SKP Bearing Industries Limited (SKP) Q3 FY2026 Earnings Call Transcript & Summary

Ladies and gentlemen, on behalf of Kaptify Consulting Investor Relations team, I welcome you all to the Q3 and 9 Months FY '26 Post Earnings Conference Call of SKP Bearing Industries Limited. Today on the call, from the management team we have with us Mr. Shrinand Palshikar, Chairman and Managing Director, along with his management team. As a disclaimer, I would like to inform all of you that this call may contain forward-looking statements, which may involve risks and uncertainties. Also, a reminder that this call is being recorded. I would now request the management to brief us about the performance highlights for the period ended December 2025, the growth plan and vision for the coming year, post which we will open the floor for Q&A. Over to the management team.

Thank you, Vinay sir. A very good morning to one and all present here. I am Shripada Patil, CFO of SKP Bearing Industries Limited. We are gathered here for Q3 financial highlights. So a small brief on what happened in the previous quarter. So our stand-alone from quarter 2 to quarter 3 has increased substantially, as you can see in the figures. It's increased by 41%. Also, our EBITDA margins have also increased, slightly, 9.5%. And even on a consolidated measure, if we go to see India and France entity consolidation, that too, we see a substantial increase in the revenue of 38.9%. Next slide. A few operational highlights of what has happened in the roller plant. In the current plant, with the space constraint removed since the ball plant has shifted, we have started expansion in the roller plant itself. Some of the capacity has been added and utilization of the same has also been started, and further addition is on the way, which is in line with our targets of 200 tons per month. Also, we are focusing on our synergies, and our export-oriented focus has increased, which has started to show in terms of revenue. Also, there are many projects underway, which might come into revenue into next quarter and in the next financial year. Regarding the customer, we had undergone an initiative to balance out the portfolios to reduce the weightage of any one industry. So that balancing out strategy is working out well. And we are seeing our portfolio diversify as well as growth in the revenue because of this initiative. Also, in view of our France plant and new technology, new products are coming into play now, which has started generating revenue on small basis, which will give a substantial contribution in the coming year. And this ramp-up is going underway as expected. Next slide. Regarding the ball plant, as we have said earlier that capacity has been fully installed and now slowly utilization is coming into play. More and more customers have started coming in and they are starting off with small SOBs. So numbers are improving. Also our utilization, because of our flexible strategy with roller and ball, so we are having improvements for certain departments, and because of which all our lines are also functional and utilization is slowly on an increasing trend. With the improvement of our ball plant, we are having a good leverage on the international market, where global multinationals are coming to SKP and showing a positive response. Also in this financial year, ISO is achievable after 3 months. So that we have started the initiative. And next year, we will be eligible for automotive IATF certificate. So all that is planned in the next financial year. Regarding the France operation, we see a good progress in the France operation. Even though we are seeing a slight dip in this particular quarter, but if you see the 9 months, we are in a good progress. Our customers have ramped up, and it's still on an improving trend. Also, our strategy for aligning our operational and utilizing our skill is all underway. So stainless steel products are improving, scaling up operations is ongoing. Also customer engagement is better in all the plants. And one of the key wins is that we are looking -- our target of INR 100 crores is on, and we are looking forward to fulfilling it this year. And rest assured, with the Mother of All Deals coming into play, our France plant and India plants are both having a good traction ahead. Next, please. As I've explained earlier, you can see the utilization. Our roller plant capacity itself has slightly increased. And similarly, utilization has increased because of our customer demand. Even on the ball plant, our capacity is now installed, and that is utilization. The utilization percentage might look small, but since the capacity overall has increased, so I'd say it's a good figure. Next, please. This is a view of our international strategy. So last year if we see, our exports were 2% of the overall revenue. This year, our exports have increased to 5% of overall revenue. And we are looking to improve it further by the end of this financial year. Next, please. A small view of our manufacturing facilities. Our Plant 1, which we are using as R&D center for developing some of our specialized machines and trial and errors in technology. Plant 2, which is our head office as well. Here, we are doing specializations in rollers, such as needles, cylindricals and special products, which are the demand of our customers. And Plant 3, specifically for ball manufacturing. Next, please. And our France plant. France plant is more into precision of stainless steel balls, miniature balls. And if you go to see, there are special coated balls. And these sort of special products in the ball segment are being used in previously known as VGI. So we have taken over a 95-year-old French company, Valette & Gaurand Industries. And now it has become SKP France. So there, we are having a vast diverse portfolio. And even the customer segment over there is quite vast. So in India, if you see, we have more of automotive and technical, there we have more of pharma, cosmetics and all other industries. And in view, when we took over this acquisition, there were presence of over 400 assets in one room, such a diverse portfolio. So it is a good synergy and a complementary takeover for us, which is showing the results now. Some of our products. Needle rollers. These are going into axles and bearings, industrial machineries, pins that way. Next, please. Cylindrical rollers. Cylindrical rollers are more for heavy machinery, heavy loads. So these are going into, again, bearing gear applications. And these pins also -- cylindrical rollers also find their application in international market in machineries. So that's another new market which we're exploring. Next, please. Precision pins, they are going into gearboxes and anywhere where holding of 2 components is required. Next. Balls. Anything which moves, rotates at high speed requires balls. So our balls are going into many, many applications: water pumps, accelerators, et cetera. This is a photograph of some of our laboratory and instruments, high-end instruments available for testing at our facilities. And these enable us to reach international clients which have precision requirement. Next, please. Our way forward. As you must have seen, our previous strategies are coming into play, and now we are seeing a better improvement. Our way forward for the coming quarters and next financial year is improving the utilization of Zamar plant, that is our ball plant. So there, we are improving the utilization. Our France subsidiary has completed a 2-year milestone, and we are looking to turn green in the coming financial year. Also, our roller capacity is increasing as well as the utilization is increasing along with it. Because we are having customers over here, demand is good. Export acceleration is ongoing as per our vision. So our export right now is at 5%. We are focusing on improving it further. Also, in view of our international base, now SKP is looking to target international clients, clients with their plants in multiple continents. And that's the way we are going to go forward. And France plant is going to stabilize now, but we are looking to not just stabilize it, to make it a big driver in the growth of SKP. And let's see how our targets go. So as you see, we are looking to target this year INR 100 crores. And I'll open the forum now for question-and-answer session. Vinay sir and Mr. Palshikar, MD, please, over to you.

[Operator Instructions]

Until the question queue assembles, let me ask you a question. Considering the free trade agreements signed between India and Europe right now, how do you see it favorably playing out with us with our French acquisition? And do you think this will help in faster turnaround in France as well as absorption of technology and pushing manufacturing to India along? If you could guide the audience on that?

Yes, it's a good opportunity for SKP India as well as SKP France, because now it's -- we are already present in 2 segments, 2 continents. And this FTA, where we had little challenges, now it's getting over. Plus, on and above that, earlier when we were there as only in India, many European customers had got particular questions of just-in-time. So they need a delivery immediately, they see this as a challenge. So now being present in 2 continents, we can have consignment stocks in France and then export from there. It's a very good opportunity for SKP, both the entities now. So we can explore new opportunities. As it comes, we can encash.

We have our first question from the line of Pankit Shah.

Sir, I have a question regarding our roller plant, new plant, Plant 3. So how is the traction going for that plant? And I believe we had a couple of clients with whom we already discussed and agreed for commercial terms. So have any new customers started for that plant yet?

Currently, Plant 3 is basically of ball. So you're talking of ball plant, correct?

Yes, ball plant. Sorry.

No, no, no, it's okay. So ball, many customers discussion, their quality requirements. So it's benchmarking, giving samples, again, receiving feedback. This process is on currently. For some, the approval has come. For some, the quality audits, the processes are going on. So we are at different stages for each different client. Six months ago -- 3 months ago, the driver was a little ahead because the QCO implementation was going to be done very fastly. So that was the impression. So because of that particular activity being getting delayed from government, so people are now a little relaxed. So imports in full swing. So that is a little challenge to us. So that is why the utilization of Plant 3 is not going the way we planned it to, because we have already done all commercial settlement, everything, only now a question of utilization. But it's okay. We are focusing right now on meeting all the customer needs. Cost-wise, we are already meeting their requirements. So that is not a problem. But quality requirement and the system requirement has to be fulfilled. So that is the process is right now going on. Let us hope, we are focusing to generate the revenue actualization as fast as possible. That is our current focus. And we are -- all the capacity, everything is available.

Yes. So that is the reason. I mean, our plant is ready since last almost 1 year, right?

Something like 1 year, but yes.

Yes. So I mean, can we expect material dispatches for new clients maybe in this quarter or next quarter?

No, no, Dispatches, everything is okay. What we're talking of, a customer who is importing -- I'll give you an example, right? He's importing suppose...

Yes, import substitution customers.

He will not buy 50% or 80% of his requirement from SKP. He will buy only 5% or 10% till the time he sees, okay, what is the performance level. Because our products are high precision and performance oriented. So the people have to be 100% assured of the performance and quality requirement. So this is a slow process, but okay, it's going on right now.

And I would like to add on to sir's point. It's not that customers have not started. We have already started dispatches and in the ramp-up part. So usually, in our industry, ramping up process takes another 1 year. In the ramp-up process, people take small, small quantities. So it's the annual demand. I'll give an example. If the annual demand is 1 lakh, they will ramp up with 1,000 pieces every month. After a few months, then the ramp-up will start. So we are in the ramp-up stage for certain customers. Those dispatches have started. Some of them are 6 months down, some of them are 2 months down. That way multiple projects are on multiple stages.

Okay. So what you mean to say is the new clients, which we found for this new plant, they have already started buying in small quantities.

Correct.

Okay. Great. It is really great to know that. Okay. And sir, I also have a question for our French subsidiary. So how is the traction going there? I believe we were targeting for a breakeven maybe in very near future, maybe this year or by next year. So I mean, are we on track?

Yes. Very well.

Okay. And how is the demand? I mean, I believe the sales has -- for the quarter 1, our sales from French subsidiary was good. But in Q2 and Q3, the sales was a little less, right? So can you please let us know what was the reason for that?

It's fluctuations. Not one factor, many factors were there. So because of that, the fluctuations were there. Last year, we had many customers with smaller volumes. So these smaller volumes, the way Shripada explained, these are like testing trials, similar type of fluctuations were there. Now all these customers have now allocated capacities, allocated volumes to us. So there is a big turnaround. So these situations will change in time to come.

Okay. And sir, in your presentation, you have mentioned that there is one new customer -- I mean, I believe 1 INR 100 crore customer which we have signed. So can you please let us know...

It's a revenue target.

I think there is a mistake. That's a revenue target which we are keeping for our financial year. Our customers are being added, but our consolidated target as an entity for SKP top line is INR 100 crores for this financial year-end.

We are targeting.

We'll take the next question from the line of Vimal Modi.

Am I audible?

Yes.

My name is Vimal Modi. I'm from Bombay. I'm first time attending this meeting. I'm a shareholder actually since maybe 2 or 3 years. Let me first congratulate you, sir, because you started quarterly reporting. This is very, very important for investors like me who invest in SME. Transparency, it gives a lot of confidence in the company. About the impact of trade deals, you have already highlighted something. I would like to know -- I have a few queries, 4 or 5 queries, basic queries. I would like to know the total number of employees in our Indian operations as well as France operation. If you can just tell me those numbers.

In India operations, we are around 200 plus. And in France, when we took over, it was 52 employees, now we are around 31 employees.

52 to 31, we have reduced. What could be the reason for that, sir?

Simple. Because we didn't -- the revenue, when we took over, it was around EUR 8 million. We didn't have the customers return. So the customers -- some of the customers are taking more time than expected. So it's very important that you need to balance your revenue versus your employee strength, because the employee cost is very high in Europe. So that's the way, you balance it out. It's very important to be efficient. And this is what we believe in, to remain efficient and profitable. It's very important. So this is a process which has taken more time, because we had certain economic dismissal, all activities, customers coming back. To meet customers, Europe is not that easy, because even if the customer sees you exist, even if the customer sees that you are doing very good, but they want sustenance. So it's just not you are present, it's how sustainable you are. So sustainability also is very important for the European customers.

So are we able to build the confidence in the customers' mindset now?

Yes.

So we can -- I mean, those orders which are pilot orders, now they have started materializing in a larger quantity? And our quality is up to the expectation, right, sir?

Yes. We are the market leader.

I see. In France?

Globally.

With a turnover of just INR 45 crores, we are market leaders?

We are a 95-year-old company in France.

Our turnover is just INR 45 crores as per the report.

No, no. It's 95-year-old, you just see the presentation, it will...

Not the old. I'm talking about the turnover, the top line.

Sorry?

Top line is just INR 45 crores as per the report.

Vimal sir, here we are comparing quality. So if you check the quality standard of our product, we are one of the top companies in the world who are giving this sort of quality to international clients. Now regarding the turnover and transition and leadership, that's a different [ topic ], which we can work out and study the market, and then we can come back with that. But as for our quality, it's what the customers are requiring and that quality and, usually in France, European markets for, customers' sake, since you are a new entity, you wait for 1 year, you check if you're profitable, and then we'll come back to you.

Yes, yes, that's not a problem. Madam, I'm quite excited. This French company we took over, such a huge, I mean, brand and quality of assets at a very, very dirt cheap price. Sir, that subsidiary made a loss of INR 5.81 crores. So I just wanted to understand like which are the major points which resulted in such a loss, like what kind of expenses or why there was such a huge loss? Have we booked any onetime expenses? That was not visible from the results which we have declared.

Usually, I have -- just now also I said, economic dismissal. So economic dismissal is a cost. It's a cost of when some employees are reduced, you need to pay them. So this is a big cost. And these are onetime costs. So when you reduce from 52 to 31, you paid something to these employees. So these are the costs which are the onetime costs. If you must have observed our previous earnings calls also, we have mentioned the same. So this is now we are at the threshold level. Now it's just enough people to run the company with the current volumes. If we have larger volumes, probably we'll have to add now to the manpower. This is already at the threshold levels.

Are we doing any kind of, I mean, automation there, fresh automation, so that we don't need more number of people? They are costly over there.

It's one of the highest automation levels already.

Okay. So sir, as you said, this INR 5.81 crores loss, it won't be now there in the coming quarter from French subsidiary, right?

See, it's very important. See, you need to understand the models of European and other continents. I will not say only India, ASEAN and other continents. The compliance cost in Europe is very high. The compliance cost is to meet the requirements, the social systems. These are all systems, the cost is something, okay? The product quality or product value also is different. But the compliance cost, if the same product is manufactured in other locations, there will be a cost difference. Okay? Now you need to have a very high productivity level to meet, to offset this particular. We are already at very good productivity levels in France. So I'm not afraid of that particular parameter. But the cost itself is a little higher. So you need to have a fixed cost structure for France, so which is going to be there. Now you have a higher utilization, automatically, it gets amortized. So that's it. So we -- our focusing is to better volumes, higher sales growth. Automatically, it will be good.

But as you said, there is quite a -- I mean, a large portion of this INR 5.81 crores is a onetime. So I mean, naturally, it won't come back, right, a portion of it?

It's not exactly like that. There are many costs which are there, are going to be there. Like rental is going to be there, like energy costs are going to be there. There are some which are fixed cost, that is going to be there. Some costs...

Particularly the compensation paid to employees?

Automatically come down. Usual industry systems.

Sir, at the end of September quarter, we had about INR 17 crores worth of inventory. Are we able to liquidate the same in current quarter?

You just analyze the current...

I mean, inventory figures are not available, not because...

It's available. You need to analyze it properly. It's available.

So what is the present inventory level, sir?

In number of days?

Yes. No, in terms of value?

We'll look at the figures and we'll reply by e-mail. Can you just drop us the e-mail of your...

No, I won't drop off. You please make a note of my requirement and you just e-mail me. My e-mail ID is [email protected].

Okay, sir.

One more point, sir, which has upset me. This Kaptify had informed NSE on 16th of February that the management is available for physical meeting in Mumbai. I'm from Mumbai, okay? But it was the same date, on 16th morning. I'm not supposed to read each and every announcement on NSE every day. We should have planned it well in advance, actually. They should have informed -- see, if we had planned in advance, they should have informed us well in advance. So I mean, like this upsets me...

Vimal-ji, the announcement was made on the exchange at least 4, 5 days before.

No, it is a letter dated 16th. [Foreign Language].

No, no. One minute, sir. That is a mistake on the part of the company, whereby they declared the con call invitation and by mistake put the covering letter of the 16th meeting. Then the con call invitation was resubmitted to the exchange with the correct covering letter. The 16th meeting letter intimation was given 5 days before and was also sent on e-mail and WhatsApp to all the investors. If you see the intimation on 16th, the second page of that letter is the con call invitation. So there was an error on the part of the company, and they resubmitted the invitation to the exchange.

Thanks for clarification. Sir, actually, I'm trying to come that side. I had called the company also 1 year, maybe 1.5 years back that I wanted to see the facilities of our company to get more confidence and increase my investment. So I was not getting a proper response.

No problem, Vimal -- ji. We'll have our team connect with you on this, and we'll help you out on this front.

My mobile number is 93...

No, no, sir. Don't put it on the call, because we have it in the...

Sorry, you have it no? See, whenever such kind of meetings are there, if you make it a point to e-mail, because we have very less number of shareholders. And e-mail is zero cost. So why not to e-mail?

We'll take the details from you, sir, offline.

We'll take the next question from chat. It is from V.I. What kind of exposure we have towards defense and aerospace sector at the moment and planned for next 2, 3 years?

We are already present in both these sectors. So defense and aerospace, we are already present. Now these sectors are very initial sectors. We cannot disclose you the volumes and all, but we are supporting these 2, both the sectors, for many years. For aerospace, also for advanced engineering, we are focusing certain new technologies where they require certain very high precision requirement. So we are already working with the OEMs to develop the products.

Their second question is, would you like to give any guidance at consolidated level for FY '27 and FY '28?

It's very difficult to give any figures, okay? Because growth is -- very good growth is planned. That's what we can commit at this stage. Because these are the customers, what we are focusing to bring back in '27 and '28, especially for France entity, because the France entity at one point of time was something -- doing something like EUR 16 million. And our target is to reach to that level with the same customers to come back and plus add new customers where, because of the duty and now FTA coming in place, we can encash that. So these 2 factors, we are right now focusing.

We'll take the next question from the line of [ Pratham Sethia ].

[Foreign Language]

No problem.

No, sir, this con call is a public call. If you're going to ask in Hindi, it will...

Okay. Modi-ji has given some -- many advice to you, please.

No. Problem is the transcription. See, we will not able to transcript it.

I understand. I understand everything. Okay. Okay, sir. Sir, post the acquisition of the France company, SKP is maintaining the profit at the -- from the Indian operation, but failed to generate the profit from the France operation. And you have mentioned the reason for the not making the profit, the low level of utilization plus the onetime cost in the quarter 3. The more interesting is that from June, September and December, all quarters, the loss amount is increasing. In the last quarter, it is INR 5.33 crore. So when the France business or France operation will start positive contribution?

Very soon.

Because you said that there was a low level of utilization and the company is 95 years.

Pratham, I'll just explain you. We did acquisition in February '24, okay? All European customers, majority, their needs, their requirement for the next year usually, last quarter, they start discussing and settle, okay? So we had already missed the bus for '24 in this because we did the acquisition, many customers did a legal representation. They want a registration, many procedures, due diligence like that. So '24 was a very, very difficult period for us to do a revenue target of our expectations. All the customers which were there present for '23 should come back to us in '24. That was our expectation. But that was not the case with many customers. '25 was better compared to '24, but then we have many costs, which are like we plan to do, because of that, all the issues. In '25, we have to win back all the -- convince customers, see, come visit us, fulfill their needs, quality needs, infrastructure needs, investment. So all these things we have done in '25 for many customers. Now all these customers have placed faith in us, but they are not still put their faith 100% was. They are better compared to the -- where it was 0 in '24; '25, it was some level. '26, it is much better levels. Now to reach to their highest level, it will take maybe 1 more year, maybe 2 years. But then it's okay. Now the customers which were present in 2010 to 2020, or '23, now these customers are focused. Their requirements, quality needs all identified, we're discussing with them. Continuously we're discussing. We are not -- we have also given them all the options that we can manufacture with India raw material, with other make raw materials, manufacture in France in your presence, provide to you just-in-time solutions. So these customers are like puzzled right now, that how you can provide the products which are competitive to India and China sitting in France. So we have given them that these are the options, and how do we meet this particular requirement sitting in France? So these are now opportunities being explored with all these customers. And that's why I'm saying we have a huge opportunity -- and some customers which are still observing because they want a sustenance, each of our major customers do a financial audit. Now financial audit means if it is profitable or nonprofitable. If the nonprofitable are making losses, they will immediately question how are you going to recover these things? And these all activities with major clients are in process. These are big clients, not small clients. Big, big clients and global presence. Many entity is globally present. So they analyze. So this is the sustenance part. So this portion is right now shaping. Once we are on a turnaround, and which I'm confident very soon, it will be, and then you will see the revenue growth, everything.

Sir, I would like to add on to a point. Pratham, sir, I'd just like to add on sir's point. Some of you might be looking at the consolidated statement together. You must have seen that the revenue of operations from previous quarter to this quarter has increased, despite having a 15-day holiday in December because Christmas holidays are a big festival in France and European countries, because of which the plant is shut down. So despite having holidays, we are having the improved turnaround. And if you check on the employee benefit cost, so we had a few of our long-term employees retiring this quarter. So when the employees retire, we have to have a onetime cost, which is to be given as per the European regulation rules. So these are the onetime costs which came into place. So you must see the figure, the substantial part of quarter expense is because of the onetime employee cost, which you can see in the figures in the consolidated financial results.

Okay. So whatever the Palshikar sir said, that he was trying to suggest that the company France business is trying to attract the new customer, and when the new customers come, they do the due diligence, technical as well as the financial, okay, that's fine. But what about the existing, when we take over any company, there must be some relation with some customers, and they are supplying the goods, the bearings or the products -- finished products to the someone. That client remains with the old company. So that business should be continued. And when -- do we have -- when we take over the company, was it profitable or was it incurring loss and we bought out the loss-making unit and we tried to turn around that company? What is the status, sir?

Yes, the company was making losses and the previous management was not interested in running it because they had no expertise in this type of it. So that was the reason it was under insolvency. We were confident -- see, it's very simple. The customers which were there in '23, the value -- the business value was around EUR 8 million, around EUR 8 million to EUR 8.5 million. Business value, the revenue was EUR 8 million to EUR 8.5 million in '23. Please mind, '23. '24, you must have seen our figures went down drastically. Many of these customers, till 31 of January, the invoice is there. On the 1st of February, the invoice stopped, because of the change of legal entity. We have tried to explain to all these customers that it's just change of legal entity from VG to SKP. No change, no foreign change, no man, no material, no method. Everything is the same. So when you have everything the same, why you are like -- they say it's legal. So legality, you need to have a financial audit, quality audits, all the due diligence of the customers. Now these are big customers. Now they took a lot of time a lot of time. Lot of time. You can imagine a customer which is there from day 1 for certain products, the validation is still on. So it's like that. They were there on 31 of January. So their validation is still on. Now when it's Indian company, the expectations also are different. They want a better quality, they want lesser cost. Okay. That's okay. It's a customer expectation. We need to meet their requirements. So it's a challenge. Of course, it's a challenge, big challenge. But I'm very confident that dream is very, very close.

One more point I would like to add on. See, the clients which we are working from France are all international clients. So we are dealing with OEMs who are having multiple plants in multiple countries and continents. And we, as SKP France, before previously known as VGI, one of global suppliers. So when these sort of entity change comes in, it is a standard procedure in OEMs and it is a regulatory requirement, which we were not aware, it is a regulatory requirement for these companies to do an entire revalidation. And these sort of things take almost 1 year, 1.5 year of turnaround. So which is why sir is explaining that this activity itself takes a long time, because we are dealing with big customers who are international, who are in itself an international OEM.

So can we understand that now that procedure is over and now few customers have been acquired and there is some concrete order book or something like that, because sir is mentioning that he is very confident about the turnaround. But every confidence must have some basis of the confidence. Say, are we impaneled with the new customer or we got any confirmed order? Or what is the status? What are the basis of that confidence? Because when we acquired that company, at that time also, you must have been confident about the business.

Pratham-ji, you answered your own question. I cannot commit this -- I cannot say something which without any proper data. All data is there. I cannot share in public domain.

That's fine. That's fine, sir.

Okay. We have a confirmed order book, full requirement. Even customer very clearly said that, okay, you improve performance, we will increase it to the next level also. So these are the confidence we have. We're also discussing with the many customers, which were not -- were lost last many years back also, we are discussing and they have started talking on. So it's not that easy, but okay. So it's a very bright future for France. There's no looking back now.

So my last question is related to the Indian business operation. See, are we doing any -- only job work? Or are we selling the finished product in SKP name? Or are we in -- our business model is B2B or B2C?

There is no jobbing. There's nothing like that. We sell product directly to our customers, OEM, Tier 1, Tier 2 like that.

B2B, sir. B2B.

B2B. So we are supplying the product to either SKF, FAG, Timken, or like that player only?

Correct.

We'll take the next question from the line of Rudraksh Raheja.

Yes. Is my voice audible?

Yes, good.

Sir, some questions on the France entity itself. You said that in Q4, there's a lot of clarity like how much the business you will get for the next year. So is it the nature of the business like by Q1 of the next year, you will have a decent clarity on how much France will be contributing for the whole year?

It is like that. Usually previous year, Q3 and Q4, the customers will start finalizing their volumes, their needs for future, okay, and how much they do want to do allocated to their suppliers. This is a common strategy adopted by most European customers. Now there could be some seasonal changes, plus or minus, okay? But then more or less, this is the strategy. So we have a very clear visibility for the financial -- because there is calendar year. So for '26, we have clarify as to, okay, where do we stand. Okay? We could have more additions, but usually no substraction. I hope I'm clear.

Yes. So since we are already done with Q3 and halfway Q4, sir, what kind of traction are we getting for calendar year '26, as you said?

That's why I explained that this is our focus in '26 calendar year, we will be green. That's very clear.

Understood. That's good to hear. And sir, you said it could take at least 1 year or maybe 1, 2 years and you're all -- we are fine with that, on ramping up the France business. When you say 2 years, will we achieve the EUR 16 million levels in 2 years? Is that what you meant?

No, no. It's not that easy. It's not that easy. See, you have global challenges. Now you have all these customers, majority of that is lost to very cheap imports. When they say cheap imports, manufacturing in a country where high compliance is there, so high compliance cost is there. You still need to reach a very high productivity and meet the cost requirement because these are the customers with very high volumes, very, very high volumes. So they are very cost-conscious. So to reach to that particular level, we may take a little more time. I'm not sure about that time line. But our focus is that. You understand? There are 2 things. One is you give up, and one is you focus and you try to deliver the best possible. So this is the drive. Our focus is to beat -- achieve imports by manufacturing in France only.

Got it, sir. And sir, how is the business, like do we onboard a customer and eventually they give you more orders, like we increase the wallet share with them? Or whenever you onboard a customer, you get a very large order? So which one of is it?

Usually, it is -- as I and Shripada already explained, usually it is on initial small volumes. Then the confidence increases, then a larger volume and a larger volume. How do you -- the customer tests you. They give you higher volumes, all of a sudden, they will reduce your volumes. All of a sudden -- it's the usual systems. They will test you, the quality, they will check how you perform, is it just-in-time, like that? How do you perform? And then it's confidence back.

So sir, is it possible to disclose like when we acquired the France business, how many customers did we have? And what's the status as of now?

I already explained to you that value-wise, we had around EUR 8 million just before, EUR 8 million to EUR 8.5 million, before we did acquisition. In '23, there was something like this. When we did acquisition, post acquisition, our revenue was just 25%, something like that, or even less probably. So you can imagine the number of customers lost. So these customers are big customers, so volume-wise, their volumes are huge. These customers are still discussing as on date with us for product validation, new generation requirement. And we are discussing with them, pushing them, welcome them to please visit us. You see the things what we are doing. It takes time, but it's okay. It's going on. This process is on. So our target first is to reach to the post-acquisition our level. After that, we have our target -- next target of reach to the 2010 levels when it was something like EUR 15 million, EUR 16 million.

Sir, value part, I understand, EUR 8 million to -- follow us there. But in terms of number of customers, like you said, now we are already discussing with those customers. I'm assuming, even if you crack them, the order...

[ We cannot give ] exactly number of customers in public domain, Rudraksh. Is that okay with you?

All right, sir. I'll just pivot to the stand-alone business, sir. Quarter 3, the gross margins have taken a hit. Could you explain why is that the case?

See, it could be little product shifts here or there. But there is nothing which is a model change or nothing like that. Everything is okay. Everything is the same. Where it is, that could be because of some product something, it could be a little shift.

Sir, actually, it's not that little since in quarter 1 and 2, we did 70% plus, and it's 58% this quarter. So 15% is a little substantial. So just wanted to get a better sense.

Yes. It could be some items, which could be of low value additions we could have added. Because of that, there could be a little shift. That is why the revenue increase is higher.

Understood, sir. And sir, sustainable gross margins and EBITDA margins for stand-alone business. I understand France will -- we are still working on all of that. But for stand-alone business, what could be the sustainable levels?

This is more or less going to be sustained, more or less, this is sustainable. There's no issue for that. Because our manufacturing activities, our cost, everything is the same. So there is no change going to be there.

Sir, I would need a number on that part, because as I explained, the quarter volatility is there, so I can't put a finger on. So could you just give me a number?

You have to be -- you please send an e-mail, specific e-mail, asking for specific information. We'll reply to it.

Got it, sir. Sir, last question, on the QCO part. Since you said it's delayed, so what's going to be our strategy to ramp up the plant that is having a [ loss in ]?

See, QCO is government-driven. So it is -- we cannot be dependent on something which is not in our hand. Our strategy is very strict. If that would have implemented, it would have been a big boost, something like that. If we are allowed -- not allowed to import, immediately you need to find an alternative. Now this particular thing is not there with the big importers. So it's very obvious that they are taking their own time. We are not leaving our efforts or less efforts like that. So we are focusing on all these customers, okay, to get back to them, focus on them, okay? So we provided -- and they also know that, okay, it is delayed. It is not canceled. It could be implemented anytime. In that case, they don't have option. So it's -- they are also working jointly with us to -- that's why, as we have already explained earlier, these trials, the product validation, this thing is going on. So this is going on. But it's very simple. When you are under a pressure and when you're under no pressure, the time line differs with the customers, you understand? But there is no priority, and when it becomes a priority. So these two things are there.

Sir, at 23%, are we breaking even on this plant, the ball pant?

That's okay. Breakeven is not a problem.

We'll take the next question from the chat, which is from [ Charsip Malo ]. Sir, what is our volume and realization for Q3 FY '26?

Well, it's the same question. I think it's better to ask for -- e-mail-specific question because it's pure numbers, what they're asking. So let an e-mail to be sent to the company, so we will reply.

Okay, sir. Sir, since there is no further questions, would you like to give any closing comments?

Madam, I have raised 2 questions in the chat box, please. You want me to read out?

Sure, Vimal-ji, it will be better if you ask the question.

Actually, I forgot to -- this was in my list. I wanted to know the current local order book as well as the export order book. Point number one. And point number two is IATF 16949 certification was expired on 2nd December '23. So are we able to renew it? Two questions. Current local order book, current export order book and IATF 16949 certification. Why -- I mean, have you renewed or are we able to renew it or any hurdles are there?

Sir, there is no hurdle in the IATF certification. It's a regular procedure. We are an IATF certified company since past 5 to 7 years. And as our regular procedure, we have renewed the certificate. It's just not...

It is renewed already. I couldn't find anywhere this information.

It's not updated in the public domain because it's a very regular activity. And regarding the order book percentage, we can say that the percentage of export, as we've mentioned in the call, it is 5% of the overall revenue was export. So we are expecting that 5% to increase further by 1%, 2% this quarter. But besides that, I cannot disclose any order book for the entire financial year -- for the next financial year.

All the companies are doing. Madam, I'm not asking any confidential information.

That's a call which we have to take with the Board, which we will consider your suggestion.

And sir, some of the...

I would like to add one thing. We do not have exactly as customer book. This customer order book is a closed order book. We have open order book with the customers. There's a difference between the order book, what we are talking. This order book are the closed order book. That means it's specific orders. We have the open orders with customers. So it's open orders and the monthly schedules. So this is a system we are following. So that is why when you are asking this particular question, is what is your order book, because we get puzzled. Because our order books are very large, very large in value, very large, but we get monthly schedules. So we get monthly schedules. That is what is important for us, because order book could be very big. But we have our monthly schedules. As per that, we also supply. So there is no...

Okay, sir. I mean rate contracts you're talking about, I think, right? Rate contracts?

Usually, it's automotive, all major industries now, when you have a specific supplier, dedicated supplier, your SOB is fixed, number one. This SOB could be 100% also and could be 50% also, could be 75%, depending on customer strategies, okay? Number one. Number two, we have open order. So these open orders would be of very large volumes, very large values. But that is not important to us. What is most important to us, how much every monthly schedules we get. Because this -- our SOB is fixed, monthly schedule is fixed, that way, okay?

Yes, yes. Sir, that's very nice. Sir, one of the -- some of the investors you say, do you send us e-mail and you will reply. So I will be missing those replies. So can you ensure that -- those were my questions also, but I did not raise. So will I get those information?

See, what is we can disclose, we will definitely let you know.

No, whatever queries are answered, which you are deferring and requesting e-mails, I would like to know the answers.

No, no. See, very simple. Whatever exact figures is asked, someone is asking, what is...

Sir, I think the point that he's trying to make is can he get answers to the other questions, that you're also replying to others?

Because you're deferring the answers by requesting for e-mails. That is little upsetting. But anyways, I mean, you may be right, it's a different issue. But being I'm a large investor, sir, let me tell you. I wanted to increase further quantity. But I got -- I lost confidence due to the lower performance. Now since you held the -- you declared the quarterly results, I'm back to the seat actually now for investing more. So for me, it is very, very important to know the whole thing.

We'll take one question from the chat, from Mr. Anil Kumar Agarwal. Reasons for the increase in expenses in consolidated P&L, employee benefit expenses?

Correct.

So what was the reason to drive up the employee benefit expenses?

I think we've answered this question. The employees which have retired after their tenure is over. So that's a onetime cost.

That is one. And secondly, once in a year like what we have in Diwali time, we have a bonus and all, right? So similar thing is there in Christmas and all, is there Diwali. It's like that. So you have additional cost of salaries for the December. That is why -- and we are reporting now quarter-to-quarter. So it's -- we're very transparent. We are very open. So whatever is there, it is shown. Now quarter -- that particular quarter, the last quarter, Q4 for the calendar year, you have all the bonus, you also have the employee costs which are retiring, plus their benefits of retirement. So that is why the onetime cost is higher for -- sorry, for Q3 for our financial year.

Sure. We'll take the next question from [ Amaresh Kumar ].

Sir, I'm new to the company, so forgive me for asking very simple questions. Sir, this French acquisition you have done, is it for acquiring some new technology or for acquiring the customers, sir? Because I can see that you are manufacturing balls and rollers, they are also into a similar kind of business. Or is it that they also manufacture tapered roller bearings, tapered rollers and also outer or inner? Sir, something like that, if you can give us some idea?

No. This company, the acquisition was with multiple thought processes. One thought process was the business, overall business in European continent. So you need to have a foothold in European continent, number one. Number two, you need to add the customers which are in multiple continents with these customers. You present them with 2 sites of manufacturing, one in India and one in Europe. So these customers, which -- who are not our customers, could be bringing to both India as well as to France. Second. Third, the technology. The technology, which is available over there, many technology, which is not available in India. So this is a technological transfer. Similarly, being Indian, I am very proud to say that it's not like that we are very down. So there are -- we have certain advantages which, over a period of time, we have gained. So we also transfer our technology to them. Number four, the raw material, the processing which we do in India, we can export to them, and we can reduce the cost over there. Number five, the toolings and all. What we have the proficiency in manufacturing, which we have developed over a period of time in India, we can have a cheaper cost over there of manufacturing. Number six, number of assets, what we acquired when doing the French, huge. It's huge, huge, huge. It's not small. It's huge. And these particular assets to acquire is not that easy also. Number seven, when we did acquisition, before SKP, there were 8 or 9 bidders, all of them want to break the company and take away everything. We were the only company to run the company because we do not believe in breaking. We believe in building. Number eight, when we did the acquisitions, our focus was very clear as to the customers, who we are presenting SKP as a global manufacturer with a site in India, with a backup from India and presence over there in their front. All the customers should stay with us. So okay, this particular strategy, a little strategy, has not exactly given us the fruits, but it's okay. We are confident these customers, because they are still watching us, they are still in touch with us, these customers will very soon will come back. And then we have a different situation. I hope I have very clarified about our French entity acquisition, what was strategy and what is our future.

Got it, sir. So my next question, in our stand-alone business, do we start our process from heat treatment? Or is it in terms of the grinding that we do for balls and rollers?

We are end-to-end -- we are the end-to-end manufacturer. We do everything. Probably in India, we are the only company which is totally end-to-end, which have dedicated vendors to even supply raw material to us as per our specifications. So please understand we are the only company in India also, probably very few companies globally, which are end-to-end.

So you take the wire rods, do the cold heading, you do the rough grinding, you do the heat treatment...

[indiscernible] also to do wire processing. Please understand.

We'll take the last question from the day from Pankit Shah.

Yes. Sir, I have a question regarding our roller plant. I believe we were doing expansion and we were installing new machines for rollers, right? So have we commissioned these new machines and have we started commercial supply from new machines? Or where are exactly -- where do we stand exactly?

Pankit, it's like this. It's piecemeal additions. We are at supposed level of x. So we do not become 2x overnight. In our case, it's not like that. So we have piecemeal additions of each steps. So we have a bottleneck of some particular, so we established manufacturing capacities, and those getting established, put the operational [ tech ]. So we are adding to every step. Some capacities are added. That is why you must have seen over 1 year back, maybe 2 years back, the capacities and the current capacities level, okay? That is why you have the revenue growth also. We are adding continuously. So some things were going to be added in this particular quarter, something is going to be added in next quarter. Everything continuously addition. We have a good booking. We have a good customer demand. There is no problem. We have a very good export potential. Very, very good export potential. And we are just focusing right now because we don't want to have anything -- you eat something which you cannot chew. We don't want to do this particular thing. We believe let it go slow, but it should be a steady and it should be very long term.

Okay. It's great to know, sir. Because I believe we were already utilizing more than 90% of our plant, right? So that is the reason I wanted to know.

You must have seen our figures to 2 years back and probably our figures now. You will see there is a difference. And actually our utilization level is the same.

Thank you. Thank you to all the participants and management for joining on the call. This brings us to the end of today's conference call. Thank you so much.

Thank you, everyone.