Shivalik Bimetal Controls Limited ($513097)

Ladies and gentlemen, good afternoon. Welcome to Shivalik Bimetal Controls Limited's Q4 and FY '26 Earnings Webinar produced by Elevate. So I'm Shankhini Saha, Director of Investor Relations from Dickenson, and I'll be moderating our call today. Great. So joining us from the Shivalik management team are Mr. Sumer Ghumman, Executive Director (sic) [ Whole-Time Director ]; and Mr. Rajeev Ranjan, CFO. Please note that this conference is being recorded and that some statements in this call may be forward-looking based on current expectations and subject to risks that could cause results to differ materially. You can download Shivalik's investor presentation and press release from the links in the chat or from the company website or the NSE. I'll now hand the conference over to Sumer for opening remarks. Over to you, Sumer.

Thank you, Shankhini. Good afternoon, everyone, and thank you for joining us today. FY '26 has been an important year in Shivalik's evolution. The performance for the year is encouraging as it reflects the direction in which we have been deliberately shaping the business over the last 2 years. It has been clear to build Shivalik into a more relevant, more value-added and more resilient precision engineering platform. We are moving deeper into components and assemblies, strengthening our engagement with OEM and Tier 1 customers and increasing our participation in applications where reliability, accuracy and technical consistency are critical. During FY '26, this strategy translated into stronger earnings quality. Consolidated revenue grew 12.3% to INR 570.9 crores, while EBITDA grew 26% to INR 130.7 crores. As a result, PAT grew 24.8% to INR 95.8 crores. EBITDA margin expanded by around 250 bps, which demonstrates that growth was supported by better realizations, improved product mix, operating leverage and continued cost discipline. We are focused on building a high-quality business as we scale. On a stand-alone basis, revenue grew despite broadly stable product volumes, indicating better average realization and increasing contribution from higher-value components. This is consistent with our long-term direction of reducing dependence on lower value-added strip lead supply and increasing our presence in engineered components and assemblies. Our core businesses continue to provide a strong foundation. India remained an important driver for shunts led by demand across automotive, smart metering, current sensing, battery management and energy management applications. In thermostatic bimetals, Europe delivered strong traction, supported by deeper customer engagement from our local presence and an export momentum. The next phase of Shivalik will be shaped by how effectively we move from individual products to more integrated solutions. The Pune facility is strategically important as it expands our capability in PCBA and bus bar assemblies for automotive and electrification-led applications and brings us closer to customers who increasingly want reliable, integrated and application-ready solutions. Over time, this should help us improve customer relevance, deepen wallet share and build stronger long-term revenue visibility. Geographically, the business is also becoming more balanced. India remains our largest market across shunts and bimetals. Europe has emerged as a strong growth engine and Asia delivered broad-based momentum. The Americas were soft during FY '26, but we are seeing early signs of normalization and continue to view North America as an important long-term market for us. As we enter FY '27, our focus remains on prioritizing margin quality, working capital efficiency, deeper customer partnerships and careful capital allocation. We will continue to invest behind areas where Shivalik has a clear right to win, precision components, current sensing, switching solutions, PCBA, bus bar assemblies and broader electrification-led application. In summary, FY '26 gives us the confidence that the strategic direction is right. We have a stronger platform, a more value-added mix, deeper customer relevance and a clearer path to building Shivalik into a more integrated precision components and assemblies business. With that, let's get started with the Q&A session for today.

Thanks, Sumer. Sorry, I think I got your designation wrong when I introduced the call, you're Whole-Time Director. Apologies for that. So we'll start with the Q&A session. [Operator Instructions] So we'll get started with the Q&A session. Our first question will be from the line of Nikhil Poptani.

So my first question would be on as we are moving forward to the component business, so for the realization per kg or per ton, how much price increase are we looking at?

That wasn't very clear actually.

Nikhil, could you repeat your question? Your line is a bit unclear.

Am I audible now?

Yes, much better. Please go ahead.

Yes. So my first question is like we are looking at the growth going forward from the component business. So how much realization growth per kg or per ton in shunts can we expect? Like what will be the price realization growth? And my second question is like how much was the contribution from the smart metering business because a lot of developing was driven by the electric contacts division. And can you just let us know how that electric contacts business had such a great growth? What led to that growth?

It's still something we're not very clear. But Rajeev, if you can take the first half of this question, then we can get to the contacts after that, the realization.

Of course. So Nikhil, the first part, what I understood from the question is regarding the shunt realization in context of converting from a strip to component. So the realization is improving. I can only share here is that earlier we used to supply regarding 55% in component, which goes up to 65% in year-on-year. And that is yielding almost 10% to 12% improved realization as per the previous per kg shunt realization.

Am I audible now? Am I clear?

Yes, much better than before.

Yes. So my second question is like we have seen a great heavy lifting done by the electric contacts division. So there's a tremendous growth over there. So can you just let us know what led to the growth in the electric contacts business? And how much was the contribution from the smart metering business? And as we used to say that the relay manufacturers are growing in India. So how is that situation playing out right now? And what is the outlook over there?

Right. So the contacts business has seen tremendous growth because of two factors. One is general business growth and what has led to general business growth, I'll get to that. But before that, there has been, of course, some -- as you can imagine, some contribution from the value, specifically in the last quarter and partly in the quarter before that, coming from exponential increases in the silver commodity pricing. Now that has some impact. Of course, over the years, our products have turned more and more into a lower silver consumption category because we, again, deliberately went in that direction because since we were not primary silver manufacturers or alloy manufacturers and neither did we want to go in that direction because of -- that wasn't our core competency. So the contribution of final silver has been consistently reducing, but because it went up so high, specifically in the last quarter, so some portion of this increase has been contributed from there. Having said that, that roughly is about half of our total increase, maybe a little less than half. So for example, if we have an approximate growth of about -- roughly about 60% on a revenue basis in the contacts business, out of which nearly about 31% or 32% is actual business growth. If you assume that silver had not changed at all from the year prior to that. So the right way to look at it would be that. But the moment you include silver in it, it shows a 60% kind of an increase. Having said that, it has limited impact, though, on margins because only a very small percentage on the margins of the business comes from -- directly from silver price. A small percentage is charged as a surcharge on silver pricing. So that tends to increase when silver goes up. But then again, that has minimal impact. So what you're seeing as margins growing in the contacts business is mainly because of us converting into more higher value-added components with lesser silver. And that's exactly what our plan was earlier. And when you see revenue growing, it's coming from basically business growth. So we have moved into a new plant. That plant has been sort of partially ready for the last 7 or 8 months. So we've added some capacity. Where we were stressed on capacity is exactly those areas where we have started work first. And -- we already had a lot of business opportunities from our existing customers as well as their new designs, et cetera, that we were deferring in the last maybe 1.5 to 2 years while our plant was under construction. So we -- probably we can say that some of our products are our customers prefer buying from Shivalik or from the contacts division. So they were keen that we set up this capacity quickly. So we can -- so you will see towards the end of it -- towards the end of the last, I would say, 1.5 quarters or so, there has been not just silver value increase, but also an increase in product as well as manufacturing. And this is what we expect this year. We expect this year's growth possibly to be more than that, but again, because of similar reasons because we already have that business opportunity in hand. Now silver contacts works in a very different way. It has a very large addressable market size. As a result, it has low margins as well. And when we can produce a certain quality or meet an expectation of a customer, the customer wants to buy more from that supplier. It simply works like that. Part of the -- another reason behind that is that Shivalik follows a very transparent pricing policy when it comes to silver product as opposed to some of the competition, which is -- which I would say is not the most transparent in that, not intending to put anybody down, but we feel that the customers find that Shivalik's not only is the quality good, but the tooling capability is great as well as transparency in pricing.

That's good to hear. So my other question is that like what is our smart meters contribution this year? And can you also give us an outlook or any kind of guidance for the revenue and margins going forward in FY '27, '28?

Is it -- sorry to cut in, but is it just my line or Nikhil is your -- I think -- is everybody not hearing this properly because I'm actually having a very difficult time trying to understand.

No, Sumer, I think it's just Nikhil's line that's unclear. You're very much loud and clear. Nikhil, if you can just give it one more shot at repeating your question. Otherwise, you can write to me, and I'll read out your question.

Yes. Am I clear?

Yes, go ahead.

Yes. So can you just provide us what was the contribution -- revenue contribution from the smart metering business? And like can you provide us your guidance on revenue growth and margins going forward in FY '27, '28?

So the second part of your question is not related -- is general, right, not related to smart meters or any...

Yes, yes, general.

Okay. So the smart meter part, and I'm assuming you're asking about smart meters from shunts as well as contacts point of view and not just contacts. Is that correct?

Yes, Sumer, please go ahead.

Okay. So currently, our -- this year, we have -- in this last financial year '26, we've nearly doubled our revenue coming from smart meter applications. It was expected because as you mentioned in your question also that relay manufacturing has been continuously growing in India. We expect a similar level of growth this year as well. I don't know at some point -- the future depends on how this continues to -- how the smart meter application in the country continues to roll out. But we feel that in about the coming, let's say, 6 to 8 quarters, we feel that we should continue to see a decent amount of growth coming from there. And when I say doubled in revenue means from a nearly like a INR 30 crores, INR 40 crores revenue contribution, it has gone up to over INR 75 crores, INR 80 crores. When it comes to the contact part of the relays, there, the contribution came in a little later in the year because, as I mentioned, that some of the contact manufacturing capacity, we had not installed until the later part of last year, calendar year. So we have only been able to increase that production towards the end of it to meet extra orders. So this year, we expect to have a more higher revenue growth of smart metering related sales coming from the contacts business as well.

Our next question will be from the line of Akash Vora.

My first question will be a follow-up to my earlier participant's question. Just want to know the breakup of our smart meter revenue into shunts and contacts currently.

I can share with you the contribution from shunt. I'll give you the contact later on. If you would like, I can give both by written whenever you shared with me or ask me in a mail. But currently, I can say that almost 33% growth in shunt from the energy meters, which is around INR 70 crores-odd.

Understood. And any outlook you would like to share, like will we see this portion of our revenue doubling for the next 2 years? Or how is it?

We expect it to double at least in this year. It's hard to obviously say exactly what it would be because it depends on certain factors. But if we see that there's only moderate installation of smart meters, but with just extra relays that we expect to be produced on the basis of that, we have a forecast that could possibly double revenue again once. But after that, I don't know at what point, what customers decide that they want to keep a certain quantity of relays coming still as imported or for whatever reason to have multiple suppliers. But what their policy turns out to be and how it shapes in the future, it's difficult to say. But at least for another, like I said, 4 to -- 6 to 8 quarters, we expect to see a good growth coming from here, unless, of course, something strategically or something drastically changes from government's implementation point of view, then it can have an impact. But I'm assuming that, that is on track.

Yes. Understood. Also a question related to our shunts business, specifically the business that we have in America with a key customer, which we have had. I think we have seen that portion of our revenue regress quite a bit in the last 2, 3 years due to several reasons, tariffs and all of that, inventory overstocking and demand normalization and all of that. But like I would just like to know the outlook for the coming -- for FY '27 and '28, like are we finally seeing a reversal there? Is there a spurt in growth that we see? What is our outlook for that, please?

So from the customer, we've started a few new products with them. They are all not -- they're no longer in strip form. Earlier, majority of our sales to that specific customer was in strip, wherein the customer was manufacturing then the resistors in-house. And most of that has now stopped. And if you've been following up how things have been going in the last, say, 4 to 6 quarters, we have been talking about that happening. Tariffs actually pushed that to happen faster because when we make the finished resistor component, we can even supply directly to their customers, 70% to 80% of who are outside the U.S. So you bypass this whole tariff system altogether in case something else happens in the future. So that actually pushed the development. And then there have been certain brand-new developments with the customers as well. I can only give limited information on it because of our NDAs in place because they have certain -- they've been able to achieve a certain level of accuracy better than competition. So it's only limited information we can give. We expect that since they have designed that, their design now provides more accuracy. So we expect that the business to go up and forecasts are very positive from their end. And the best part now is that all of that increased business that will come from them in the next couple of years, which has already started, will all be in component form, which means that any contributions to the bottom line coming from those businesses is going to be much more encouraging than before.

Understood. But just -- I mean, based on our forward integration contracts and whatever positive forecast that we have got from them, if you could assign a number to the growth number for '27, '28?

See, we expect that in this year and the year after, we expect numbers to reach and then probably the year after that to go beyond what its highest numbers were when we used to supply those larger volumes of strip 2 or 3 years ago to them. So we expect the business to come back to those levels or almost back to those levels at least in this year and then probably surpass it next year, '27, '28. At least that's the kind of indication we have, again, because of their absolutely new entry in some of this high-value business being a little bit of a NDA protected thing. That's why I can give limited information. But the outlook is that it is going to surpass those numbers that were there earlier, 2 years ago or so. At least that is the kind of capacity that we have been asked to build. That is the capacity, that is the forecast that we have. The end customers that are going to be using those products sort of fall in line with those volumes. So we feel confident that it's not just an indication from a customer. Although honestly speaking, it's -- usually, typically, we have seen that American companies are usually better at forecasting and they give more black and white forecasting as compared to many others. So we feel confident. We are fully prepared. We are in the process of building whatever capacity we don't have out of these processes. And whatever we have, we are ready for these numbers.

Next question will be from the line of Dhruv Jain.

My first question is a follow-up to the previous participant. So just a clarification there. So when you said that your numbers for this year would be as good as maybe what you had done in the peak. So if I'm not wrong, those numbers would almost mean that you double your U.S. revenue with that particular customer in this year. Correct me if I'm wrong, please. Just a clarification here.

Yes. It's not -- it's -- to be very optimistic, it is a possibility that can go there. And the forecast that we have sort of does translate to that, where it now actually ends up going is, of course, it can vary because of certain other factors, as you can imagine. But yes, that is at least the kind of indication that we have. Now the difference -- main difference can be that the numbers should get there, whether they would get there in 4 quarters or 6 quarters, that kind of variation can always take place. But yes, that is the indication that we have.

Okay. And the second question is on the bus bars and the PCBA side, right? So if you could just talk about the progress that you've made? And how should we see the ramp-up of this new segment in FY '27, FY '28? What's the kind of revenue contribution and revenue that you expect from this? And what's really the end market application or demand? If you could just talk a little bit about that, that would be very helpful.

So our current developments that are -- some developments which have now already materialized into business, some developments that are, again, very close to developing, are in sampling stages, et cetera. In the first phases, the CCS application or these bus bars are basically 2-wheeler related application. So one way to look at it would be when you link it to a 2-wheeler EV. So the first phase is 2-wheeler EV. Although these kind of bus bars are used in -- even in hybrids, even in non-EVs, even in ICE cars. So that is one of the reasons why we are setting up this facility to target all of that business. But yes, our developments happened in such a way that it started with the 2-wheeler EV development, and that's why we decided to get into this product and we realized some of those CCS designs, now not all of them are, but some of those CCS designs need to be EB welded. And that is, of course, one thing that we are experts at and the EB welded CCS, definitely, we have to have to get. But we realize that doing that alone by itself is not the only way to go. We have to do all sorts of bus bar and CCS developments for this application. And that's how we can target the larger customer base. Of course, the -- we have a much stronger realization or a better margin or a pricing that we can have on the EB welded one because not many other manufacturers can do that and specifically not in India. So keeping all that in mind, when we look at this product as a future for Shivalik, this has -- in the next 2 to 3 years -- you asked about 2 financial years, we expect with the kind of developments that we have identified, the ones that we are already working on and the ones that we are targeting, we expect that this stand-alone unit, this new stand-alone unit could bring in revenues anywhere in the INR 250 crores to INR 350 crore range. Now again, some factors are there, some of these are assumptions on the basis of numbers from customers. Some of these when we expect something to happen in 2 years, can possibly even happen in 3 years. So let's say that instead of saying 2 years or 3 years, I think this is a revenue potential with our initial stage of investment over there. As we go deeper into these assemblies, there are other opportunities as well. At this point of time, of course, they are not fully identified or they're at very early stages, so I can't put numbers. But just talking about these bus bars and CCS, this is the kind of revenue we can look at from -- in a 2- to 3-year period. Let's say, 3 years is a safer...

Just a follow-up on this part only. I think directionally, since the time you've seen that ownership change within the company or you guys taking a larger share in terms of ownership. I think the plan going forward, if I'm not wrong, and you can elaborate a little more on that, is that every 2 to 3 years, you will have a new product. And so this is one, and I'm guessing that every 2 to 3 years, the direction seems to be that you'll identify new areas so that the TAM of the company increases substantially, right? That's the direction that which you guys are headed, if I'm not wrong.

Your understanding is absolutely correct. So we -- when this change happened, we were already mentally thinking in those directions before the change formally happened. But as soon as the change happened, yes, we identified and that very consciously, we took a step that rather than stepping into products which are 1 or 2 verticals, but have individually a very high TAM. Instead of doing that, we will maintain our ethos of smaller niche TAM kind of products, but add many more such verticals. And it all happened at a time when a lot of these kind of components were being imported or the entire devices were being imported and this movement and the shift of the government also pushing towards making these here. All of those things have sort of worked very well, and we have been analyzing quite a few interesting opportunities as a result of that. And as you can imagine, we have to be able to find 1 or 2 good ones, which meet all of our ethos and the way we work, we have to go through many more. So we have been in that process. It has been an exciting thing, of course. And we don't have any fixed things like this. We are just analyzing many opportunities. Now whichever falls into this place, we are very open to investing. We are very open to investing in very different types of different ways. It could be a partnership. It could be acquiring a certain technology or it could be a greenfield product like this one, but somehow related to our existing products. So we are open to all sorts of these things. Now if 3 or 4 opportunities need to be added in a year's time, we'll look at it like that. And the simple way that we have decided to go about with this is that we will turn this more and more into -- all of these areas will have its separate unrelated team members who are going to be taking care of these projects and growing them because in the past, of course, we've worked as a smaller, more promoter-driven company wherein things obviously happen one by one and probably was right for the time. But now we've developed separate teams for all of this. So the entire mindset of the company is to grow the existing business as well as to grow the business as a whole by getting these new opportunities in place.

Our next question will be from Kenneth Mendonca.

My first question was on India bimetals revenue. We've seen some flattening out over the last 2 years. So is there something in the domestic demand scenario that's leading to this?

You see from -- again, since we are the largest market -- we have the largest market share for the Indian market. And it's -- that market share is basically between just 5 or 6 large customers, 80% of that is just with 5 or 6 large customers. So it's actually very easy to know if -- what is going on. And what we see or what we analyze what is going on specifically in the switchgear business that we supply to, the flatness basically comes from -- is just less consumption. It's not growing. Consumption is not growing, even though -- even if you see the switchgear companies, not that we supply into all products, so it's not really relevant to us. But if you analyze and look at the MCBs alone, where Shivalik's growth is, the growth in India has generally been more on the flattish side or even if there has been growth, it's been not very encouraging. What feedback we get is that the real estate boom, which usually plays as a very major factor, has been very concentrated more in the high-end areas wherein you see a lot of stuff happening in the real estate boom, but it's not really translating too much into high-volume numbers because the property development or real estate development is happening in the lower volume and a high value or a luxury kind of a sector. And we can all see that to some extent, the lower category or the higher value or let's say, low-cost housing or mid-level cost housing, we've not seen much growth there. And the domestic market for thermostatic bimetal is very deeply connected to that cycle. Having said that, we also see that, that flat -- we need to find ways. We can't rely on the market to remain flat. And as a result, our bimetal business remains flat. So we have certain other strategies in place to give a boost to our thermostatic bimetal business by getting more export business. Now unfortunately, our first target market that we wanted to get additional volumes from was the U.S., which whole of last year became a kind of a slowdown for us, and we had to put on hold and our customers had to put on hold many development projects that were going on. As you can imagine, some of them have been restarted, but many of them, once that momentum goes, it takes a while for them to restart because a lot of the switchgear testing and switchgear validation, et cetera, is a very long drawn and costly process. So sometimes when an opportunity is missed, it takes a while for it to come back. Now with these changes in the U.S. now again and the tariffs looking in a different way, I think we should be able to target a couple of larger business opportunities. And what we have in mind is more related to high volume because our aim at this point is to get added business and fill up our capacity because we have a lot more capacity spare available right now. So there are certain customers who buy in very large bulk volumes and they rely as a result on more attractive pricing. So we are exploring those options of getting those bulk volume businesses, maybe by sacrificing 1% or 2% margin, but adding that capacity and getting that added revenue in bimetal will anyway overall be really good for our bimetal-related numbers. So we are working on strategy. We are not relying only on the Indian market. It has been -- we understand it has been flat. It's not happening because of any other reason or competition or something like that. So it has a very limited control or very limited things we can do about it. Our only thing that we can do is get a few of these high-volume businesses from overseas.

Sure. Another question was on -- you mentioned that there is confidence this year in terms of meeting -- I mean, shunt revenues from America, meeting our past or similar meeting those records, right? So just trying to understand, we also mentioned that there is a design phaseout happening at the same time with our clients. So whatever incremental decline in revenue you feel will be met by new product launches with the similar clients.

Yes. Could you -- sorry, could you just say that again? I missed the second part of your question.

So previously, we mentioned that there is a design phaseout happening with our biggest client there. So you mentioned that you have confidence in meeting our past peak revenues from U.S.A. So just trying to understand the -- has the decline bottomed out? And two, the incremental revenues, which will come from component sales would be more than enough to meet whatever targets we have?

Yes. So with our customers, not just this particular customer and most of our customers, we follow a forecast system of, we take certain numbers from them where they give us the best case scenario and then we sort of make them more moderate and more realistic sometimes. So if we look at the best case scenario requirements, yes, the revenue can be taken to those levels. If we see that, okay, maybe some unforeseen factors make it not the same as the previous past revenue. We have to also understand that the value addition in these products is nearly double of what it was when it was -- when we were doing -- supplying similar revenue in just strip form. So we feel very confident that even if those volumes that the customer is indicating are for some reason not met, let's say, we go by our not so optimistic scenario or we go by more on the pessimistic side, even with 50% growth in terms of revenue, just switching to those parts will add a bigger contribution to the bottom line. So even if in a bad case scenario, we don't meet those revenues that we have expectations of, we still would see that the contribution would be higher than what we had in strip form. So when it comes to that, it's still a very good place to be even in a worst-case scenario situation. And I think we have kind of indicated this in the last couple of quarters as well. It's just that obviously, these developments at times can go by a few months here and there. So that is what we expect. The interesting thing, though, is that let us say that 4 to 6 quarters, things reach those levels. By then, even at those peak levels back from '22, '23, which contributed to about 35%, 40% at one point almost of our total revenue. This time, going back to those numbers will still not cross a dangerous mark. It will still remain in a 17%, 18% maximum revenue level even after that. So we don't have -- we still are not dependent very highly. We were in a position 3 or 4 years ago when we had very high value or high volume of orders coming from this customer as -- and we, at some point, had too large a share. And that, of course, sort of left us vulnerable as well because when that went down, it started showing everything when the revenue started going down. So this time, we are in a much more balanced and a much safer position. So a few percent here and there or a few quantities here and there going up or down is not going to have an overall impact or a minimal impact, I would say.

Our next question will be from the line of Sukriti.

My first question is what explains the decline in gross margins this quarter?

Rajeev, I think, better...

I'm looking at it quarter-on-quarter, Rajeev. So is that not the correct way to look at it?

This must be quarter-to-quarter is simply because of product mix.

No, we still -- the quarter-to-quarter, we have improved by 329 bps as per the stand-alone result. So there is no decline in the gross margin. The gross margin earlier in quarter 4 '25 was 46%, which grew by 49%. So maybe...

Maybe she's looking at the consolidated because the revenue of contacts business has gone up. And the contacts business has a lower gross margin because of the precious metal-related raw material input. If I got it right, then...

Yes, I'm looking at the...

So the contacts revenue has grown more as a percentage as compared to the other products. So that's why it's probably showing on a consolidated basis.

Yes, yes. Okay. Okay. Makes sense. And just if you could go to Page 28 of your presentation, the screen you're showing where you show the volume numbers. Is there a typo here for Q4'25 volume?

No, this is not a typo. Actually, we used to give the volume excluding wastages. But you see in our registered business, even wastages has a significant recovery based on which I have decided to give absolute number, including wastages. That's why you cannot compare the last year figure, which has now changed and comparable to the current year figure.

Also, one more thing I'll add here, the direction that we are going in general, whether it's shunt or bimetals, but specifically, let's say, Shunt, we are going into a direction where there's a gray area in between the volume and the number because there are some very high value-added components, for example, they're really small in size. So when you see that the kgs as an output may go down in a certain business when it gets converted to parts because -- or let's say, a new business comes in, which is these small high value-add components and high value as well, not just high value add, but it may not show as much of a growth in terms of kgs alone. So we -- it's very difficult to put this out as a presentation because the customization and the difference between one customer to another and all of those can vary so much that there's no better way to explain that. I mean the only way we can do it is by talking about it.

Okay. Makes sense. And last question maybe for Rajeev again. If I'm looking at your full year numbers, receivables have gone up quite a bit, trade receivable days have gone up. So what product mix shift explains that?

No, this is not about product. This is about region. So we are exporting more. If you see the regional-wise, we have improved in Europe, and we have also improved in the Asian region outside India. In this case, what is happening, any credit terms is counted when you -- when they receive the material. So the transit timing that may be, in some cases, 15 days, 20 days, some cases, 45 days. That is somewhere adding for realization, which is still under 90 days.

And typically, what would the difference be for an India customer versus, let's say, a European or a North American customer?

So in India customer, the average realization days is somewhere in between 70 to 90 days, whereas in export cases, it varies from 30 to 90 days.

Sorry, India is...

70 to 90 days.

India is higher?

No. Realization, you were talking -- days. It is in between 70 to 75 days.

And export is 90 plus?

Yes, 90 plus.

Our next line of questions will be from the line of Raj Agarwal.

So I wanted to understand the bus bar business in a little bit more detail. Sir, as we -- our understanding is that it is replacing laser welding. And in the last few years, this Bajaj, TVS, Ather, they have all basically positioned their bikes downward towards sub-1 lakh entry SKUs. So as these OEMs run cost-down workshops, so will our premium EBW solution, which is a superior kind of welding, will this trend continue from laser welding to EBW welding?

That's an interesting question, and we also think of these -- when we talk before I get to the specific question, a good way to look at this is that if you see any of our products, starting with our first and core product and the oldest product that we have is thermostatic bimetal. Now nothing went into a more commodity-like or a more, I would say, cost-driven or a cutthroat cost-based competition as compared to an MCB. Now because not too many people or not too many suppliers can supply that thermostatic bimetal and the ones who can also is very difficult to revalidate and get another supplier. So even though prices for MCBs kept going down, we were able to always get our margins. In fact, over time, they only improved because the number of bimetal suppliers in the world actually reduced. So when it comes to EB welding, it's a very similar scenario. In fact, I would say EB welding is a step ahead. Now why others cannot do -- this is a bigger question, why others cannot do strip EB welding of this accuracy. It takes 5 or 6 years, in some cases, maybe longer to get that accuracy right. And again, when -- if you understand what is, let's say, what -- in India, the role of a CCS or a bus bar for a 2-wheeler EV, for example, let's take one specific example, is not just linked to its functional ability. It's also linked to safety issues. Now if you see in the past, in the last few years, a lot of people have not adopted or not gone towards 2-wheeler EVs because they think that there are safety issues of fire, et cetera. So at this point, as we speak, the manufacturers are very keen that anything could be done or anything should be done to ensure that. So our EB-welded bus bars are actually acting providing an extra layer of security. On top of that, what it does is also saves on certain materials. When we -- in bus bars, where we don't need, for example, high-value material like copper, we don't have to put copper there. And as a result, because the bus bar is a very large assembly, you can save a lot on that commodity cost as well. And copper, as we all know, has been becoming pricier. So even if our value addition is still saving or there's more savings just on the copper, our price -- there will be no reason for somebody to pay us for that process of welding. So there are a couple of factors here that will ensure that this kind of premium is continuously paid for the customer to get what they want. And it's not very easy for them to quickly switch to somebody else. So this barrier will always remain. Even if somebody decides to go full in today and says that, okay, let's get into this technology and get into it fully. And I'm not saying it will never happen. Maybe it happens that's competition is -- can always happen. It will take them some time. So we'll have enough time to look at this thing going down or margins not remaining sustainable. And joining this with -- or connecting this with my previous answer when we were talking about adding more product verticals, it's good to have then 20, 15, 20 in the future, more and more product verticals so that even if this kind of a scenario was to happen, we are fully prepared with other product verticals.

Got it, super helpful. Sir, since this is a customized solution, how many OEMs are we working with today? And are other OEMs are also looking -- or are we in talks with other OEMs as well? Are they demanding this solution?

So these developments actually, in some cases, happen with the OEMs. In some cases, it happens with the Tier 1 supplier. So we become the Tier 1 supplier. So it happens with -- so we are talking only with the OEMs. So for example, these 2-wheeler developments are mostly with 2 separate players, not with the OEMs, the automotive manufacturer directly. But the automotive manufacturers are fully involved in the design, development, audit of our plant all of those things because, again, coming to -- it's got to do with safety and functionality. So -- but there are certain applications where we have no role. We have no involvement with the final user, and those are more general products. So we are doing both types.

Got it. And sir, since this product also has basically application in 3-wheelers, 4-wheelers and also battery management, battery energy storage systems, do we have future ambitions to go into those products as well, taking the same solution?

Absolutely. One of the primary reasons of setting up the facility in Pune, which is being set up as we speak in a phase-wise manner with the Phase 1 almost complete. Part of the plan is to go into these other areas as well, where energy storage or nonautomotive current applications. We have to -- we don't wish to become an automotive component supplier. We don't wish to be too exposed to one industry. We want to consciously make efforts to be supplying to various different industries so that our exposure is not concentrated. So -- and of course, the opportunity is there and the same kind of accuracy is required in those applications as well. So interesting thing is some of those use EB welding as of now and some of them wish to convert to EB welding and some of them, we can go and market our products. And that is precisely -- which was the foundation stone for thinking about this Pune facility was exactly that because it started with the idea of setting up an R&D facility there first. And because we thought that a lot of the manpower and the high-tech -- the senior technical kind of people for those kind of -- in this kind of industry are more based in these 2 or 3 concentrated centers. And we were considering setting up our R&D center in one of those areas. And before we even set up our R&D center, we got product-related opportunities as a result. So once this R&D center is functioning, which is actually part of the Phase 1 that I mentioned, we expect that such assemblies and such opportunities in these other industries that you're mentioning will also keep coming up. So all of that is currently not a part of our revenue plan because we only take those things which are already materializing into development or sampling or maybe pilot lots, et cetera. We take into our revenue model. We have not taken a lot of these opportunities. And the -- once we start looking at these opportunities and which we already are, by the way, those numbers obviously add up really quickly. So what we have in mind is to the facility that we are creating in Pune, we are making it in such a way that very quickly capacity for such opportunities can be added.

Our next line of questions will be from the line of Dhaval Shah.

So fairly new to the company. Sir, my first question is regarding -- in the press release and you've spoken about the smart meter opportunity, how we are capitalizing on that and the entire how the relays are getting manufactured here and we are seeing a higher revenue. But on the other side, when we see the EMS companies, which are contract manufacturing the smart meters, they are facing a problem of reduction in revenue because on-ground installations has not been great in the last year. And currently, the smart meter story is not going well. So how do you respond to that? So are you seeing a very strong growth for the current year back of higher relay manufacturing or the installations have again started increasing?

I'll just quickly address this because I've already addressed this today once, we have always maintained that smart meters is something that we will not back our future or our growth story on the basis of smart meters alone because it is linked to many other factors, which are not in our control at all. Tomorrow, the government decides that, okay, we want to slow down in a particular region or we don't need to or we have other priorities. Nobody can say anything about that. Now I have always mentioned and I mentioned earlier today also that we see that this kind of a growth before it plateaus, assuming that this implementation does not go well, we still would continue to see in a very good scenario, maybe 6, 7 quarters or 6 quarter growth, maybe in a bad case scenario, 4 quarter growth, but at least in the next 1 to 2 financial years, we expect that growth -- our growth levels should remain the same on the backing of the relays being manufactured. Now of course, relays is not something that can be overnight manufactured. These capacities are built by somebody. These capacities are built by companies, and those are physically happening. Now what will need to happen before we plateau our growth, it will -- the implementation of smart meters will have to come down, we calculate it to less than half of what is planned. Now if it's less than half, even then for the next 2 years to reach that relay level for that less than half quantity, we still foresee decent growth or similar levels of growth. And then we plateau. And if that implementation goes up, then it's a different story. Either way, we are ready for it. But again, not -- smart meters is, if I was to put it in a very, very simple way, we consider any growth coming from smart meters good or bad or we consider it to be more of a bonus for us, and we don't want to rely or make our growth story, as I mentioned in the previous question also related to any one particular industry or one product type.

Understood. Got it. My second question is as a new investor coming in at these valuations, how should we look at growth of Shivalik over the next 3 to 5 period, both from a top line and a bottom line perspective? In the past, we've done fantastic. We've had a 35% plus 10-year PAT growth. which is very impressive. Going forward, how should we look at it?

To get back to those levels. And this time, we wanted to get back to those levels in a more structured manner, in a more sustainable manner, in a manner that is spread across industries, spread across customers so that we are not -- as I've been saying, we're not exposed to just one kind of -- when growth happens, it's so great and when it doesn't, it goes down drastically. So I would say that we've matured a lot more after that run-up of revenue because you can imagine that it's a much smaller company before that and then to switch from that smaller company mindset to thinking like a larger company, it does take some transformation time. So this time, we wanted our products to be spread across. We wanted to have continuous value add, we wanted to strategically get into products, something that may complement one product with another as opposed to, let's say, 5, 6, 7 or maybe longer than that. We worked as a company that was doing -- taking more ad hoc decisions that, okay, good opportunity comes, this works for us, it fits, we don't need to invest much, go for it. So now we've switched our way of thinking to a very different way. And I think that's probably been our biggest achievement in the last 1 year, 1.5 year or so, to be able to achieve that mindset because we feel that, that's the hardest thing to do, and that is absolutely on the right track. And the results of those -- a lot of those results are difficult to say which positive direction we could go in. So -- but if we were to put numbers to it, we want that our -- over the next 5-year period, our growth levels come back to those 30-plus kind of numbers and in a more short term, we expect or we want or we are trying or at least our targets internally are to remain in this -- on the lower side also upwards of 20% and closer to 30% if all goes well. And as of now, I think this last financial year, I'm very confident to say that we have built a foundation that can take us back to those levels. And that's what's required building that foundation. And that's what we feel that we have done successfully, and we've got the ball rolling to take us back into those levels.

We go to the next participant now. We have some time for some more questions. Our next participant asking questions will be from the line of Gokul Handa.

My question is on the working capital cycle. So I believe like historically, the working capital cycle has been elevated about 190, 200 days because of some reliance on imported raw materials. And you've mentioned that you -- going forward, you want to locally source these to reduce this inventory cycle. So I just want to understand where we are on that? And what kind of working capital or rather inventory days can we expect going forward on a sustainable manner?

So as we mentioned earlier also, we are working for some developments, which will give at least dependency from the domestic supplies. This time, this inventory level has gone up due to this Pune or the additional PCBA assembly business where we are consuming copper at a large. And second thing, if you see due to the geopolitical scenario, we always safeguarded ourselves in terms of supplies, which is where we decide we should go and at least secure whatever order size we have in hand, based on which we decide and accordingly procure the material, which somehow increase our inventory days as the year ended. So that is manageable, and that has no risk related to this inventory. But for the future, we are still in discussion, which is in a second stage of development where maybe very soon, we would be procuring more material from domestic market and keep our dependency from import.

Got it. And secondly, I wanted to understand, so our presentation states that our total capacity is to do a revenue of INR 1,300 crores, including the contact business, and we're at INR 570 crores right now. So is it correct to assume that going forward, there is no meaningful growth CapEx required to sort of -- as we see normalization in the revenue. Is it safe to say that there's no material growth CapEx required setting aside the bus bar business?

Yes. So there is no substantial CapEx is required, but still, as we mentioned earlier also, we need some maintenance CapEx along with some automation CapEx, which is in the range of INR 10 crores to INR 15 crores year-on-year. So we are not yet see any substantial amount which needs to be deployed for expansion. We have enough capacity in all 3 segments, and that will continue.

Our next participant asking a question will be from the line of Harshal Sheth.

So I just wanted to ask that if you could -- over the past couple of years, there have been like a mid-single-digit growth. And this year, on a consolidated basis, the company has done a 12% top line growth. So just wanted to understand like why -- why was the past 3 years, past couple of years, the growth was so muted. And right now, if you see like a big jump in the growth, so is it going to be sustainable at this level going forward?

Yes. I just mentioned that you see we were trying to fix a few things that required -- that were required to be done to be able to get to those levels again. One major factor that has sort of hidden some of the other areas that we have grown in has been one large customer of ours, which was -- which we had a major exposure to over 2 or 3 years, continuously went down, specifically in the last about 8 quarters or 6 quarters or so. The decline was very rapid. And that sort of overshadowed a lot of other new developments and new revenue, new business that we had. And that is why you would see even with that kind of a decline of a large customer like that, even with that, it sort of remained at a lower growth level or in some cases, some quarters flat, but some cases, low growth level. So now with that customer recovering and now not being our single most point of exposure and these other new businesses will also start showing up as a result because earlier they were just simply covering up that gap. And so we expect that not only sustainable, we expect this to be definitely at a very different level now from this year onwards to the next 3 or 4 years and a lot depends on what new products we get into after that. But yes, as of now, I think we -- as I mentioned, that we have absolutely built the foundation to take it back to this growth level.

Okay. Understood. And also, if you could just help me out with that. You said you were talking about just one large customer. So is it related -- like to what business is it related? Is it the bi-strip metals or the shunt resistors?

That was related to shunt resistors. There was a large spike in growth for certain quantities from that customer. Then eventually, a couple of factors led to its decline. There was not one single factor. There are factors related to first overinventorization then the market -- the U.S. market as a whole. Then after that, the change in design, some business going to other competitors of theirs. Then them coming up with a new design and going into these new components, which will help us increase business with them again. So it's been a good like 3, 3.5 years of this roller coaster ride with them.

So if you could just also point out how much concentration was it from this customer? Like if you could just give a number.

From its peak, it's come down from nearly 38%, 39%. it came down to about 13%, 14%. And now when it goes back to those levels, it will come back to 18%, 19% level at the most. Most likely, it should be less than that. But I'm saying even in the -- if the volumes do go up as expected, it could not -- it will not go beyond that number, maybe 16% to 18%.

Our next participant asking a question will be from the line of Nishita Shanklesha.

So most of my questions have been answered. I just had a clarification. So based on the peak revenue of INR 1,300 crores that we can do from the current asset base, is it safe to assume that our current utilization on a consolidated basis is at around 43% to 45%?

Yes. At an average, that would be the case. But of course, between the three major product verticals, it varies. In some of the verticals, it's easier for us to, at a very low cost, add capacity, incremental capacity. In some cases, we've already got all like the thermostatic bimetal, for example, we've already got all the added capacity. We don't need to add anything. So yes, it would be safe to say that even today, even without that incremental CapEx, we would be at an average, we are still around 60%. But theoretically, yes, your number is right, but actually, it would be 60% because very minimal incremental CapEx can be done to reach full capacity in case it's required.

Okay. And in FY '27, where can we see the utilization levels go?

See, again, it will obviously -- it can vary because of the product mix, which particular vertical grows faster than the others. Now I'll give you a practical example. In the last 1 -- almost 2 years, the contacts business grew faster than other businesses, even though that also supplies to the switchgear industry. But because we had a very small market share to begin with, our growth was more over there. And then the thermostatic bimetal, which also is supplying to the switchgear industry, the market share was already 90%. So that's why -- so it wasn't fully anticipated that, that will happen, but it did happen. So what happens in the next 2 years, it's difficult to say which product mix will exactly go in which direction. But I think even at that point, we should be at about maybe around 75% -- 70% to 75% of our capacity utilization, assuming we haven't done those incremental CapEx.

Okay. Okay. Understood. My next question is you mentioned that the target -- internal target is to reach upwards of 20% and closer to 30% growth. So do we see that growth in FY '27 as well?

Well, we've got all the ingredients in place. We've got all positive information from our major customers. And we've got everything that we need for it to happen. And then the rest, of course, depends on certain other variable factors. But yes, I would say that we are certainly in a position where it's possible.

Our next question will be from the line of Viraj Negandhi.

Perfect. So all my questions are answered. I just had one request that if you guys can do a plant visit to get a better understanding on what is happening on ground and get an understanding of the products that we have.

Sorry, I just missed your first part of your question. Can you just repeat that, please?

Yes. So all my questions are answered. I just have a request, you guys could arrange a plant visit to get an understanding about the products that we have and what is happening on ground. So that would be great.

Yes, yes. So I think if you can put in a request with Shankhini and we can see what best we can do and whatever can be worked out.

Thanks, Viraj. You can write to me directly on this, and we'll keep all participants and investors and stakeholders posted on when our next plant visit will be planned. So thanks for that answer, Sumer as well. We will take the last couple of questions now. Our next question will be from the line of Ansh Gupta.

So my first question is that it has been 30-plus months since the Metalor MoU, which was signed in November 2023. So we can see the contacts revenue grew like 54% in FY '26. So my question is that is the JV still on track scope down or moving to a licensing agreement? And how much of the 54% growth is the silver price pass-through versus the underlying volume?

At some point earlier today, I addressed this question, but I'll be happy to do it again. Roughly about half of this -- or I would say about not half, but 30%, 31% of this growth is actual product growth. And out of this 52%, nearly 21%, 22% or so is simply because of the precious metal jumping extremely high to high levels in the last 5 or 6 months of the financial year. Secondly, this is no longer a JV. It's a 100% subsidiary of Shivalik. And this used to be a JV until 2023. And at that time, the JV partner was exiting their overall -- the parent company business. And as a result, we had the opportunity to buy the equity of their equity in the business. And now it's a wholly owned subsidiary.

Okay. Understood, sir. And my second question would be one player in the bimetal segment went bankrupt in the Europe. So does that help us gain share in Europe?

Who -- which company are you talking about?

EMS bimetal, if I can name it.

EMS bimetal. So EMS is basically -- it's an American company, which now has -- the parent company is a European company. But the EMS as a separate division is very much functional and it's catering to the U.S. market. It's not gone bankrupt. I think maybe some other division of theirs or some other business of theirs may have had that issue, but the thermostatic bimetal -- what they have done, though, EMS, which is a competitor of ours. So EMS originally was a company which was a part of the Texas Instruments Group, then was taken over in consolidation by a German company. And so they are not -- they've not gone bankrupt that division, but they are moving their capacities and capabilities to certain other product types. So what we understand is that they have not been able to supply properly to some of their old marquee customers as a result of that. And that is where an opportunity for Shivalik arises. And what I was mentioning earlier, those are the kind of businesses for us to grab in order to really shoot up the thermostatic bimetal division of the business, which currently, as you can see, the other ones have gone through ups and downs of exciting phases, but bimetal has been a more consistent and a more -- so we need to do -- we need to grab those kind of business opportunities. So yes, partially, you're right that there is an opportunity there, but it's not because of bankruptcy, it's because of other technical reasons.

Thanks for your questions, and thanks, Sumer, for answering. I think if you have any more follow-ups, please feel free to write to us at Dickenson and the e-mail ID on the last slide of the investor deck or get in touch with me directly, and I'll be happy to arrange more interaction with the management and get your questions answered. So for today, I think I'll hand over now to Rajeev for closing remarks for today's earnings webinar. Over to you, Rajeev.

Thank you, Shankhini. Financial year '26 has reinforced that Shivalik is becoming a stronger quality business. We are moving up the value chain within critical applications with a clear focus on margin-led growth, component-led opportunities and value-added assemblies. As we enter FY '27, we will continue this strategy with discipline, deepen relationship across a stronger geographic customer base, increase wallet share with key customers and focus on converting growth into stronger cash generation. Thank you to everyone for participating today and for being part of Shivalik's journey as we enter the next chapter of growth. Wishing everyone all very pleasant evening. Thank you.

Thanks, Rajeev, and thanks, Sumer, and thanks to all our participants today. On behalf of Shivalik, it's a pleasure to have you for this hour. And on behalf of Dickenson, thank you for participating. Please take a few minutes to answer a short feedback survey that will be coming into your inbox shortly after this call. Thank you, everybody, and please have a very pleasant evening ahead. Cheers and good evening.

Thank you.