business, we are trying to enter all those futuristic businesses, and we try to give guidance based on the market. Most of the time we are right, sometimes we are unable to achieve what we commit. I think there are multiple reasons in the -- at the ground level. So that's all I can say. Yes, I think different con calls, we have given different projections. We have scaled down on the smart meter projections, which I have agreed. There are difficulties in securing large-scale orders, which is again what I have mentioned in the con call a little bit earlier. But we continue to work. We continue to see how we can scale up in every business that we have invested.

Next question comes from the line of Sudharsan [Nachimuthu] from Prosperity Wealth Management.

Am I audible?

Yes.

Coming back to the smart meters part. So, if you can provide an update because you were waiting on the TANGEDCO tender, and that was a very large chunk, 3 crore meters. So, what is the current status on that? And are we seeing any delay because of the upcoming assembly elections in the state?

So far, there is no news about the tender. I think tender has been invited for. People have bid for it, and I think that's where it stands. So, after that, there is no news. So, I expect this not to move because the elections are around the corner. So most probably this will be retendered after the election is what I think.

Understood. And regarding smart meter order book, what are our expectations of order book in Q4? And what do you envision for FY '27 ex of Tamil Nadu?

I think that's exactly the conversation I think I was having before with one of our other investors right now. I think it's very difficult to give a guidance on smart meters at this point of time, though we are working to see how we can fill our capacity. So as things evolve, I think we will keep informing shareholders. But right now, we are trying to secure large-scale orders from different AMISPs and DISCOMs.

Understood. Not on the guidance part. So, with your conversation with the players, what do you see is the difficulty in getting those large-scale orders in your conversations?

One is the -- of course, the execution by the AMISPs are also slow. Second, I think there's stringent eligibility criteria because of the new entrant that we are and also the tender conditions are evolving from state to state. These are some of the issues that we face as a new entrant when we get into the market, which we are working with the AMISPs and trying to address the concerns of those payments.

Okay. And we did receive an initial order from one of the players. And is there any follow-on orders from the same player? How is the feedback so on? And you did mention the feedback is good.

Our feedback from the customer has been good so far, and we still have a pending order from the same customer, though there's no clearance for the dispatch. So, we are ready with the products, and we are waiting for a clearance for dispatch. Once this is done, I think we expect further orders to come from them.

Okay. And the second part is on your wire and cable division actually, just following on the previous participant's question. The margins and ROE profile are lower and driving down the consolidated ROE numbers down. So, when you move forward FY '27, '28, is there any particular action plan wherein you would like to increase the ROE, ROCE metrics, margin metrics for the division? Or is there any other products and divisions in play wherein your entire consolidated ROE is increased because our ROE is anywhere around 19%. So, is there any plans to do it because your wire and cables is pulling down the entire consolidated ROE?

Yes, I think that is true. The EBITDA margins are pulling down. We are trying to see how we can increase the margins on the wire and cable division and increase the volumes also in the wire and cable division. Definitely, that's a constant work and continuous work that we are working at.

Okay. And in terms of guidance, if you want to put a number to, are you targeting anything internally in terms of ROE?

No, we are not -- there's no -- I mean, guidance I haven't given an ROE. But on the EBITDA levels, we are looking at around 6.5% from the current levels for the wire and cable division.

Next question comes from the line of Darshil Jhaveri from Crown Capital.

Sorry, just hoping a bit about smart meter. So, this quarter I know that you received then INR 50 crores order, right? And even that in 1 quarter because also customer you are able to execute just INR 1 crore in Q3, right? So even if we are trying to hunt for a larger order, what is the guarantee that execution is also not going -- execution is going to be fast, right? Because even after INR 50 crores order, we are not being able to execute it, not maybe because of any fault of us, but it's still the market condition, right? So sir, your thoughts on that, even if we get a big order, what's the likelihood of execution -- being able to execute that big order, sir?

There's no question of execution capability not existing with us. I think we do have the capability to execute. I think we have received the order...

Sir, I'm not saying that you cannot execute.

I'm coming there. I understand what you asked. We received a INR 50 crore order. We have executed half of it. We don't have a clearance for supplying the material for the rest. That's where we are waiting. So executing is what -- we are here to manufacture and supply the product, which we are ready. The customer has not given a clearance for us to supply the material for the second portion of it.

No, that's what I was getting at, that [indiscernible] execution on our end, even if we get an order, if the customer himself is not ready to be able to put it up for whatever reason that the delay is happening. So what is the use of us as a company getting an order where we have all the capabilities running but because of customers [indiscernible]

I won't be able to answer, sir, because the customers -- different customers have different issues. So we can't say that everybody is [indiscernible] we are waiting for it, and we have to wait and see how it works out. [Technical Difficulty]

What I'm trying to get, sir, is that a ground level reality in terms of smart meter just being put in household, I think a lot of people are finding it difficult to execute the order. So I'm just trying to understand that, sir, even if we are hunting for a large order, will it be executed in the same space because you being there in the ground level that -- is the installation happening fast? That's where I'm just coming on because if the installation is not happening...

Things are definitely improving.

So sir, in FY '27, will we be able to -- I'm not even asking for a guidance, like will we be able to see orders coming in, right? Like what is our qualitatively thinking in terms of orders for -- is there a pipeline that we have right now like that we could comment on like for this much tenders or something like that? Or are we partnering up with someone that can help us get more orders, sir?

The addressable market is quite huge, definitely. I think this -- we have been telling in the con call -- previous con calls, many con calls. Out of the 25 crore meters, the addressable market is still close to INR 20 crores for the next 2, 3 or 4 years. So that's the addressable market that we are looking at and targeting. And as for your question of execution, yes, the market execution, people are finding it difficult. There are different challenges. However, I think it is getting cleared and people are solving those challenges and trying to execute.

Okay. Fair enough, sir. And sir, with regards to our other business that we are very bullish on the charging business, could you just help us understand what's the outlook for that for the next year? Like I understand this year, we've partnered up and we are trying to scale the revenue out there. But like any color on -- is the business profitable yet? Is it -- what's the outlook that we can expect next year maybe? Even if you don't want to give a firm number, I understand, but sir, any -- like what's the vision for us next year because EV adoption is increasing. So just wanted to get your thoughts, like how do we increase our sale of chargers, sir?

The guidance for current year, whatever we have given is around 20%. I think we are continuing to grow at around 20%, 22%. And for the next year, too, I think we will continue to grow at the same level.

No, sir, I was specifically asking about chargers, DC chargers, sir.

DC chargers, yes, I think we are partnering with this Ultrafast Chargers and the market is growing. I think so far in the 9 months, we have sold close to around 100 chargers in the market. And we are trying to tie up with large charge point operators to see how we can scale up that business and increase the volumes.

Next question comes from the line of Rabindra Nath Nayak from Sunidhi Securities.

Sir, am I audible?

Yes, sir.

Sir, my question regarding your -- you mentioned that the copper prices have gone up by 62% on a Y-o-Y basis. But if I see the quarterly numbers, the price -- the revenue has gone up by 51%. So, does it indicate that we are having some lower volume this year?

If you look at our wire and cable business on a year-on-year -- on a quarter-on-quarter, even sequential quarter, we have grown at around 25%. And this quarter, year-on-year, we have grown at around 50%. So, if you look at -- year-on-year figure, if you look at on the 50% value volume-wise, we have grown by around 20%.

Okay. And because you mentioned that the copper prices have gone up by 62%. So that is what I am asking.

Not 62%. I give a number, but it has been gradually increasing from INR 800. Today, it is around INR 1,300. Every month, there is a jump. So, it is not a 64% jump from last quarter to this quarter.

Okay. And secondly, if you see your geographical mix, it is quite possible that the North America business due to tariff issue has been muted and Europe is actually contributed. But your Asian market, particularly, it has actually shrunk. So, can you please give some reason for this?

Overall, I think the export has been down in this quarter because of various reasons. I think the American market is one. And I think we have grown, of course, in Europe, we have grown. And Asian market, I think sequentially, we have grown year-on-year, we are a little flat. But otherwise, sequentially, Asian market is doing well. Middle East also is doing well. Our [indiscernible] supplies are down. And that's what I said the indirect export that we have been doing. So that is down because of the tariff reasons.

Okay. No, I'm just -- from your presentation, it is Asia, excluding India, is 13% last year in Q3. It has come down to 5.3% this year. So, whether the reason you are citing that the supply to the EC is low, that is why the revenue is down?

You're looking at the percentage, as a percentage to the revenue you're saying, yes, but if you look at the growth figures on the absolute numbers, that's what I was talking about. We have grown in the Asia year-on-year, close to 20%.

Okay. So, sir, regarding your guidance, you were saying that the copper has contributed significantly to this year, your turnover largely, majorly, because of the price increase we have taken. So, you are saying that next year, you will grow 20% which segment you are looking at the growth would come, the smart meter or the other subsegments which are having -- you are seeing the growth? Can you please highlight something on that?

The major growth for us is now coming from the industrial switchgear market, particularly the transformers and the control gears that we are making. We are seeing good demand coming in from these products, and that is where we are seeing the growth coming in. Look at our share over the last few quarters from around 50% -- 50-50 from wire and cable and the industrial switchgears. Currently, we are standing at around close to 60% revenue coming from the switchgear and around 35%, 37% coming from the wire and cable. So that means more -- as we go forward, we will see the growth -- more higher growth coming from the switchgear market.

But in the presentation, it is 55.7% in Q3 as against 60% last year.

Yes, 55%. I think 9 months, if you see we are at around 57% and wire and cable is around 37%.

So you mean to say the industrial switchgear will grow because some copper -- also the copper must be contributing something to the growth of CT Industrial Switchgear also.

I'm talking about volume growth, sir, not copper price growth.

Okay. So you mean to say the industrial switchgear is going to grow. That is the growth based upon that, we are giving guidance of around 20%?

Correct.

So this 20% guidance you are giving the volume or it is in revenue guidance?

Volumes. I mean, of course, revenue growth, but we are definitely seeing volume growth also coming to the same level.

Okay, 20%. And also again, just one question on the smart meter side. What is the expectation for next year for smart meter? Can you please -- and which are the states you are looking at? And what is the potential? Can you give some light? I understand that this year may be a little bit disappointing. But next year, what is the guidance you are looking at?

Sir, I would like to refrain from giving a number for the smart meters guidance because that's where I think a lot of issues have happened in the past. Because...

No, no, I'm just...

I'm coming there. I've already said several times that we have created a very good capacity, very good facility to produce a complete meter in-house, which I think only top players in the country has a facility like that, one. Secondly, on which states we are looking at, I think we are talking to various AMISPs who have taken orders from Maharashtra, Andhra Pradesh, Gujarat, Punjab, Madhya Pradesh. These are some of the large states that we are talking to, including UP also to some extent. So these are the states that we are looking at. These are the customers we are talking to.

But sir, your competitor if see Genus or HPL they are doing well in this business. But what is the gap you are -- according to you for which we are not able to grow because Adani Energy Solutions, they have already done a very good execution. But so far, what is the gap we are finding according to you? Candidly, you can say that, that we can understand that how to see this business in the future.

It's a problem for the new entrant. I think that is where we are seeing the issue because the HPL you mentioned and Genus also we see, I think they are all very old companies in the meter business. They have been in the meter sector for many, many years, and they're continuing to do the business. For us, we are a new entrant in this business, and we are seeing all the difficulties and challenges any new entrant will face in a government-linked product. Product where the tender conditions are different, the customers are different. So we are facing those challenges, and we are trying to solve them.

Okay. So is there any difficulty in marketing for that kind of sales or marketing we are facing? Because see, there is overcapacity right now in the meter -- so far as the meter is concerned. So how will you think through this? Because we have already invested around close to INR 25 crores, INR 26 crores in this business. How would we address the gap going ahead?

Sir, I mean, how would you address? I think we are doing whatever is possible by us to see how we can fill our capacity. I think that's what we are doing. So there are several things that we are doing. We are hiring domain experts. We are having marketing people. We are visiting customers. There are different issues for each customer that we are having and we are solving them. How will you do it? I think we are confident that we will do it. That's how -- what I can say at this moment.

All the best for that. But conservatively, how much you can give for next year? It is ultra conservative, I mean 2x sales or 3x sales, what you can expect for next year?

As and when we get there, I think as and when we have the orders and we execute it, we will definitely inform the market. Right now, I refrain from giving any guidance.

The next question comes from the line of [indiscernible], an individual investor.

I have a couple of questions. One is, have you taken any price hikes across any of our products? So that's my first.

Yes, price hike we have done. I think we have done a very small price hike in the month of November. However, I think in February, we are going in for a major price hike because of particularly the silver price. I think silver also is a major contributor for our switchgear business. So the price of the silver, as we all know, has gone up by close to 3x from where it was. So that has impacted our switchgear margins also close to around 2 bps -- 2 percentage points. So we are going in for price increase in the month of February and March.

Okay. My second question is related to the data center market that will be coming up -- is already coming up in India. Do any of our products find its way into these data centers, especially hyperscale data centers?

Yes. I think some of our products are not directly going to data center, but indirectly, we are supplying to customers who are making products for data centers, the transformers, inductors and filters that we make and wire harnesses. So these are some of the products that find the market in the data center business. And we see that, that's a major market. That's a good growing market where we see good demand coming in from. Data centers is one and also the renewables.

Okay. That was actually going to be my next question that looking forward to this market, which is expected to be quite huge. Have we made any plans on the drawing board of how we are going to place ourselves for this big order that is -- big market that is going to unfold?

No, I think we have already identified data centers and renewables as a major growth market. I think in our last call or even a call before last quarter, we mentioned about this. We have already seen the outlook for the entire digital infrastructure growing at a very fast pace. And we are all set and ready to take advantage of this growth for whatever products that we have that can address this market. Particularly the 3-phase transformers and wire harness I mentioned.

I'll just put the same question in a different form. Like if you're currently looking at the hyperscale data centers that are growing in U.S., there is a bit -- there is a shortage of components and products the way they are expanding. So I was trying to figure out, are we able to understand that how we are able to play so that we should not have any issues regarding our supply chain whenever those orders come in. So yes, I think you have answered.

Yes. I'll also add a little bit more. I think the U.S. data center market was actually growing at a very high speed a few quarters away ago. But in the last few quarters, actually, they have slowed down a little bit, I would say. But I think now maybe post April, we can see the demand coming up again. But right now, the U.S. data center market business is a little slow for us.

Yes. That's what I'm trying to -- is it slow because of the supply chain disruption is what I have understood. It's become -- the market has become a bit slow because of the supply chain disruption. Or I don't know whether it is because of the new orders that are coming in.

I mean that's something that I don't know. But overall, it slowed down a bit, and we expect this to get back again.

We have the next question from the line of Ankit Kapoor an individual investor.

Am I audible?

Yes, sir.

Sir, actually, most of my questions are already answered regarding smart meters and other products division. So my concern is only regarding the increase in debt. As I have already asked that question in last con call, if you remember. But when are we planning to reduce our debt because it's increasing quarter after quarter and impacting our bottom line. So my concern is increasing short-term bad debt impacting our balance sheet.

Sir, if you look at our debt, I think we have been stable from March, not much of an increase. Whatever we -- the short-term working capital that we have increased is only for our working capital. And particularly because of the smart meter. I think you -- the increase in the debt is because of that. So once the smart meter starts running at a run rate that we expect things will be normal, and we will start reducing the debt from there.

Sir, this quarter also the interest expenses have -- if you see compared to last quarter and from last year also, interest expense has increased significantly.

Yes. But if you look at the sequential quarter, we are at the same level, sir. Compared to last year, yes, it is definitely up.

For the next financial year, can we expect reduction in debt for FY '27?

Next financial year, we will remain stable at this level. I think so. But once we start seeing the normal business continuing, then we will start reducing it.

Okay. And sir, what's the update on that? You received the patent for the disconnecting and earthing device for high-voltage applications. Any update on that product?

It's a new innovative rotary switch that we have developed for more than 1,000 volt. Until now, it was around 600 and 800 volts. So, we have developed a switch that can withstand 1,000 volts and this is a specific application for the railways. So, railways have been increasing the voltage levels from 600 to 800, now 1,000. So, we have adopted a product that can withstand 1,000 volts. So, this is the first time that somebody has done a single switch that can withstand 1,000 volt in the rotary switch market, and that's why we have got the patent.

Okay. And then last question is just on behalf of minority shareholders that just to boost the sentiment, can management consider some interim dividend or a bonus issued to boost the minority shareholders sentiment? It's a request from my side.

Definitely consider that sir. Thank you for giving the inputs from you.

The next question comes from the line of Kishor [indiscernible], an individual investor.

Sir, I have 2 questions. One is regarding the LOI you talked about in the last quarter, the INR 30 crore for smart meters. So, what is the progress on that front? And another question is, sir, you talked about 20% growth in some segments of our business. So sir, on a blended level, can we maintain 20% growth without the smart meters? And what will be the blended EBITDA margin on that in the next year the FY '27?

All the growth projections that we are giving is excluding smart meters. So as a company, we will definitely be growing at around 20% for the financial year FY '27. So that's the target that we have, and we are confident that we'll be able to achieve a 20% growth at the company level, excluding smart meters.

And sir, blended EBITDA margin?

Blended EBITDA margins, I think we are -- we should be able to do close to around 9.5%, 10% for FY '27.

And sir, the LOI of INR 30 crores, sir, what happened to that?

The LOI is still -- I think the order is still there and the LOI also is still there. We are waiting for certain clearances from the customer and the DISCOM to continue that execution.

Okay. And sir, when we talk to other players in the Smart Meters industry, I understand that you are a new player, but HPL and others talked about things improving on the ground. So sir, can we expect like with a quarter or 2 quarters lag things improving -- things will start improving for us as well because things...

I also mentioned that things are improving, things are getting better. So we will definitely see some kind of change and order inflow for this division for us.

The next question comes from the line of [indiscernible], an individual investor.

My name is [indiscernible] and I want to ask that what will be your full year of FY '27 growth plan will be?

Can you repeat it, sir? I couldn't hear you properly. Once again, please?

I want to ask what will be your growth plan for FY '27?

So I think -- as I mentioned, I think the sectors, particularly the industrial switchgear sector is seeing a good demand and a lot of products that we have in that segment is seeing good demand like 3-phase transformers, single-phase transformers, wire harness and some control gears. So that's why we are giving a guidance of around 20% growth for FY '27, excluding smart meters.

And sir, [indiscernible] innovating any new products or something?

That's something that's always on the table. We continue to develop new products. We continue to develop new technologies, enter into new technologies. So that's a constant process. But nothing significant or immediate for us to tell to you right now.

As there are no further questions from the participants, I now hand the conference over to Mr. Rajesh Doraiswamy, Joint Managing Director, Salzer Electronics Limited for closing comments.

Thank you. Once again, thank you all for your interest. I can understand the kind of information that you need from the company, particularly on the smart meters. I think that's a concern that every investor and shareholder has. I think we are working -- once again, I would like to assure that we are working hard to see how we can scale up every business that we have invested in. So, with that assurance, I would like to thank you all once again for taking interest and joining us today. Look forward to talking to you again in the next quarter. Thank you.

On behalf of Aditya Birla Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.