Thaai Casting Limited (TCL) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Thaai Casting Limited H2 and FY '25 Earnings Conference Call, hosted by AKMIL Strategic Advisors. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Ms. Shreya Girish from AKMIL Strategic Advisors. Thank you, and over to you Ms. Girish.

Good afternoon, and thank you. On behalf of AKMIL Strategic Advisors, I welcome you all to the conference call of Thaai Casting Limited. From the management side, we have with us Mr. Anandan, Chairman and Managing Director; Ms. Shevaani, the Whole-Time Director; and Mr. Ramakrishnan, the Whole-Time Director. Shevaani mam, I hand over the call to you now.

Hi, everyone. Good afternoon, and thank you all for joining us today. I'm really pleased to walk you through the latest update from Thaai Casting Limited, including an overview of our company, some recent milestones and our financial performance for H2 FY '25 and FY '26. We start with briefly introducing who we are and what we stand for as a company. So let me brief about the company. Thaai Casting Limited established in 2011, specialized in high-pressure die casting, precision machining for ferrous and nonferrous materials. Backed up by over 30 years of industry experience, our company supplies critical components such as engine mounting brackets, transmission mounts and steering parts to the automotive sector. Our company also offers advanced surface treatments like induction hardening and gas nitriding to enhance durability for demanding applications such as windmill gearboxes. Committed to quality, innovation and operational efficiency, our company is expanding its infrastructure to drive growth and product diversification. As of 31st September 2024, our company holds a robust order book of INR 386.83 crores with an execution time line ranging from 60 to 80 months. Recently, we secured 2 significant orders, one was INR 126.53 crores for the supply of various automotive and nonautomotive products and another valued at approximately INR 12.43 for building and construction hardware. Our end customers include leading global brands such as Hyundai, Kia, Maruti Suzuki, PSA Group, Ashok Leyland, Tata Motors, Mahindra, Toyota, GEV Wind Power, Adani Wind and JCB, et cetera. So our financial snapshot. In H2 FY '25, our company reported consolidated revenue of INR 68.75 crores with an EBITDA of INR 16.08 crores and the net profit stood at INR 5.68 crores. In FY '25, our company reported consolidated revenue of INR 122.21 crores with an EBITDA of INR 30.5 crores and a net profit of INR 11.05 crores. So on concluding this, we stand as a trusted and innovative player in the precision casting and machining industry, backed by decades of experience and a strong customer base. With a growing order book, robust financial experience and ongoing infrastructure expansion, we are well positioned for sustained growth and diversification across sector. We thank you for your continued trust and support. I now welcome any questions you may have.

[Operator Instructions] The first question comes from the line of Arun Arora with [ NB Investments ].

Sir, I had a few questions. One is, our business is heavily dependent on the performance of the automotive sector in India, particularly the 4-wheeler segment. So now we are entering the wind sector and also we are planning to enter LCV, as you had mentioned in the earlier call. So just wanted to know, going ahead, maybe 3 to 4 years down the line, will still 50% to 60% of the revenues will be contributed from the automotive industry only?

Yes, sir, minimum 50% will be from automotive industry.

Okay. Fair enough. Sir, second is, the aluminum die casting they are used in making the bigger and heavyweight products also. I think maybe due to our capacity concerns, we were making lighter components and with the installation of the new machines, now we can go for the heavy weight up to 10 kg or something to that also?

No, we have been ready already. We can go up to 10 kg even right now onwards. Everything installation completed. We have made some sampling also submitted some of the samples, something in the validation process.

Okay. Fair enough. Sir, my next question is -- sir, the future growth potential for aluminum die casting is majorly expected to come from defense sector. So I remember you had mentioned the machines that you are getting it for the wind vertical. You had mentioned in the earlier call that they can also be used for aerospace parts also. So just wanted to know whether you would be interested in getting into defense segment or not?

Sir, we already get registered with the defense manufacturing parts, but I don't -- I cannot name the customer. But within 6 months' time, we would able to register our company into the vendor. Now with the RFP procedures, we are making some of the samples for defense also. [indiscernible] customer name cannot be disclosed. Already we have [indiscernible] but we're targeting this coming year only, but with the opportunities we already entered in.

Okay. That is good to know, sir. Sir, a small clarification on this order book. A lot of questions have been asked in the earlier calls. Based on that, what I have understood is these orders that we have on hand, around INR 380 crores or INR 389 crores, so these would be executable over a period of 4 to 5 years, where part of this has already -- the execution has already started. Some of them may be started in maybe, let's say, next year or so. But all the trials, die development, et cetera, that initial approval, everything is over. Only thing is based on the schedule of the -- from the customers, these parts or the purchase orders will be executed. Is that understanding is correct?

Your understanding is correct, sir. Up to 25 dispatches -- even up to 26 million dispatches, all the parts validation, sample submissions, pilot by submission, everything is over. Now we are working on 2027 launching models development.

Okay. Okay. Got it, sir. Sir, my last question is regarding the capacity of our die casting. See, earlier, you had this 350 tonne one where you could go up to 1 kg components. Now with the installation of this new 1,300 tonnes, now you can go up to 9 to 10 kg components. Is it possible to give us what is the total metric ton that we can produce in a year?

The new machine, which will we installed this year with all this past months this can go up to annual consumption of minimum 2000 metric tonnes in addition.

Okay. What was the earlier one could have produced, sir?

The earlier on, my capacity was around 2,500 tonnes. Thumb rule only it is because I may produce...

I got your point because it depends on the weight of the components, then [indiscernible] so many things. So what I can take it as around 4,500 is the metric tonnes.

Yes, metric tonne is correct.

Okay. Sir, the reason why I'm asking this is, this capacity that you have, how much revenue it can generate? I also know you had mentioned as you go for a higher capacity -- higher weight components, you have to go for different machining -- machines and all that, I understand. But only from this die casting machines, how much revenue we can generate in a year?

INR 220 crores, present around INR 220 -- INR 210 crores to INR 220 crores as a present capacity can go, sir.

So if you -- let us say FY '27, you have the target to reach that -- no, sorry, you have the target to reach INR 190 crores during the current year. So that means you may have to go for increasing the die casting capacity also next year?

No, sir, die casting may not be. Yes, it is included in other nitriding and gear-shaping process. For 2, 3 months we get a gear-shaping [indiscernible] . Gear shaping and nitriding, all inclusive, sir.

No, sir. Sir, what I was asking is not how much you are expected to do in the current year? No, I'm not asking the revenue guidance. I'm saying with this 4,500 metric ton per annum capacity of die casting, how much revenue we can generate?

This year or for entire 4,500?

Maximum possible. I don't know, it may take 1 year or it may take 3 years. That is different. How much it...

Yes, present capacity and additionally recently something can be added. Maximum INR 250 crores can go, sir.

How much?

INR 240 crores.

INR 240 crores. Okay. Okay. Clear, sir. Sir, the land where we have all these facilities, what is the size of this land? Is it owned by the company? And how much it has been utilized sir?

The present facility which you are sitting is 2.24 acres constitute around 70,000 square feet. It is own land of Thaai Casting.

Okay. Do you have any more space there?

No, this capacity is most full, sir. No space available. We have purchased 1 more acre nearby, that's purchased in the name of our Induction and Nitriding.

How big is that, sir?

That is 1 acre plus. The nitriding process in some portion we've considered and getting processes going on. And we have purchased another 3 acres also all near the within 1 kilometer circle, 3 acres there only the construction is happening now for gear shaping.

Gear shaping and...

Yes, the construction is going on there.

Okay. So there we have more space.

In Thaai Casting. That is in the name of Thaai Casting.

Okay. The parent company. Sir, can I ask some more questions or is anybody else who's in the line? Operator?

Yes, we have people in the line.

So you want me to continue or come back in the queue.

Mr. Arora, if you want, you can fall back in the queue, by the time I'll just promote the next in line. [Operator Instructions] Our next question comes from the line of Chirag with Scoop Investment.

Sir, I had a couple of questions. Sir, continuing from previous one, does the peak INR 240 crores peak revenue include nitriding or excludes it?

No, sir, it is exclude nitriding, sir. Only casting alone capacity which we already created and recently we created.

Okay. Understood. And we stand by our guidance of INR 195 crores revenue guidance and 20% to 27% margin for FY '26.

Yes, INR 190 crores -- INR 170 crores to INR 180 crores.

Okay, INR 170 crores to INR 180 crores, understood. Okay. Sir, the next question was on the funding part so how -- what is the status of the fundraise that you were looking for?

So far, all the machine has been given advances with the internal accruals and get one paid. But because 1 machine, which is already under sailing which is from Austria, that machine we have taken from the supplier credit. So all other things are almost finalized with the bankers and one of the NBFCs not yet concluded. We are negotiating on the interest terms. Maybe another -- we have another left out of another 20, 25 days on the final. So we'll be concluding the risk-benefit analysis, execution and completion. Mostly all of the money...

So are we still looking to raise funds or it is out of picture currently?

No, this is the right time to raise the funds. Originally, to raise the funds only I started this project, but unfortunately at that time the prices were not lucrative. So I have not raised the funds, doing as a [ bps ] project.

Sir, the next one was, have we started our auto plant, which was scheduled to start around April, May -- March, April 2025.

Come again, sir. Auto plant?

Yes, which was scheduled for March, April 2025.

Auto plant, what is that?

Yes, there was some plant, which you were going to schedule in March or April 2025.

You mean the new plant?

Yes.

New plant started sir. That is new plant one is nitriding started already, another plant is under construction for the gas -- apart from the existing land additional 1 acre land is business has started. That is only gas nitriding. So apart from this 1 more 3-acre construction undergoing for gas.

So how we what is the current utilization of that plant currently?

Currently, we are constructing for 30%, 35% utilization. Balance will be available for future expansion. We are thinking to go in the same segment of wind for the balance land also.

So I was asking that we are at 40% to 45% utilization of the current capacity. So are we looking to ramp up it to full utilization by at the end of -- by the March 2026?

So the land or the machinery?

Machinery.

Machinery, yes, by 2026, we'll be utilizing almost maximum capacity.

100%. We are at currently 40% to 45%. Am I right?

No, we have increased lately, not 40% to 45%. We are almost around 50 % to 55%.

Okay. 50%, 55%. Okay. Okay. Also, sir, on the wind facility part, which is scheduled to start from Jan 2026 onwards. So is that on track? Or are there any delays on that?

No, no. That is on track. All the machines from Europe, all are tracked, sir.

Okay. So all the payment part has been cleared?

No, no, Advance has been paid. Before shipping, we need to pay some LCs and other things. That's what earlier I have answered. It is under final negotiation with the financial institutions.

So could you -- if you don't mind, could you share what is the cost remaining to be paid?

So most of the machines has been paid 25% to 30%.

Okay. In the absolute amount what the...

One machine is 100% paid, which is at the sailing, some of the machine is -- another machine is going to sail another 20 days' time. That has to be fully paid. Rest of the machine takes another, 2, 2.5 months' time. So at that time it will be paid before sailing.

But it would be much helpful if you could provide absolute amount in numbers like INR 20 crores, INR 30 crores is remaining to be paid. So that would be much helpful.

[ WFL ] which is from Austria is almost paid around INR 21 crores to INR 22 crores because euro -- different dates we have paid the different euro prices. Around INR 4 crores to INR 4.3 crores standardized German machine, gear shaping machine. Another -- INR 2 crores for another VTL machines, another INR 1 crore or measuring equipments. These are the amount so far, all are euro funds. So I'm paying from past 1 year from [ INR 90 to INR 98 ] fluctuation I'm paying, I'm telling approximately.

Understood. So we have remaining INR 30 crores, INR 35 crores yet to be paid?

No, no, more than that, more than that. Including construction it's reaching around INR 100 crores.

INR 100 crores. Okay. Understood. And last sir, what is your latest order book, sir?

[indiscernible] around INR 520 crores, sir? Present INR 520 crores sir.

[Operator Instructions] Next question comes from the line of Prabal Jain with SM Holdings.

Am I audible?

Yes, yes. Yes, sir.

Sir, this order book that you have INR 380 crores, so I wanted to understand an approximate blended margin profile of the orders that you are doing. And your new CapEx also just went live and one more plant will go live in, I think, January, February products, right? So, like, what kind of steady operating margins or margins we can expect for your company as a whole catalog of all the products you have?

EBITDA, you can commit that exactly around [ 22%, 23% ] minimum can be maintained in there. Margin is again depreciation because a lot of CapEx is happening every year. So this year also a lot of CapEx we are bringing in for a new project. It is the same company name. So that need to work out exactly what will be the PAT.

Okay. But EBITDA -- okay. And sir, one more question. So you said that some of the payments for the machines are still left. So I mean, would you be taking on further debt to fund it or you want to do fund raise? I think you mentioned to some participants about the fundraise, but I was not able to get you.

No, sir. Some of the investors discussing here. But so far, not decided, taken any decision on the fundraising. At present, we are going for a decision.

[Operator Instructions] Next question comes from the line of Hardik Gandhi with HPMG Shares Securities Private Limited.

So I just saw that we significantly increased our debt already from long term and short term to approximately INR 80 crores to INR 90 crores, right? And further, we are looking to have a CapEx of INR 100 crores, which will require significant debt. So do you think with the revenue profile and the margins we have, it will be sustainable as a long term -- on a long-term basis because we are taking on a lot of debt. We are expanding fast, but the order book is not moving in the similar trajectory. So just wanted your thoughts on that. What is the -- are we doing any risk analysis on the same?

Yes, sir. We have made external risk analysis also, and we have -- our consultant he is also in the line. So we have analyzed it because earlier we thought of going for fundraising. After all this analysis only, we of taking -- going forward for the debt because revenue why you cannot be lucrative because it is all service industry. The parts will be supplied by the customer -- parts will be supplied by the customer. We only process. Otherwise, our revenue can be even around this year alone, we can go up to INR 400 crores, INR 500 crores. We don't want to catch on the inventory side. So we initially want to start only on the service industry. They supply the material and we do the conversion.

Okay, okay. So what will be the cost of debt right now as a percentage interest cost, what is the interest cost on debt?

[indiscernible] sir.

Yes, sir. So currently, on an average, it's around 10 percentage.

10%. And after the new debt, will it still be at approx 10% or we are taking a higher cost debt?

Yes, we are trying to retain our 10%, to keep the average at 10% because we are getting some cheaper -- better rates also from some supplier credits to supplier credits. So it will be, max it will be at 10%.

Okay. And till what time are we planning to raise debt? And what will be the ideal debt on our books going forward, like since INR 80 crores is already there. And other than that, we'll have a CapEx of INR 100 crores plus we might require some further working capital. So on an overall basis, do you think we'll be carrying a debt of INR 200 crores to INR 250 crores?

No. Maximum we would be reaching around INR 120 crores or INR 130 crores debt. So some of it we are already repaying. So considering all those things, maximum would be at INR 120 crores to INR 130 crores debt.

Yes. But I mean we already have INR 80 crores and we require more INR 100 crores plus there will be a working capital requirement. So given that you want to put a max debt of INR 120 crores I mean, you'll be falling short of INR 60 crores to INR 70 crores with that calculation.

We have internal accruals. So 2 things. So one, we have internal accruals. So as we are at INR 120 crores of turnover next year, around INR 170 crores turnover with -- even if we take 21st March. So INR 30 crores, INR 35 crores, we can generate internally. So we are funding through internal accruals. So rest other things we are going for a debt.

And what is the present [indiscernible].

[indiscernible] sir, INR 170 crores na?

INR 170 crores, yes, sir, sales service.

Yes. I think he understand INR 130 crores.

No, no, no, no. No, INR 130 crores, we would be very short, sir. No. But on the payment side, like what is the scheduled payment for the CapEx, like INR 100 crores is pending from our side. So will we be paying this throughout the year and by the next year and we won't have any further CapEx or it is distributed between this year and the next year?

No, the entire CapEx will be -- done will be this year.

Entire CapEx of INR 100 crores will be done this year. Okay. So we will be having like a very high depreciation going forward in the near future given our -- like since our revenue is at a smaller base and although our margins are -- EBITDA margins are quite good, but given our revenue is at a smaller base, we'll have a very high depreciation as well as interest cost in the going future. So on the -- don't you think it will be very heavy on our PAT margins?

Yes. Generally, this is a capital-intensive industry, as you know, this automotive industry. So initially, in this kind of industry, initial first 5 years to -- 5 to 7 years, there will be a huge depreciation cost. But post that, once the asset is completely depreciated. So once post that, then our profit margin will improve. Okay. Yes, depreciation is only a noncash item. So better to...

Yes, yes. That's fine. But still as an investor, usually people tend to neglect.

I do understand your concern.

And we have a WDV or SLM basis?

WDV basis.

Okay. WDV method. Okay. Understood. So we'll be -- like there will be very heavy depreciation at least for the upcoming years then?

Initially, yes.

Initially. Okay. And second thing, I misheard the order book. Right now, we posted a INR 386 crores -- INR 380 something odd crores order book. And sir, just mentioned that our overall order book is approximately INR 500- something crores. Did I mishear something?

Already INR 384 crores, INR 386 crores, and INR 126 crores fair enough. and it is INR 520 crores.

Okay. INR 520 crores.

Approximately [indiscernible] information. So lastly, we had a press release, INR 120 crores yes.

Okay. So total INR 520 crore order we have out of which we'll be executing INR 190 crores -- INR 170 on the safer side this year.

Yes, sir.

And just wanting to this excludes our nitriding process and everything, right?

All inclusive.

All inclusive. Okay. So if you can just break down the revenue like peak revenue, which we can have from our nitriding process because we were, I think, planning to put 3 nitriding machines, out of which 2 are already put in, right? Is that correct?

One already continuously running. Second furnace, all the validation process is over. First trial batch is going on this. Third also installed completion. Now the validation process is going on in third also.

So from nitriding, what kind of revenue can we expect on an annual basis?

With these 3 machines around INR 12 crores, INR 35 lakhs per furnace per month.

INR 35 lakhs per furnace per month. Okay. And the gas lighting, which we are putting up on new 3-acre plant from that, what kind of revenue are we expecting?

That is only gear-shaping, 35% to 40% land utilization we are doing. This new -- that is around INR 40 crores to INR 45 crores initially only service job. Yes.

Okay. INR 40 crores to INR 45 crores only service industry?

Yes.

Okay. And our peak revenue from just the casting is INR 220 crores as for now, correct?

Present capacity, which we've already invested.

Okay. And given that further CapEx, which of INR 100 crores and everything, so what -- like of the INR 100 crores, how much we are putting in the casting segment?

100% we are putting only -- one and only for the wind segment, sir. That is only gear shaping. No casting. And this is made agreement with customers for 5 years volume committed. And any volume reduction also, they will be compensating on the price -- amount. And we are also -- exclusiveness we have given. We cannot use this facility for others. This one advantage is this all is set up in 1 roof. In pan-India level, our Thaai Casting will be the first company, creating all the specialty in 1 roof because we are in...

Okay. Yes, yes. So just to be more clear, we'll be getting INR 40 crores to INR 45 crores from the gas lighting business, approximately INR 12 crores from the nitriding business. And the remaining part will be contributed by the casting business, but we are not expanding on the casting side. It is maximum peak revenue of INR 220 crores, and that will remain as it is for the near future?

Without any additional CapEx.

Yes, yes. And we are not -- right, we are not expanding there, correct?

No, sir, existing customers they'll keep giving some opportunities. So there will be -- expansion will come, sir. We cannot stop that. New customers will try to avoid with giving a higher price like that. And the existing customer, any request or demand coming, we will be adding here and there some...

And when can we expect our gas nitriding to be commercial -- to be -- to start?

One furnace already commercial business is happening past 6 months. Second furnace...

The gas lighting one, not the nitriding process.

Sir? Gear shaping, yes.

Yes, yes.

Gear shaping will be from gas nitriding business. Nitriding also from wind only, sir. Nitriding also from the wind. Additional information for the gas nitriding, over last visit gentleman they have requested for additional 3 furnaces. We have also agreed for that. That is also a separate agreement has been made. 2026, January, we need to ready the additional 3 furnaces for gas.

Okay. So additional INR 12 crores per year. So total it will be 6 furnaces?

Yes, it will be 6 furnaces. We've committed from January, the additional 3 furnaces will be ready that construction and design activities are going on. So [indiscernible] like this every customer commitments will be taken.

And is the CapEx for that already included in the INR 100 crore number? Or are we -- is that...

No, no, no. That is recent development. We made an agreement also.

And what will be the CapEx for that, roughly, the 3 furnaces.

Without building and furnace alone it will come around INR 12 crores. Building needs to be added. Building design added. So we have space for that in the same space. That space already we purchased 1 acre only for nitriding. So we need to -- we are looking on the -- the German is coming to inaugurate that for the groundbreaking program.

And just a feedback from a stakeholder. Two things to be very careful for is the given that we are consuming very high debt and we are going in that trajectory, although our margins are good, but I would sincerely request the management to be more cautious of the debt given we are -- on the quality side, I'm damn sure that we are at a very high quality. All the products are at the top level, but at the same time from financial risk management perspective, I would sincerely request the management to have -- to do that debt analysis very thoroughly because for a company of our size INR 220 crores market cap, INR 80 crores debt and we are further planning it to increase. So just on those terms.

Got it sir. Thanks sir. We will analyze the same. But already we are doing that because existing customers that is this [indiscernible] you know that they are more than 30% stake in the global. So they are a very stable customer. So when the opportunity is coming to those steps. So we are working hard towards completing, the project itself completing very difficult time line. Everything we are working hard, but financially, anyway, initially just we thought of raising some funds. So we are going for debts that also we analyzed because everything is not a new. If it is a new project, new development, definitely I would have not taken this. It is already existing suppliers to substitute. Import substitute we are doing. Whenever we are ready for production, the business can be happened immediately, and that it what an additional advantage. Any this would have been a development process definitely I would have not touched this. This is the only replacement from China and German, so we are taking this [ cost ] with all the investment.

Yes, yes. Just one last question. I'll just then go back to the queue. What is our revenue guidance for the next 2 to 3 years? Like I know a lot of things are getting into place, this year and the next year. So just a conservative number from your end would really help on the top line?

So around 40% we will keep, sir, year-on-year growth because many things we are working, sir, because 2.5 years I'm working with the Bosch Siemens. So I thought of -- started the business from last year, maybe some 8 months before the German approvals here and there one and one, small, small development activity. So now recently, we got approval. So this -- another 3, 4 months development will be completed and supply will get started. Like said, another 2, 3 things are get pending. So all the big customer [indiscernible].

PAT margin improvement...

Everything -- everybody is big customer. We are working closely with close everything and then this minimum we can do this, but we are trying to work hard to complete maximum, to the thing maximum up to 50% also we are trying to...

And when do we expect our PAT margins to improve going forward? Because I know the PAT margins will be under a lot of pressure for the next 2 to 3 years given high CapEx, high depreciation, high interest cost and everything.

This we discussed with [indiscernible] sir, also about what's on the depreciation, how the PAT margin can be increased. Definitely, it will be increased. [ 23% to 23% ] EBITDA I can commit, but interest, very well that we are doing for items, interest cost will be there, depreciation will be there.

Next question comes from the line of Arun Arora with NB Investments.

Sorry for harping back on the CapEx. A small clarification so that we are clear on that. One is the IPO money was used to increase the die casting capacity then machining capacity at the parent company, plus whatever the land you have taken 3 acres. Is that understanding is correct?

Correct. Correct.

Okay. Then you said this gas nitriding, so that whatever the INR 12 crores were required to commission these 3 furnaces that was done through internal accruals?

No, no, the internal accruals only first furnace and the building, land purchase. The balance everything we have borrowed from bank.

So whatever the additional 3 you're going to do, which again, will cost you INR 12 crores again some building. So that again, you have to go for debt, correct?

Yes. Yes. That also debt.

Okay. Now the third thing is this gear shaping you said including the building construction, total CapEx is INR 100 crores, correct?

This INR 100 crores is Including building construction except the land. Land already we purchased it. This [indiscernible] because this building is -- the air conditioned building, sir, with all the machines require air conditioning.

Correct. Correct. So out of this INR 100 crores, you have already paid around INR 30 crores to INR 35 crores as an advance, right?

Yes, sir.

So that means you would require only additional INR 60 crores or INR 65 crores, plus what -- working capital anyway you don't require because they will be providing the parts. So only you would require INR 60 crores to INR 65 crores additional fund. Is that understanding is correct, sir?

Yes, understanding is correct. Working capital also will be requiring because a lot of...

Correct, Correct.

Not much.

So that means -- so the working capital requirement plus another INR 12 crores for the gas nitriding, plus the building cost on that plus another INR 60 crores. So these are the total debt requirements for you?

Correct. Correct. A small correction. Gas nitriding is not INR 1 crore. It will come more than INR 12 crores on 3 furnaces.

Not INR 1 crore, INR 1 crore plus building cost also you said, right? Plus building cost.

Yes.

Sir, there is small clarification. You had said this gas nitriding you have done on 1 acre of land and it is completely utilized. So you have to buy additional 1 acre land to put this additional...

No, no, no. The gas nitriding is 1 acre land. We have utilized only less than 30%. Balance only, we're going to CapEx.

Okay. That is clear.

For the entire -- for electric. All the power connection and everything taken for 6 furnaces, it available for.

Okay. Okay. But this sixth furnace, you have committed to the customer that you would do everything by January '26 or so, correct?

Correct. Additional 3 furnaces.

So that means from FY '27, we can expect around INR 24 crores of revenues from these 6 furnaces, correct?

Correct. Correct. INR 24 crores. Correct. Correct.

Okay. So that is clear. So now whatever we said this total CapEx, all this would be completed by the end of the current financial year?

This CapEx. Yes, sir, it will be completed, sir.

Yes. All these CapExes. So whatever other than the internal approvals you would be going for the debt just to tie it over whatever the deficit in the funds correct, sir?

Correct, sir. Correct.

Okay. My next question is regarding the orders you have received, not for this, one is the subsidiary, another is for the gas shaping. Now you said this furnace, you have received orders from the German customer where you would be exclusively doing it for the entire 6 furnances. Is that understanding is correct?

Correct. Correct.

And similarly, for gear shaping also, you said by investing INR 100 crores, we can do INR 40 crores of turnover. And again, that is also completely committed.

Correct.

Correct. Okay. So there out of the 3 acres you are doing, you will have some more space left to expand in future for either the gear shaping or maybe further die casting requirement, correct?

Exactly.

Okay. Fair enough. Sir, my next question is regarding the cash flow. I know, see, '23 and '24, we were cash negative. And only during the current year, we would be able to generate some positive cash flow. I think you said that INR 170 crores turnover, so you are expecting around INR 30 crores to INR 35 crores of cash flow. So is it fair to say that we would be cash flow positive every year from now onwards? Sir, [indiscernible] sir.

Yes, sir. So we'll be cash flow positive.

But every year, we would be having this cash flow positive.

Yes, sir. Yes.

Sir, my next question is, I believe promoters have given us some loans to the company. Is it possible to share what is the interest rate that we would be paying there?

For the bank?

Not bank, sir. I believe as a promoter, you have given some loans to the company.

Can I check and comment sir through mail or something? [indiscernible] sir, you have any. [indiscernible] sir?

No, sir. Currently, I don't have any numbers. Maybe we can check and come back to you, sir.

Yes. No problem, sir. No problem. Sir, next question is regarding your cover requirement. I know once you have furnace and all, there will be a huge consumption of electricity. I think in the DRHP, you had mentioned that we are going for 3-megawatt solar energy. Any development on that sir?

Sir, we almost kept finalized and then ready everything. Present, we need to pay around 20%, 25% margin on the 3-megawatt project. So being in this -- all this coming in recent development. So we just complete all the machines side, then we'll be going definitely for that. Because of this only all the land I'm purchasing on my own as a company name because rental we lose on the [indiscernible] also we are having around 250-kilowatt the entire power facility. The new facility for 1 acre purchase. Initially I created the 2.5 megawatt facility created in the land. 3 acres also I'm creating all 2.5 megawatts. Once everything is finished, then I maybe going for better --- maybe not 3 kilowatt -- 3 megawatt, I'll be increasing also once I understand better. So we said we can save a lot of money in that but also one of the key object for cash flow because whatever I'm paying electricity bill that my [ EMA ] will be very lesser than my electricity bill.

Correct. You're right. You're right. Sir, just for idea, how much this 3 megawatt solar energy would cost us, sir?

Approx I'm telling whatever I negotiated. It will come nearly INR 15 crores, sir. It depends about panel and what generator you are using. Chinese means you can reduce another INR 1 crore.

Okay. So INR 15 crores, I think you should be able to get the return between 3 to 4 years only.

Maximum. Depreciation if we calculate definitely there, but I don't want to calculate, 4.5 to 5 years I'm calculating with my -- by paying electricity bill with a lesser amount, I'm considering [ EMA ] of solar.

Okay. Okay. Okay. Fair enough. Sir, my last question is regarding our raw material where you procure different grades of aluminum inroads. So possible to know who is our supplier? Is he an Indian company or so? And second...

All are Indian companies.

All are India. Okay. Okay. Very nice.

Because lot of fluctuation.

So there will be a lot of fluctuations. So are we also paying to them on a monthly basis or a quarterly basis?

Price fluctuation monthly basis per month is. Purchase of raw material every monthly basis the price fluctuation. For the customer, few customers monthly basis, maximum customers are 3 months.

Okay. Okay.

All Hyundai related people -- customers 3 month basis.

Okay. Sir, another important thing I have noted is that majority of your customers are based out of Tamil Nadu. I think more than 90% you get these sales from there because lot of OEMs are there in the [ TashiKarabaduru ] belt. So maybe you're getting majority of your revenues from that area itself. But just to derisk yourself, I know you're getting into wind and now this gear machining and all. Just wanted to know, would there be any problem in approaching Western North automotive band?

Sir, already I'm supplying to Pune, big volume. Initially I started very small. I'm doing good numbers now. And Gurgaon, Gurgaon also I started small. All these segment I entered, sir, first 2 years before it's 3 years. I'm doing, slowly in my volumes with [indiscernible] segment also increasing. And I started entering the Nashik. Nashik also we started supplying. We thought of putting a plant in Pune also ideally, but at present my investment levels. But we have that much of business [indiscernible] side, and then Pune side. We have a vision for long term. So that much business we are leading from that area. Repeat orders, I'm getting, Nashik, Pune and Gurgaon, I'm getting repeat orders. [ 13th ] also I'm going for vendor meet in Delhi. So I'm getting repeat orders.

Okay. So no, whatever these orders you are posting, let's say, INR 520 crores that you had, is 90% of this is repeat orders only?

90% of the existing customers, yes, repeat orders. New customers -- yes, yes, max 80% to 90% of the existing customers with new business.

Next question comes from the line of Sudarshan Nachimuthu Prosperity Wealth Management. [Operator Instructions].

Yes. So my question is on the gear shaping part of the business actually. So when we mentioned INR 45 crores of revenue, our business would come from INR 100 crores debt. So we'll take at least INR 10 crore in interest cost then at least INR 10 crores in depreciation. So I'm just thinking about what would be the margin profile of this. So will it be north of 50% because at least at that rate we can service debt and interest?

That's right. [indiscernible] earlier it is only a service industry. No raw material involved in that turnover. Only conversion. If I involve that raw material, the revenue, that portion alone will cost more than INR 300 crores, INR 350 crores. Unnecessary inventory carrying, I don't want to touch that. So I'll get [ steady ] with the labor charges.

Yes that part, we understand actually. So my query is on the margin profile of the business.

Sir, margin only in-person we can have a general discussion because it's a very precise customer and then part. So very, very unique component. We have worked very hard to get better margins. Still we'll keep on working what is the cutting tool plan. Even today morning also we had a 4, 5 hours discussion with how better [indiscernible] reduce the cycle time. So easily cannot be -- I'm sorry.

Understood, understood, sir. And on the new casting business, does it have adequate machine capacity to accommodate 2000 metric tonnes?

Yes, yes, present machining facility, we have created well enough because any samples or validation process, forum violation is very important because the validation process has to be done in the same machine. So we are having enough capacity for whatever they can be taken. Over and above, we may require -- and here and there, we may require another 6, 7 machines, sir.

I understood.

Mr. Nachimuthu, are you done with your questions?

Yes. I'll get back to the queue.

Next question comes from the line of [indiscernible] Spark Capital.

I think my questions were answered.

Next question comes from the line of Bhagwat with Prosperity Wealth Management Private Limited.

Could you please update on the details of the new orders wins, orders from the existing customers or new customers?

Maxim is present existing customers, sir. We have added new customers -- around 7 to 8 new customers we have added very good customers.

Okay. So this INR 120 crores order [indiscernible] the existing customers?

1 second. Yes. New customers also is there. Existing customer is major. We have a new customer.

Okay. And how is the expected EBITDA margin from this order?

From the casting, same level of EBITDA margin for the new customers.

Okay. So this INR 120 crores is considering the same EBITDA margin. Okay. So this INR 100 crores CapEx that we are considering now revenue potential?

Which CapEx, sir? Gear shaping?

The INR 100 crore CapEx that we are doing for...

Yes, around INR 40 crores to INR 45 crores revenue potential.

Considering all the raw material [indiscernible] when it will start contributing to the -- on the raw material only service.

Without [indiscernible] only service.

Okay. And when it will start contributing to the revenue?

Next year.

Next year, FY '27. So considering this CapEx, so what's the expected revenue and EBITDA margin on a consolidated basis for FY '27?

Come again, sir, sorry.

For FY '27, what's the expected revenue and EBITDA margin?

The EBITDA margin will be same, sir, because the equally automobile business also getting increased.

Okay. Okay. And remaining [indiscernible] FY '27?

Sir? FY '27?

For FY '27. Yes, no, '27 I am saying next...

Next, I say around 40% will be the increase sir, new.

Sir, I couldn't catch the numbers.

Sir?

I didn't catch the numbers. Could you please repeat?

Around 40% we will get increase that because we are clearly working on that new projects or the target completion time and SOP time, sir.

Okay, 40% you're saying on FY '26 numbers.

Yes, correct, correct, correct.

Okay. So that would be roughly around INR 270 crores to INR 280 crores.

Yes.

Next question comes from the line of Sahil Raj with Samdariya Capital Ventures.

Sir, most of the questions are answered. Just one small request. Are we planning to release the quarterly updates going into FY '26?

No sir, only H1. because still we are schedule on the financial side also because a lot of expansion is going on. And [indiscernible] sir, is it possible?

No, sir. I'm not asking about complete results, just one pager summary of what all the company did and what all the CapEx and everything is going on track or not? Just one pager summary.

Maybe after this H1 we can give a third and fourth, it can be possible. So I don't know. [indiscernible] a lot of banking work is happening now.

So initially, it will be difficult. Maybe we'll see in Q3, whether we can start quarterly summary 1 page summary.

Because, sir, most of the other SME companies that are willing to actually work and with good promoter pedigree are voluntary decreasing -- I mean, voluntarily, they are releasing quarterly updates. That's not results. That's 1 pager summary of what the company did in those 3 months and that sort. so it's a small request, if you can consider it. That's all.

Yes, sure. [indiscernible] try to.

Yes, sir. Yes.

Yes sir. And sir, on the windmill thing, the wind projects that we are targeting, no revenue is expected in FY '26. Is that correct?

No, no. This year, slightly will be there because very minimal because SOP only in January '26, only 2 months will be there. The initial pilot background will not be like attractive number.

So from Q1 FY '27, we can see some traction in that regard.

Yes, yes. Yes.

Okay, sir. And what is the expected annual turnover that you are seeing in FY '27 for the wind project? I mean...

Around INR 45 crores. Yes.

INR 45 crores. That's right?

Yes, yes, sir.

Next question comes from the line of Chirag with Scoop Investment.

I had just last question. On the number part for FY '27, so the number guidance we have in place was INR 270 to INR 280 crores. And the EBITDA number seems to be around 34% if we calculate around like similar margin for auto and high margin for service business. So that would be around 34% on a combined basis for FY '27, Am I right?

34% EBITDA, no sir. [indiscernible] sir.

Sir, it would be around 23% -- between 23%, 25%. So same level of EBITDA we are expecting in future also. But on the revenue guidance, INR 270 crores seems to be too aggressive. So INR 170 crores when we close next year. So 40% whatever Mr. Anandan and I have committed it would be around INR 230 crores, INR 240 crores. It will not be INR 270 crores.

Okay. So I was expecting like previously, we have heard that service business is higher margin compared to the normal one. So how much margin are we expecting from the service business?

Yes. Comparably, it will be better than the current die casting business, but right now, still we are working on the numbers. So we're not able to commit to anything on the margin side at this point.

This is a very special project...

Thank you. Ladies and gentlemen, as there are no further questions, we have reached at the end of question-and-answer session. I would now like to hand the conference over to Ms. Shreya Girish for closing comments.

Thank you, everyone, for joining the conference call of Thaai Casting Limited. If you have any queries, please get in touch with [email protected]. Once again, thank you all for joining the call.

Thank you. On behalf of AKMIL Strategic Advisors, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.