Vilas Transcore Limited ($VILAS)

Ladies and gentlemen, good day, and welcome to Vilas Transcore's H2 FY '26 Earnings Conference Call hosted by PhillipCapital PCG. [Operator Instructions] I now hand the conference over to Mr. Sri Surya K from PhillipCapital PCG Desk. Thank you, and over to you, Mr. Surya.

Thank you. Good morning, everyone. We are pleased to have with us today the management of Vilas Transcore Limited, Mr. Nilesh Patel, Chairman and Managing Director of the company. Before we begin, I would like to mention that some of the statements made during this call may deem forward-looking in nature. These are based on company's current beliefs, assumptions and expectations. They are not guarantees of future performance and involve certain risks and uncertainties. The company does not undertake any obligation to update these forward-looking statements to reflect any future events or developments. Over to you, Mr. Nilesh-ji.

Good morning, everyone, and a very warm welcome to all of you joining us today. Thank you for taking the time to be a part of our earnings call and for your continued trust and support for Vilas Transcore. I would also like to thank PhillipCapital PCG and Sri Surya for hosting this. Today, we will discuss our operational and financial performance for H2 and full year financial year '26. Before moving to the numbers, I would like to briefly talk about our journey, our business and the opportunities we see ahead. Vilas Transcore started its journey in 1996 with a simple vision to deliver high-quality transformer components with a consistency, precision and long-term reliability. What began as a modest setup has today evolved into a trusted and publicly listed company with 3 advanced manufacturing facilities in Vadodara, Gujarat spread across more than 5 lakh square feet. For nearly 3 decades, we have remained closely connected to India's power infrastructure growth story. As the country expanded its transmission and distribution network, renewable energy capacity, railway electrification, industrial infrastructure and grid modernization, we continuously strengthened our manufacturing capabilities to support this growing demand. Today, Vilas Transcore has built up a strong presence across CRGO lamination, nanocrystalline core, transformer radiator and now copper conductors as well. Step by step, we are evolving from a component supplier into a more integrated transformer value chain partner. One thing we have always believed is that in this industry, trust is built over a year through quality, consistency and execution. Our focus has never been only on short-term growth. Instead, we have focused on building strong manufacturing systems, long-standing customer relationships and scalable operational capabilities. I'm proud to share that today, we are a trusted supplier to several leading transformer and electrical equipment companies across India and overseas. Our marquee customer base includes companies such as Voltamp, Atlanta Electricals, Electrotherm, [indiscernible] Industries, Kirloskar, Shilchar Technologies and many other reputed players in the power equipment industry. One of the biggest milestone for us during financial year '26 was the successful ramp-up of our new Unit 3 facility with this expansion. Our CRGO Lamination capacity increased from 12,000 tonne metric tonne per annum to 36,000 metric tonne per annum, representing a 3x capacity expansion and significantly strengthening our ability to cater to rising industry demand. Along with this, we also added a new value-added product categories, including nanocrystalline core with an installed capacity of 240 metric tonne per annum and transformer radiators with a capacity of 7,200 metric tonnes per annum, where commercial sales have also recently commenced. Further to capitalize on growing opportunities in the power and energy sector, we are expanding into copper conductors with an installed Phase 1 capacity of around 1,500 metric tonne to 1,800 metric tonne per annum and an estimated project cost of approximately INR 25 crores to INR 30 crores. The product portfolio under this segment will initially include copper paper insulated conductors, CTC conductor and paper insulated aluminum conductors, which are widely used in transformers and other critical power equipment application with plans to later add copper as well. Specialized and customized machinery for the new facility has arrived already while installation and erection activities are currently underway, trial production is expected by the end of September 2026 with revenue contribution likely from H2 financial year '27 onwards. This expansion further strengthen our strategy of increasing value addition and becoming a more integrated solutions provider within the transformer and power equipment ecosystem. In line with our strategy to expand across high-value and technological-driven transformer equipment segment, Vilas Transcore along with its promoter have announced that we will incorporate a new entity for manufacturing high-voltage boosting ranging from 12 kV to 400 kV. Vilas Transcore will initially hold a 25% equity stake in the venture, marking our entry into a high entry barrier and specialized segment with a strong long-term potential. The initial phase will focus on R&D and product development followed by phased commercialization over the next year. Overall, this expansion marks an important step in our journey towards becoming a more integrated transformer component and value chain partner for the power equipment industry. Now before I discuss what lies ahead and how we plan to take the business forward, let me quick walk you through our performance during financial year '26. Please note that pursuant to adoption of Ind-AS from financial year '26, the comparative financial numbers for previous period have been appropriately restated. Financial year '26 was an important year for Vilas Transcore as we successfully executed a major expansion phase while continuing to deliver healthy business growth. During the year, we achieved around 64% year-on-year volume growth, which was precisely in line with our target. The performance was driven by strong demand from the transformer and power equipment industries, better capacity utilization and contribution from the newly added capacity across our CRGO and nanocrystalline core business. At the same time, the revenue grew by around 30%. The difference between volume growth and revenue growth was primarily due to sharp correction in CRGO steel price during the year. While volumes increased significantly, lower CRGO prices impacted the realization across the industry. On the profitability front, the margins during financial year '26 were temporarily impacted due to the ramp-up of our new Unit 3 facility. As a part of this expansion, we incurred initial operating and establishment costs related to manpower, utilities, maintenance and overall operational readiness while utilization level are still gradually scaling up. At the same time, the sharp decline in CRGO steel price also created temporary pricing pressure across the industry. However, despite these challenges, we were able to maintain operational stability through disciplined execution, efficient inventory management and strong operational control, which helped us limit the overall impact on profitability. The overall EBITDA margin remained at 11.17% versus 12.68% last year, indicating a drop of just 1.5% and PAT margin remained at 8.6% versus 9.8% last year, indicating a drop of just 1%. We continue to witness noticeability volatility in CRGO prices, which is largely influenced by movement in global steel markets and fluctuation in logistic costs. During the recent geopolitical and war-related disruptions, the industry also experienced a temporary shortage of transformer oil, which impacted production schedules for several transformer manufacturers. However, this situation has now largely normalized, and we are seeing healthier demand and order environment gradually returning. At the same time, the entry of Chinese mills into the Indian market has brought a structural shift into the CRGO supply landscape. On one hand, this has improved product availability and reduced dependency on import from other regions. On the other hand, it has also increased price competition in the market, creating some pressure on industry margins. Over the past few months, CRGO prices have corrected by nearly 15% to 20% from the earlier peak levels due to the increased supply and broader market adjustment. Despite this volatile environment, we have remained focused on disciplined inventory management, operational efficiency and maintaining strong customer relationship, which helps us manage the impact a relatively stable manner. Importantly, even while undertaking significant expansion and capacity additions, we continue to maintain a healthy and conservative balance sheet position and the company remains net debt free. Now before we move to a question-and-answer session, let me briefly lay out the next phase of growth and the key priorities ahead for Vilas Transcore. Our future growth strategy is built around 3 key pillars. First is capacity utilization. Over the last 1 year, we have significantly expanded our manufacturing from 1,200 metric tonne per annum to 36,000 metric tonne per annum through our Unit 3 facility. This expansion removes earlier capacity constraint and positioning us strongly to cater to rising demand coming from the transformer and power equipment sector. Going forward, we are targeting around 45% to 50% growth in CRGO lamination volume as utilization levels improve further across the expanded capacities. The revenue will also increase by around 30% to 40% based on CRGO price. EBITDA and PAT margins are expected to remain at present levels with the improve rather than downfall. Second is expanding our product portfolio and increasing value addition along with CRGO products. We have added nanocrystalline core to the capacity of 240 metric tonnes per annum and transformer radiators with a capacity of 7,200 metric tonne per annum. While commercial sales have recently commenced, we are targeting higher utilization levels during the current year as customer acceptance and order flow continue to improve. Further, we are also entering into the copper conductor segment with a Phase 1 capacity around 1,500 metric tonne to 1,800 metric tonne per annum. Our objective is to gradually evolve from component supplier to a more integrated transformer value chain partners and increase wallet share with the existing customers. Third, expanding our customer base and market reach while we continue to deepen relationship with existing marquee customers, we are also actively pursuing new transformer OEMs, EPC contractor and export opportunities across Gulf countries, Europe and Canada. As the industries continue to expand globally, we believe our wider product portfolio and enhanced manufacturing capability will help us strengthen our positioning further. Overall, with expanding capacities, increased value addition and strong product portfolio and growing customer opportunities, we believe Vilas Transcore is well-positioned for the next phase of sustainable and profitable growth. With that, I conclude my opening remarks. Thank you once again for your continued support and confidence in Vilas Transcore. I would now like to hand over the call to the moderator to open the floor for the question-and-answer session, where nanocrystalline core and radiator, our other Director, Ms. Natasha Patel will address the questions and for lamination and other products, I will address the question.

[Operator Instructions] Thank you. The first question is from the line of Hardik Gandhi from HPMG Shares and Securities.

Congrats on a good set of top line. One of the key surprises for the investor community was the bottom line. If you can explain on at least the gross margin, why were they impacted? I can understand the fixed costs from new plant were not absorbed, but on the gross margin level, we had a correction.

Sir, as per our policy, whatever the stocks we are keeping, the sharp declining in the price of the CRGO did not impact us like exactly because a strategical purchase and everything was there. But a few of the materials which we have to bought from the India and that was the obligation because in India, the 2 mills which are NLMK and TKS, they were having very less capacity and they did not reduce their prices in current scenario. Whatever the import we got, we had adjusted all our prices as per the market in India. But the local vendors, they did not reduce their prices up to the extent of the market finished product in India. And these 2 mills, we have to keep continued relationship with them, and we have to buy limited quantity from them. So this quantity has affected. And like we always say that we have a few customers having what you say, quarterly contract where we are getting an advantage when the price has gone down because our price restriction has incensed. But 30%, 40%, we get material orders on a day-to-day basis, in which we have to pass on a bit of the market situation to them and we have to reduce the price. So in this second half, we have faced such kind of few problems, which has impacted on our gross margin around 1.8% to 2% whereas market has dropped to 20%.

Correct. So if you can share how much are we buying from these Indian mills? And second, if you can explain on the earlier point which you mentioned that Chinese mills have entered Indian markets from like local -- have they put up local plants? And do you see further pressure on CRGO prices as well as earlier point which we raised on the antidumping duty on CRGO prices. If you can explain on these points, that would be helpful.

None of the Chinese mills have the local presence. We have to import from the China only. There are only 2 mills that have the BIS approval. Their BIS approval was for 1 year in last June. So this June 1 mill BIS has been -- is going to be finished. And July, there's one more mill whose BIS is going to be finished. It may be renewed, but we don't know exactly at present will it be renewed or not. If it won't be renewed, the price will shoot up again. And if it will be renewed, the price will remain same. About antidumping duty, we have got the news that now government wants to reduce the dependency on import and they are working on the safeguard duty or antidumping duty. So that we will come to know when the exact news will come. But whatever internal talk in the mills, from the details we are getting from the mill, it seems that it will come.

And just how much did we buy from the local mills versus Chinese mills? And what was the price?

We usually buy 25% from the local mill.

Okay. And what's the price differential between local and Chinese mill post -- any duty charges on it?

Always it is somewhere around 5%.

[Operator Instructions] The next question is from the line of Aman V from WealthTrust Capital.

So got 2 questions. And the one major thing that I can see is on your working capital side. So that number has been going up year-over-year and so have our receivables also increased. So I understand there is a bit of uncertainty in the market. But where do you see this number settling for you?

So receivables will increase as we increase our turnover, receivables will definite -- because our cycle is 60 days credit. If we sell INR 30 crores a month, our outstanding remains around INR 60 crores. In this financial year, we have increased our cash by INR 130 crores. So definitely around INR 15 crores to INR 20 crores receivable will increase.

So overall on the working capital days cycle will be close to 95, 100 days.

Yes.

Okay. And my next question is around your copper conductor business that you are spending some money on. So what is the revenue potential from that plant utilization?

Installed capacity is around 300 metric tonne per month, so 36,000 metric tonne per annum and average if we count INR 1,000 cost value, it will be INR 360 crores installed capacity. First year, we are thinking our plan is that we will be starting our trial production in September and commercial size from October. And if we can do around 1,000 metric tonne in this month, this particular year, we will get INR 100 crores out of it. That's what is our target. With present price, it becomes somewhere around INR 135 crores to INR 140 crores. But -- see, copper is volatile. So we never know. We assume that we will get INR 110 crores or INR 120 crores revenue from this financial year.

Okay. And are we a niche player in this segment by any chance? Because from what I understand, CRGO, we are definitely a niche player. But considering you are also going into this adjacent business segment. So I wanted to know your thoughts as to -- do we have any competitive advantage over here over our peers?

Sir, this is the beginning of our new product. So competitive advantage will come as and when we grow into that particular product. But initial stage, we don't see any competitive advantage. The only advantage we will get is that the customers what we are catering to the CRGO and radiator, the same customer will buy this particular product from us. As far as competitive advantage is that once we reach to a certain volume, definitely, we will -- competitive advantage because the premium on the copper gets reduced as your quantity increases. So profitability is always increasing when the quantum of consumption in copper increase.

The next question is from the line of Krupa Desai from Electrum Capital.

Am I audible? So sir, my first question was how much revenue this year came from the radiator business?

Ma'am radiator business, commercial production has been started in April. So the revenue will start from this year. Last year, we had submitted the samples to lots of customers. They have evaluated it and our sales has been started from the April 2026.

Okay. And sir, this year, do you think we will fully utilize the 7,200 metric tonne capacity of radiator?

No, ma'am. Radiator is not something that we will be able to utilize 100% capacity because it's lots of laborious work and labor has to settle slowly, slowly. So we are targeting somewhere around 20% to 25% utilization in this year.

Okay. And how much revenue will come from that?

Somewhere around INR 25 crores.

Okay. And I believe the margins there are like 18% to 20%, right?

Yes.

Okay. And sir this CRGO pricing will continue to be lumpy. So is there any way that we can hedge ourselves against that?

No, ma'am. The CRGO price cannot be hedged. It's not listed anywhere. It can be hedged by procurement or that way only.

And in the presentation, like you said in the initial commentary also that you'll be able to maintain the EBITDA and PAT margin. So is the guidance between like EBITDA margin between 10% to 11% or anything like that?

Yes.

Okay. So for the next year, you will maintain 10%, 11% EBITDA margins?

Yes, that will be minimum, we can improve in the next financial year because now CRGO prices is getting improved to this level.

Okay. And sir, how much CapEx we have done in this year and how much we are planning to do in FY '27?

In current year, we have done INR 60 crores and in coming financial year, somewhere around INR 30 crores to INR 40 crores.

The next question is from the line of Kushal Shah from Nexus Equity.

Excellent business performance during this uncertain time. Sir, my question is on -- again on the bottom and the profitability side. So sir, during H1 results and also during your recent update in February on our recent press release, you have mentioned that the margins were maintained at around 11% to 14%. So just wanted to understand in Q4, which is from January to March, has the margin -- I mean the margins have reached a significant deterioration or how is it?

[indiscernible] somewhere around quarter 4.

Okay. So the margins were deteriorating in quarter 4 only. So it went to something around 6% to 7%, right? Because if I remember -- 9 months, I think the margins were somewhere around 11% to 12% as per your press release. So in Q4 only, I think the deterioration mush have come and that must be around 6% to 7%, right?

In Q4, 11% to 12% was the EBITDA, right?

Q4, 11% to 12%?

No, no. When you say for -- so, like in Q3 whatever the update we have given we said stable margins to be there. So see in a volatile situation where your entire raw material prices has dropped to 20%, 25% -- and you hit with a 1% or 2% EBITDA, you cannot 100% manage the price drop -- has been happening in Q4 [indiscernible].

Okay. Perfect, sir. And sir, also, I mean, my second question is on the capacity side. So what will be the capacity utilization from the new plant? So put together old and new. So what is the current monthly run rate? And what was the run rate in FY '26?

So we are planning to cater around 30,000 metric tonne in this coming -- this running year. So that 80,000 metric tonne has to come from the plant 2. What happened sometime few customers has approved plant so they give us the order we have to take on the plant 1, we have to process from plant 2 and need to build from the plant 1 because they open up LC and everything for the plant 1. So there are lots of customers with whom our approach is going to incorporate plant 2 in their customer data base, so that approval process, everything is going on. But if they give us the order on the plant 1, we take the order, we process from plant 2 and invoice from the plant 1.

Okay. So 30,000 we are targeting for FY '27. FY '26, around 20,000. I mean that was the target.

19,500 metric tonne was there.

Okay. And sir, just one connected question. So during H1, I think -- I mean, we commissioned our plant in somewhere around July. So you mentioned that due to fixed cost and other overheads, pre-operative overhead, the margins were impacted in H2. But in H1 also, I think the operations are commenced and the ramp-up has happened from H1 to H2. So how, I mean the cost has affected the margin? I'm not able to understand that point.

Sir, the full power came in H2, so whatever power we have taken is for radiator and for the copper. So minimum -- our power minimum charges is around INR 12 lakhs, which has incurred in last 6 months. Second, entire copper team, around 13 people, all manager level has been appointed since December and the radiator entire unit was appointed since December and November. So all this copper and radiator has -- did not start and the majority is there in place because we started making radiators from the December onwards, making the radiator, giving the samples, getting the taxes and all this process was going on. So like if you start factory today, you cannot just loop manpower from today. You have to have the -- hire manpower and all those security charges even right now, we are spending around INR 5 lakh to INR 6 lakh security charges from our Unit 3. So all these charges, it will be compensated when entire setup will be started more than 50%, 60%.

The next question is from the line of Prolin Nandu from Edelweiss Public Alternatives.

Just this question again on margins, right? See, in the past, right, since you have been listed and we are tracking you, you have managed the CRGO volatility very well, right, much better than some of our peers. Has something changed in Q4 for the margins to drop as much as they have? And then in the same light, sir, the 14% margins that we used to earn, let's say, in FY '25, right, and maybe even for quarter 1 or some part of FY '26 as well, are those margins now things of the past and we should probably look at a more normalized 10%, 11% margin. So has anything changed where in the past, what we have realized is that the volatility in CRGO prices did not affect us as much as it has in Q4. So is my understanding correct? And what one should think about the normalized margin, right? That 14% was too high an exemption and those are more like in 3-year cycle, you might earn those kind of margin in 1 year out of 3 years? Just some comment on CRGO volatility and margins.

Sir, if you recall my all the comments, lots of people ask me this question that [Technical Difficulty]

I'm sorry to interrupt, sir, your voice is breaking up in between.

Yes. So if you recall all the calls during the 2 years, lots of people ask me whether this 14% margin is constant, it remains same or it will be volatile then I say, this kind of margins are always there when there is a shortage of CRGO or when there is a very, very high demand and shortage is not there, prices shoot up and we get such kind of benefit. But in normal criteria I always said, if you recall my -- all the comment is that the minimum to minimum margin PAT, we have given 7% in last 25 to 30 years, and we have never gone below 7%. So when there is an average running or when there is a decline in CRGO prices and all those things, our EBITDA runs somewhere around 11%, 12% and net margin runs around 7% to 8% PAT margin. So this year, it was in declining. Now it's -- even if it is stable, we could have been improved it better, but it declined. And in second half, it declined a bit higher. And first half, we were having a good stock, we managed everything. Second half, we were buying from the local vendors. And the second part is that the local mills did not reduce their prices. And we are in compulsion to buy from them because we wanted to continue because in -- see if in next 2 months, if China gets [ gold ], the price will again shot up and we need to go to the local mill to buy the material. So such kind of strategical calls we have to take. Otherwise, we could have not bought 25% material from the local mill and we have bought -- we must have been bought from the 100% material from China, this could all -- do not happen. But strategical call has to be taken and we have taken that strategical call, which has impacted not this 100%, but 50% of that is due to that. This coming year, we are definitely seeing that the margins will improve because now there is no scope that the CRGO price will decline.

Okay. But the rise has not yet started, right, which you would have -- I mean, maybe I think in February.

5% market has improved, and it has improved since the war has begun. April month, the 5% market has been improved. The only thing is that the demand in April month was very slow because lots of transformer manufacturers stopped their manufacturing because of the crude price. Oil price has been sharpened to double. So lots of people postponed their orders and everything. But the price has improved. That is for sure.

Understood. And my second question is on your press release, right, where you have -- you have started a new company for Bushings, right? Now again, in the past, you have said that you want to enter only niche categories. It's not very crowded. Maybe even I remember myself asking you about Bushings. But again, I'm not sure what was your answer then. But has anything in the market changed? And why this 25%, right? I mean, are you expecting some global collaboration, which you have already mentioned in the press release there? So 2 questions. Bushings, has the market changed which has made you interested in this subsegment? And secondly, why the listed entity only has 25% stake? So those are my 2 questions on the Bushing.

So sir, Bushings, strategically is like an R&D project. We are setting up the R&D center and product development center first. Like if I'll do that in Vilas Transcore, lots of new products will enter into the Vilas Transcore, which will impact on the balance sheet for the 1 or 2 years. First thing. Second thing, it's a development process, and it will take time to launch the product, say, 1 year, 1.5 years. Third thing is why it is a separate entity because it's a highly technical item. We will in future -- right now, we are discussing with 2 or 3 companies for the joint venture or technology transfer. So if such kind of things takes place, it's very difficult that the one portion of the -- one product of the company will have a joint venture with another company like that. So we are starting up the new venture having 25% of the Vilas Transcore we are not keeping separate -- Vilas Transcore and total separate. And we are exploring opportunities for the technical collaboration, which can help us to cater into the Indian market as well as go to the global market. And that's why we are doing it separately.

[Operator Instructions] The next question is from the line of Mehul Panjuani from 40 cents.

[Foreign Language]

Capacity we have doubled, but the manpower, customer, product, setting up, all those things slowly, slowly takes place. So we are not targeting double-up from here, we are targeting around 45% to 50% from here.

And sir, and what about the margins? I mean are we expecting the situation in the West Asia settles down then we will get back to normal margins or even without the crisis settled?

Definitely the market remains stable, margins will be -- we will reinstate the margin what we were having earlier in first half.

Sir, when you say market means are you talking about the transformer market or can we -- can you please elaborate a little bit.

I say market means CRGO prices. Transformers market good demand is there. The question is the CRGO prices.

So sir, what are the variables will drive the CRGO prices?

Sir, too many inflow when Chinese mill gets open, too much of material inflow takes place, and that's why the prices slowly, slowly gets corrected. And sometimes it's sharp defunct like INR 5, INR 10. So that kind of things can impact to the market.

Okay. And sir, with the antidumping duty, if it gets past what you had just mentioned and then are we expecting CRGO prices to remain stable?

If antidumping duty will be there then CRGO price will increase, not remain stable. It will be increased by INR 25, INR 30, INR 30.

Okay. That's great. And so you are not expecting CRGO prices to be as bad as Q4 at all?

No, no.

The next question is from the line of Ritesh Bhagwati from Alpha Plus Capital.

My question pertains to, again, our new entity that we just talked about. So first of all, I want to understand what sort of total CapEx is planned for this venture? And what sort of bushings are we focusing on? Is it OIPs, RIPs or both?

So first phase, we are developing OIP bushing. And for that we are doing a CapEx of INR 10 crores. We are allocating one -- ready-made building having with our transformer company, which was ideal. So we are renting it out and we are putting up the R&D center with the tape labs and everything. And we are developing OIP bushing up to 145 kV in this financial year. Parallelly RIF Bushing fab we will take and RIP Bushing, we are discussing for the technology and everything to some of the big companies. Once that will take place, we will come up with the bigger expansion in future, say, maybe next financial year. So at that time, we will think how to scale up this company if we will get what you say, technical collaboration or a joint venture from another bushing company across the world, anything, in which we are discussing. So according to that, we will plan future expansion and everything in next financial year. In this financial year, we are targeting OIP bushing up to 145 kV to start production and sales, but first will be the R&D test and everything. For that, we have fixed up the machines, we have fixed up the tape lab, which we will get in next 4 to 5 months.

That's correct. And again, I just missed out in the opening remarks in regards to our 25% holding. So like are we already partnered with someone already or what is it like?

No, sir, we are in talk with a few companies for these kind of ventures and technology transfer joint venture and all those things.

Okay. And lastly, like how do we -- will be benchmarking ourselves against the incumbents like Hitachi Energy and even like Yash Highvoltage?

Sir, at present, we are a [ BBAE ]. So we cannot benchmark anywhere. Our focus is to develop the product. And if there is a shortage of OIP bushing, we should enter into that market. That's the first goal. Second goal for RIP bushing, there is a heavy investment. So if we have a proven technology with a very good name into the world market if we get some such kind of collaboration, we can put up the plant with the big investment. This is a small investment we are doing in RIP bushing, we are doing with the indigenous capability for that Mr. Ramachandran, who has found the Yash Highvoltage, that Founder, Promoter is joining with us. We have made an agreement with them, and he is on board and developing all this product.

The next question is from the line of Aakash Jhaveri from Kuber India Opportunities.

So just on the new products plan that we have -- understand we're talking -- you talk in detail on the bushings plan that we have. But sir, you, this -- so radiators is going to be, as you said, 20%, 25% utilization next year. Copper is something where we can do very large turnover also. So why are we focusing on sort of new products such as OIP Bushings and RIP Bushing later on when we have these businesses, which are still needing to get ramped up?

Sir, we are focusing means, we are developing it. For that we have appointed Mr. Ramachandra as COO, and it is his duty to develop and product development and marketing and everything. Being an entrepreneur, he has set up the 2 plants. One is for the earlier he was in Crompton, then he has set up the Yash Highvoltage. And now we have joined hands with him to set up the new plant. And that's why we did not keep it into the Vilas Transcore because we need to give answer every now and then. So when we get the work from the professional, that speed might be plus or minus, slow and fast. So we keep it as a separate entity; he develops and it will be developed. It will be very good for us for Vilas as well as overall Group. It's not -- and we want to be -- cater all the niche component of the transformer industry, and that is one step towards it. It has nothing co-relationship that if you do -- you are doing radiator, you cannot do bushing.

Got it. So just on this, is there any plan to sort of bring this company -- merge it with Vilas over time?

So that's what -- that's why we have keep it separate because we are not knowing what is -- what will be the future of this radiator plant. I didn't want to risk any money of the Vilas Transcore. So we put up our own fund. Once it will be developed at certain level, we will definitely take a call whether it has to be merged in Vilas Transcore or not. There may be a chance we could get a merge because ultimately, we want Vilas Transcore as a flagship company, which caters to all components of transformer industry.

My second question was on the guidance for FY '27. We've given the 40%, 50% revenue growth number. Is that on an overall basis or is that only for the CRGO basis? Because I think in one of our previous con calls, we talked about potentially targeting INR 1,000 crores revenue for '27. So this 40%, 50% number, is it for overall?

Sir, we were definitely talking about INR 1,000 crores revenue. When we were targeting that 30,000 metric tonne CRGO we will do and with the price of INR 270, INR 280, will reach INR 2,000 crores. That was the guidance when we got the public issue. And we are targeting this 30,000 metric tonne with a price of INR 270 to INR 280. At that time prevailing rate was INR 280, INR 290. But in this coming financial year, it has been reduced sharply -- 30,000 metric tonne is our goal and definitely we will do it. The only question is what will be the price? We are taking an average price of say INR 200 or INR 210. With that, we are seeing 45% to 50% growth in revenue. Other products like 25% of the radiator, nanocrystalline core and CTC conductor, all this -- all altogether, we are targeting somewhere and anywhere between INR 750 crores to INR 800 crores with the price CRGO of INR 210. If CRGO price goes up, like say, antidumping duty or something come up and CRGO price goes to INR 240 or INR 250, even if the Chinese BIS mills get renewed after 2 or 3 months delay, the price will shoot up and that will help us in improving our margin as well as for the top line. But at present, we are considering the present condition, and we are targeting somewhere around INR 750 crores.

The next question is from the line of [ Siddhant Lodhia from Sanchiv Bank ].

Just wanted to understand if there was any impact -- any element of export in this year's revenue?

So we have around 1% to 2% of the revenue from the export. We had a couple of order from the Gulf, which right now is on hold because shipment cost from here to Gulf has increased.

Sure. Understood. And how much would that order be?

The same, 1% or 2%. But I'm telling you the export margin is not good as on date because everywhere you are facing Chinese competition with the export. We are getting lots of opportunities. Recently, we got order from the Malaysia. We got the LOI in the Chinese price, which is very difficult for us to supply from here. Our friends are doing from India, but it's very difficult to do exports with such kind of low margin.

Sure. And in the copper conductors business, I think the deck mentioned 1,500 metric tonne to 1,800 metric tonne per annum. But we -- on the call, I think I heard something around 36,000 metric tonne. So was that 36,000 metric tonne for the CRGO or for the copper conductor?

36,000 metric tonne is CRGO, not the copper.

So what is the copper conductor potential revenue that we are envisaging for FY '27?

Our capacity is 3,600 metric tonne, not 36,000 metric tonne. Copper is 3,600 metric tonne with PICC and CTC Conductor, both the product.

Okay. So FY '27 revenue would be INR 100 crores to INR 120 crores. Is that correct?

Yes, yes.

The next question is from the line of Daksh Malhotra from Aadriv Global.

Thank you for clarifying so many doubts that everyone had on the call. Most of my questions have been clarified. [Foreign Language] at about INR 210 per kg with 30,000 metric tonnes, we are talking about INR 600 crores coming from CRGO, around INR 100 crores, INR 120 crores coming from our copper conductors starting H2 FY '26. And then around INR 25 crores coming from radiator plus ballpark around INR 10 crores, INR 15 crores coming from nanocrystalline core, right? So amounts to about INR 750 crores to INR 780 crores, which is what you are also guiding for?

Right.

[Foreign Language]

[Foreign Language]

[Operator Instructions] The next question is from the line of from Deepankar Bisht from CCV IM.

Out of 45% growth in revenue for FY '27 that you have guided, what is the expected revenue contribution from the newly added capacity of core CRGO?

This balance 18,000 metric tonne will come from the new facility only. Because our old facility is fully exhausted from the very first day in so many years.

And sir, can you provide some color on quarterly pacing for FY '27 revenue?

Can you repeat your question?

Can you provide some color on quarterly pacing for FY '27 revenue? Like would the H1 be stronger or H2 be stronger for the company?

Sir, what I see at present, H1 will be a bit lower than the H2 in this coming -- this financial year because at present oil price has jumped from INR 70 to INR 150, transformer oil. Lots of customers are having their orders as a firm price order. So a few of the customers are waiting that this conflict gets finished and the oil price comes down, then they will start the new order. A few customers who are getting price rise from their ultimate customers are starting up their production. So this April and May is going to be a little bit on lower side looking to the sales. So H2 will be better than H1 because even in transformer industries figure, H1 will not that be good because of this oil and other prices.

So can we expect 40% in H1 and remaining 50% in H2 or 30-70.

It won't be 30-70, it will be 40 60.

The next question is from the line of [indiscernible].

Congratulations on a good set of numbers. I just had a query on how our business model is. So it's a cost-plus model and if it's a cost-plus model, so should we focus on EBITDA per tonne in the CRGO business and also in the copper business? And if not, so what's the value addition and what drives our margins so moving forward that we have a better clarity on the same?

It's about -- it goes in percentage. Our few of the cost is fixed per kg -- so if the price goes up, we get a higher percentage. If price goes down, we get EBITDA a little bit on lower side in CRGO. In copper, the same, like if copper price goes up, whatever the value of paper we are using, we get more value for that paper. Paper price remains same, copper price goes up. 3% to 4% paper is used in the copper product. So whatever the paper we use, we get multiplication of that benefit. So if copper price goes up, we get the valuation of the paper higher. So the margin is high. If copper price goes down, the valuation of that paper comes as a lower value. So it's margin comes down. So any product in which the price goes up, we get the better EBITDA margin and the margin, copper as well as CRGO.

So copper won't be EBITDA cost plus model where there would be a certain kind of EBITDA per tonne that we would be looking at.

Average EBITDA is around 4% to 5%. But if copper price goes up, you get more realization of the...

Because you would be having a better inventory early on at a lower price, that's why our margin would improve on that front. Other than that, it would be a certain fixed EBITDA per tonne, right?

Yes. But the point is you don't understand it. Copper, we don't -- copper is an extraordinary volatile product. So you cannot keep on copper open, it's always hedged. It's about the paper what you are using in copper and the process cost. Like paper cost is around INR 200 a kg. When you sell copper at INR 1,400 a kg, you get the valuation of the paper from INR 200 to INR 400. If copper price comes down to INR 1,000, you will get the valuation from INR 200 to INR 1,000.

Understood. But I want a better clarity, sir, if you can give on CRGO business. The same thing applies over there as well?

CRGO business, typically, there are no such kind of calculations. It's like price is going up, then why it's going up because there is a shortage. When there is a shortage, you always can get the more price and more profit. That's how it works.

[Operator Instructions] The next question is from the line of Vihaan Badri from Umayu Advisors.

Sir, my first question is that despite us having a decent cash balance, why have we chosen to go for short-term debt?

Sir, we are having a cash balance, but if you see our forecasted turnover, we will definitely require more and more working capital.

Okay.

And we sought fund because in CRGO, we need to keep lots of stocks. And like right now, if Chinese mills BIS will close down and 2, 3 months if the government delayed it to open it, we need to keep a few stock building up to get the -- cater to our customer and everything. And for such kinds of strategical purchase, we need to have some -- this kind of cash flow on our hand as well as if we have to reach to turnover of INR 750 crores, we are utilizing the same cash flow.

Okay. And my second question is I wanted to know your thoughts on going to main board from SME.

So as and when these 3 years will be completed, we will definitely switch over to main board. And for that whatever the process has to be started that we will start in this financial year around December because we'll be eligible for June '27. All other -- but the minimum timeline is 3 years, which we are completing on June '27.

All right. If I can just squeeze in one short question...

I'm sorry, sir. Could you please return to the question queue?

Okay.

The next question is from the line of Siddharth Shah from SRS Capital. There appears to be no response from the participant. We'll move on to the next question, which is from the line of Miten Shah, an Individual Investor.

So my first question will be, Nilesh Bhai, if you see, we essentially are CRGO manufacturing -- lamination manufacturer, but we ventured into the radiators, then the copper conductor and now we are planning to go then the nanocrystalline core and now into the HV bushings. So these are all connected to transformers in a way. So my core question is that is there a plan where we could probably also think to become a transformer OEM, which would really help us in improve the efficiency in margins. Means everything will be backward integrated?

If we will enter into the transformer field, definitely these customers what we are having right now, we have to compete with them. And do you feel that any customer to whom I will compete, they will provide the technical details and everything. Technically, if I start my transformer business, definitely, I'll lose lots of customers.

Okay. So what probably we are seeing here we might face a pressure of conflict of interest or whatever and hence we might lose business. And hence, probably that may not be the case going forward. Am I right?

That's what we don't want to happen. And that is why we are never -- we are not going to plant transformer factory or transformer manufacturing in Vilas Transcore. We are making CCA, core coil assembly and everything. And that if some customers will come, definitely, we will think on that. But full transformer, we will not go in Vilas Transcore because that will spoil our existing business.

Got it. Got it. And the second question will be like -- sir, actually, I'm failing to understand regarding the [indiscernible] CRGO prices because I had asked the question in the earlier con call also, like if the CRGO prices increases, and I know what is the effect of that thing [indiscernible]. So what I understand as of now in this con call is, if the CRGO prices increases, so that probably increases our margin. So what I don't understand is that if the raw material price increase, how does it affects -- how does it increase our margin because that's the main raw material to make the lamination?

Right. So sir, raw material price only increase if there is a shortage. Unavailability is not routine availability of the material in the market. So when there is a shortage, you can definitely get better price from your customers. One thing. Second thing, at that time, if you are having a good contract of the raw material supply, that can help you. Like if price increase, you are having your inventory, you are having your backward booking and all those things, you can definitely get benefit out of it.

Okay, okay. So that is direct proportional -- the margins are directly proportional with the increase in the price of the CRGO input prices.

Yes.

The next question is from the line of Deepanshu from Securities.

First of all, congratulations for great set of numbers. Sir, is there any way to track CRGO prices? Like any website or we can track indirectly by tracking some other steel product prices? Is there any way like?

There is no such kind of mechanism with the CRGO prices.

The next question is from the line of Chetan Dhruva, an Individual Investor.

My questions have been answered. I wanted to know about the INR 1,000 crores revenue thing. I think the management has already clarified.

The next question is from the line of Hardik Gandhi from HPMG Shares and Securities.

I just wanted to know 2 small things. First, what is the current profitability from nanocrystalline and how do we expect to ramp it up post this expansion?

Can you repeat your question because background, there is a noise and we are not able to properly listen it properly?

Is it better?

Yes.

Yes. Just wanted to know what is the current PAT we are realizing from nanocrystalline sales? How are we expecting to ramp up after -- for this year? And are there any further CapEx plans in nanocrystalline?

Yes. So the current PAT we are realizing is about 25%. And we are under the process of research and development of developing new products in the same -- in nanocrystalline core. So our current proposed capacity is 240 metric tonnes and we are proposed to utilize around 180 metric tonnes with these new added products in nano core.

Right. But earlier we guided for a 50% PAT. Is it that something which we'll realize by end of this year or is it -- was it a hypothetical number and real plant...

Like we said that we will do around 240 metric tonnes. And in value-wise, if you count it, it will be around INR 25 crores to INR 27 crores. It's full capacity. But at present, it's -- from very commentary I said, it's a highly technical product and we have to develop it segment by segment. So whatever the segments we have developed, right now, we are catering around 10 to 12 tonnes per month, which one more machine is coming from China in the next 15, 20 days. Once that machine will come that will add somewhere around 4 to 5 metric tonnes per month. So that particular machine will come. So one segment will be added, and that will add somewhere around 4 to 5 metric tonnes per month in this present capacity. So this year, conservative, we have kept 180 metric tonnes, which will fetch somewhere around INR 18 crores to INR 20 crores as a turnover with around 20%, 25% PAT margin.

Right. And just second question. Recently, Voltamp and Shilchar provided PAT results for Q2. Their margins were under pressure. So is it that we are seeing overcapacity starting to show up in the numbers? And is there a pressure from transformer companies to provide at a cheaper cost? What is the competitive landscape, if you can...

It's not about the pressure, it's not about something like if you are having an order for the fixed price for 6 months and if your raw material prices is going up, your margin will shrink. The same thing is happening with the transformer company, because earlier, the copper has gone up like anything, then the oil has gone up like anything, and recently if you see, all the components, including nut and bolt and Fevicol also has gone around 25% to 30% on higher side. If you're having a firm price order and if your customer is giving you firm price order for 10 years, you cannot go back to the customer and say that, oh, my price has gone up and I will not cater you, because in 10 years of time, your customer must have been given you -- continued the order when the prices has gone down. So in such kind of era, a prominent transformer company will definitely stood up with that commitment. And once they fulfill their commitment, the short time balance sheet for the quarter or 2 quarters may hamper. But in a longer vision, maintaining the customer in such kind of era always helps in a long-term relationship, and that what is the business. So this is not something like the overcapacity or something. They are fully loaded with the order, a few orders are on the firm price. And when you have an order of the firm price in downward trend, you get the benefit, and in upward trend, you get hit with some kind of this short term loss -- short-term drop in the profit or something.

So there is no pressure on you to reduce your margins for the short term as well? So they don't expect that from you?

No, no. In CRGO, they cannot pressure us on reduce the margins. That doesn't happen. Nobody sells in CRGO below the price.

The next question is from the line of Khushi from Radian Capital.

Sir, I wanted to know your vision after FY '28 or beyond FY '27 as you will cater 30,000 metric tonne capacity in FY '27. After that, how will you scale up your businesses?

Ma'am, in next financial year, we will definitely plan to reach to 36,000 metric tonnes. And once we will be confident enough that we will be able to reach 36,000 metric tonnes in this year, we will expand our capacity sector-wise, territory-wise, and we will put up the plant somewhere else in India or somewhere else out of India. That we will plan in somewhere around '27 March or something, we will take a call on that.

The next question is from the line of Aman V. from WealthTrust Capital.

Yes. Just one question from my end is on the price rise clause. So in the contracts that you do with your clients, how often are these contracts repriced just with regards to the volatility in the CRGO prices?

With our customer?

Yes, yes.

With our customers, we never reprice any contract.

Okay. So I mean what is the contract tenure usually like?

Quarterly. And that is only quarterly, not more than that.

Okay. And these are fixed margin contracts or fixed price?

Yes, it's a fixed price contract.

Next question is from the line of Kushal Shah from Nexus Equity.

Sir, my question is on the other income side. The other income is roughly around 15%, 20% of our total profitability. So just wanted to understand, as you just mentioned that going forward with increasing turnover, working capital requirement will be there. So can we expect -- I mean, what -- can we expect some moderation in other income or you intend to maintain this kind of other income? I believe the other income would be the treasury income only.

So these are all the margin FDs against the LC what we import the material. So that is a fixed LC. That we are not disturbing. So the other income other than that money invested from this IPO, the FD which we did from the IPO, the interest income of that will be 0. But the other income which was there before IPO on our balance sheet, that will remain the same because that is FD there and we are utilizing LC limit from that FD.

Okay, okay. Because sir, I think your IPO proceeds have been fully utilized, as per your statement which I saw. Around 95% you have utilized the amount. So we can expect some moderation, but you just mentioned that there will be some sort of other income, which was present before IPO.

Rightly said.

Yes. And my second question was on the LC other prices only. So I mean just going back to 1, 1.5 years, your prices were roughly around INR 270 to INR 290 per kg. Am I right, sir?

Yes.

And now it has came down to roughly around INR 180, INR 185 per kg. So roughly 50%, 60% moderation in the prices?

Yes, it is INR 195 right now.

So despite that I think -- despite 50%, 60% correction, you have done wonderfully well. So congratulations on that part. But I just want to understand that, I mean, if I want to look at long-term average, the long-term average would be roughly around INR 200, INR 220 or higher than that?

We are looking at somewhere around INR 200, INR 210, INR 220 long-term average because this INR 195 is not the realistic price. All the mills were grind when that price has gone down to that.

Okay. Okay, sir. And sir, you just mentioned the transformer OEMs are facing pressure because all the components, raw material prices have gone up, including transformer oil, micro components, copper, et cetera. So just coming to our manufacturing setup, so our main raw material is CRGO steel, right? Apart from that -- I mean, due to this rest Asia war impact, do we see any other challenge? I mean, do that war has direct impact on our business?

No, sir. At price-wise, yes, the plastic and all those things which we are using in packing has risen by 30%, but that is not a big consumption in our particular prototype.

I think around 50%, 60% will be CRGO steel only -- I mean the raw material cost.

We have CRGO steel, then the labor and then the wooden packing and plastic.

Okay, okay. And sir, the INR 1,000 crores turnover target, so when can we expect that now?

Sir, with the CTC plant fully operational, one thing is CTC plant fully operational in next financial year. Second thing, in this financial year, CRGO price goes to INR 250 or INR 280. In this year, we can [indiscernible] otherwise next financial year with fully operational CTC conductor plant, we will able to achieve that INR 1,000 crores.

The next question is from the line of Vihaan Badri from Umayu Advisors.

Yes. Actually, I just had one question regarding the orders that were stopped from April due to the war. Have they started the production for their orders, have they started with the capacity orders?

Yes, sir. In this last month, the order position was not good. But this month, the order position is good. So slowly, slowly they have started, because last month, the entire -- lots of transformer manufacturers were in conversations with their ultimate customers and all people, big MNCs, they do not take decision immediately. But from this financial year, this month, it has been started in line.

Ladies and gentlemen, as there are no further questions from the participants, I now hand the conference over to Mr. Nileshji Patel for closing comments.

Thank you, everyone, for being part of today's conference call and for your active participation and continued interest in Vilas Transcore. We sincerely appreciate the trust and confidence that all our stakeholders, investors, customers and partners continue to place in us. We hope we have been able to address most of queries and provide a clear perspective on our business performance, growth plans and long-term strategy. As we move forward, we remain confident about the opportunities ahead and committed towards building a stronger, more integrated and future-ready transformer component business backed by disciplined execution, operational excellence and continued value creation. In case of any further queries and clarification, please feel free to reach out to our Investor Relationship adviser, Stellar Investor Relations. I would like to leave you with that note. And once again, thank you all for your continued support and encouragement. Have a great day ahead. Thank you.

Thank you very much, sir. On behalf of Vilas Transcore and PhillipCapital, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines. Thank you.