Triveni Engineering & Industries Limited ($TRIVENI)

Ladies and gentlemen, good day, and welcome to the Triveni Engineering & Industries Limited Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I will now hand the conference over to Mr. Gavin Desa from CDR India for opening remarks. Thank you, and over to you.

Thank you. Good day, everyone, and a warm welcome to everyone participating in Triveni Engineering & Industries Q4 and FY '26 Earnings Call. We have with us today Mr. Tarun Sawhney, Vice Chairman and Managing Director; Mr. Suresh Taneja, Group CFO; Mr. Sameer Sinha, CEO of Sugar business; and Mr. Rajiv Rajpal, CEO of Power Transmission business as well as other members of the senior management team. Before we begin, I would like to mention that some statements made in today's discussion may be forward-looking in nature, and a statement to this effect has been included in the invite, which was shared with you earlier. I would also like to emphasize as well this call is open to all invitees, it may not be broadcast or reproduced in any manner. I would like now to hand over to Mr. Tarun Sawhney to make his opening remarks. Over to you, sir.

Thank you, Gavin. Good afternoon, ladies and gentlemen, and welcome to the Q4 Fiscal '26 earnings call for Triveni Engineering & Industries Limited. It's a good [indiscernible] to be with you today. And unusually, for the first time we're having this call a few days after the results due to certain business exigencies and travel commitments. We wanted all the senior management team to be present for this very important and in some ways, a starting call. I'm delighted to inform you that the composite scheme of arrangement is effective from the 19th of May 2026 after the approval of the NCL team. The revenues from operations of the company, net of excise, stood at INR 6,291 crores and the PBT stood at INR 378 crores. There was a strong underground in the operating performance of the Distillery segment. In the Power Transmission business, the highlight was an order booking of 25% higher than previously, a significant increase of inquiries as well during this period. However, the engineering businesses Q4 was impacted by global and domestic uncertainty, especially in a wide variety of industrial sectors. And I will be talking more about that and the future through this call. The Board has also recommended a final dividend of INR 1.25 per equity share. Looking at the consolidated financial results, I'd like to mention that the INR 6,291 crores of revenues was a growth of 10.6% versus the previous fiscal year. And this expansion was propelled by stronger sales volumes in our sugar and distillery verticals, along with better organizations. For the quarter under review. Revenue stood at over INR 1,500 crores, which was slightly down from the previous corresponding quarter primarily due to a calibrated scale down of some ethanol dispatches aligning with the OMCs delivery time lines and also because of some short delivery deferment in the power transmission business. The EBITDA margins for the business rose to 16.9% to approximately INR 624 crores, up from INR 533 crores in the previous fiscal year. And the -- we have accounted for an exceptional charge of INR 14 crores in fiscal '26, which reflects the estimated retroactive impact of the labor codes on employee benefit provisions. The net profit as a result for the full year reached INR 268.7 crores which was up by 12.8% versus the previous corresponding year. Reflecting the sound balance sheet and commitments to invented the Board has recommended, as I mentioned. A final dividend of 125% or INR 1.25 per share. The balance sheet remains strong. Our consolidated debt stood at INR 2,148 crores on 31st of March '26, which was slightly higher than the INR 1,969 crores on the 31st of March '25. However, our long-term debt stood at -- on a consolidated basis stood at INR 472 crores at the end of March '26, which was lower than the previous period where it was INR 506-odd crores. I'm very proud to announce that both the scheme having been approved, ICRA has reaffirmed our long-term credit rating at AA+ stable, lifting it from its previous under watch status. And I think that's a return to the highest rating of given engineering historically. Something that we at the business are quite proud of. Turning quickly to the operating businesses. I'll first talk about the Sugar business. And in this vertical, we delivered a stable baseline profitability despite the ambient agricultural challenges. The revenues grew by almost 13%, while the PBIT grew very marginally and ended up at about INR 272 crores [indiscernible] season, ended at 8.25 million tonnes, lower by 8.8%. And this was due to agroclimatic factors on [indiscernible] yields as well as aggressive diverse of sugarcane to local jaggery and production -- to local jaggery production in select areas, the steepest decline in cane crushing was witnessed in Western [indiscernible], 17%, where our significant capacities are. And this was a little bit of a surprise, very honestly speaking, to the management team, and a lot of that had to do with aggressive diversion towards the good and Kansai sectors where they were paying aggressive amounts for harvesting sugarcane for cocoa areas. I have, and I would like to mention very confident with the fact that the present government is looking at a revision in the sugarcane control order, which will also look at a revision in the [indiscernible] and bringing that under the central Ambit, which will then rain in the same kind of conformity that is much desired to have a progressive ecosystem. And one that is truly fair to the Indian farm and to the Indian sugarcane farm. Our [indiscernible] unit, having said that in West of [indiscernible] we're the only one in the state to cross 200 [indiscernible] of crushing capacity during this season. We are, of course, very hopeful for all of these. I'll discuss that when I look -- give you the output and outlook of the sugar business going forward. Furthermore, our intensive claim development initiatives have yielded excellent outcomes, especially in the season under review as compared to the previous year. Our gross recovery rose by 26 basis points to INR 11.06. Operating entirely on [indiscernible], our net sugar production was about 913,000 tons, almost the same as the previous year despite a slightly lower level of crush, outperforming the [indiscernible] state average where there was a decline of 3.4% as an average in that state. So certainly, a better performance by surveying compared to the state average other groups in the state of the position. Our domestic sales volume up at 10.4%, INR 9.7 lakh tonnes had strong realizations for the year under review at INR 40,680 per metric ton. The higher increase in cost optimization measures insulated options against the INR 300 per metric ton increase in can pricing in the state of location. So that, I think, was a very well-absorbed hit the gain price increase, as I had mentioned on previous calls, was higher than what we had anticipated. So yes, [indiscernible] and by the industry at large, but we were able to compensate that through better efficiencies in the system. Furthermore, equal revision of export power tariffs were effective [indiscernible] under the UPERC regulations brought an additional INR 31 crores of income during the fiscal year. The inventory of sugar as on the 31st of March '26 stood at a shade under INR 60 lakh quite and it was valued at INR 38.1 per kilo, absorbing the impact of the increase of INR 300 per metric ton. Currently, ex milk prices for refined sugar are approximately INR 4,220 with sulfidation sugar being about above the [indiscernible] per kilo lower than these average prices. Turning quickly to the [indiscernible] business. The segment has achieved an outstanding operational turnaround posting its highest ever production and sales volume in fiscal '26. Annual revenue of excise reached INR 1,550 crores, driven by better availability of feedstocks, lower procurement prices for [indiscernible] and sharp cost optimization. What I want to say is that actually, it is the variance in grain prices. That has been the biggest surprise, especially for the year under review. And it gives a lot of credence to the huge amount of work that happened in the supply chain activities of the company in order to be able to procure the feedstock from various states. At the best possible price, transport it efficiently and store it efficiently, fee to be converted and reflect in terms of the profitability of this business. So that has been a big success of the Distillery segment. And so that actually one as we've talked about in previous calls as well. While the average realization prices shifted slightly lower to INR 61 per liter due to the higher mix of FCI rights allocated ethanol, which carries a relatively lower made the volume growth more than compensated for this variance. Greenway lockstituted 56% of our total ethanol sales in the year. We injured a solid allocation pipeline of 17.1 crore liters at the cycle of the OMCs and the private enter programs. And we expect for allocations of ethanol, both from the OMCs and private tender in the subsequent cycle, which is anticipated very shortly now that the legal hurdles are getting sorted and I expect it to get sorted very, very shortly. And I think it is this legal issue that happened in the south of the country that has really played havoc with the ethanol blending program. At a time when the nation actually needs as much ethanol because there has been a willingness factory speaking by OMCs to even blend slightly more than 20%. And there's been talk of it, at least in the metros, slightly higher blending percentages being attempted by the ones. I cannot certify as to where and when, et cetera, but these are certainly press reports that have gone out. And it kind of makes sense at a point in time where the rupee has created a little bit of have and the footfall is only rising in one direction. Our branded I&L business outperformed the broader industry growth metrics in [indiscernible] as well, solidifying its position amongst the top 5 players in this business within the state of the parent. Turning very quickly to our engineering businesses. I've tried to focus first on the Power Transmission business. Our Power Transmission business is experienced a challenging quarter under review. And this was because of some order finalization shoes in the steam turbine and other turbine markets for domestic projects as well as the [indiscernible] and Middle East projects. Especially in the fourth quarter, and this was the geopolitical inactivity in West Asia. Plus -- and in fact, I think that would be the most significant contributor. Actually, it had some delays in terms of our customers and OEMs accepting completed or complete gearboxes and also had an impact on some finalization. But honestly speaking, looking at where oil prices are, looking at where industrial activity is going and the kind of industrial growth that is happening around the world because the addressable market is a global one. I'm very happy that the inquiry book has been even more robust. And in fact, our order booking, as I mentioned in my opening remarks, is also seen robust increases. And therefore, the future, very honestly speaking, actually calls great promise for this business, especially the fiscal -- the present fiscal year. During the Q4, our business secured a landmark quarter of an axial compressor test gearbox from a premier defense [indiscernible] first of a kind in Asia and one of the very few orders for this type of gearbox that have been placed anywhere in the world. This is a big order for a supplier of a test trick along with all the electrical, mechanical equipment but a very comprehensive scope and actually gives a broader scope of just beyond just the gearbox and adds a newer dimension of adding more barrels of great value to the gearbox value proposition, not just for this stream, but also for other gearbox streams going forward. This test facility will support indigenous gas entrant development and reduce the reliance on foreign test facilities. And we are hopeful that other such test facilities, not just in beta, but also around the world, will be promising targets for this business. The high-value orders and very -- they represent the [indiscernible] of high-speed gas turbine technology. And so our success here actually is a validation of the technology that we have in us. Key machinery items have been provisioned at our defense manufacturing facility, which has been completely launched during the quarter -- during the fourth quarter, including our late deep drilling machines, crow-baring machines, et cetera. The test facility as a testing facility will be installed sequentially and over the next couple of quarters as well. We concluded this year with a very strong order book of just under INR 500 crores, 25% higher than the previous year, providing distinct revenue visibility for the coming quarters. I would like to mention, we've talked about it, and I'm sure there may be a question coming up. I got to preempt it by saying that the CapEx that the Board of even Engineering has approved in 3 tranches, totals about 300 totals exactly INR 340 crores. For the gearbox business, this represents an output of about INR 700 crores based on the product mix. It could be higher also, very honestly speaking and does not reflect the output of the defense facility. I want to mention that -- and of course, all of this CapEx is anticipated to be complete by as I -- as we have previously mentioned, September '26. INR 231 crores has been incurred up to the 31st of March '26 of the INR 231.78 crores has been for the defense facility. As you can quickly do the backward [indiscernible], about INR 109 crores will be incurred in the next this quarter and the next quarter, completing the INR 340 crores. A lot of that is already planned, executed under way thing is being delivered in various stages of execution -- final execution, really speaking. So we are exactly in plan with what we had targeted pretty much with the small separate trends facility, but the rest of the targets are pretty much as planned and having no material impact on the operations of the company, which actually has been very, very important. Of course, as Power Transmission migrate to even Power Transmission Limited, the company is armed with sufficient cash flows and the balance sheet to be able to incur all of this CapEx and OpEx and more. Turning quickly to the water business. The consolidated revenues of our water business increased by 15% to INR 270-odd crores, driven by an acceleration in execution of our EPC portfolio. The prior year PBIT also included a onetime favorable arbitration award, making the normalized underlying operational profitability for fiscal '26, quite encouraging. Key operational highlights include the successful completion and four-wall handover of the Exim Bank funded or Deep Water and Sanitation infrastructure project across 6 islands closing order book for this business stood again around about the same level at 1,500 just over INR 1,500 crores, out of which longer duration or in maintenance contracts comprised just over about INR 1,077 crores. I want to spend just a few minutes talking about the strategic outlook for all these businesses. In sugar, the overall domestic production for this season is anticipated to be 27.8 million metric tons. With Maharashtra and Karnataka registering a substantial increase of 23% and 16%, respectively, of the previous season, with [indiscernible] a decline of approximately 3.4%. Of course, [indiscernible] has seen the greatest declines. However, on average, our performance invest to be significantly better than all of our neighboring factories at growth with an opening stock of 5 million metric tons production estimated at 27.8 metric ton on consumption estimates for this year [indiscernible] given standard, about 27.5 million metric tons and exports will be about just a shade about 0.5 million metric tons. And there for the closing, stock for sugar season '26 is anticipated to be lower than the opening stock at about 4.6 to 4.8 odd metric tonnes by and large. Hopefully, with the quotas from the -- from DGFT being what we anticipate as well. Now this actually bodes very, very well for the remainder of the sugar year and beyond as far as robust sugar pricing is concerned. And you will note that with at average sugar pricing of refined at [indiscernible] sulphitation at about 4,150 today, and it is broadly been the same in this quarter. It is a stock increase to the overall average refiner of -- that we had at [indiscernible] of 4,132 for all of our sugar for the previous fiscal year. So quite a substantial difference in terms of average sugar pricing, and I think that bodes very well. And it's reflective in one part, or the balance sheet of the country. And also the second part, very honestly speaking, is about the anticipated emergence of its El Nino, some say super El Nino, I think concerns that, that has on the impact of the one soon for 2026. A lot of that is unknown. Although frankly speaking, if you were in [indiscernible], the thunder storms are a very rigorous monsoon. But the anticipation, of course, is that as the monsoon progresses, it will have an impact of potentially a super El Nino occurring and both Skynet and the metrological departments concur with the findings of major metrological bodies around the world in the impact of the LDT and especially of the impact of the [indiscernible] monsoon. Now what does that mean for India and for the [indiscernible] industry. Very honestly speaking, it means that there could be an impact, especially where there are areas of water stress. Water stress is primarily in the central and southern part of the country and towards the eastern part of the country. And these places can fuel the stress because they do rely more heavily on monsoons and on monsoon, course, filling [indiscernible]. In Western [indiscernible] always maintained that we are relatively insulated because we get a lot of email water, et cetera. In fact, the problem for the last few years has been of excess water, not less water. As you will remember from earnings calls for the last few years, it has been because of flooding because excess water has actually been led by [indiscernible] et cetera. And then we've not been able to control it by our dams and the dam is a bit open, it led to flooding that has impacted crop for has had standing water for 3, 4, 5 weeks. Now that, frankly speaking, in a scenario when actually doesn't happen. So there is a significant possibility of early maturity of the sugarcane crop. I think that is what we are sensing. We have excellent planting. The planting of course, is over. We have excellent planting across our sugar factories. And the anticipation is for Western Central of the position that there could be an earlier maturing if there is less rain for of the sugarcane crop. And that ties in very well because you have an early divide which, frankly speaking, always is a signal for the start of the sugar season, which is I would say, still anticipated towards the second half of October of '26, very much in line with previous years of an early Diwali. Turning towards the ethanol business. The [indiscernible] along BPA, alongside [indiscernible] are actively formulating policies for applications beyond E20. There has been ample coverage in newspapers and ample discussion in government circles on applications of higher than 20%. I alluded to a little bit higher being tried incentives. Certainly, that is the distinct possibility in informal and formal business provided this issue of the court case that has prevented the tenders in -- from South [indiscernible] of India for the nation to continue if that issue gets sorted out, I think we can handsomely see higher blends be accepted. It does help in terms of saving crude from ForEx also when the rupee now is almost touching $100. In addition, draft notification amendments for the CVR, the central [indiscernible] propose a higher inclusion of ethanol blends under the emission norms and providing a regulatory basis for formal introduction of SSDs and [indiscernible] diesel capable vehicles in India, you will be happy to know that one of the leading car manufacturers this year has had a very important launch of the flex-fuel vehicles. And I'm delighted to inform you that we have one of the first 5 purchasers of set vehicle, and we hope to be that get our offices in fill to be able to drive it down with suitable advertising across the street [indiscernible]. So we're, of course, very supportive of this entire program. The ATS loans, airline turbine fuel loans are the redefined to include acetic hydrocarbons, enabling sustainable aviation fuel integration, which includes the ethanol jet part way. So it is laying the grounds of course, for investment into that very important industry. Again, these are routes taking place [indiscernible]. And I think it actually gives them insight to what can be anticipated over the next few years from this particular industry. We look forward to well coordinated policy action effectively utilizing the existing capabilities of the country, and we expect the government to follow a rational policy regarding the pricing of ethanol from sugarcane-based feedstocks to match can price and also our grain-based feed start to match the pricing of grain in the country. And the hope is that as we approach October as the next tender, there is a good deal of review that happens in a sector which actually has not benefited from any pricing increase of note over the last 2 years. Within the Power Transmission business, our strategic push is to clearly move towards, of course, the independent listing of GPT, capital expenditure programs are progressing very smoothly, and I've already covered that in my opening remarks. The export market continues to be the major growth driver of the business. The [indiscernible] of our Swiss subsidiary has provided huge engine of growth as we're seeing in terms of our order book as well as our inquiry book. [indiscernible] compressors supplied to major customers will increase the Power Transmission businesses, presence in the oil and gas sector, a lot of which is under commissioning now already having been described from the business. So we're very hopeful for that also to be add another significant push to the business. Our compressor testing is emerging as a promising growth segment for suppliers in Europe, especially and in the Middle East. And as you are aware, there's a very important pipeline being built urgently in the Middle East, and there's quite a lot of refurbishment of pipelines that are happening. We hope to be a beneficiary of this CapEx as over the next couple of years. Finally, in the Water segment, the market remains point. stricter environmental plants, including the liquid discharge management rules and the expanding corporate norms are driving commercial demand for water recycle and reuse infrastructure where an area where our technological excellence is highly competitive. So I'm hopeful that we will be receiving more orders in the very near future in this business. Before I open up the floor for questions, I'd like to just comment on the demerger. As I mentioned at the very hard set of the call, the approval of NCLT has been granted on the 19th of May and has been informed to the stock centers and the ROC. We appointed date for the scheme is the 1st of April '25, and the appointed date for the demerger is the 1st of April 2026. In respect to the record date, we have 2 record date. The issue -- our shares for [indiscernible], a group company on even is the third of June. That is the record date for the issuance of shares to [indiscernible] shareholders. For the issuance of shares for the remaining engineering shareholders, I anticipate that over the next 4 weeks, we will be able to set the record date. This is subject to the approvals of the stock exchange for the disbursal of shares to the shareholders. In a nutshell, what is anticipating that by the end of August, we will have a listing of Triveni Power Transmission Limited. I do want to assure all those on this call and other investors of remaining engineering that the end of August '26 will probably be after our Q1 Board meetings for TIL as well as PPTL, and we fully intend on publishing our results in the papers and on our web pages and holding earnings conference calls for both companies. So there are shareholders are fully knowledgeable about the profit that the businesses have made in Q1 of fiscal '27. With that, ladies and gentlemen, I'd like to open up the floor for our questions.

[Operator Instructions] We take the first question from the line of Ashish Ajit [indiscernible] from B Ventures LLP.

Yes. Sir, my question -- there are 2 questions. First, I'll ask the first question, and then I come on the second question. You had basically planned a CapEx for a multi-motor facility with respect to the distance, you were planning something on the protection side. If you could throw some light on that, and also wanted to understand the next 3 to 4-year plan with respect to PTB because I understand that evening talks with Aramco, voice rise and also you are targeting basically a more addressable market with respect to exports. If you put so light on this, it would be very helpful. This is my first question. Second, I'll come when first is completed.

Okay. The first question is actually 2 questions, but happy to answer that. With respect to the CapEx for the defense facility, as I mentioned in my opening remarks, of the INR 231 crores has been already incurred by the 31st of March this year, INR 78 crores has been for the defense facility. Of the balance, INR 109 crores, a small portion of that is also for the defense facility. But this [indiscernible] facility is now fully [indiscernible] in my saw at a short distance from our earlier facility. It will cater to not just propulsion charging, but also a wide variety of other projects that the company has won. . I'm combining the second part of your question with this in terms of the future development of the future market, both as far as defense is concerned as well as gearboxes. As far as defense, yes, we have had a significant and good success with the Indian Navy as far as mechanical products are concerned. Before that, technology partnerships with some of the largest and best-known firms has been essential. And this will continue to happen in the future in order to be able to expand our value proposition to enable customers. However, the Defense business is looking at other forms of -- other parts of it in defense and providing mechanical solutions to them as we speak as well. We have not had success with the [indiscernible] Navy. However, we anticipate that this year could be a breakthrough year for those 2 branches as well. Our hands are still full with the Indian Navy that actually has significant CapEx plans not just this year but also for the years going forward in terms of revamping and new builds of vessels as per the DPP, which has already been published and is available for you to download. With respect to the Gears business, there are a variety of relationships that continue primarily in terms of technology and development, et cetera, but I'm afraid we do not give forward-looking and advance estimates. The fact is that the gearbox business now is a global one. We compete with all the global companies domestically as well as in their home countries. And we are now looking at that as the entire addressable market. Caveat to that in areas where -- or other third parties where we do not have AVM approved vendor listings. Those are things that are being worked on very, very actively. One such company you've taken the name of in your question. And we are very aggressively working on getting those areas done so that we have absolutely no restrictions in the actual -- in the overall high-speed gearbox market. But yet again, let me say that we don't give forward-looking estimates, et cetera. So it's I'm afraid are constrained to give you any future-looking numbers. What is your second question?

Yes. Sir, second question is with respect to the [indiscernible] making India programs, we are taking significant opportunities for indigenization of imported Europe installations in PSU units. And the trend is further expected to increase. So I wanted to understand how is the company focus for this aftermarket business as well as the different business because the government itself is backing [indiscernible]. So how is the company targeting this vertical? If you could throw some light.

Right. In terms of digitization of technologies, the old -- I mean [indiscernible] doesn't need to indigenize any further technologies. As far as high-speed gearboxes are concerned, we have the entire meter technology. So neither do we need to partner with anybody, nor do we need to developed areas that we don't have technology in. Yes, we continue to improve, and there is research and development to continue to improve. As far as [indiscernible] is concerned, we've had the support of all parts of the Indian government, and we have a huge market share. So I don't see that as being any different in years past. . With respect to specific defense applications like marine gearboxes, in that area, yes, we are seeing a lot of support by the Indian Navy, and we have been successful in gaining some orders, and there are many important tenders that are pending. However, for marine gearboxes, we do intend on having some collaborations for that specific thing, but that is not a high-speed gearbox technically, it's sort of in between to be very honest. And it's a heavily specialized gearbox. We have a wide variety of relationships in that, and we are very hopeful of getting the same kind of market share that we have in the high-speed space across the country. With respect to aftermarket, we have a significant aftermarket team in-house that is able to reach a customer within 24 hours. And I think a lot of our proposition for the aftermarket is very compelling, not just [indiscernible]. And as we roll it out internationally, it will be even more compelling. This actually is catered towards other people's gearboxes, not [indiscernible], and it's about not just replacing order bearing but also about providing upgrades and downgrades technologically and providing unique technological solutions to other people and other mix of gearboxes, of which we have pretty much repaired and refurbished almost every single make in our 50-year history. I hope that answers your question.

Can we expect [indiscernible] in the next 1 year, please?

I think I've just answered that question already earlier in the call.

We take the next question from the line of Siddharth Shah from SRS Capital.

On the high-speed gearboxes, you mentioned the comps and compressor segment. Are we also working on the Gas segment. I think in the last quarter, you mentioned you're seeing a lot of traction there. Will that -- can that be a big growth leg for us going forward as well, especially in the export market?

100%. You're absolutely right. We are working on qualification orders because they are -- you see the gas infrastructure domestically is very, very little and it's only for a few models of gas turbines, of which we have been supplying those gear boxes. But the real growth in the gas market actually is in the medium and small scale as gas turbines and engines get paired to data centers especially in the United States and other parts of the world where there's been a boom in that sector. For us, to partner with said the OEMs that are supplying into that is a huge area of growth. And I anticipate successes in terms of being on the ADL of sand companies in the next few quarters. We are in active discussions with all. There's a lot of marketing that has been happening. All the companies are familiar with traveling, but for specific orders, we may need to have additional conversations. But it is something that the entire team and I are cognizant of as an opportunity and hope to develop quite significantly especially this year and going forward.

Understood. And from a technology perspective, I know you just mentioned actually that we have the full gamut range of technology required. So that is not something we have to work on to get on these approved vendor lists for that end market.

That is correct.

Okay. And just my second question was, I think rank, which seems to be a global competitor has just had opened [indiscernible] last year. So you know we have ramped up fully. And given a very high market share in this segment, are we seeing more competitive intensity from that?

Yes, we are [indiscernible] more in terms of tenders. I don't think it really has changed our competitive positioning. I think the value proposition that we bring is still very compelling. I can't comment on that specific company because I don't want to comment on drinks operations. What I can comment is on our history. This has happened in the past as well, 15 years ago, a very significant global firm, had a test pension and packaging facility in India. And eventually, they decided that it was not competitive, but they've been focused on their home market in Europe, another very significant thing. As far as rent is concerned, whether it is only for high speed because rent actually has a huge portfolio of low speed as well as defense tier boxes and activities. I don't know what exactly is happening at that site facility. Competition for high-speed care boxes, yes, we're seeing their name more. Are they winning more? No, I don't think so.

We take the next question from the line of Somnath Saha from 360 ONE Capital.

A few bookkeeping questions, sir, if you can help with the crushing numbers for the fiscal year along with net sugar recovery for FY '26?

During the just concluded season for '25, '26, [indiscernible] with a gross recovery of 11.06%.

Okay, sir. Secondly, if you can help with the order inflow for the water business during the financial year.

Total orders in [indiscernible] water business during this year is INR 155 crores.

So as I already mentioned, the CapEx for the year business of INR 340 crores. Tell us quickly [indiscernible] can how much is for the defense part.

Yes. Of the INR 231 crores that has already been incurred by 31st of March. INR 78 crores of that has been for the defense business. Of the INR 109 crores that is balanced, which will be incurred in Q1 fiscal '27 and Q2 fiscal '27, a smaller portion is still pending. I would anticipate about 40% of what is [indiscernible] for the best business.

And sir, lastly, if you can give us a sense how much the [indiscernible] for your distillery product and how the margin is going on? .

The Mace cost over here right now is much lower than last year. We are anticipating that it would be lower to the extent of about [indiscernible] However, we have to be careful in terms of the rupee depreciation because the exports to that extent increases. But otherwise, we are seeing a much lower pricing versus last year.

We take the next question from the line of [indiscernible]

My question pertains to [indiscernible] our transmission business. If I just look at the business that is part...

I do apologize to interrupt you, but your audio is not coming in clear. Could you please use the handset and proceed with your question?

I just want to understand the PTP business and there is something that could come from FX-related projects, and some of them would come from just refurbishment, for example, in [indiscernible] factory, you have a captive power plant and they want to change the gear box after a couple of years, you would have a play there. So just -- I want to understand if you just look at the overall business mix, how much comes from the CapEx start? And how much would come from these OpEx-related things, and whether that has actually changed in the last 1 year. That is the first question related to domestic PT business. . Secondly, I understand that as we expand in international markets, one of the key reasons to succeed is to have distribution partners or tie up with certain users who would actually in turn work with the end clients, right? So it could be EPC contract on or whoever it is. So in the second front, I just want to understand how our progress has been in the last 1 year because I understand that we have been accelerating our -- however, our partnerships in the European markets in particular.

Okay. I would answer the question in terms of the way that we actually disclose data. It's slightly different to the way that you've asked the question. But I do appreciate how you've asked it. It's it is the way that one should actually look at sales, frankly speaking. We don't typically give out data to segment between original equipment sales as well as replacement sales of original equipment, okay? Because -- and I'll tell you why, the customer of ours is typically the same. So if we -- for a new project, if we are selling to either the Siemens or a Mitsubishi or a Triveni turbine or to an Atlas Copco or a BHEL and the list can go on. . Typically, it is our OEMs that are securing the overall order with the end customer for a new gearbox, okay? For aftermarket, and third-party users, like I said, cement company contacts us and asks us for replacement. It could be of something that we had installed 20, 30 years ago, even earlier, it could also be how we have replacement of somebody else's back. The vast majority are other people make. Now if I look at the -- at fiscal '26, actually, the percentage is typically about in previous years, historically, it has just been above 30-odd percent that there has been the aftermarket share. However, in fiscal '26, the aftermarket share was about 40% of overall years. So that is part of the reason why even with slightly lower revenues, our profitability margins, et cetera, are very, very good and remain unabated despite a slightly lower revenue at higher overheads, obviously, as has elapsed. That's one. Going -- looking at this particular market globally, it remains exactly the same. You mentioned resellers and retailers. So unlike low-speed gearboxes, which are catalog unit products, sold on an access frankly speaking, and can be stopped and can just , et cetera, are the heavily engineered gear boxes, which are customized do take a particular requirement and a set of conditions. And therefore, it has to be engineered and then supplied uniquely. So we can't operate within the same type of retail type system that other companies within the industrial landscape comply. However, how we operate this and it's a very good question, I'm happy to answer it. is through a different type of structure. The first thing, of course, is that our OEMs are the same, broadly speaking. So if we are selling to these OEMs, be it [indiscernible] Atlas Copco, Mitsubishi, [indiscernible] given you a smattering of names. The list is very, very extensive. It is the same OEM that will buy in Germany, in France, in the U.K., in the United States, in Korea, in Japan, where the offices or wherever their plants are, they will be [indiscernible]. So it is about marketing to the supply chain teams in sales and that is something that we do aggressively, and we do that internally. We don't outsource that and is a critical part of our value proposition and something that actually creates a lot of stickiness. Why is the play stickiness because we are able to give responses to inquiries in the shortest possible time and a huge part of our IT development continuously is about reducing the time it takes to give very complex quotations. So that OEM of ours has that comfort that they can get it so much faster than anybody else, but this is the firm to partner with going forward. And that has been part of our USP. Getting on to third-party ABLs is very important, especially when we look at the oil and gas segment. So people who buy our American Petroleum Institute compliance norms. And that, of course, is an outward process. We have had a huge amount of success in the last 3 years, it has been as much more than I personally anticipated. However, we are not fully there. There are still some critical companies around the world. We don't disclose names, but I would just assure you that we are working on, and we expect even more success this year. And hopefully, in the next couple of years, we should be covered with pretty much everybody of doubt around the world or anybody as important that the world. Having said that, our aftermarket business globally is one where we can work with partners. And we have accelerated agencies. So having agents in local countries that can go out and do these are small mechanical companies that have engineers, et cetera, that can go up, do dimensions, have relationships with third parties third-party users and secure aftermarket business for us because aftermarket business needs proximity, it needs something to be -- to at that side, take dimensions and good wins end users that Triveni is the solution provider for any problem, especially when it's a gearbox or somebody else's make. That is a program that is ongoing. That is a program that needs a lot of strategic attention by the business and by the marketing teams. And yes, we've had successes, but there is a long way to go as far as that is concerned. Domestically, our aftermarket business is handled by a very professional and strong team in Mason, which has decades of relationships with OEMs. So we don't need anybody else to be able to do that. And in fact, we are the first port of call for not just [indiscernible] everybody's care box is pretty much across the country. I hope that answers your question.

Yes, that's helpful. Just one more question. So if I just do 3 plans across some of the defense by steel companies, cement companies and paper companies, et cetera. I did a mixed use that some of the semi companies are reducing their CapEx even the large one and some of the steel companies want to sharpen their CapEx, and they want to actually debottleneck and things like that. Now how much of that is actually which from your vantage point, you are seeing that would potentially would give some kind of a pathway into 1 or 2 years' effect?

So you asked a very, very important question, very honestly speaking. And I can't offer you any core numbers. But I can't offer you a sentimental picture very honestly. In Q3 and Q4, we did see domestic Indian industry really looking at the way that they were incurring CapEx. That had an impact. There was an impact in terms of our OEMs, et cetera. However, a lot of that has changed in Q1. In Q1, we've seen a huge amount of domestic inquiries coming from the 2 sectors that you mentioned, plus a whole load balloon. It is the same trend that actually happens globally except globally, it's a much larger market with the same industries and many, many more players that actually are there. . I think the rupee depreciation will make exports this year and this quarter, next quarter, et cetera, going forward, very, very competitive and compelling. So as you see a realignment basically rupees and dollars and euros being spent more carefully with more care in terms of efficiency, et cetera. I think that TPPL will actually be a great beneficiary for that, simply because of our price point simply because of our efficiencies and because of our time to produce and deliver.

We take the next question from the line of [indiscernible] SKP Securities.

Sir, can I get to know what is the EBITDA margin impact after the demerger? Like do we see any positive side or negative side in the PTB business?

As regards to the PTB business, it is what it's all dynamics as a matter of fact. And so far, we have been maintaining about 35% PBIT I think the same trend is expected to continue in future also. .

Okay. My second question will be, can you give me a breakup of like how much was the ethanol production through [indiscernible]

Okay. So we can talk about the product mix of this year, wherein our Mace, the total base overhead was versus 33% -- come down a little bit by -- from 44%, but that was largely because the ESI tender set that 40% of all grain allocation has to come from [indiscernible].

And what was the breakup of the entire [indiscernible] of the total production?

So if the total product mix, it was about 56% as the grade feedstock. .

Okay. And can you give us a like expectation about the crushing numbers like will the season being better than the previous season or something [indiscernible]

[indiscernible] a magic ball, we would certainly be able to tell you. And if you refer to my opening remarks, in the month -- in early June, it is -- the only thing that we can talk about is [indiscernible] and the survey of [indiscernible], let me just go with the process because I think it's important that to understand the entire process and what one can expect over weeks and calendar months. The planting in trade classically starts off in the month of March and finishes just on to read harvesting and can conclude by the end of May. However, this year, it was concluded by the first half of May. But the end to be pretty much all of it was concluded in the state of the decision. And this was pretty good because one was expecting a very hot summer, and planting is not ideal and very, very hot [indiscernible] because the germination gets infected. The next process after that is because internally, we have got enough checks and controls to figure out how much planting has happened. But you have an official survey that is done for the [indiscernible] state government. The process starts in June and finishes in July. That is the next process that is underway. And we can happily report that there is an increase in area under game which will be certified during the upcoming survey process. However, even until early July, the monsoon is hit around about that time as far as the protests concerned. And that is the most important hurdle in terms of the grand growth period, the veracity, strength, duration, spread and content of rainfall that happens. And overall, these little factors make a very important are important contributors. How much rate, how well it's spread out, how and where it is and how dispersed it is. These are important parameters that we will not know the result of that until we come to August. From August onwards, you have the second stage of grant growth period, which then continues. And then, of course, we have more detailed internal service that continue, and we have a better projection of the crop. Today, with the technologies that Triveni has invested in, including our overhead broad and satellite coverage and a much better ability. In fact, the work that we've done in the last 6 months should substantially improve our predictive capabilities for the upcoming season because of exposure to newer technologies and newer AI and ML models, I think that will give us a much better picture as we approach the start of the season. to have more effective control and analysis of how much gain is there. But at this point in time, it is very difficult to tell because what we know is that there's been a [indiscernible] planting has happened, it's been better. And there thus far compared to last year has been much, much better than before [indiscernible] has been much, much better than before. So it looks good, but there is so much more to come.

So just last question, like compared to last year, your distress has performed very well. So I wanted to know whether the conversion cost has decreased in the business or not compared to FY '25.

Yes. So compared to that, the conversion cost, definitely after accounting for byproduct credit, et cetera, has significantly come down and this, coupled with the decrease in the raw material costs has led to the significant turnaround in the performance of the business. .

Okay. Can you give me a number like how much the conversion cost has decreased [indiscernible]

We try not to give that.

We take the next question from the line of Rajesh Majumdar from 360 ONE Capital.

So I had a few questions, sir. The first one is on the working capital. The short-term debt is very, very high compared to inventory position. So I would assume a large part of it is also due to the water business. Is it possible to quantify the kind of receivables, et cetera, we have in the water business?

In the case of -- I think the total receivables are about INR 500 crores. If you look at water business, that will be approximately about INR 125 crores to INR 150 crores, that is because of the nature of their business. Mostly they do EPC business. So therefore, the receivables are normally higher in this kind of an industry. Now as far as the cash credit is concerned, you must realize that there has been an increase in the cane price also as a result of increase in gain price, will require a higher working capital. So that's why the short-term volume is a little higher. Now this is something which you would find from the month April onwards, it would very rapidly and rapidly start decreasing so that by September also, September or October. So it would also be a [indiscernible]

That's useful. Secondly, sir, this policy of [indiscernible]? How do you hear it? I mean, you have earlier mentioned that because of mass prices falling, ethanol profitability will improve, but that doesn't seem to be happening despite [indiscernible] prices falling. So where is the guarantee of the government policy on rice versus mace will continue interfering with our return on EBITDA in the future as well. Or if you could give us some color on the FY '27 kind of grain EBITDA [indiscernible]

So in terms of the profitability of the delay, it's gone up significantly and that's also to do largely with the performance of the grain displays, which I just mentioned, where in both the converged costs as well as the raw material costs have come down significantly and therefore, enhance the profitability. And we have been doing -- we have been very dynamically looking at all the feedstocks that are possible. And in terms of broken rice, we find ways far more competitive as of now. In terms of the EBITDA going forward, it would all depend on what you were able to the next [indiscernible] tender year. And that is something and what are the conditions over there that we need to be aware of and how much onto get -- and having said that, let's say that base has the largest margin followed by the C molasses that we are seeing.

But Rajesh, your question also alludes to the government's provides and what we're looking at. I think that -- I think our realization around that is very important. And while Sameer and I are trying to give you that rational expectation the government's imperatives at a particular point in time, especially in October, November become most paramount. So my reading is that the government is trying not to push mace after having pushed it a lot to be perfectly and it is also because India has now been in the newspapers about it's massive butane right you had huge stocks, et cetera, a lot of publicity about right with the quantum of rights in the country and the balances, et cetera. And so logically, it showcases to me that we put is going to be towards rights. Now there is a huge difference in the margin structure, whether we look at MCI or we look at broken rice or we look at any other very enterprise. And frankly speaking, I think that is the nimbleness and the discretion that MoPNG and the various government departments that have an impact on the EBP policy will have in terms of pushing out the margins, et cetera. The good thing -- the very good thing is that unless a proper price increases, given you're not going to see huge increases in available quantities as we start looking at massive quantities for E85. Will that happen for the ethanol lending year for '27,'28? I think that's a bit premature, to be honest. But it will certainly be something to be considered for subsequent years.

Sure. And one last question from my side is what is the export mix in the PT business for the year? And we had earlier actually, a related question because yes, earlier been talking about the fact that after the technology tie-up with [indiscernible] to a lot of global markets and the export share will continuously go up. So what has happened in this regard? And when do we see that kind of playing out in our numbers?

Rajesh, I'm not going to answer your question. I'll tell you why. The real reason is because Q4 was not a good quarter for the PTP business. It doesn't -- it is a bit -- it is a significant [indiscernible] of one quarter in time due to global changes where we had a lot of gearboxes that were scheduled to be exported that are in finished goods in the business. At an earnings quarter will be exported during this quarter and some in the following quarter. Now the trend towards higher exports is certainly there. The inquiry book is massively skewed towards export orders, both from domestic OEMs as well as global OEMs taking product out of the country. And that has an impact on profitability margins, et cetera, obviously and is an exciting growth trend for the business. But to reflect on the data of the year gone by in terms of that increasing trend, unfortunately, does not give you the accurate picture because of the events of Q4.

Right. I mean -- so I mean so how should we [indiscernible] forward in that case? You could give us some color as to what proportion, say, 2, 3 years out, the exports would be as a percentage of sales from the [indiscernible] that could also be space.

I think the growth targets since that exports as far as original equipment is concerned, should be more than half in the very near future. A lot of this is going to come from Indian OEMs exporting their products coupled with the gearbox abroad as well as deliveries of gas to global OEMs. More than 50% in the very, very near future. .

We take the next question from the line of Resham Jain from BVD Asset Managers.

So I have 3 questions. First one is in the defense business, what kind of order size, which we can have, like -- is it like a smaller presell kind of orders? Or is that like particularly larger orders? What is that we are looking for?

Resham, the orders in the defense business, I don't know what you would define as large or small. But if I look at it from the perspective of a gearbox, because that is the business where our defense business is has been incubated and is growing. It is a much larger size than the value of the box, okay? So from our perspective, it is a significant value in order business. Now the orders that we've been receiving are in double-digit gross to triple-digit crores. The delivery of set orders is between 1 or 2 years sometimes to 3 or 4 years. We are yet to receive orders that have tenure that there are part of the 10-year programs, et cetera. But I think we're well, well on the way in terms of getting those orders and you can just multiply the size, rightly speaking. The good thing, of course, is that a lot of the orders that we're getting are repeatable, which means that the government has [indiscernible] has the ability without a fresh tender of assigning it to the person that is on at the first time aware. That is why technical decisions that are being taken now under the latest PPP are very important, especially for a company like Triveni.

Understood. Got it. The second and the third question is with respect to the overall sugar business, where given the overall volatility in policies in the last 2, 3 years. The [indiscernible] towards CapEx is more in the engineering business, while we are a little slow, I guess, on the -- but going forward, the overall mix of ethanol being change -- changing from sugar towards grains. How are we looking at the overall CapEx, let's say, in the next 2, 3 years, just on the thoughts perspective? And how -- from where the growth can come in their sugar business overall?

Okay. So there are multiple places where growth can come. Winning sugar, of course, there's so much work that is happening on marital replacement of 238. So adding the yields and, therefore, top line growth by processing more came. The addition of the [indiscernible] factory and the return of sharply to its crush levels that are expected by our management team is another area of increase. From a profitability perspective, the CapExes that are presently being incurred is only to lower the cost of production within sugar. . Turning towards the distillery business. I think the S&R [indiscernible] this year has been a huge disappointment. [indiscernible] we should have been at 4. We haven't even had 2 this year. And so the growth organically in the ethanol business that should have happened has not actually happened this year. And I anticipate in future years, you will see that. Having said that, with Triveni, we are seeing some capacities being debottlenecked. And most importantly, we have the distillery at [indiscernible], which has not operated since we acquired the unit that will add to our capacity and top line for the distillery business. And this is without incurring any new CapExs for greenfield or ground field expansion. So this is just organic growth. Of course, with the cash flows that the company is generating, you can look forward to policy related a favorable policy related greenfield and brownfield expansions within our commodities business of sugar and distillery.

We take the next question from the line of Siddharth Shah from SRS Capital.

I just had one question on the aftermarket business. I just broadly wanted to understand why are the OEMs -- why are the other manufacturers we are competing with letting this business go and letting us kind of replace or refurbish like deals? Is it just a question of cost? Or are there some other factors at play?

So I'll answer your question in detail. It really depends on what the aftermarket solution is. So what exactly is aftermarket solution. It could be and it's not limited to is a gearbox that fails, okay? So what you do is you get the exact same gearbox with the same dimensions and replace it. A second solution could be that your [indiscernible] or some of your gear deep get chipped off and during the annual maintenance, you do some replacement of parts or perhaps the entire gear train or you do a bearing replacement, et cetera, or [indiscernible]. That's the second. The third could be a speed upgrade and the speed downgrade, okay? The fourth could be a complete refurbishment because the footprint of gearbox actually it does not change it adds value. And you can go out and put in a much bigger gearbox in the same footprint designed by a company like Triveni, for example, is part of our compelling value proposition. And then there are other variants of after we have market sales and service. What distinguishes us in each one of these various segments is different, okay? Now in the overall -- in the classical aftermarket that you probably were thinking about, there what our value proposition is that we can deliver much faster than anybody, anywhere in the world. Even if you have to ship this 3,000 miles, 4,000 miles, we can do it delivered faster than anybody, which means our costs are time to manufacture some tax because of our supply chain initiatives because of our stocking policies, et cetera, can be 2, 3 months. We have the capacity. We are able to do it. For global firms, I have led to understand by my teams that this could be as high as 12 months. So there's a substantial difference in terms of the time period and then to get mission-critical. As you can appreciate a gearbox is tied to a turbine or a compressor or a pump or an agent. It is a much smaller value than what it is coupled to at either end. But it is just as mission critical. So if a gearbox goes down, the plant goes down. It's just as bad as if a competitor goes down or turbine goes down or [indiscernible] goes down, the plant goes down. So it is the same type of criticality, frankly speaking. And therefore, for a customer that has broken gear need, for example, for them to find a time, an appropriate solution is very, very important. We have some other tricks of the trade in terms of how we do that engine ready sites. We do a lot of pre-activity work that we work with our third-party users in helping them with predictions, et cetera. All of these things are more on the relationship side, and they work very beauty, which is why domestically, we have certain fantastic market share because of the service that we can provide. That is not product. Now I'm coming to the service side of it. Internationally, it's going to be a challenge, obviously, because we're based in India, we don't have somebody sitting in Argentina. We don't have somebody sitting in North India, South Korea and I'm just taking some of these names as examples. And how we're going to develop solutions around that will be with local partners. And then as the business progresses with other remaining staff incident, international locations, et cetera. But that is something that we will have to bridge. So not just on the product side, but also being able to add this service which then leads into guaranteed product orders. But it's a complex arrangement, I think the fact that we can do it at a lower price point also plays a very significant part of the value proposition. Sometimes we are a fraction of what is usually offered by the original equipment gearbox manufacturer big client, a fraction. And yes, it's a highly profitable business for us.

Got it. Sorry, just to clarify anything. Our aftermarket to deliver is one-off, like our competitive strength, the fact that we have like a dedicated aftermarket day of facilities just focused on that, where maybe some other people want?

I'm glad that you asked that question. Yes, the new aftermarket Bay facility is to further accelerate the time for delivery. So we are looking at further beating what we do well already. Why? Because today, to be able to export in the aftermarket solution needs even faster time because we can't do anything to insert shipping. So what can we do from a production perspective to be even faster, and we've done that already. So the team that runs the aftermarket part of this business is extremely entrepreneurial they are constantly reinventing the product and the solution. And part of that, of course, was the infrastructure for that was in the new repair facility or myself.

As there are no further questions from the participants, I now hand the conference over to Mr. Tarun Sawhney for his closing comments.

Ladies and gentlemen, thank you very much for joining us for this earnings conference call. I think we've had a productive discussion where at a very important inflection point for Triveni. The growth trajectory for TPPL looks extremely robust. We're very excited about the new journey as that company and that business also completes its 50th year, a year being celebrated. As far as Triveni Engineering is concerned, there's a lot of excitement in both the commodity parts of the business. I think it's unfortunate that El Nino has such a devastating impact. But for the sugar industry, it can only be considered positive in some respects. . As far as the distillery business is concerned, we've seen with what's happened with oil par prices, with the rupee and with the government's reduced push and look at higher blends more or less about. I'm personally very excited about the next path of that business as well. Our water business, too, continues very, very well in terms of its progress as well. I look forward to discussing both Triveni Engineering and Triveni Power Transmission with you separately in August. Thank you very much.

Thank you. On behalf of Triveni Engineering & Industries Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.