Salzer Electronics Limited ($517059)

Ladies and gentlemen, good day, and welcome to Salzer Electronics Limited Q4 and FY '26 Earnings Conference Call. [Operator Instructions] I now hand over the conference to Mr. Ankit [indiscernible] from Aditya Birla Capital.

Thank you, Akash. Good evening, everyone. On behalf of Aditya Birla Money, I welcome you all to the Q4 and FY '26 Post Earnings Conference Call of Salzer Electronics Limited. This conference call may contain forward-looking statements, which are based on the beliefs, opinion and expectations of the company as of the date of this call. These statements are not a guarantee of the future performance and involve risks, uncertainties that are difficult to predict. I now invite Ms. Savli Mangle for the opening remarks to be followed by the question-and-answer session. Over to you, ma'am.

Thank you, [indiscernible]. Good evening, everyone, and thank you for joining us today to discuss the audited financial performance for the fourth quarter and year ended March 31, 2026. I have with me Mr. Rajesh Doraiswamy, Joint Managing Director; Mr. K. Raman, Chief Financial Officer; Mr. Bellary, AVP, Business Development; Mrs. R. Menaka, General Manager, Accounts; Mr. K. M. Murugesh, Company Secretary; and Mr. Jitendra Vakharia, Non-Executive Director, Kaycee Industries. Starting with the consolidated financials for the quarter and year ended March 31, 2026. During the quarter, our revenues increased 26% year-on-year to INR 474 crores from INR 376 crores in the previous corresponding period. This growth was mainly driven by higher demand for industrial switchgears, wires and cables and Building Products division, mainly on account of high demand products like 3-phase transformers, wire harnesses, relays and new products like contactors, et cetera. The contribution from exports stood at 15.6%. EBITDA, excluding other income, was INR 31 crores in Q4 as against INR 29 crores in the corresponding previous period, a year-on-year growth of 7%. The EBITDA margin for the quarter stood at 7%. Profit after tax was INR 10 crores in Q4. Coming to the full year performance. In the year ended March 31, 2026, our net revenues in FY '26 was INR 1,758 crores as against INR 1,418 crores in FY '25, a year-on-year growth of 24%. This growth has been largely driven by higher demand for industrial switchgear, wires and cables, building products, also on account of high demand products like 3-phase transformers, wire harnesses, relays and new products like contactors. Contribution from exports stood at 21%, largely driven by higher sales from Europe. The EBITDA, excluding other income, stood at INR 147 crores in FY '26 as against INR 134 crores in FY '25, a year-on-year growth of 10%. The EBITDA margin was 8%. Profit after tax was INR 54 crores as against INR 52 crores in the previous corresponding period, a year-on-year growth of 3%. Coming to the revenue breakup for the businesses, starting with the Industrial Switchgear business. This contributed to 56% of the revenues in full year and 51% in the quarter. This business grew 15% year-on-year in Q4 and 20% year-on-year in FY'26 EBITDA margin for this business in Q4 was 8% and for the full year was 11%. Coming to wires and cables. This business contributed to about 43% of our revenues in the quarter and 39% in FY '26. There's been a 42% increase -- year-on-year increase in this division during the quarter and 30% in the full year. EBITDA margin for Q4 stood at 4% and 5% for the full year for this business. Coming to the last one, which is Building Products division. This contributed 6% to our revenues in the quarter and 5% in FY '26. This translates to a 36% year-on-year in Q4 and 16% in the full year FY '26. Export front for the quarter and the full year, the export share was nearly 16% in Q4 and 21% for the full year. I would now like to hand it over to Rajesh to take us through the business developments in the way ahead. Thank you.

Thank you very much, Savli. Good evening, everyone, and a very warm welcome to Salzer Electronics earnings conference call for the fourth quarter and the year ended March 31, 2026. Thank you all for taking time to join us today. We have shared our results update presentation and the media release. I hope you all must have received and gone through the same. Some key highlights I will share and some recent developments and also the outlook for the future before we open the floor for question and answers. FY '26 has been another very important year for Salzer Electronics as we continue to strengthen our position across industrial switchgears, wire and cable, building electrical and emerging businesses such as EV charging, smart metering and energy management systems. Despite a very volatile global environment, elevated commodity prices and pricing pressure in certain categories, we delivered healthy revenue growth during the year, supported by strong demand from industrial CapEx, infrastructure development, power distribution upgrades, renewable energy investments and export markets. Our Industrial Switchgear and Wires & Cables businesses continue to remain the growth drivers for the company. India's electrical equipment industry continues to witness very strong momentum backed by rising investments in transmission and distribution infrastructure, manufacturing expansion under the China Plus One strategy, railway modernization, renewable energy capacity additions, data centers and urban infrastructure development. The Indian electrical equipment market is expected to maintain a double-digit growth over the coming 4 to 5 years, mainly supported by rapid electrification and industrial automation, expansion in renewable energy and strong infrastructure like data centers, increased adoption of EV charging ecosystem, government focus on energy efficiency and grid efficiency. Smart meter rollout under the [indiscernible] . Now coming to our key stats and the recent developments. We are pleased to announce a strategic partnership with Wirepas, the global leader in wireless mesh connectivity solutions headquartered in Finland. Through this collaboration, Salzer will integrate Wirepas Certified platform into Salzer smart electricity meters, enabling the deployment of next-generation meter solutions designed to help utilities operate more efficiently and [indiscernible]. Coming to our new growth businesses. In smart metering, we continue to build strong capabilities for the long term. We now have installed a fully integrated EMS facility in-house for manufacturing and assembling electronic PCB boards for smart meters. While execution timelines in smart metering industry have been relatively slow than initially expected, we have already executed a business worth approximately INR 45 crores over the last year. And we remain highly optimistic about the long-term opportunity in this segment. As of now, we have not secured any large long-term orders, though we continue to be in discussions with all potential customers. Under the Energy Management Solutions business, INR 200 crore project in Bangalore Corporation is currently under execution, and we expect the revenue contribution from this project to start flowing in from Q2 of this financial year at a steady monthly run rate. In EV charging solutions, our subsidiary, Ultrafst Chargers Limited continued to make progress during the year. We have already sold around 100 chargers, generating a revenue of approximately INR 9 crores. With increasing EV adoption and potential strategic tie-up with larger ecosystem players, we believe this business has significant growth potential as we move forward. We currently hold orders for close to 100 DC fast chargers from various customers. On the export front, Exports currently contribute around 24% of the revenue. During the year, we faced certain temporary challenges due to geopolitical tensions in the Middle East, which impacted progress related to our Saudi Arabia operations and also created volatility in oil and petrochemical prices globally. However, we continue to remain positive on our international business prospects. Our U.K. operations continue to benefit from favorable currency movements and also the zero import duty advantage, which strengthened our competitiveness in the market. Operationally, the global situation increased oil prices has impacted to a large extent on our margins due to the increase in the prices of all petrochemical-linked plastics, supply chain disruptions, increased freight costs and continued increase in commodity prices. At Salzer, we sourced a lot of plastics for all our products, and this impacted our margins to an extent of 2 to 3 percentage. In Q3, talking about last quarter, we faced increase in prices of silver and copper, which we had offset to some extent by way of price increase in February 2026. However, now the plastic price increase impact of Q4 will be offset only in June 2026 by way of another price increase to the market. At the same time, we are also happy to say that the market has accepted the price increase from us very smoothly. Our subsidiary, Kaycee Industries continues to perform well. Kaycee's top line grew 9% year-on-year in Q4 FY '26 to INR 17 crores from INR 15 crores in Q4 FY '25 and 13% year-on-year in FY '26 to INR 60 crores from INR 53 crores in FY '25. EBITDA was at INR 2 crores and PAT was at INR 1 crore in Q4 FY '26. For the full year April 26' EBITDA was at INR 8 crores and PAT was at INR 5 crores. Looking ahead to FY '27 and beyond, we remain optimistic about the opportunities ahead. The long-term growth drivers for the electrical equipment industry remain very strong. India's focus on infrastructure, energy transition, manufacturing localization, industrial automation, smart grid and electrification continue to create a very large addressable market for all our products and solutions. Going forward, our strategic focus will remain centered on expanding our high-margin industrial switchgear portfolio, scaling up our smart metering operations and strengthening our export and international business. With strong manufacturing capabilities, diverse product offerings and increased presence in future-oriented business, we believe Salzer Electronics is well positioned for sustainable long-term growth. Before I conclude, I want to thank the entire Salzer team for their dedication and hard work. I also thank all our stakeholders, our customers for their support. This is all from our side now. We can now open the floor for questions.

[Operator Instructions] First question comes from the line of Disha [Boudhya] from Satya capital.

Firstly on our EBITDA guidance of 10% for FY '27 confident are we reaching this number because the last price hike we have taken was in Feb and March. We've seen April also had fair bit of volatility. So how protected are we? And are we planning any further price increase?

Actually, we -- I mean a couple of quarters before, we had guided that we will definitely reach 9.5%, 10% EBITDA margin. But unfortunately, I think there was a lot of situation that arose, which was not under our control -- so we had to undergo the pricing pressure because of the commodity price increase in Q3 and in Q4, a new situation that came up because of the Middle East war is the plastic price increase. So this both has impacted, as I said in my speech, close to 2% to 3% of the margins because of the price. Though we have done a very good performance of close to 15% price increase in Feb 2026, but the actual impact will be seen only in Q1. And in Q1, again, I think now we are facing pricing pressure on the plastic. So we are going in for another price increase in June 2026. So I expect that margins will stabilize in Q2 of FY '27.

Any sort of [indiscernible] price?

in June, we will be doing a price increase of close to between 7% and 10%.

Okay. And so Q1, we might see a bit pressure and Q2 will stabilize.

Yes.

So on an overall basis, we can -- for FY '27, we're confident enough to reach 10%.

9.5% is what we expect for the full year.

Okay. And how should one look at the growth, sir and the contribution from the smart meter segment for FY'27.

Our existing business growth, we expect we will reach a top line of around INR 2,000 crores to INR 2,200 crores. That's what we are looking at. On the smart meter, I think I'm not giving any commitment right now because we are working with a couple of large AMI customers. And as soon as we have an indication from them, then we will come back to you and inform you what's the prospect of smart meters.

And in terms of exports, so we want to go back to that 25% sort of revenue mix for FY '27. What will be the key markets that you will be targeting? And what -- and how are you looking at the overall export growth for this year?

I think our largest export market is North and South America, number one and number two in Europe. I think these 2 markets contribute close to half of our exports -- we continue to focus on these 2 markets apart from the Middle East business. Unfortunately, this year, year-on-year, I think our exports have degrown by around 5%, mainly due to the tariff issue from the U.S., which has dropped around 6% from last year and also the Middle East crisis, which has reduced our business close to around 10% to 12% compared to last year.

Okay. And sir, this energy, the EV charging business, what sort of margins do we see here?

I think in Charging business, we are doing with our subsidiary, ultrafast chargers. Right now, I think we are continuing to do breakeven business because of low volumes. Once the volume picks up, we expect that the EBITDA margins on these products will be between 12% and 15%...

The next question comes from the line of Kaushik individual investor.

I just want to ask -- I have 2 questions. First question is what is the mix of B2B and B2C in wires and cables business?

Our majority of our wire and cable, whatever business that we are showing, I think this year, our contribution was around 40%. 40% is B2B. Our B2C business, including the wires and cables, including all other products comes under the building segment business, which is around 5% of [indiscernible] .

Sir L&T our largest customer client concentration, What is the client concentration?

Our single client concentration is Schneider Electric, which will be close to around 12% of our total revenue.

And L&T and all will be down below 10%?

L&T is now part of Schneider. And whatever business we were doing with L&T is the business that we are doing with Schneider, but that is not a single client concentration because that's distributed widely in the market by Schneider. So we don't consider that business as a single client business.

I have a query. See, I'm looking at your wires and cables business. And in last con call, someone asked what is the borrowing currently been using for wires and cables. You told them that you are using like 50%. I just -- I did some calculation. So out of INR 500 crores borrowings, I think around INR 200 crores, INR 250 crores we are using for wires and cables business, which is like steady state you will be making around 6%, 6.5% EBITDA margin. And if I calculate the interest and everything, I think it will only make 1%, 1.5% PAT. Am I right? Or am I missing something?

No, you're right, actually. We will be making close to 2% to 2.5% may not be 50% exactly because it's very dynamic because that's the business -- as other businesses grows, the debt usage for other business also increases. Today, I think close to 60% of our revenue comes from industrial Switchgear business. So the debt usage also might be a little higher with the switchgear business.

And sir, but your 40% business is like wires and cables is contributing only 10% to 15% of the PAT. So is there any possibility to demerge both businesses because switchgear business is a high-margin business, and it has a lot of growth potential. Because we are not a net cash company. We are using like INR 250 crores debt only to generate some 1%, 1.5%, 2% PAT on a steady basis. You leave alone FY '26. So is there any possibility to demerge and create some value for the stakeholders because...

We will look at the option.We take your suggestions as it is a good input. definitely I think [indiscernible].

Debt is so much, sir because INR 500 crores, INR 250 crores, you are taking debt and bank is even bank itself, you are paying INR 20 crores, INR 22crores of interest for wires cables and generating only INR 7 crores, INR 10 crores. That doesn't help shareholders, sir. So kindly take this suggestion?

We will definitely take your suggestion. We'll see what we can do on that.

Because I'm following some other companies like RR Kabel and everything many companies, they have actually lean balance sheet and higher margin. So the entire EBITDA is mostly flowing to the PAT that is creating value. But here, we are not a debt-free company. So taking debt from a bank and then deploying to a 5% to 6% EBITDA margin, it actually is not helping shareholders. So that is the reason we are still at INR 1,100 crore market cap. And we would have -- the funds which are being flown to the power and energy sector is huge in Indian market. And I think we need to do something to unlock the shareholder value.

Suggestion taken.

The next question comes from the line of Mr.[indiscernible] from [indiscernible].

Expectations for the business outlook regarding smart meter tenders -- as a local manufacturer, do we have an advantage for Tamil Nadu smart meter opportunity?

I think things are still evolving. So I don't think there's any update on that front as of now. But I'm sure that the earlier tenders will be canceled and the new tender will be floated for the smart meters what we expect. So we will have some clarity on this as we move forward in the next 1 or 2 months.

Okay. But as a local manufacturer, do we have the advantage over other manufacturers, particularly for Tamil Nadu.

There is always a clause that gives some advantage or some percentage of business for local consumption.

Okay. And my second question is in our Switchgear segment, could you please provide the approximate percentage of the cost of our key raw materials, say, plastic, silver and copper?

It will be difficult to provide that information here in the call as it might lead to some competitive information that I will not be able to disclose. But overall, on the switchgears, our gross margins stand at around 40%, 35% to 40%.

Okay. And EBITDA margin is expected to improve in Switchgear segment going ahead?

Yes. I think EBITDA margin, we were trying to get to around 13%, 14%. But unfortunately, the situation is beyond our control actually and continue to pull that down. We were at around 12% in Q3, which dropped around 8% now. Overall, I think next year -- next quarter, Q2 onwards, it might stabilize between 12% and 13%...

Okay. Understood. And as you mentioned regarding Q1 also could be a little bit subdued with regards to margin. And is it -- we can expect the same margin as compared to Q4 or it's going to be lower than that?

No, it can be better than Q4, but it may not be as expected.

[Operator Instructions] The next question comes from the line of Mr. Ankit Kapoor an individual investor.

Sir, my question is actually other previous participant has raised in other previous calls also raised this issue regarding debt. The debt short-term borrowing especially if you see FY '26 short-term borrow stands at INR 503 crores now. So it's continuously shareholders' value and net profit margin is just 3.1% this time. So when can we expect this to normalize to up to 5%...

Your point is right. I think we will consciously see that our working capital that doesn't go beyond 25% of our total revenue. I think that's how we have been managing for a long time. Unfortunately, I think this year, like some time back during the COVID time and the previous financial crisis, global financial crisis times, we have exceeded that, and we have touched around 30%. This year, I think there is a combination of events. I think one, because of the geopolitical tensions and the commodity price rise, our margins have dropped by close to around 2%. That is one. Second, I think the working capital and the CapEx that we have invested on the smart meter and the smart meter business not scaling up as expected has also impacted. So we expect all these things to get smoothened out in FY '27, and you will see our overall debt levels coming back to 25% or below percentage for the overall revenue.

And sir, our trade receivables, they are continuously rising. So any reason for that?

Sir, as the business volume grows, I think trade receivables will continue to increase, but we will have to see what are our receivable days. I think we continue to maintain between 90 to 95 days of receivables. if we take -- I mean we have to consider our gross revenues when we look at the trade receivables. In that case, I think we are well below 90 days, which is reasonable for our industry.

Okay. And then the last question is, as the previous participant has said that please convey a message to the management to unlock the shareholders' value by demerging or do something -- anything like bonus share or something like that.

Definitely. I think that's also one of our main objective is to definitely increase the shareholder value and market cap. So we will continue to work on that. And taking that suggestion positively will work on that.

[Operator Instructions] The next question comes from the line of Mr. [ Bala Murali Krishna from Oman Investment Advisors ]. [ Bala Murali Krishna's ] line has disconnected. He is not in the line, sir. The line got disconnected. [Operator Instructions] We have one more question from Mr. Kaustubh, an individual investor.

I just wanted to know why is the EBITDA margin for the wires and cable business so low. There are other companies and they're almost double of the EBITDA margin that we have. If we are at 4%, 5%, they are around 8%, 9-ish percent. So any reasons for that?

I agree with you. I think almost 70% of our business is B2B. I think that's one reason that our margins are lower. Secondly, if you see, I think we were also at around 6.5%, 7% a year ago -- a couple of years ago. It has dropped now. I think the main reason is because of the increase in the commodity price. I think we used to make a certain absolute amount on the copper price of, say, INR 700. Today, we make an absolute amount on copper price of INR 1,400. So as a percentage, I think it is dropping. But if you look at the absolute number, I think we have been growing as an absolute number.

And the -- then the business is not really generating any profit, right, if we factor the interest expense for that? Given that...

I think in the previous question, I said you are making 2% to 3% of PAT.

Okay. Okay. One last question. Sir, you told that this year, you will be exiting at 9.5% EBITDA margin. So is it an exit number? Or are you mentioning that for the whole year aggregate, you will have 9.5% of EBITDA margin?

Whole year. For FY '27 guidance is what we are trying to achieve 9% to 9.5%.

Is it 9% or 9.5%, sorry?

Between 9% and 9.5%.

The next question comes from the line of Mr. [ Bala Murali Krishna from Oman Investment ].

Sorry, my line got dropped. So in -- I have seen some positive comments from AMISPs. So they're expecting some good ramp-up in the smart meter installation. So how confident you are to get some good chunk of business in this financial year? And you are already in discussion with some AMISPs. What would be the approximate quantum you are looking for this financial...

The addressable market for smart meters is still close to around, I would say, 17 crore meters. We are talking to AMISPs, and we are addressing with these AMISPs' requirement close to around 2 crore to 3 crore meters. So we have to see what percentage of share of business we will get out of the discussion that we are doing with them. We are confident. I think we will scale up this business. And hopefully, by this year, we will have some very good news coming in on this business.

Okay, sir. Secondly, on this INR 22 crores sales, do we have inventory at least of the smart meters, which is waiting for dispatch to where and so -- It is dispatched or still under...

No. Whatever we have done last year, we have done. I think up to Q3, we have not done any business on that. The small invoices we are doing, but nothing significant.

So on the electric EV fast chargers, sir, you have told that we have 100 DC chargers on [indiscernible] would be around INR 10 crores of revenue. Here, what our anticipation is to have 100 DC chargers [indiscernible]. So how do you see this [indiscernible]? In FY '27, what kind of revenue we can expect in the entire year?

For the entire year, I think we expect close to around INR 35 crores of revenue. That's what's the expectation as of now. But as we move forward, if things work out well, we'll update you and we would then revise our estimate as we move forward after Q1 or Q2.

[Operator Instructions] The next question comes from Mr. Rohit Ohri from Progressive Share.

A couple of questions from my side. The first one, on this Saudi expansion, sir, if you can take us through what is the exact business model for Saudi operations?

Regarding Saudi, the main reason that we wanted to get into there for manufacturing is because of the local government's insistence of Saudi-made products to be used in the upcoming projects in Saudi, one. Second, I think Saudi also has been growing at a very fast pace because of the large investments that they have been making in various infrastructure projects. So we saw a lot of business opportunities coming up there if we be a local Saudi company, and that is the reason that we went in there. But unfortunately, as we started to implement the project, I think the Middle East war came up in February and then pushed our plants -- delayed our plants by close to around now 6 months. So we have restarted the process now. I think we have ordered for the capital equipment, machineries and things, tools and dies. So hopefully, by August this year, we will receive all those equipment, start installing and start operations from September, October this year.

Okay. Sir, while we probably might look at making Saudi as an export or maybe manufacturing hub for GCC and the MENA region, what sort of investments do you think that you will have to put in now? Because the earlier one must have been escalated, right, the price or the CapEx that you must have thought of. So what is the current CapEx that you will require now?

We are not seeing any CapEx escalation because of the delay. We are only -- we might see some minor OpEx -- additional OpEx that we will be spending during the course of this period. Otherwise, there's no CapEx escalation. We still continue to see -- I think we will be investing close to around INR 15 crores in Phase 1 to set up and start the operations.

And these investments, maybe by FY '28, '29, what sort of revenue do you anticipate from these developments?

Currently, the Middle East and Africa business, we do an export business of around INR 24 crores. That's the revenue that we generate out of this region by exporting from here. So we think that this can double over the next year, FY '27, '28.

Because this also can provide an impetus to the exports if we are generally talking about 25% of the revenues come from the export division. So you think that you've been conservative with this number of INR 50-odd crores from the Saudi plant?

Saudi plant, the first year, we are a little conservative. But overall, we are expecting that this Saudi plant has to generate INR 100 crores of revenue catering to the GCC countries.

And these will be very much in line with the wires and cable business or you're going to be targeting only the switchgears?

Right now, we are starting with switchgears. So as we move forward, once the plant is set up, then if there is a demand and there is an operational feasibility, then we will start wires and cables there.

Another development, sir, was with the synergies that we tend to see with Effilume and Aurawin. If you can just take us through that -- what synergies do they bring to the core business?

Effilume is an SPV that we promoted to implement the Bangalore corporation street lighting automation project. Okay? So that's been a business that we have been doing for several years since 2010 until 2020. Then we actually didn't take up any project post that. But this was again another good opportunity that came up, and then we have taken that project. So that's an SPV specifically for that implementation of that project. So I mentioned that the revenues from that project will start flowing in from July, August of this financial year. And second, Aurawin, that's again another SPV that we have formed with one of the market participants in the smart metering business. We're trying to create this platform so that we can use this as a bidding company for upcoming future tenders, if any, for the smart meters. We're just getting ready for that, because the smart meter tendering requires a lot of technical qualifications, financial qualifications to be fulfilled. So we are taking this company as a bidding company in future with all the required qualifications.

And lastly, sir, if we look at LinkedIn page of Salzer Group or maybe the company, we see that there are quite a lot of products that have been posted over there related to HVAC or maybe custom-built panels or ACDB or DCDB, which have some -- combining with [ HNV ] solar. So if you can just take us through these new developments. Are these absolutely new products? Or are they some sort of catalog products which we have been already working on?

On the R&D and product development, I think it's a constant process that we continue to develop a lot of products within our existing product range. So all these products are new developments, but not completely new. It's existing products, vertical new developments for some specific applications like HVAC, as you said, HVAC-specific application products. Or AC-DC combo is a solar-specific product from our circuit-breaker range and some of them from our contactor range. So those are the products that we continue to develop seeing the market opportunities and cater to those applications.

So do they come under the Salzer branding? Or do we do some contract manufacturing for some customers?

Salzer branding. It's all our catalog products.

Okay. Okay. Sir, last question from my side. At what ROCE threshold do you think that the management team would approve a new CapEx?

I think our target is around 18% ROCE.

And that would be by...

That's what we want to achieve.

By which year, FY '28, '29?

Difficult question. I think we are working out to see how quickly we can reach that. But we want to see progress on this year-on-year. That's what we are expecting.

Fair to assume by FY '30, you will be targeting 18%, 20% ROCE?

Yes. That is fair to assume for the time period, yeah. Thank you, Rohit. Thank you.

The next question comes from the line of Mr. [ Shravan Modi from Syndicate Family Office ].

A couple of questions. First question would be what is the proportion of expenses -- raw material expenses, which is passed on to the customers like at the end?

Sorry. Come again.

What percentage of raw material expenses, which have increased, is passed on to the customers at the end?

Ideally, we want to pass on 100% of the increase to the customer. But fortunately or unfortunately, I think we are unable to do so in one shot and also at the speed at which the input increases. I think this time, the input increase also was not very constant. Now they have been increasing on a weekly basis, fortnightly basis. So we also were not sure what is the extent that the input is going to increase. So that's why we had to wait until February 2026. And I think the entire market did that. All of our competitors did that. We did an increase in 2026. And now we are trying to do it in June again. So I think in these 2 increases, we will be passing on 100% of our cost escalation to the customer.

Right, sir. Also, thinking about how competitive is the organization globally in terms of pricing and in terms of product quality as well as in terms of how competitive you will be.

I think in -- most of the products that we are in, we are in the top 3 in terms of quality, in terms of pricing. We also command a premium for certain products because we are #1 in the market. The capabilities that we have is something that many of our competitors don't have, and that's also one of the reasons that our OEMs stick with us. Sorry, I think you're not clear, sir.

So I think that -- what is the competitive moat of the organization in terms of globally well placed, where they could say that the company is really differentiated among the peers?

Our moat is that we are the only company in this segment manufacturing this basket of products catering to our OEMs. I don't think there's any close competition that we have in this segment, except for the foreign competition. We have top foreign competition. We have Chinese competition. We have companies from other countries who are competing with us.

We have a follow-up question from Mr. Kaushik, an individual investor.

What is the revenue mix you are expecting for FY '27 between wires and cables and switchgears? Will it be the same percentage mix or there will be any change?

Mostly, it will continue to be 55%, 40% and 5% to 6%.

Okay. Sir, another question is regarding the smart meters. So whatever order we have delivered for smart meters, are there any receivables left or we have received all the payments for what we have delivered?

We have received all -- as per the contract, whatever, we have received, except some 3% or 4% that will be held until 8 years.

Do we have any orders for inventory currently lying?

We are expecting some orders. That's what I said. I think there's no guidance that I'm giving as of now until we are very clear and confident from our customers' side.

Sir, are we holding inventory as on date or...

Yes, we are holding inventory.

Okay. And sir, what is the interest and depreciation which you are expecting for FY '27 for a normal business, which you are telling like INR 2,000 crores top line and INR 2,100 crores? It will be -- will it be the same interest cost and depreciation this year or there will be more comparatively because of the higher working capital requirement?

Definitely there will be higher working capital requirements. I think there will be an increase of at least 10% in the interest cost, in my opinion. That's what we expect. Depreciation should remain the same.

What is the average interest cost we are paying to the banks on the short-term borrowings?

8%, approximately.

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

Once again, I think, thank you, everyone, for your interest and time taken to come and attend this call and show interest in the company. Looking forward to our interaction in the next quarter. Thank you very much.

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