Sandhar Technologies Limited ($SANDHAR)

Ladies and gentlemen, good day, and welcome to the Sandhar Technologies Q4 FY '26 Earnings Conference Call hosted by Dolat Capital Markets Private Limited. [Operator Instructions] Please note that this conference is being recorded. I will now hand the conference over to Ms. Shailly Jain from Dollar Capital Markets Private Limited for opening remarks. Thank you, and over to you.

Thank you, Rehan. Good morning, everyone. On behalf of Dolat Capital, I would like to welcome you all to the fourth quarter and FY '26 Earnings Conference Call of Sandhar Technologies Limited. Today, we have with us from the management team, Mr. Jayant Davar, Executive Chairman and CEO; Mr. Neel J Davar, Director; Mr. Gurvinder Jeet Singh, Whole time Director and Head of Corporate Strategy, and Mr. Yashpal Jain, Chief Financial Officer and Company Secretary. We will begin the call with opening comments from the management team followed by the question-and-answer session. Over to you, Jayant, sir.

All right. Thank you, Shailly. Thank you for all of capital and good morning, ladies and gentlemen. I welcome you all to the quarter 4 and 12 months earnings con call of Sandhar Technologies Limited. I'm very happy and pleased to inform you that in line with the expectations, Sandhar has crossed the revenue mark of over INR 4,800 crores, which is an all-time high. . The Indian automotive industry recorded growth across all segments in the financial year '26. With domestic sales hitting a 7-year high, according to the data that's been published by [indiscernible]. The strong contributors obviously has [indiscernible] positive sentiments, which was created through the GST 2 reforms and the multiple repo rate cuts during the year. At the same time, this year, in the latter part of the year, has seen what many people say has been a deterrent with the world experiences -- experiencing what the economists call are polycrisis. It's multiple cascading shocks running simultaneously, whether it is the U.S. China tariff architecture or the tariff direct load on India, whether it is the Middle East, which remains volatile. The European energy costs, which went up dramatically, also the commodity prices which was so volatile that has skipped both sides by almost 20% to 30%. But despite all of this, India's GDP continued to grow, and we grew at over 6.5%, passenger vehicles hit new records 2-wheelers cross the mark of what we had done in '18/'19 and the automotive sector at almost INR 22 lakh crore in size is now the third largest in the world and growing very, very rapidly. Our Sandhar is concerned, if I was to compare Sandhar with the industry growth, especially the India business of Sandhar, the industry has achieved a growth rate of 12.7%, whereas Sandhar has achieved 28%. In terms of 2-wheelers, Industry has achieved a growth rate of 12.9%, whereas Sandhar has achieved 35.1%. So almost 1/3 revenue growth has come in the area of 2-wheelers. In terms of our consolidated yearly performance, which is financial year '26 versus FY '25, the revenue for '25, '26 is INR 4,852 crores, which is up 25% on a consolidated basis. EBITDA at INR 513 crores, higher by 28% year-on-year at the rate of 10.6%, double digits and more, PBT at INR 256 crores, up 39% and PAT grew by 40% at INR 199 crores. We consolidated year performance, which is quarter 4 year-on-year, revenue up by 29%, EBITDA up by 33%. With the gross margin, our EBITDA margin at 11%, PBT up by 42%. If I look at India business yearly performance, the revenue growth is up 28% at INR 4,384 crores, EBITDA at INR 472 crores, higher by 32%. PBT at INR 282 crores, up 37%. PAT grew by 44% year-on-year to INR 221 crores. If I look at quarter 4 of India business, revenue up by 32%, EBITDA up also at 32%, EBIT up by 37%. Coming to joint ventures. The performance of all 5 joint ventures has been satisfactory and registered revenue of INR 257 crores and an EBITDA of INR 2.25 crores. We are constantly watching the performance and are taking all necessary steps in collaboration with our joint venture partners for sustained growth and profitability. Currently, the investment of Sandhar in the joint venture is INR 62-odd crores. Overseas subsidiaries. In overseas subsidiaries, we sustained an annual loss of EUR 2.56 million, which is INR 26.19 crores at EBT level. The best part, however, is that in quarter 4, the business has turned around and registered an EBITDA of 14.6% and has come to neutral or breakeven at EBIT level. We expect the improvement to continue further, in view of the optimization efforts, which are carried out there. Of course, with the recent increase in aluminum prices, we might find a little bit of a dip in quarter 1, but once the regenerative cycle of the pass-through of aluminum prices come through, we are back on track with our international or overseas subsidiaries. In terms of EV, the business finally is on track. I'm happy to share the EV business is gradually picking up and close this year with a revenue of INR 20 crores. We are expecting now to double this revenue in the current financial year. During financial year 2026, 41,000 battery charges were sold and 5,500 motor control units were sold. Sandhar is on a growth path, and I would like to further reiterate that we expect to double our revenues every 3 to 4 years with consistent improvements in margins and return on investments. We're also very cautious about preserving our cash reserves and managing a healthy liquidity position to meet our commitments. We are expanding our footprint and carrying a sound relationship with all our esteemed customers. I'm thankful to all investors who have shown faith and confidence in us, and are continuing with us. I'm also thankful to all the stakeholders for their continued support and patronage. This particular year will be another very interesting year, and despite all the problems in the polycrisis that I spoke about, I do expect that even on a conservative level, I'm happy to give a guidance of over a 15% growth in the overall revenues. This is without taking a price re-trigger which is likely to happen, especially with a lot of costs having gone up, a lot of states announcing new [indiscernible] costs, which has also been a challenge in the last few months. But we do expect with the repricing and recosting that is happening, gas prices going up, oil prices going up, manpower costs going up, which is affecting every aspect of input costs, there will be a pricing re-trigger mechanism that will be activated. And sometimes, this becomes positive for the company, because many cost pricing that has been done by the customer was done years ago and this gives us a mechanism to bring it to the current level of stability. So with that, I am very happy to close my opening comments, and we will be happy to take your questions. For anything to do with technology strategy, we have GJ Singh. We have Yashpal Jain, our CFO, who will be very happy to ask -- to answer your questions on financial matters. And I am, of course, there to complement and supplement whatever is necessary. With that, thank you very much. I'm happy to take your questions.

[Operator Instructions] We take the first question from the line of Chirag Jain from Emkay Global.

Congratulations Jayant sir, and the entire team Sandhar for a very strong performance across the division. My first question is, in terms of the revenue growth guidance, which you indicated that you plan to double your revenues over the next 3 to 4 years, which in a way implies about 20%, 25% annualized growth, can you share more light in terms of which segment or customers or product categories is likely to be a major growth driver over here?

Thank you, Chirag, for that question. If you -- like I said, we are very, very positive and optimistic on the growth of the automotive industry in India, and especially in the 2-wheeler sector. As I said today, the entire industry, if it wasn't for the manpower constrains that most of the industry is facing,; we would be probably growing at a faster level than we are doing right now. This, of course, is the entire automotive industry. So even if I were to produce more and the others don't component suppliers, obviously, the entire thing doesn't matter. But the demand is extremely, extremely positive, very, very strong. And I think in the 2-wheeler segment, for example, there are now 3 leaders who are fighting bitterly amongst each other to become number one. Having said that, we, as a company, continue to get very, very robust orders in some of the new businesses that we have, whether it is sheet metal, whether it is casting. But now with new technologies being thrown in we do believe that the speed of growth of even the business that we have in our proprietary business, the locks, the mirrors and so on and so forth, are getting a major fill-in. So in terms of customers, all customers, like I said, are very, very positive and very demanding for this year. We will, of course, have to wait and see. And therefore, that's the reason why I'm giving you a conservative estimate of 15% plus, 15% to 16% plus of revenue growth this year. This, of course, doesn't include the pricing re-trigger that I spoke about, which will bring additional revenue to the company.

Understood, sir. And on the new businesses or the new projects, on the existing one, we are close to doing about 12% EBITDA margins, and now we have crossed even 20% ROCE threshold, how do we see the new projects, let's say, moving towards the direction of our existing or mature businesses, both in terms of, let's say, the overall revenue potential, we have done about close to INR 340 crores of investment. So what kind of revenue potential we could have? And maybe on the profitability front, I mean, when we can achieve, let's say, sort of close to double-digit margins that we are doing on the existing business, if you can share some thoughts over that .

So as we said today, I think as Yashpalji will answer that question as to how many units are still in losses, which will become positive in this year. But on an overall platform, all I want to say is that you are aware that we've made a lot of investments in new businesses in the last few years, which include the acquisition of [indiscernible] Clayton Aluminum business, which includes the new business of sheet metal, which was then taken in in terms of order booking. All those businesses are now mature and are growing very, very positive results. We only expect that with newer digital -- now those capital expenditure has already been done to a large extent in these businesses, we do expect that all of them will start showing results. But the positive news is that when we had taken these businesses, there was an anticipation of the amount of growth that these businesses would be able to show. I'm happy to say that, that level of growth is not only being validated but is being exceeded by a large degree and a percentage to what we are anticipating. yashpalji, do you want to come in and talk about the loss-making units where they are.

Sure, sir. So like as we have mentioned on Page 7 also of our investor presentation. One of the loss-making units is [indiscernible] business that we have acquired in March '25, and shifting is in progress. And I think by the end of quarter 2, we'll be able to shift our entire business to our own premises. I think from quarter 3 onwards, we would start turnaround in the units with our EBIT levels. But on a yearly basis, '26; 27, we expect to continue with EBT level losses in this [indiscernible] business that we acquired from [indiscernible]. There is another project in Khed City for aluminum die casting, which is focused on passenger vehicle segment. From quarter 2 onwards, it will start generating EBITDA level margins. So this is a turnaround time for this budget. There is another project in Pune cabins and fabrication that also we expect to start a turnaround from the end of quarter 2 of this current financial year. And then EV business, we expect to turn around in profitability in FY '28, means the next financial year. This year, we expect the revenues to approximately double but there would be losses again as we are trying to develop more new products also and capturing new markets. So that involves some costs. And Romania also, FY '28, we are expecting to go at a breakeven or I would say in a profitability mode. So this is how the time line as the management expects on -- while you sit on today's time. .

Just last question...

I just want to add here, Chirag. You mentioned that we made an investment in these 5 units to a level of INR 342 crores, which has generated a revenue of INR 468 crores. So if I was to add these businesses, this particular financial year, the investment will mean a revenue from INR 468 crores, INR 342 crores would convert itself into maybe 2.5x in this year itself. .

Okay. So 2.5x asset turnover ratio is what led to that kind of revenue potential. .

Being conservative, but that month seems very, very clear at this time. .

Understood, sir. And just last question, and then I'll come back in the queue. In the overseas business, bearing the near-term commodity fluctuation, which you mentioned that eventually, we should be able to get passed through, do we see any major headwinds? I mean broadly, are we, let's say, are done with the dr[Audio Gap] that we were seeing over the last few quarters in terms of overseas operation. And here onwards, we should see positive .

Chirag, the difference between India and overseas is that the payment terms in in our overseas business as a longer duration. So is the trigger mechanism for the pass-through. So in India, it used to be 3 months. Now with some of the customers with the volatility that has been there, we are trying to convince them to do it within 30 days instead of 90 days. With the international business, that typical lineup is 180 days, while we are trying to talk to them and bring them also to a level of half that or maybe in 3 months that lag and pass will take some time before it matches up to the speed of the change that happens in India. . And therefore, we are anticipating that the volatility still continues. So right now, the price at which we are selling is possibly the price or the cost of aluminum, which was more than 4 or 5 months of it. The new one will become active now from the month of June onwards. So that's the lag, and that lag obviously hurts us. But I'm very confident that with the lag now continue coming into place, the aluminum prices and the commodity prices seem to have peaked and are stabilizing. We should be able to match up to what we had projected in the beginning of the year in terms of our overseas operations. .

Understood. And bearing commodity fluctuation, the overseas business, I mean, fundamentally, they are on a strong footing. I mean, in terms of the improvement ratios that we have undertaken.

Yes. Absolutely. Absolutely. So if you saw a breakeven, the idea was to breakeven in the last quarter, which we had promised everyone, we will and we have. The idea is to improve from there on and go into positive territory at the EBT level. So we were 0 at the EBT level. we want to improve on the EBT level going forward. But this particular quarter that we are sitting in still carries the land of the commodity. But once that is settled, we'll be back on our feet strong and up.

[Operator Instructions] We take the next question from the line of Saket Kapoor from Kapoor & Company. .

My question is for Yashpalji. Yashpalji, we have closed in working capital in progress at closing balance of INR 104 crores. So how much will be getting capitalized? [Foreign Language]

So INR 115 crores to Slide #12 that you are talking of, right? .

I'm looking at the balance sheet -- I'm looking at the consolidated balance sheet at closing balance at 104, maybe you can continue, sir. .

Sure. So the first question is the working capital.

Closing balance is INR 104 crores. So how much will get capitalized and what is our CapEx program for the current financial year?

So like as we mentioned in our earlier participant's question, we expect a [indiscernible] project to get shifted by the second quarter of this year. So part of that will be capitalized at that point of time. Secondly, the Khed City project will also be capitalized by end of quarter 2. So major portion will be done away in terms of capitalization by the end of second quarter. In terms of[indiscernible] Sunary also, the ahead of quarter 2. . So mostly the [indiscernible] this is something revolving type of capital in progress. We investments and it keeps on floating. So while this result will be capitalized by the end of second quarter, new figures might come in. And in the earlier call, sir, Chairman has mentioned that we keep our CapEx limited to 5% to 7% of our venues. So taking a 15% growth on the current year revenue, which is roughly INR 5,500 crores, you can expect some out capital outflows INR 275 crores to around INR 310 crores for the upcoming financial year, which will include a part of growth CapEx, part of maintenance CapEx part of upgradation CapEx required to upgrade or some old facilities also. Right .

Sir, as you alluded to a conservative number of 15% of revenue growth, and I think so earlier, there was also an EBITDA margin trajectory that was guided towards. So sir, where are we in terms of now the consolidated EBITDA margin that we may exhibit -- our endeavor is for this current financial year, we exited, I think, like 11.08% for Q4 on a consolidated level.

So like earlier, we have discussed on over con calls that we also want to get into margins. And if you exclude the new projects, I think our performance has been very good this year also on a consolidated basis also. And the new projects, the time lines we have set, so Slide #6 and Slide #7, I mean, we have tried to mention how we have performed in our new projects. And like as we discussed and we discussed in earlier calls also, every year, we want to grow and improve our EBITDA levels by at least 0.5% in a range of 0.5% which could be 0.20%, 0.30% or something like that. So this year also, we are expecting to improve our EBITDA margins in a range of 0.5% which could be 0.1%, 0.2%, 0.3%, 0.4%, depending on the market dynamics as far as a trust in the previous question. And the new projects, we have already given the time lines. But yes, new projects this year won't be up to that level. that market is expecting because part of the year, they will be operational part of the year, they would be in the commissioning stage. I hope that answers your question. .

Right. So on a consolidated level, we did the exit of the year at 10.57%. So the very likelihood that on the commissioning of the new project and also on the on the revisiting on the cost front for aluminum, in particular, the margin should grow from this 10.57% level to -- in a brand of 0.25% to 0.5%, that should be the understanding as of now.

Yes. As we mentioned, we also are able to grow and improve -- keep a healthy margin basket. But at the same time, we should also remember that we exclude executing some projects to keep that growth momentum. So excluding the new projects that would be coming up, yes, we could expect a growth of 0.25% in EBITDA margins. But at the same time, the new projects, these would be in the commercial production and new projects will be coming up during the current financials. So it's, I would say, ongoing process. One is finished, another is taken up so that we keep on growing as sir has mentioned, that...

Sir, your last point I missed.

Yes. So what I was saying is that, yes, we are also -- we also have a desire and expectations to improve our EBITDA margins by 0.25% for our existing projects. But in case of new projects would be some more new projects would be coming up in the current financial year, which would again have a profitability and around another 1.5 years to 2 years' time. So these are process continuous forces, I would say, a revolving process, which keeps on going, but new projects are very well poised to achieve our growth in margins as well as the revenues also in every 3 to 4 years, as our Chairman has mentioned, we want to just double our revenues .

Okay. And lastly, sir, between the sales mix -- yes, I will join the queue.

We take the next question from the line of Ashutosh Tiwari from Equirus Securities. .

Congratulations on a good set of numbers. Firstly, you're talking about that on new projects. You can do to end market revenue on investments in this year, correct numbers or can we do [indiscernible] from their side? .

You mean to say 2.5% of the revenues we put from our current in .

Yes. I think it was mentioned by sir, that from of INR 42 crores on [indiscernible] this year. Is it correct? .

Yes, yes. It is possible that it is correct. We expect to lose .

So this [indiscernible] revenue that we did in this year can go to INR 800 crores plus in FY '27 .

2.5%, you can say INR 700 crores, INR 750 crores something. I mean it's a range for us, which can be 2 to 2.5x basically, I would say. Around INR 750 crores of revenue, these projects can do INR 460 crores, they have already delivered -- but as I mentioned...

Ashutosh, there is 2 ways or here in some sense. What I mentioned earlier that there is every likelihood that this year would call for a price re-trigger. So the overall concept of revenue will also grow with the increase in prices that we will charge the customers for all our existing products. This has happened because at one point of time, it was only commodities. But this particular year, there is every level of costing and input has gone up. And therefore, the entire industry will recalibrate in some sense. .

Okay. Okay. So -- and we had a marginal EBITDA, yes.

Where? Margin EBITDA where?

I was saying that you had a margin EBITDA loss this year. So with this kind of growth in revenue, when you make good profits will look like not good, but we are not coming on, but will you make a decent profit from this new business? .

Yes, absolutely. So we will obviously improve the margins. We will have to wait and see how it affects on the EBT stage. But do remember that while these will turn around to a large degree, where I think it's written in the presentation as to when they will turn around. The Sundharam Clayton business will turn around in quarter 3, Khed City in quarter 2, [indiscernible] in quarter 2. The EV business, we are saying financial year '28, Romania in dand financial year '28, but besides these, there is also growth that is happening and that growth is happening in several areas with several new projects. So like Yashpalji said, it's a continuous dynamic scenario that we are going through. If we have to meet and prepare for the growth that we have in mind of doubling our revenue every 3 to 4 years. So there will be something in a project stage, there will be something in a loss stage, there will be something in a turnaround stage. And at the same time, we are making an endeavor that our business, which are established and stable, keep improving on the margin for which a 0.25% increase like Yashpalji has said, is what is being targeted. I hope this has clarified a lot of things sales, right? .

Yes, yes. And how much of revenue in Sundharam Clayton business for the full year? .

It was INR 369 crores. .

Okay. And secondly, you alluded to the fact that the aluminum price increase, there'll be some margin pressure in overseas business, the margin pressure in India business as well in Q1 because of this increase in the [indiscernible].

There is. We've suffered some loss on account of that, but we are hopeful now with the new prices kicking in, those -- unless they go up again, the prices, we should be able to get that benefit in the current period. .

So India business, the team has already happened in this quarter, like say, from May or May basically or will happen to the lag in India as well?

See, a large part of the increase happened in the month of March and April. April was the worst affected. So April -- April pass-throughs will start from the month of June in that quarter. Yes. So can take a lag of 3 months, typically, as to how it happens in India. Like I said, we are talking to the customers now, to make it more proactive and not do a 3-month basis. I think the entire industry is talking to the customer saying that this needs to be done every month. It hasn't happened so far, but we are hopeful that something could happen. .

We take the next question from the line of Aditya Kondawar from Complete Circle Capital. .

First of all, big congratulations on the execution that you guys have done in the past 4 years. I think in a single quarter of Q4 FY '26, you guys have done more PAT than the entire full year PAT of FY '22. So kudos for that. Jayant sir, thank you for the commentary that you gave at the start of the con call. I just wanted to ask you I mean, at the FY '30 or '31, is it safe to assume that Sandhar will do a PAT of anywhere of INR 150 crores to INR 200 crores? And what are the margins that you are aspiring towards? That's my first question. .

I didn't understand, INR 150 crores in 2030? Is that what I heard? .

Yes, yes. you did your entire year's stack after 4 years. So I wanted to ask whether you can do the same in the next 4 years. .

Are you saying every quarter? .

Yes, yes.

Well, I think Yashpalji, what is our projection? Do you want to give some...

Yes, yes, sure. So like Aditya, sir has mentioned, 3 to 4 years, we want to double our revenue. So in case we touch INR 1,000 crores of mark. We would expect that our return on capital employed [indiscernible] because we are more focusing on it on capital employed as the volumes will go up because the percent of margin is a limiting factor for us in terms of EBITDA and EBIT but we are targeting an improvement in return on capital employed starting with a post-tax return of 15% going something at a high peak of 20%. So in that scenario, you can expect that on a INR 10 crores of revenue, we could be in a position to generate a PAT of around INR 450 crores, something around that to achieve that return on capital in [indiscernible]. This is all we expect .

And any EBITDA margin guidance, sir? .

As you know, that we -- I mean, manufacturing a diversified products on diecasting I mean, SME as well as manufacturing. So while EBITDA levels will remain constant, I would around 11%, but with the volumes coming up and the revenue going up, automatically in terms of absolute returns, our multiplier will be giving us a more return on capital impact, so more of a cash with us in that term. So at that point of time, the percent margins would be of much importance in terms of EBITDA or EBIT, more focus would be on how to generate more absolute margin, sir? And forecast going forward is again on ROE and ROC. So even if EBITDA -- I mean, 11% you can take on INR 11,000 crores, close to INR 100 crores, expect to levels of 20% post-tax.

So my second question . Supplemented and give you some supplement to this whatever commentary I have given you in the beginning where we've said that the revenue will grow to double every 3 to 4 years. It is safe to assume that the bottom line will improve better than that, right? Yes. .

Correct. .

So that should give you -- we are sitting at INR 200-odd crores. The number that Yashpalji has given you of INR 450 crores seems quite safe. So .

So my second question was on debt. The near-term guidance on them and the long-term guidance. . Even if you don't give me absolute numbers, just a commentary on debt-to-equity ratio that we are aspiring towards. .

Yes, sure. So like in terms of debt levels, if you refer to Slide #14. So I mean, we have a net debt of INR 897 crores and a gross debt of INR 948 crores. And largely out of that content of INR 948 crores INR 564 crores is working capital debt, largely linked to the revenue size, right, because of a receivables are normally 45 days, while the tables are even somewhat shorter period during this crisis as we sit on today. So I mean the term loans are INR 384 crores, which will be automatically paid with that due schedule. This year, we have a repayment commitment of around close to INR 103 crores with various banks. So some that will start bearing as a repayment should come in -- but working capital debt is aligned directly to the business. So I don't think that is a point of worry. What we are borrowing is directly dependent on what we are earning and what we are selling to the customers. It's varied the business part . Term Loan automatically will start to shut down and pay it down in next 3 to 4 years, unless a new project comes in because as I told, it is a going process. If a new project comes from our greenfield project from -- so again, we will be doing a fresh borrowing as mandated in the [indiscernible] covenants also 25, 75 or whatever the ratios required. But working capital loan will be continuing as per the business cycle now. I hope that is okay. And even today, the debt equity ratio is fairly good for us. If you compare with our other industry competitors, we are sitting on a very healthy debt equity ratio. .

We take the next question from the line of Shashank from ICICI Securities. .

You mentioned about entering the telematics kind of technology space. So any mixup we have in terms of any joint ventures you're supposed to do or you -- Something we've done in the captive in the R&D side, if you can throw some light? .

GJ, you want to take that question? .

Yes, sir. So on your question, yes, we are definitely working on these product lines. And as we mentioned earlier meetings also, we are very, very ahead of those discussions with partners for those technologies and also in-house development of those products in our R&D center. So we feel that these products are going to be presented to the potential customers going forward. We have actually started representing them to the customers. And this is a very good response from the customers. And now we are going through the next level of creating some POCs and submitting them and then things will take way forward. So we feel that these -- this year, current financial year, these are going to be informed showcase to the customers. And next year, we feel that this should come into the development cycle and then from the development, it will move to the production cycle. .

Shashank, just adding to that, we are not looking at joint ventures at this time. We are considering transfer of technology or collaborations which will be on the royalty basis rather than in the form of joint venture. We want to use the infrastructure that we have already within the platform instead of creating more, what we will do, we will do it on the basis of incremental capital cost using our existing infrastructure. So that the return on capital employed and the return and margins come much faster than they typically do in the preparation of joint ventures. .

So sir, given that the industry is moving towards this technology space. So do we expect coming to expedite their look up for technology transfer kind of a thing in a future? Or do you see that as a new 3, 4 years kind of a story to plan out for us from that technologies? .

We are already in the process. I am not at liberty to say, but we have identified some prospective partners who should be able to give us the technology that we seek. But of course, the finalization of that, we need the go ahead from the customers who like GJ just said, is the customers have it under consideration. We are having discussions. And as soon as we can lock in, the kind of technology that is apt, that is attributable to the Indian industry, we will lock it with that particular corresponding partner and take that to the market within the next 12 months. .

Sure. And sir, any update on the smart key projects? So has the penetration kind of increased? Or has it got more seen on the stimulus?

No or no, it is growing. Right now, it is growing. I think we've reached a level, if I'm not mistaken. It could be 10% up or down, I don't know, daily numbers, but we've reached a level of about 5-odd-thousand locksets per month. And is going. The volumes are growing every month. .

Right, right. And sir, lastly, our top line is most power in papers, right? So gradually increase from 60% to 67% -- so directionally, should we think of this line? Or directionally, as a company, are you thinking of diversifying your ability to move towards tangible things like TV or other line items? .

We run on the opportunities young man, so whether they appear in the 2-wheeler market or the 4-wheeler market or the construction market as a tractor market, we are quite agnostic to it. See, we have the capital that we can employ is limited. And wherever we feel that we will get traction. At this stage, at this time, the 2-wheeler market is growing very rapidly, and we are very well trenched with our customers. And therefore, their dependency on us is an opportunity we don't want to lose. It is quite possible, and we continue to work on new technologies, we continue to work with new customers, including several 4-wheeler ones. As and when we get the breakthrough in those technologies with those customers, obviously, we are in the game. And there is every likelihood that the share of 4-wheelers and other aspects of the auto industry will grow as a percentage to our revenues. But are we just doing that, no, the answer is no. When the opportunities today are in the 2-wheeler stage, we will not take the opportunity just because our percentage to that or our exposure to that particular category will become more. .

We take the next question from the line of Rajit Aggarwal from Nilgiri Advisors. .

Just first, a quick clarification on the consolidated balance sheet numbers, so there is a total debt number of EUR 41 million. And if you ask our Slide #8 of the presentation, Q4 FY '25 overseas business outstanding borrowings of EUR 41 million and Q4 FY '26 is EUR 47 million, EUR 46.9 million. And if I look at the INR crore numbers for the same head, the number has increased from INR 380 crores to INR 506 crores, which is INR 136 crores. . So is that correct? I mean, EUR 5 million leading to increase of INR 120 crores. .

I'll answer this question. I am Yashpal Jain. So I mean there is not an increase in the absolute debt. Earlier thing is that if you while presenting our financials earlier we were into build discounting mode in overseas operation, which was proving to be costly for us and bill discounting as per the standards, IFRS and Indian accounting standards, we are clubbed with the current liabilities. While we have shifted these tables or I would say the discounting to a clean debt because it was economical for us. So that is the reason, as per the standard, it is now a part of the borrowings and shown in the borrowings. So this is how the increase has been on. .

I'm sorry, sir, but what you are saying is in the euros and in rupees, I mean the difference should be the same, right, EUR million or INR crores number -- the difference EUR Million, INR 5 million and INR crores is INR 120 crores So how does...

It happens that we are presenting our financials into a group currency, which is Indian rupees today, the euro is reporting at around INR 111 per INR. It was around INR 108 in the month of March, whereas 2 years back it was around INR 90. So when you convert the we translate the financials as per the accounting standards, we need to take the closing rates. While our components are in euros, they are repayable in euro. So this is not something [indiscernible] I mean classify or directly convert at each every balance sheet date on each reporting date, we will look in the closing rates . It's the mandate. .

So the increase in...

Its a notional value because it's been converted to Indian rupees. In it, it is to be serviced by the overseas operations, which will continue to be in euros. I hope...

If it goes like INR 90 again, this INR content will again come down to that extent. So -- so overall increase is EUR 5 million. In that majority portion that we have shifted from bill discounting to a clean that -- so are we are regrouping the balance sheet hedge itself -- there is a little increase. I would not rely around 0.5 million we have done a fresh borrowing over there to meet their commitments. .

Understood. . Okay. Now on the working capital, if I look at your working capital overall, the inventory, the receivables number of days have gone up in -- as of end of March 2026. And a large part of that increase, it seems has come from overseas subsidiaries or your Indian subsidiaries either way. So any thoughts around that, sir? I mean are we looking to .

Yes, you must be happing Slide #12, right? So it is a consolidated level, it is 44 days stand-alone 51, there was some onetime receipts that we got -- because of that, the cycle has gone up. Otherwise, our normal receivable cycle is 40 to 45 days itself. Inventory holding period is also from 54 to 55 days because in overseas, we are required to carry a large chunk of inventory compared to Indian operations. Otherwise, Indian operations, we are not even carrying inventory of more than 12 to 13 days. This is -- I mean, the movement of inventory right over. So it's going to rise up. It was -- the receivables would have been a period of collection period of 40 to 45. And technically, if you see if we go for a bill discounting, this would come down. But right now, costly. So that's the reason. So it's more of an accounting presentation, I would say -- if you go for a becoming automatic, the receivers goes out of their books, and it goes to the current [indiscernible]. So this is a synergy. But on a normal basis, it 40 to 45 basis .

[Operator Instructions] we take the next question from the line of Mihir Damania from Vidant AMC. .

Yes. . So my first question pertains to the overseas business. So if you look on a full year basis, it has grown by around 8.5% in euro terms. EUR 46 million revenue, a similar amount of debt. . If you're taking like a 3- to 5-year look, how do we actually . Ensure that this business also generates around like, let's say, mid-double-digit kind of an ROE. What is the strategy going there. At first, we've seen that you should get some of the plants, but even on growth, even on debt because almost half of your debt is in its outside of India. So just wanted to understand more on a strategic perspective, what value basis add toward the overall organization when the [indiscernible] where we are probably going to deploy a lot more capital. What's the strategic outlook here?

If I understand correctly, you're asking the justification for us and our overseas business, right?

I would -- and rate outlook of where you see the business over the next 2 to 3 years.

Yes. So you are aware that Europe markets and American markets haven't done as well as India has. In the meantime, from what started off with the Ukraine war and the increase in prices of gas, which went up 800%. Obviously, the margins have been affected since then for the last few years. There is stability that is now being brought into the entire system. But for us, the strategic call is not about the business. It's about having your presence overseas, because all the customers are now moving to India. And if you have your legs overseas, their dependence on companies even supplying from India. To give you an example, some of the big majors who are our customers, give us business in India, which is now becoming stable and mature is largely because of the fact that we had experience dealing with them overseas. So we were suppliers to them overseas, and now they feel that we can do it from India. So I think there has been reference there. There has been relevance there. And also the last couple of years, while your question is very valid because our investment and our return on capital employed falls dramatically on account of our overseas business. And we've considered and reconsidered whether we should keep it on-on. The fact that it was in losses made it even more difficult for us to take any strategic calls. Now that we are hopeful that this particular year, we would have all those things washed away. We will relook at this business. But at this point in time, it is very difficult for me to comment as to what is likely to happen before the end of the year.

And my second question relates to -- so one of our anchor customers has highlighted like a major supply chain challenge in the month of April. Do -- is that behind us? Does it impact us in some way or from? Or do you think that was just a temporary and should be as usual in the remaining years? .

Well, the biggest problems that we faced in the month of April were, let's say, the availability of gas, the availability of raw materials, especially aluminum. And then the most serious became the availability of manpower. From the time of Holi, and then subsequent elections that happened in Bengal and its [indiscernible] and then everywhere and Tamil NAdu, at one point of time, the entire auto industry was grappling with an absenteeism of almost 20% with the thereon announcements of various state governments increasing the minimum wages by almost 30% to 40%. And yesterday, Karnataka giving an indication that, that could be even higher than 50%. Obviously, there is a lot of restlessness in the market on availability of manpower. So we, as a company, are trying to make the best possible out of this scenario. But as an industry, whether it is TVS motors, whether it is Hero, whether it is Honda, whether it is anybody else of the entire industry, according to my understanding would have lost somewhere in the region of almost 200,000 to 300,000 vehicles. And that reflects in the inventory, which has come down dramatically. If you look at the 2-wheelers, some of the customers who used to have a 60-day stock in the market is now to less than 14 days. So there is demand. I said that in the beginning. It continues to be very, very robust, irrespective of the challenges that there are on a global scale. But for us, while these challenges are there, it's not individualized as a company. This is for the entire sector. Things are improving as we speak. The month of May is better than what it was in April. And I'm hopeful that by the end of June, irrespective of anything else except maybe some dramatic stuff that happens on a global scale, we should be back to work as normal.

We take the next question from the line of Jai Prakash from Gorman Capital. .

Sir, I just -- I didn't follow your company and we have been executing really well and growth has improved margins .

A little louder, [indiscernible], can you speak a little louder? .

Yes, yes. Am i audible. .

Yes. .

Yes. Sir, my question is basically, I'm trying to assess your final, right? So when I look at your business sheet market aluminum diecasting our major of your business, right? So I want to understand your depreciation? Is it the size which differentiates you that competition cannot come in . That's the first question. And second question is where you are -- when you say growth is like 15% growth side where you have been conservative in and I think we will be outperforming the industry. . So we have the confidence comes from? Does it come from the new products like Smart locks. I think you talked about battery chargers which is kind of a new product, right? So if you can explain [indiscernible] high of smart loss this couple of sets. But battery charger, if you can explain where you are in terms of the competitive solutions -- and how does -- where your confidence of the 15% to 20% growth comes from, right? Is it from existing or new product launches, that will be helpful. .

Okay. Let me put one thing tied which is you said EV products are very insignificant for the entire company. Even if you are going from a INR 20 crore revenue to a INR 40 crore revenue, you would appreciate that, that number is extremely small in the context of the size. Yes, what we are doing in the EV business is that we are trying to now work as we become a little on scale, we should be able to reduce the negative portion of the bottom line to the best extent possible in this particular year. When you talk about casting, for example, yes, we had several USPs. one USP comes from the international business that we have, which was to make spoons. Now these are thin wall machine west casting which are not done at open or by everybody in the country here, number one. Number two, with the acquisition of the Sundaram Clayton business, we've become an integrated player in the casting scenario. . You are aware that in the year before that, we had bought other machining business from TVS as well. With that happening, now we do both high-pressure die casting. We do low-pressure die casting, we do machining and the entire context of larger small components, but from small to extremely large, including [indiscernible]. So the size, scale, the flexibility across the supply chain in the aluminum business has gone up dramatically. So we are an integrated player, and that in itself is a real USP for us to grow and the opportunities are showing very, very openly for us because now people want -- as our customers want to consolidate in terms of their supplier base, we fall in line with someone who can give them from 0 to 100 in terms of whatever the requirements of casting are. At the same time, you're also aware that we are possibly the only player who also does zinc casting, we also do magnesium casting. So anybody who wants any kind of casting is now available with Sandhar in every sense of the word. . You wanted growth. you want growth, right? .

Yes. Yes, yes. .

So in terms of growth, at this time, the 3 major verticals which is aluminum business, sheet metal business, the proprietary business. And in fact, even the construction business, -- all of them are rated at growth rates for this particular year, which are probably internally much higher than what I have quoted us. I have been a little conservative. I said that right in the beginning. That is because of a little bit of confusion as to how this year would pan out depending on global case scenarios, India case scenarios, but the overall growth estimate that I'm giving you seemed conservative. And I also said it was without taking into preview the pricing retrigger, that is likely to happen. So it's across every division, and every product line that we manufacture that we are looking at the growth rates that I've told you. .

Great, sir. Great, sir. And sir, just a follow-up question because you mentioned that you work with zinc, magneium, aluminum, right? And I heard another office talks about that they are able to release process these zinc, magneium, aluminum things, and that's how they were able to move up the value chain in terms of getting into aerospace. So not -- I'm sure you have enough on your fleet right now, but anything in terms of the future guidance where you want to see us and do you want to expand the sectors you cater to or take these existing capabilities to anywhere else within the [indiscernible]?

That's a very big question. That's a very big question. It depends on the opportunity that is presented to us. Like I said, in terms of building our capability, that's what we are doing from 0 to 100. Obviously, whether it is aerospace, whether it is defensce, whether it is railways, whether it is auto, the present case scenario of what and where our capabilities are in castings, we cover it all. We are obviously concentrating on the existing customers that we have and the existing businesses that we have, where the volume play and the volume growth affords us pretty busy for this particular year. But this is not taking away from the fact that we are very open to looking at various other possibilities. And as and when something strikes and we will keep you posted. .

Ladies and gentlemen, we take that as a last question and conclude the question-and-answer session. I now hand the conference over to the management for their closing comments. .

Once again, I just want to thank you all. Just telling you, informing you and congratulating you that your company, at this time, is in solid stead. We are in a happy place. India is in a happy place. Our sector is in a happy place. And unless and until barring anything major that happens outside on the global horizon, we seem quite confident that this year will also be a year where we will have record numbers show up for the entire year. With that, thank you once again. Thank you to Dolat Capital for putting this together, and I look forward to speaking to you again after the next quarter. Thank you very much. Bye-bye. .

Thank you, and bye-bye.

On behalf of Dolat Capital Markets Private Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.