Thank you so much. Good morning to everyone.

I welcome you all to Aeroflex Industries Q1 FY '27 earnings call. Joining us today are members of our senior management team, along with representatives from Strategic Growth Advisors, our investor relations partner.

I hope that you have had the opportunity to review our financial results and the investor presentation, which is available on the stock exchanges and also on the company's website. We are pleased to report our highest quarterly performance ever.

Our consolidated revenue for Q1 FY '27 stood at ₹145.97 crores, which is an increase of 72.4% on a year-on-year basis, with growth coming in both from our core business as well as our emerging businesses. Our flexible hose business grew 41% on a Y-on-Y basis, and the assemblies and other value-added products grew even at a faster pace.

Revenue from SFM skid assemblies reached ₹32.4 crores in this quarter, which is contributing to approximately 23% of the total revenue. These skid assemblies enable controlled circulation of the coolant across the entire cooling systems in the data centers, and it is engineered to meet the stringent requirements with regards to reliability, pressure management, and also leak prevention.

This marks a major step in our company's evolution from being just a flexible hose manufacturer to an integrated provider of advanced flow control and flow management solutions for mission-critical applications. As part of our capital expenditure plans, we have expanded the capacity of skid assemblies from 6,000 units to 9,000 units per annum, and we have the plan to further increase it to 15,000 units per annum based on the requirements from our customer and also the deployment timelines given by them.

We also continue to invest in automation, advanced welding solutions, and also precision manufacturing to help strengthen our product quality and reliability. On the flexible hoses vertical, we have planned to increase the production from 17.5 million meters per annum currently to 20 million meters per annum, and it should be completed by Q3 of this financial year.

Now talking about our financial performance for Q1, our total income stood at ₹145.97 crores, which is an increase of 72.4% on a year-on-year basis. Our EBITDA stood at ₹33.5 crores, which is up by 116% on a year-on-year basis, with margins expanding by 468 basis points as compared to the same quarter in last year, to 23.04%.

Our profit after tax stood at ₹18.79 crores, which is up 162% on year-on-year basis, and our PAT margin currently stands at about very close to 13%, which is an improvement of 440 basis points from last year same quarter. Our cash profit grew by more than 100% to 26.5 to ₹26.64 crores, with the cash profit margin improving by 278 basis points to 18.25%, which reflects strong operating leverage and improved cash conversions and profitability across our major business verticals.

Our exports grew by 43% on a year-on-year basis, and the higher contribution from the domestic market in this quarter was primarily driven by the rapid scale-up and supply of the liquid cooling solutions, the skid assemblies of the liquid cooling solutions. Looking ahead, we are confident in the business model that we have, in the products that we manufacture, and the long-term momentum of our growth story, which is built on a strong core business of flexible hoses and assemblies and the fast-growing vertical of skid assemblies for data centers.

This gives us an opportunity to scale rapidly along with seeing the growth coming in from the opportunity that the AI infrastructure provides. We remain firmly focused on scaling all our business verticals, including the liquid cooling business, expanding the capacity of skid assemblies, and also for flexible hoses and hose assemblies, deepening our customer relationship across our customers both in India and across the world, advancing new product development, and also undertaking automation and digitalization initiatives.

I would like to thank our employees, our customers, our suppliers, our business partners, and all our shareholders for showing their continuous support and trust to the company. Thank you, and with that, I conclude my remarks, and we can now open the floor for questions.

Hello, am I audible?

Yes, sir. My first question is, I saw there was a spurt in revenues from Europe in this quarter.

Could you please explain where that was specifically from, which segment?

We're seeing increased business coming in from both Europe and also in the USA market. From Europe, it's a mixture of the business growth coming in from various countries, which includes Italy, Spain, France, and also the UK.

We're seeing the business across Europe coming in not only from the traditional industries, but also we are supplying our flexible hoses to data center applications in Europe as well.

Sir. We are exporting data center applications?

Exporting our hose assemblies, the flexible hose assemblies, also for data center application in Europe.

Got it, sir. That was my question.

Thank you.

Thank you.

Am I audible?

Yes.

Thanks for the opportunity, and congratulations on the good set of numbers. I had a question on skid assembly segment.

Who are the domestic competitor who are supplying the same product?

Skid assemblies, right now we are among the few players who are into this space who are supplying. In terms of competition, there are a few people who have just started to work on that, but would be difficult to share the details of competitors because not much data is available in public forum with regards to that.

Okay. What about international market?

Who are the peers who are supplying this product in international market?

In international market, there are companies in the US, there are companies in Europe who are manufacturing of these SFM skid assemblies, plus also our competitors such as Senior and Parker are also into this. They have also started with this business vertical.

These are our competitors internationally, plus there are local players in the international market who are supplying and serving their local industry like in the US and in Europe.

Okay. That was my question.

Thank you.

Thank you.

Hello, sir. Can you hear me?

Yes.

Sir, I have a couple of questions. First on the flexible hose assembly part.

I just want to understand two things. What is our current utilization of our current capacity in this segment?

Once we are done with the capacity expansion of this flexible hoses by, I think, Q3 will be done, what will be the peak revenue potential from this segment?

Okay. Currently we are operating at about between 65% capacity utilization right now, 65% to 66% capacity utilization.

At the peak utilization and assuming that 70% of the sales comes in from the assembly, we are looking at a top line of anywhere between ₹650 to ₹675 crores.

Okay. You're basically saying we can do around ₹650, ₹670 crores of revenue from flexible hose, including the assembly part, right?

Correct.

Sir, about 2 years back, you were more towards the margin on the flexible assembly will improve and move towards 25%. During the current quarter, what's our margin from this business stands?

Are we on the road to achieve that 25% margin in this business?

Yeah. Our idea is to achieve a 25% blended margin, combined as a whole.

Which includes all our products, which includes the flexible hoses, the flexible hose assemblies, bellows, and also the skid assemblies. The target for the company overall is to achieve an EBITDA margin of 25% in the next 2 years, and we are right now on track to achieve that.

No, I'm just talking about the flexible hose assembly part. 2 years ago, your aim was to get 25% margin in the flexible hose.

I just want to understand where are we at?

The margins in the flexible hose business depends on the product. When we sell the flexible hose just in the hose form, margins range between 16% to 20%.

When we sell the assemblies, the margins range anywhere between 22%

to 26%.

That's the range of the margin.

Yeah. Can you give the blended split between how much are you selling as just a flexible hose part and how much are you selling as flexible hose plus assembly?

That split is already there. Like I mentioned, I think in this quarter, approximately 60 60 66% to 63% of the business was through 63% of the business was selling of the fittings and assembly products, and about 37% of the business was selling the flexible hose.

It's

63-37, yeah.

Okay. Understood, sir.

Basically, on a blended basis, this is more towards 22%, 23% margin.

Slightly higher because of

higher contribution from Yeah. Okay.

Understood. My last question is, can you also give us the revenue from Hy-Air and miniature metal bellows and metal bellows as well?

The revenue from Hy-Air in the last quarter was around ₹7 crores. The revenue from the metal bellows was about ₹3 crores in this quarter, in Q1.

What about the miniature metal bellows, which we were planning?

Miniature metal bellows is part of the metal bellows. Yeah.

For metal bellows, we are seeing Okay. For metal bellows, we are seeing increased business also coming in.

We are expecting the next two quarters to see really an uptick in the sales for the bellows division.

Do we have any capex plan for Hy-Air? You said you will share it in the next financial year.

We are in the discussion for the same. We would announce it as soon as it is finalized.

Okay. Thank you, sir.

Thanks so much. Thank you.

Thank you.

Hello, sir. My question is that our average price for skid assembly has declined.

What is driving this? Is it coming from competition?

What is driving this price decrease?

Each skid assembly, for every data center and for every floor of a data center has a different design. Based on the design of the skid assembly, the value of the skid assembly changes, even in the same data center building.

The value of the skid assembly might change based on floor to floor. Technically the price has not declined because the value per skid assembly depends on the design of the skid assembly.

If the skid assembly has less number of, for example, piping, the value will be definitely less. If the skid assembly has a longer piping, the value will be higher.

It's more of a tailor-made product. Hence, it's not the right way to see as the price per skid assembly because it varies vastly.

We have supplied skids worth ₹1 lakh also. We have supplied skids worth ₹5 lakh rupees also.

Obviously the materials used for ₹1 lakh is much lesser as compared to what the piping used in a ₹5 lakh.

Okay. This will not impact our margins per se?

No, it does not impact our margins because the costing for every skid assembly depending on the design is done separately. It's not like a standard off-the-shelf product.

My second question is that we are doing a lot of R&D. Any product which is close to commercialization, also all this R&D, will this lead to some better market opportunities for us or will that impact on margins, any technological improvement?

We are working on a lot of products both in our hose assemblies business and also in the liquid cooling, where we are developing certain products in collaboration with our customers. Definitely these products basically will be ultimately commercialized and used in our applications.

Any timeline on this? Or will this improve our efficiencies, cost, or will lead to better margins?

It depends. Products depends at what stage they are in.

Some are towards the end of completion, some have just started, some require a lot more in terms of engineering, in terms of its end-use application. Some products might require a special machine for us to make it, it's difficult to give a specific timeline as to what product will happen at what time.

Some products stay in R&D for a long time, right, because sometimes it is difficult to meet the requirements of the customer. That's part of R&D.

Sure. Thank you.

Hello. Hello.

Yeah. Congratulations on the numbers.

I had a few questions about if you can give us an update on the fire hose assembly for the data center?

Fire hose assembly for the?

Data center, which we were developing. Is there any update on that

one? That product is already almost towards the end of completion, should be commercialized by the end of this quarter or latest by the start of next quarter.

In terms of realization, can you quantify how big that can be?

Difficult to give a number right now, but we have put in certain investments based on the projections or the estimations that we've received from our customer. I think once it is commercialized and into production, I think probably at that time we'll be able to give a better perspective on that.

Right now it will be difficult for me to comment on it in public forum until and unless something is not yet commercialized.

Sure, but would it be for domestic use or international?

No, international supply.

Right. Also on the other products other than the SFM product, we had developed some 15-odd different products which we exhibited.

Is there any update on any traction on that front?

The 15 products which are under development?

No, there are 15 products which we showcased in the exhibition in April.

Yeah.

International

customers' order? Yeah.

These are the products. Some of that we already had the orders from some of the customers in Europe, we showcased those same products in the US as well.

We've already received the orders for the assemblies which will be used in the data centers. For the skid assemblies, we are in talks with a few potential customers.

Once everything is finalized, we'll definitely let our shareholders know. Right now it is still under discussion.

These things take some time because like I mentioned, the partner that we're working with in India, right, from the day we started discussion with them to the date of the first transaction that we did with them took almost 10 to 11 months.

Sure. Just an update as you have shared that at the end of the year, 25% of the revenue will be contributed by SFM.

In this quarter, you have done already 22%, and you're not fully utilized the capacity. Do you want to reiterate the statement or anything on that front?

I think I would talk about this at the end of the year because, like I mentioned, it is the plan for the end of the year. Quarter-on-quarter, things change.

We work on a yearly basis. That's why I think it's better that I answer it at the end of the year.

Sure, sure. Thank you.

Yeah. Thank you.

Hello, am I audible, sir?

Yeah.

Thank you so much for the opportunity. Congratulations on a good set of numbers.

Sir, given recently there are a lot of announcements by the likes of Yotta and there's a Gujarat policy coming in, there's a lot of traction of data centers in India. Just wanted to get your thoughts on are we contemplating based on our engagements with customer and their order pipeline, expand our capacity beyond 15,000?

If the thought is so, you are already in talks with the existing customer to expand capacity beyond 15,000, right? Your thoughts on this, once we probably let's say get the capacity to 15,000 by Q3, are we contemplating to let's say put in more capex beyond 15,000 as well based on your conversation with your current customer and what are

the thoughts? Capacity increase that we have planned from 2,000 to 15,000 was based on detailed the discussion that we had with our customer.

Based on their projections at that time, we have built up the capacity to 9,000 now and to complete the 15,000 by the start of Q3. Now, in terms of the further expansion and beyond 15,000 are under discussion, but it's too early for me to comment right now on this until and unless something is finalized.

Then I'll share the same. Yes, demand is increasing.

As we all know, it's the kind of data center is coming up. Obviously it takes time for a data center to be built up and to be up and running.

We will definitely plan our capacity expansion after discussion with our customer, and the customer definitely shares with us their orders in the pipeline that they have for the next few months and also the kind of business that they see coming in the foreseeable future. We are in constant touch with our customer for this, and probably our first target is to get the 15,000 skids commissioned and up and running, and then to look at further expansion.

Understood. That was helpful, sir.

Taking from the last con-call, you said probably we will probably do some business internationally in the skids business and not the fire hose assembly, but in the skid business.

Yeah.

Are we on track? How hopeful we are to get some orders and execute in this financial year only?

Yes, we are definitely on track, and in this financial year, we'll definitely have business coming in from international market.

Perfect. Of course, given you had to execute this here, you might already be engaging with the customer, right?

Is it the same customer that we are dealing with within India or is it a complete different customer?

Would not be able to comment on that. That's slightly propriety on that aspect.

Got it. Not a problem.

In terms of quantum or let's say, in terms of quantity, if you could help us understand, is it significant to our current capacity? Or will it be a part of our existing 50 as a planned 15,000 capacity or would it probably require to put up another capex for it?

In terms of the potential, right, you can just see the potential in the international market is multifold as compared to the India market, right? Just talking about Europe and USA themselves, probably would have multiple times the potential as compared to the market in India, right?

The design of their skid assemblies is slightly different than what we have in India, we're in talks with them to develop the skid assemblies that is required by them. I think once we get some confirmation, finalization, only then I'll be able to share more details on that.

Got it. Not a problem.

Sir, the fire hose assemblies, which earlier participant was asking, that is for the same customer, which probably our largest customer in USA, right?

Yeah. That's for that customer.

Got it. Sir, if you could probably help us understand with some indication on margins on the skids business this quarter.

Is it possible to give a range if not an exact number, what margins are we making on the skid business right now? See,

the margins on the skid business is on the same level as the margins on an average for the entire company as a whole. I think will only be able to share that much detail because I'll not be able to share the exact margin details on public forum.

Got it, sir. Not a problem.

Thank you so much, and all the best.

Thank you.

Hello, am I audible, sir?

Yes.

Thank you very much, sir, for this opportunity. Sir, just wanted to understand, now this capacity expansion from 9,000 to 15,000, right?

What is the capex involved there?

The plan is to increase the overall capacity from 2,000 skids per annum to 15,000 skids per annum. For that, we have budgeted the capex of ₹48 crores.

The entire capex would be utilized to increase the capacity from 2 to 15,000. Some of the machines are required right now they will be used, some of the machines are such that they are ancillary machines which don't add to the capacity, but are used right from day one.

It will be difficult to give an exact number of how much capacity is required from 9,000 to 15,000 because some of the machines have already come in, some of the machines are being planned to come in in this quarter, and a few of them would come in in the next quarter.

Okay. Understood.

What about the capex for the flexible hoses from 17.5 to 20?

Again, when we planned to increase the capacity in flexible hoses, it was planned from 16.5 to 20, and the budgeted capex for the entire was around ₹54 crores. Some of it was spent in FY '25, some of it was spent in FY '26, and now the remaining would be completed in FY '27.

Understood. This also we expect to come on stream by third quarter, right?

Yeah. By Q3 of this financial year, most of the capex that we had planned last year would be completed.

Understood. Coming to skid, this 15,000 capacity, we expect to optimally utilize in FY '28 now that FY '28 you will get the entire year of this capacity, right?

Yeah. Yes.

Do you expect to optimally utilize in FY '28?

Yes, once it is commissioned, we expect it to be up and running and then to be utilized at the optimum level based in the next financial year.

In FY '28. What would be the optimal utilization, can we reach 90%, 95% or 80%, 85% would be your optimal?

No, about 80% is the optimum utilization. So

80% is what the optimal utilization.

Yeah.

Okay. You did mention that the approval takes a lot of time, right?

About 10

to

12 months in this segment. Will the scale-up happen fast for you to kind of have this 80% utilization in FY '28?

There are two kinds of approval. One is when you have a completely new customer to whom that you are working with, that obviously takes a lot of time.

The second kind of approvals are when you're already working with an existing customer, but the data center that they're working with, they need to take approvals for all kinds of drawings, all kinds of designs before we start the production. That is where sometimes the delay happens where a lot of the time the designs are not approved by the customer, till that time, we cannot produce the product because until and unless the design is not approved, the production cannot happen.

Okay. I got it.

Given that, skid assembly revenue share will increase because it will grow much faster than your base business, which might be expected to grow at 15%, 20%, right? Ideally the share will increase.

Is that margin accretive for you? The skid would have superior margin as compared to your flexible hoses or assemblies?

Like I said, again difficult to give a number on the margin increase just from the skid assembly on a public forum. Like I mentioned, the target for the company is to achieve an EBITDA margin of 25% over the next few years.

That is where we are focusing our efforts towards.

Yeah. Okay.

Understood. Got it.

That's very helpful, sir. Wish you all the best.

Thank you so much. Thank you.

Hi, Asad. Thanks for the opportunity, and congrats on a great quarter.

My question is, Asad, this 15k expansion, you've said Q3. Can you also tell which month it will come?

For Q4 exit run rate, I think in the last call you had said 750 skids per month we will hit. Is that guidance intact?

When we talk about Q3, it's expected the Q3, it it may come anywhere between October to November. Difficult to tell an exact month because it depends on our machine supplier because from where we are, facing certain delays from their end.

It might it might come in October, it might come in November. Difficult to specify a month specifically for that.

That's why we have given a quarter because we are dependent on external suppliers for, specific machineries. With regards to, Q4, you 750 skids, can you just repeat your question?

750 skids is for

yeah,

yeah.

Overall the exit run rate for Q4, I think last time you had said you expect to hit about 60%, 65% utilization on the 15,000 skid capacity. That worked out to, I think, approximately 750 skids per month.

That was my question. Is that guidance intact?

Do you think you can do higher than that, or yeah?

As of now that how the things are planning up, we feel that that is intact. Obviously it depends on when we reach Q3, we'll have a much better idea in terms of the planned dispatch for Q4.

Yes, the entire team is working towards increasing the supply of the skid assemblies to our customers.

Sure. Asad, I had a question, this skid assembly facility, right, the capex that you're doing for skid assembly, suppose after a few years skid demand tapers off, this particular facility, can you repurpose for your flexible hoses or for bellows?

Is it a reusable facility, the same machines, et cetera?

Some of these machines can be utilized for bellows. A lot of these machines can be utilized for providing flow control solutions for other industrial applications as well, not exactly flexible hose, but it can be used for flow control applications in HVAC, in the other industries, in important terminals industries.

The machines are something which say 5 years from now the demand for skid assemblies goes away, which I feel is a it's a little far-fetched to think that, but, just to assume that if it goes away, these same machines can be utilized for developing piping solutions for some other industries. It's quite fungible from that aspect.

Awesome. That's great to hear.

Last question, Asad, is that this quarter while gross margins went up quite a lot, Q-o-Q I'm talking about, 200 bps gross margins went up, but you had 300 bps of deleverage coming from employee costs and other expenses. Is it expansion-related costs which will get absorbed completely by the next two quarters, or is there some one-off?

No, these are mostly setting up of the plant at Chakan in Pune. Some of this cost of the employees, if you see the employees cost has increased because of the ramp-up in manpower that we have done both at the facility for SFM in Taloja and also the new facility coming up in Chakan.

Some of these costs are for those particular projects, which has affected. Plus also with increased business, we expect in the next few quarters coming in from bellows as well, because bellows has not yet reached optimum utilization in terms of its positive contribution to the blended margin.

Once that also ramps up, I think we'll see a bigger uptick or a higher uptick in terms of the EBITDA margins.

Great, Asad. Thank you so much, and all the best for the upcoming quarters.

Thank you.

Sir, on skids, is there a order book that you have or is there a delivery schedule that you have as of now?

We generally receive the tentative dispatch schedule from our customer 2 months in advance with regards to the tentative dispatch that they plan for which the designs are in the final stages of approval. For Q3 they've given a tentative that, these are the projects that are in finalization and these are expected to come in Q3.

That's what they give us. For this quarter, we already have a broad dispatch plan.

Basically every time you will have a 3-month delivery schedule available to you, which is a defined delivery schedule and a defined skid to be made. Beyond the 3 months, you will have a visibility in terms of a client telling you that this is the identified project, and I will come back to you with my design.

That's how we have to understand, right?

It's 2 months of dispatch plan for 2 months. The customers don't tell us directly because it is not our customer, the end customer who is ultimately setting up the data center.

It is the customer of our customer. Based on what discussions that they have had with the customer, they give us a tentative plan that these are the projects that we will plan to dispatch in the next quarter, yeah.

From each project to each project, the skid size and the skid value will differ, right?

Yes. Even in the same project, on a different floors, the value of the skid might change, and the amount of the SFM for each floor might vary between a floor to floor also.

That's

why the design of the floor, how are they planning to set up the data center is extremely important to design the SFM.

Lastly, sir, here you've given the value of ₹34 crores in quarter one as your value. Can you tell us the volume there, and what delivery schedule do you have for quarter two, value and volume?

In Q1 we had ₹32.4 crores as the value of the sales.

Correct.

The volume was 1,040. It is mentioned in the presentation also.

This is what we have achieved in the last quarter. Yeah.

Q2 delivery schedule you have, right? So

Yeah. Q2 delivery schedule we have, but I will not be able to share it right now.

Probably we can take it on one-to-one basis. Okay.

Lastly, the exit run rate, which you're saying at 65% utilization, that is on the expanded 9,000 skid capacity or the 15,000 skid capacity? Which one?

Sorry, can you repeat the question?

You have guided for utilization run rate to improve to 65%, right?

For the skid assembly, right?

For the skid assembly, right. That one has to take as exit run rate on 15,000 skid capacity or 9,000 skid capacity?

That was for the Q4 that I mentioned to the other.

I know it is for Q4, but on what capacity? 9,000 or 6 15,000?

That is on 15,000 once it is commissioned.

Sounds good. Thank you.

Thank you.

Hi, sir. Am I audible?

Congratulations on great results. Just one question on fire hose assemblies.

Of course, you may not be able to give us the exact number, but a ballpark on what kind of margins are we looking at in case we go ahead with the fire hose assemblies for the customers who've opted for it?

The fire hose assemblies has margins ranging between 23% to 26%.

Great, sir. Thank you.

That's all I wanted to know.

Thank you.

Hello, sir. Am I audible?

Yes.

I can see on sequential basis your margins have decreased by approx 80 bps, but the skid volumes have also increased, like they have doubled. Is this because of any product portfolio changes?

No, if you see the gross margins have increased, but like I mentioned into the earlier gentleman who had asked. Because if you see, we have put more investment in terms of team where we have increased the team for the skids business, plus also we have set up a new facility for manufacturing the hose assemblies for specific application for one of our international customers.

We've invested a lot of amount in terms of the particular future expansion. Hence, that's the reason for slight decline on the margins on a sequential basis.

Got it. Thank you.

No worries. Also to add to that, barring the material cost in the Q1, if you also would see that logistics cost also has increased because of the crisis that has happened in West Asia.

That is also a cost which has seen significant increase specifically in Q1 because the real impact of the West Asia crisis started to begin towards the middle of March, and then it became more and more severe in Q1. That was also reason for increase in expenses, the other expenses that you see.

For Q2 also, we should assume margins on the similar lines, around 23 %?

I I keep mentioning that, quarter-on-quarter, it's, I would I would want everyone to look at it or we we definitely, look at our business not from a quarter-on-quarter basis, but from how we see it on a year-on-year basis because, like I mentioned, some quarters, can be very good, some quarters can be not so good depending on external circumstances. It's it's better that we are judged on an on an annual basis because in over a period of a year, things tend to average out.

Okay. Got it.

Thanks.

Yeah.

Hi, sir. On the SFM skid, I wanted to understand what actually yours versus bought out.

Say on a typical skid, roughly what share of value is Aeroflex's own manufacturing, say, the piping, hoses, bellows, versus the components that you're sourcing and integrating? Over time, do you plan moving up to the higher-value pieces like CDUs, manifolds, or quick disconnects, or stay focused in fluid transfer?

It's difficult to give a number. See, some of the components, the raw materials that we are buying from our suppliers, then we are converting into the SFM.

Some of the components that we are buying from our vendors in terms of the fittings and the connectors and the valves and all. Our manufacturing is for the entire product, right?

In manufacturing, for us, all the components that we're buying from our suppliers are raw materials because ultimately we convert them into a complete skid set, a skid, and then we supply it. The best way to judge is to see our gross margins because ultimately those are the materials that we have purchased and then ultimately consumed into manufacturing.

Understood. The second one would be, everyone's quoting a 9-gigawatt India pipeline in terms of the data centers.

Just wanted to understand one thing from you. For 1 megawatt of liquid-cooled IT load, how much Aeroflex content is there in rupees, roughly how many skids does a megawatt absorb?

Just trying to understand how you get from gigawatts of pipeline to a revenue number for Aeroflex.

About 40-odd skids go into 1 megawatt on an average.

Understood. Okay.

The last one would be, say, against a global integrator like Boyd or Motiveair, what's the actual reason a global thermal management player would source SFM skids from India and from you? Is it cost arbitrage, localization mandate, or genuine engineering differentiation?

In a longer run, would this be a defensible moat for the company?

You're talking about international customers?

Yes, in terms of international customers.

International customers are right now obviously buying internationally from their own suppliers, whether they're based in US or Europe or any other region, right? Now they are looking at us both from the perspective of one, our engineering capabilities.

In just 1 year's time, we have developed a product which was not existent in India, right, in terms of the business, a year back SFM was not available in India. In the span of 1 year, our team, our engineering capabilities, our R&D, obviously the product quality that we manufacture.

Second is the kind of innovation that we're doing. I think I had mentioned in my previous call that the first skid that we supplied and the last skid that we have supplied recently, if you see the design, we have done so much improvement that it'll be difficult for anyone to judge that the difference between the first skid and the latest skid that we have supplied, there's a huge difference in terms of capability and innovation.

Now that is not easily available in the market. In terms of cost arbitrage, see, obviously India will always have the cost arbitrage, but that will always remain one of the factors.

For us, it's more important is how do we innovate in the products in order to ensure that we give better product than what the customer has asked for. That's what excites us from our customers, yeah.

Understood. Thank you so much, sir.

One more thing is our speed. Our speed is something which, probably we can proudly say that we are amongst the ones who are the fastest and the most agile in terms of adoption of technology both in engineering and also in our production.

Understood. Thank you so much, sir.

Thank you.

Hello, am I audible? Yes.

Thank you for the opportunity, and congratulations for the great set of numbers. I just wanted to ask on the Hy-Air side.

Are we looking individual or standalone approval to sell components from Hy-Air to other skid makers or CDU players globally, or is it only for our own internal process?

No, we'll be using the product set Hy-Air for our own internal usage, and not to supply to other data center manufacturers.

How much is the percentage? If you can quantify how much of Hy-Air component is going into our SFM skids part?

In our total SFM skids, how much?

Right now in terms of the SFM, Hy-Air is not supplying the components for SFM because the components for SFM are made with a different technology. Hy-Air is providing certain components which are used for our hose assemblies, and those hose assemblies are going into data centers.

Right now we're utilizing the capacity for components for hose assemblies.

Are you planning to move that also into data center? Hy-Air

components to data center? It will not be directly.

It will be as part of Aeroflex's product offerings.

Right now we are not doing it?

No.

Thank you.

Hello, sir. Can you hear me?

Yes.

Sir, just a follow-up on the previous participant's question. On the flexible hoses part, you said there have been inquiries from Europe.

I just want to understand what are the applications of the flexible hoses, not the skid assemblies, in the data center? Where are they used, and where are we seeing the demand coming from?

There are two kinds of usages for hose assemblies. One is obviously for the last-mile connection between the rack and the SFM, where there is a flexible component which is required.

That is one. Second is the fire application where the hose assemblies are used for fire-fighting solutions or for the fire suppression systems that are installed in the data center.

Then some data centers where even air cooling is already there, they use the flexible hose for HVAC applications. It's different-use applications for the hose.

Also, what we're seeing is the older data centers who used to earlier have rubber hoses as part of their fluid management system, they are converting it from the rubber hose into metal hoses. These are the various applications that we're seeing come in for the hose assemblies.

Hello. Yeah.

Am I audible?

Understood, sir. Understood, sir.

Thank you.

Thank you so much. Thank you to everyone who has joined the call today, and thank you for supporting our company always.

If I'm not being able to answer any questions of anybody, you can please share your questions to SGA, who is our investor relations partner, and they'll be able to provide you with the relevant details. Thank you so much again everyone for joining.

I hope to see you in the next earnings call. Take care, and have a good day.