Good evening, everyone. On behalf of Elara Securities, we welcome you all for the Q2 FY '27 and H1 FY '27 conference call of Elecon Engineering Limited.

I take this opportunity to welcome the management of Elecon Engineering Limited represented by Prayasvin Patel, Chairman and Managing Director; Aayush Shah, Executive Director; Chintan Shah, Chief Financial Officer; Dipak Dalwadi, Business Head, Gears; Kaushik Patel, Business Head, Material Handling Equipment. We will begin the call with a brief overview by the management followed by a Q&A session.

I'll now hand over the call to Prayasvin sir for his opening remarks. Over to you, sir.

Thank you, Harshit. Good evening, everyone, and welcome to Elecon Engineering's Q2 and H1 FY '27 earnings conference call.

The earnings press release and investor presentation have been filed with the stock exchanges and are also available on our website. I will begin with the industry context, the operating environment, and our performance during the quarter.

Chintan will then discuss our financial results in great detail, after which we will take you through your questions. India's industrial outlook remains constructive, supported by public capital expenditure, infrastructure development, and domestic manufacturing.

Demand from cement and power together with the anticipated three-fold expansion in the steel production capacity presents a substantial opportunity for the capital goods sector. Considering the industry research estimates, the Indian heavy-duty industrial gearbox market will grow at approximately 8% CAGR through FY '30.

Key drivers include capacity creation, brownfield modernization, and the need for efficient, reliable solutions. While global uncertainty, geopolitical developments, and raw material volatility warrant continued vigilance, India's industrialization plans provide a strong and a durable foundation for long-term growth.

At Elecon, our gear and material handling equipment divisions are distinct but complimentary growth engines. Both serve critical industrial applications, and together, they give us the scale, technical breadth, and market access to convert structured demand into sustained business growth.

Over more than seven decades, we have built a strong position in industrial gear solutions and material handling equipment. Our focus is clear, expand in overseas markets, deepen our domestic footprint, and execute with discipline and convert opportunities into profitable revenue growth.

We will continue to protect margins, strengthen earnings quality, and allocate resources to areas where Elecon has a durable competitive advantage. Our MHE division is now establishing a meaningful international presence, securing orders worth approximately US$9 million during the first half.

This outcome validates the strategic decisions and capability building initiatives undertaken in recent years. It also demonstrates that our engineering expertise is competitive in global markets and gives us confidence in the division's international growth roadmap.

In the gear division, Elecon continues to strengthen its leadership in India's organized industrial gear market. Our comprehensive product portfolio, deep application expertise, and ability to manufacture customized high-precision solutions meeting DIN Class 2 standards for critical applications have enabled us to build enduring relationships across key industry sectors.

Turning to the MHE division, we see an increasingly important growth engine supported by established engineering capabilities and leadership in bulk material handling. Our record in complex applications and demanding project environments is difficult to replicate.

We intend to build on this position by expanding in core industrial sectors and improving execution. Moving to segment-wise performance.

The gear division, which contributed approximately 76% consolidated revenue in Q2 FY '27, reported revenue of ₹488 crore, representing year-on-year growth of 10.6%. This performance was led by 30.3% year-on-year growth in overseas markets, supported by stronger execution across international operations and sustained demand from overseas customers.

Domestic demand remains stable. The result reinforces the value of our international strategy and the strength of our execution capabilities.

The MHE division regained momentum in Q2 FY '27, reporting revenue of ₹151 crore with year-on-year growth of 10.4%. Execution improved progressively compared with Q1, while demand from steel, power, cement, fertilizers, and ports remains supportive.

The division enters the second half with a clear execution agenda. Despite an uneven macroeconomic environment and delays in project execution clearances, our Q2 and H1 performance remained in line with expectations with consolidated revenue growing by 11% in H1.

This outcome reflects the resilience of our diversified portfolio across gear and MHE as well as growing contribution of international markets, which helped offset near-term softness in domestic activity. Our priorities for the second half are equally clear.

We continue to build order pipeline and broaden our market footprint, maintain execution discipline, and sustain profitable growth to navigate through volatile market environment. Elecon's strategy for the long term is anchored in three priorities: extend our reach across markets and applications, expand our engineering capabilities, and execute consistently.

Our investments in R&D, technology, and production development are directed towards practical customer outcomes: higher efficiency, reliability, and lifecycle value. This disciplined approach will broaden our addressable market, strengthen our competitive position, and create a scalable platform for sustained growth.

With that, I will hand over to our CFO, Mr. Chintan Shah, who will take you through the Q2 and H1 FY '27 financial performance in greater detail.

Over to you, Chintan.

Thank you, sir. I will take you through Elecon's finance financial performance for Q2 FY '27 and the first half along with the key operating drivers.

The results reflect disciplined execution and the resilience of our business model. Before discussing our financial performance, I am pleased to share two important developments.

The outlook of the company's long-term credit rating has been upgraded from AA- stable to AA- positive, while its short-term rating has been reaffirmed at A1 positive. In addition, our lead banker has released collateral security for both fund-based and non-fund-based working capital limits, thereby removing the hypothecation of movable and immovable properties, including plant and machinery.

Both the above developments reflect the continued strengthening of our balance sheets and our growth outlook. Coming back to financial performance for Q2 FY '27, revenue from operations increased 10.5% year-on-year to ₹639 crores compared with ₹578 crores in Q2 FY '26.

When compared with revenue of ₹521 crores in Q1 FY '27, your company has registered a growth of 22.7%. This reflects a clear acceleration in execution and improved conversion across our businesses.

Profitability strengthened faster than revenue. EBITDA increased 17.7% to ₹148 crores, while EBITDA margin expanded by 140 basis points to 23.1%.

Profit after tax grew 9.8% to ₹96 crores with PAT margin at 15.1%. Financial performance for H1 FY '27.

For like-to-like assessment, H1 FY '26 revenue and EBITDA are adjusted for ₹25 crores of one-time arbitration settlement and income recorded in MHE. On this basis, H1 FY '27 revenue grew 11.1% year-on-year, demonstrating the underlying strength of our businesses.

H1 EBITDA reached ₹257 crores, up 11.4% over adjusted H1 FY '26 EBITDA. EBITDA margin was sustained at 22.2% compared with 22.1% in the corresponding adjusted period.

This consistency demonstrates our ability to protect profitability while supporting the growth. Profit after tax was ₹167 crores.

Adjusted PAT increased 6.5%, excluding the after-tax impact of arbitration income and ₹80 crore net of tax unrealized mark-to-market gain from reclassification of investment in the prior period. Now let me take you all through our segment-wise performance.

Beginning with gear division, the gear division delivered a strong Q2 with revenue increasing 10.6% year-on-year to ₹488 crores. H1 revenue reached ₹903 crores, representing growth of 13.1% with power remaining our high-contributing industry.

Profitability improved decisively. Q2 EBIT rose to 27.2% to ₹108 crores and EBIT margin expanded by 290 basis points to 22.1%.

H1 EBIT increased 21.8% to ₹182 crores with margin at 20.2%. This demonstrates the earning potential of disciplined execution.

Q2 order intake was ₹493 crores, broadly stable year-on-year, while H1 order intake increased 8.8% to ₹1,063 crores. The open order book was ₹1,056 crores as of September 30, 2026.

This is up by 37% year-on-year, providing strong H2 visibility. Power, steel, and cement, our three largest contributing industries, remain supported by India's mid-term and long-term development priorities.

With established technology, manufacturing depth, and customer relationships, the gear division is well equipped to translate demand into sustained earning growth. Coming to material handling equipment division, the MHE division delivered improved execution in Q2.

Revenue increased 10.4% year-on-year to ₹151 crores from ₹137 crores. H1 revenue stood at ₹256 crores, up 4.

4.5% over adjusted H1 FY '26. With improved clearances on the projects, MHE has started scaling up the operations.

We made tangible progress in Q2 and are positioned to accelerate through the remainder of H2 FY '27. Demand indicators are encouraging.

Q2 order intake increased 32.5% to ₹253 crores. This includes overseas orders of ₹68 crores.

H1 order intake rose 34.8% to ₹438 crores. The open order book reached to ₹579 crores as of September 30, up 27.3% year-on-year.

This provides sound execution visibility. Now coming back to geographical mix, our overseas business continued to build momentum.

Q2 overseas revenue increased 30.6% year-on-year to ₹159 crores. H1 overseas revenue reached ₹309 crores with a growth of 26.2% year-on-year.

Now overseas business contributes 27% of consolidated revenue compared with ₹245 crores in H1 FY '26. Balance sheet and capital allocation.

Elecon's financial position remains a strategic strength. As of September 30, 2026, shareholders' fund stood at ₹2,509 crores.

The balance sheet carries no conventional borrowings. The debt in our balance sheet primarily represent represents lease liabilities.

This gives us resilience and capacity to invest. Working capital performance improved during H1 with the cycle towards normalizing to 89 days from 98 days in FY '26.

We continue to maintain a strong balance sheet with a net cash position of approximately ₹700 crores. We also remain committed to our capital expenditure program for 3 years, which remains on track.

Furthermore, we are pleased that the board has declared an interim dividend of ₹0.50 per equity share of face value of ₹1 each, reaffirming our commitment to delivering value to our shareholders. As an outlook, as we enter the second half, our priorities are clear: we wish to accelerate MHE execution, convert the order pipeline with discipline, sustain margins, and advance our international strategy.

Given continued macroeconomic uncertainty and inflationary environment, but improved execution cycle, we are expecting a medium double-digit double-digit consolidated revenue growth for remaining part of the year while maintaining minimum EBITDA margin at last year's level. We have the financial capacity and operating capabilities to deliver profitable growth while building a stronger, more diversified Elecon.

With that, we conclude the financial review and welcome all your questions. Thank you.

Hello. Am I audible?

Hi. Good evening and thanks for the opportunity.

My first question is on management remarks regarding the near-term softness in the domestic market. I wanted to understand more about that.

What do we mean by that? What is driving this softness?

Which sector is contributing to it? In the terms of the outlook for the full year, we are again a bit not clear in the terms of the number, right?

We are speaking about double-digit growth, something like that. Can you please put some more clarity in the terms of the growth outlook, as well as what is happening in the domestic market because despite the decent demand from the end industries, which we also mentioned in the opening remarks, our business is more or less stagnant there.

Please help us to get more clarity on this point, sir. Thanks.

I would like to say that there was a lot of volatility in the pricing of steel in the last 6 months, which would affect our margins. That is number one.

The second aspect was that there was a bit of slowness because the monsoon, as we all know, has not gone in the way that was expected. Therefore, there is a little bit of lethargy in the execution of various projects.

They are going a bit slow. However, the orders are all firm and fixed.

We have manufactured goods lying with us. Some of them are yet to be delivered to our customers.

What it looks like is that after Diwali, the expected momentum would catch up for the near future. Especially till March.

We have a very healthy order booking on hand. These orders are all executable, most of them, which means that we will be able to deliver a sizable amount before March.

This is the overall scenario that is prevailing as of today. In spite of all this, we have done well, and we expect to do even better in the H2 second half.

I hope this answers your question.

Where exactly we are targeting in a number in the terms of the revenue that we used to speak about that we will give the clarity in H2, right? Sorry, H1.

Where we are targeting the number in the terms of the top line for this financial year?

In terms of the guidance, we just said that we are looking for mid double-digit revenue growth. This can be somewhere around 15% in that range.

This is again considering the improved execution that we have recently seen in last couple of months. We still don't want to overlook the macroeconomic conditions, the geopolitical conditions, and also the inflationary pressure, which we have just spoken about, which is like volatility in the base raw material prices, the rupee depreciation, and the high inflation rate, which is already being announced and under a lot of discussions.

Okay. When we say the inflationary pressure is there, are we not able to pass on the commodity price hike, especially the steel?

We all know that prices have increased significantly, but still in this quarter if you see, the margins have improved. From the standpoint of view of the commodity inflation vis-a-vis the product mix getting improved, it is more going towards the export side.

How one should look at the overall margin trajectory in the second half? What is your view on that, sir?

As we look at our current performance in H1 itself, at a overall level, we have been able to maintain EBITDA margin of 22.2%. Our sense that we should be able to maintain the same margin, but out of the abundant caution, we have said that we will be having a minimum EBITDA margin percentage what we achieved in FY '26 because what we have a visibility of the current orders that we have locked and back-to-back a lot of locking of the prices that we have done it.

There are a few businesses like CP business, as which is about 50% of our total revenue, where the back-to-back pricing doesn't happen. We typically release the price list on a monthly basis and where we start getting the orders and their manufacturing cycle is less.

This kind of business our ability to transfer the price from immediate buying that we do, that ability is slightly on a lower side compared to the businesses that we have other businesses like engineered products also. Got it.

Got it. One last question

Okay. Thanks.

I'll join back.

Yes. Am I audible?

Yes, yes. Thank you very much for the opportunity.

Sir, my first question is on the MHE segment. It was very delightful to hear that we have received $9 million order inflow in the H1.

My question was regarding, sir, margins. If we see in MHE segment, there is a fall in margins from 27% last year to around 22% in this quarter.

Even sequentially, there has been a fall in margins. I recollect that in the previous call, the management had mentioned about some projects in power sector where there were some kind of delays.

If you can throw some light on the margin trajectory in this business and the cause of problem in this particular projects.

Yes, thank you. As far as MHE division is concerned, I think we have given guidance that we will maintain our margin throughout the year, that is in range of 22% to 24%, okay?

The two orders which we were talking during our Q1 conference call, I think now execution is happening now. In fact, good amount of invoicing we did in Q2 itself.

Over the quarter, we will get the good amount of invoice as well from those projects.

Okay. Of course,

for overseas business, yes, slightly higher margin than what we are getting in domestic business. I hope I have answered your question.

Yes,

yes. Understood.

Sir, second question was on the defense side. We are aware that the RFP for P-17 Bravo has already been issued to the shipyards.

Based on what you have been saying in previous interactions that around 6 to 9 months with that kind of lag, we can expect the order should be received by players like you. Can you throw some light on when can we expect this large order in defense space?

Good afternoon. See, regarding the P-17 Bravo, though the RFP is given to the all shipyards, and recently only we have submitted our budgetary offers, but still they are deferring the final ordering to the shipyard.

We are hopeful that in the Q2 or Q3 of the next financial year, we can get the RFP for submitting our final offer to the all shipyards. Beginning of the financial year 2029 Q1, we are expecting the orders to be awarded.

Got it. Based on your assessment--

No, no. It's not a question, sir.

It's just a follow-up to what the management is answering.

Yeah. Based on your assessment, sir, this defense order, execution shall take place in FY '29 and '30.

Is that understanding correct?

It normally takes 2 to 3 years for executing the complete project.

Got it. Do you see any competitive intensity for this particular order, or we are reasonably--

No, it's a follow-on orders of the P-17 Alpha. We will be the single bidders.

That order goes to the Elecon only. Got it.

Got it. Thank you very much, sir.

I will get back to the queue.

Hi, sir. Thank you for the opportunity.

I have a few questions. Firstly, I want to know, we have seen a fair bit of increase in our margins in the gears business.

I think we are at this level after almost five or six quarters. Could you explain what is one or two reasons that has helped in this?

Is it product mix, or have we taken a price hike? What have we done here?

Basically, we have taken a price hike and also a bit of improvement of product mix. On top of it, margin improvement has also come from contribution of our overseas exports orders, where we typically see a slight high margins.

There were some orders in the exports, which we were trying to execute and complete in Q1, but because of the softness that we had it, we could do it in Q2. That's the reason there is a spike in the margins because a bulk amount of the export order has come in Q2, which could have been distributed evenly between Q1 and Q2.

When you say our product mix has improved, can you tell what is it? What are the catalog and engineered product mix?

It's about 53% is catalog, 47% is engineering, but within engineering also, we have a lot of highly engineered, complicated solutions that we design and sell. That also has improved a lot.

Again at a macro level, as we said, in Q2, we had 22% gear EBIT margin, right? With that, we did almost 20.2% in H1 for gear.

This is the range we are talking about for a gear. Since last couple of quarters, we were not doing good, lately in FY '26.

We were asked a lot of questions about how gear will bounce back and what kind of margin trajectory gear will maintain. We used to always guide to our shareholders that we will maintain 20% to 22% EBIT margin for gear, and we are happy to report that we are heading towards that trajectory that we always wanted to achieve.

Got it, sir. Just to finalize one thing.

You said price hikes have offset whatever input costs have gone up. Your price hikes will cover it even going forward.

I just wanted to know on your order book, growth is a bit weaker, and our execution also seems to be a bit slower than what we have done over the last few years. Could you just give some color on these things?

Right.

In terms of the price increase, when we had the volatility of the steel, we went a little aggressive in quoting price to our customers. At the same time, we also were very aggressive on locking the price on our supply chain side.

That's where we typically keep cushion or a conservative approach on both the side. That's where we see some monetization happening in that particular space.

Coming back to the order backlog, we are working on almost 60% capacity utilization on a consistent basis. There are some machines where we have a capacity constraint.

We are debottlenecking the capacity. We are quarter-on-quarter reassessing and putting more kind of machines that we want.

That's how we will see a gradual improvement in that case. Coming back to the order backlog, the H2 seems to be very promising, even though there was some slowness in Q2 in terms of the order intake, but when it comes to the availability of order, we are pretty confident that we'll be able to execute the same.

Got it, sir. Just to follow up on what you're saying.

You're saying that--

I'm just continuing on the answer he had given, I just want to finish one line. The order book growth, you mentioned that it can get better in second half.

Is that the correct way to understand what you're saying?

No. What I said is execution of the order book because what happens is during Q2, even though there was a slowness in the order intake, but the clearances from the customer in terms of our projects have improved, and that's the reason MHE has visibly improved in terms of the execution.

The gear is also picking up. The kind of visibility we have in terms of the clearances, the clear executable order, it's far better.

Got it, sir. Thank you so much.

Thank you.

Hi, sir. Thank you for taking my question.

I have two questions on the gear division, sir. First is on I think the Q1 call, you had indicated--

Is it better?

Please go ahead. Yeah.

I have two questions on the gear division. First one, on the domestic gear side.

I think in the previous Q1 call, you had mentioned three sets of issues. One was related to RM inflation, which was leading to delayed decision-making at your clients.

Second was related to peers who are sitting on low-cost inventory. Third one, on the public capex, the government capex.

Would like to hear your thoughts on these things, how they are shaping up right now. That is question number one.

Second one, on the export side, I think it's very heartening to see almost a 30% growth on top of the previous quarter when we also grew very fast while the domestic seems to be muted. I wanted to get a sense what is the sustainable growth rate on the export side, and is there something which has changed which is giving us confidence on that?

These are the two of my questions. Thank you.

Right. I will, I think, answer the first part on the first question, and the second question will be answered by Mr.

Dipak, who heads our business, gear division. On a Q1 side, when we say that there was a huge volatility in the raw material, I think that volatility has been stabilized.

The Q1 volatility was a significant volatility because of the capacity and supply chain constraints, the price rise that we could see in Q1 was abnormal. We do not see that price rise in Q2.

That's number one. Number two, we explained in Q1 that whenever there is an abnormal price increase, if there are players in the market who are sitting on a high inventory, typically, they will have a slight advantage because they will carry the inventory at a lower price.

We could see in few cases, but it has not significantly seen in Q2. I think that positioning is softened.

The market is normalized, and I would say that in the guidance also, we say that this was expected to be normalized in Q2. Typically, in a sudden event when there is a sudden increase in the price, this is what happens over a quarter, and this is what we witnessed.

Q2, as of now, as we speak, we do not see that problem. This is what it is.

Coming back to the government spending, we, from a mid-term and long-term standpoint, all the sectors that we are catering to, we see a strong demand, strong spending. As our CMD sir just said in the initial phase, there is a softening right now which has happened, which is more a temporary in nature which we feel because of the monsoon and and such kind of factors.

Post-Diwali, we are expecting it to be picked up. What we are seeing is based on the current discussion, which is happening on a lot of pipeline orders.

Coming back to the exports, your second question, I would hand it over to Mr. Dipak.

Yes. Our overseas business is definitely picking up.

Market is increasingly shifting from standard gearboxes towards the application, engineered, and condition monitoring application solution-based overseas business is increasing. As you know that now data center is also picking up overseas business.

We are having a very good traction from the database center's cooling tower application for the database. At the same times, we are having a oil and gas applications.

Also, we are getting good orders from the oil and gas based applications. The applications are moving from standard gearboxes towards the non-standard and very specific customized gearboxes.

We are having all capabilities developed here at R&D center. We are having good orders on hand for the all this customized gearboxes.

We are hoping same and continuing or increasing the overseas business what we are planning for in H2 also. We are having a very good order backlog for the H2 for the engineering product, and we are hoping the same numbers for the growth in H2.

Got it, sir. Thank you.

Yeah. Thank you for the opportunity.

Am I audible?

We can hear you. Yes.

Yeah. Firstly, my question is more on the long term.

We have an export target of 50% mix by FY '30. In the previous concall, we had given a ₹5,000 crore top line guidance.

That's something aspirational. What gives us the confidence, and what are we doing to move from a ₹600 crore, ₹650 crore export presently to say somewhere around ₹2,500 crores by FY '30?

Secondly, in terms of overseas order inflow, what is the Y-o-Y growth for this quarter? Where in the end industry are we seeing more traction?

Could you just let us give some sense on that?

Yes. Basically, we are confident that by FY '30, we will reach 50% of our turnover from overseas markets.

Now, this growth is not only going to come from organic growth, but also from inorganic growth. Now, considering this fact, right now, there are a lot of areas where your company is planning to dive deep into it and develop different sectors where the company will penetrate deeper into it and get additional business.

Apart from that, we are expecting a sizable quantity of defense orders coming in from the marine sector. There is also a huge demand coming in from heavy-duty, large-size steel gearboxes.

Okay. MHE also has got great prospects for exports now.

We are just seeing that this is just the beginning. We are also having large inquiries coming in in material handling business from abroad.

All in all, we are expected to do quite well, and this is over and above the fact that there is a possibility of inorganic growth with acquisitions possible abroad also. Considering that fact, we are quite confident of achieving our ₹5,000 crore top line by FY '30.

Got it. My second question was on the overseas order inflow for the quarter and Y-o-Y growth.

Our overseas orders have seen an upsurge, okay, especially coming in from the Middle East and the Americas

35% and

which is to the tune of 35%. We are also expected to do much better than this in future years to come because United States, especially, has got great potential.

We have just got the tip of the iceberg. There is a huge potential in United States.

The good part and the heartening part is that we have started getting good references in various different types of industries in United States, and this will help us get more business in those areas, especially cement, steel, even power. Therefore, we want to catch that momentum.

Even the data centers are giving us good business. We've got healthy order in that area also, which we believe should open up large doors for us.

All in all, we believe that exports is the way that would be growing. Middle East is also showing great momentum, especially the Africa and the northern part which they deal with.

All in all, we are very, very positive and looking forward to more orders coming in from those sectors.

In terms of quantum of order inflow?

Europe and UK are also improving, though the improvement is only slight right now or little, but we are seeing good number of inquiries coming in, which, I'm sure, would get converted into orders at a future date. Sorry, continue.

Yes, please. No.

The only thing is left is the order inflow for the quarter, overseas order inflow.

It is difficult to say. There are healthy inquiries on hand for H2, but as of now, it is difficult to mention as to what would be the inflow.

Got it. Fine.

Thanks a lot. Thank you.

Yeah. Thank you so much, sir.

I have two questions. One, on the guidance, what we say is 15% revenue growth.

Is it for half two, second half of FY '27, or it is for entire FY '27? Is it on consolidated basis?

That was first question. On the overseas business, you did allude that we are seeing strong growth.

If you can just clarify what was the order inflow number in Q2 and what is the outstanding order book? In relation to this, is our growth is driven by both overseas subsidiaries as well as direct exports from India, if you can clarify.

Thank you.

Yeah. Coming back to the guidance, the guidance is on a consolidated level, and it is for H2.

Coming back to the order inflow for the exports, it's about ₹230 crores in Q2. When we look at the exports as a business, we do not differentiate between exports through our subsidiaries and exports directly from India.

The result is we work in a very integrated manner, and that's how we look at strategically the entire exports versus domestic sales.

You said ₹230 crores order inflow in Q2.

Yes, it is.

Okay. I believe in Q1 it was ₹194 crores.

Am I right, sir?

Yes.

This ₹230 crores would be what comparable number for last year Q2 or first half, if you can give us that comparable number? What is the-- First half, we are-- Yeah.

Yeah. Yeah.

For the Q2 last year, it was ₹172 crore, and for the first half this year, it is ₹420 crore. For the first half of the last year, it was ₹291 crore.

Okay.

What is the outstanding order book, sir, in international?

Just so, it is ₹326 crores.

Thank you so much.

Thank you.

Hi, sir. Thank you for this opportunity.

I hope I'm audible.

Basically, my question was regarding the material handling division. Who are our main competitors in that, and is TRF one of our competitors?

Yes, TRF was our competitor earlier, but now they have closed down their material handling operations. Hello?

Who else are there? Yeah.

Apart from TRF, I think L&T and TKIL is also our competitor, but since they are focusing on the EPC project, so, of course, we have a competition, but good opportunity for us that whosoever are participating the EPC project or BOP projects, I think most of the main bidder, apart from TKIL and L&T, they need the support like us as a OEM. We have a good opportunity in domestic market to supply our product for that particular project.

And-- Please go ahead.

We have a competition sector to sector. For private sector, yes, few players like Takraf, FAM.

They are competing us.

Got it. Sir, can you help me understand, TRF is still in the material handling equipment space.

What part of our business overlapped with them, and is it so that they have shut down? If you can elaborate a bit.

TRF? Whether they are still competing in what?

No,

no, TRF, I think in present scenario, they are not existing now, okay?

TRF in material handling have closed down their operations.

What overlap did we have with them?

Yes, hi. Good afternoon, and thank you.

Sir, two questions. One, on this inorganic comment, if you can just talk about what kind of size and scale, capability, manufacturing base, if any, that we're looking at?

I'm sure, inorganic happens only when it does, but just what are we scouting for and what are we looking for? Second, coal and thermal has been our mainstay, and we anecdotally keep hearing from our electricity ministry or BHEL or NTPC, the kind of requirement over the next 5, 7 years keeps bumping up.

We have this coal gasification, which is now back on table. Just if you can talk about our preparedness or any white space, if any, how are you thinking and looking at it within the next few years?

One on inorganic and one on the coal and thermal ecosystem.

Let me answer the coal and thermal area. We see great potential in that area, especially because apart from the material handling business that we are doing, in the gearbox area, there are new applications that we have been now catering to, and those also have got great potential.

All in all, power and especially the thermal power plants have a special liking for us because it not only gives business in material handling, but also in the gear sector in a big way. That is number one.

Number two is, as long as inorganic growth is concerned, we are looking at opportunities in America and in Europe, where there are small to medium-sized companies which have got great potential for acquisition or strategic tie-ups, thereby products can be supplied and supported from India. That is an area which we would definitely like to pursue in a very strong way in the near future.

This would be like $10 million, $20 million in size or much larger?

It will depend upon what opportunities we get. Okay.

I'm sure that if it comes our way, we will definitely give a very, very serious look at it.

Correct. Fair enough.

Thank you, thank you, and all the best. Thank you.

Yeah. Hello, sir.

Thank you for taking my question. My question was on the Navy side.

From my understanding, we make the low-speed gearboxes, right? The ones which are around 200, 300 RPMs.

We are not present in the high-speed gearboxes that run at tens of thousands of RPMs, right? Any plan because from what I remember, previously a year or two back, we did try to venture into this high-speed gearboxes.

Do we still plan to go venture into this because these are high-value, right? This would probably get us more orders from the Navy going forward in order to achieve the target of ₹5,000 crores by 2030.

In the defense sector, right now the gearboxes that we have supplied, they are coupled either with a diesel engine, which has low RPM compared to the other prime mover, which normally is a gas turbine. Gas turbine operates at very high RPM, and which is on the high-speed side.

Okay. Those are also products that we have supplied in the past, and we continue to supply even as of now.

Number two is high-speed gearboxes in industrial and in the oil and gas area have got good potential. We have a reasonably good reference list with us.

We need to now catch more momentum in those areas and pursue those areas further to get more and more business.

Overseas market.

Overseas market also, we've got healthy applications, different kinds, recently, and which we will further pursue and get more business

for high speed.

Okay. High speed, the export is the primary--

Sure. No problem.

Thanks.

Hello, sir. Am I audible?

Yeah.

Yes.

Thank you for this opportunity. Apologies if the questions have already asked, as I have joined late.

I have around two questions, and the first one is despite being the strong growth in revenue in the MHE division in Q2, the EBIT margins have declined in Q2. Just I want to understand what are the key factors behind this decline, and should we expect the margins going forward, how would be the margins going forward?

All right. In MHE division, in Q2, we reported EBIT margin of about 20.2%, but with H1 combined, it is about 22.40%.

We have to understand the fact that MHE has remained with only marginal growth compared to last year. Last year H1 was the period with some significant orders with slightly higher margins.

As we progressed in last year itself in Q3 and Q4, the entire year margin was normalized to almost 23%, 24%. This year also, we have a reverse situation where we have picked up with the lower margin, and what we are saying is that we move from 20% to 22%, where we have the capability to move to around 22% to 24%.

The margin guidance that we have been talking about for MHE business in the range of 22% to 24% for EBIT level stays committed. When it comes to the intricacies about the margin movements, the large part of margin decline has been on the quality of the order, number one.

Number two is the stage because we got the clearances in the Q2, and we started picking it up. The scale has just picked up.

Once we have the scale moving further in Q3 and Q4, you will see the margin improvement. Third is, compared to gear, the kind of price locking that we do for raw material on a MHE side is slightly not that strong what we do in a gear because MHE is completely on a project-to-project business.

That's where the kind of raw material price increase pass on, which happened in gear, has not happened in MHE. As we move in Q3, Q4, we will gradually improve our margins and will stay into the range what we have factored and given the guidance to the shareholders.

Sir. Got it.

The second question which I have is on-- Krishna,

Thank you.

Congratulations on good numbers, sir. I just wanted to understand the differentiator factors for good performance behind our company versus competition, what is the moat and the USP for our company, and the opportunity size for us in both in Indian market, exports market, defense market, sir?

Thank you.

I would put it this way that the differentiating factor with us compared to our competitors in India is the fact that, first of all, we have one of the widest range of products. We are also in a very high-sophisticated, high-value gear products that we have, especially the marine defense that we have is a very high and very sophisticated gearbox, which ordinary companies in India as well as abroad find it very difficult to manufacture.

That is number one. There are also other products like high speed, especially, which are critical, which also very few companies can do in India.

If you look at the

coal

mill gearboxes that we have, they are also very sophisticated. Apart from that, there are very sophisticated applications that we quite often pursue, which our competition is not able to pursue.

Apart from that, we also have a very, very sophisticated, ultra-modern manufacturing plant, and our infrastructure is extremely good, which the competition does not have. This is what makes us very unique, and which also is appreciated even abroad and domestically.

This also helps us in very fast deliveries.

What about the expected growth rate for us and competition in the foreign countries for MHE and the gear business? So-- Yeah.

Expected growth rate for us in the years to come, number one. Number two is what about the competition in foreign countries in gear and MHE division, sir?

The competition abroad is from German companies, a few of them, which we compete with them not only in Europe, but also in the Americas. However, we have our own strengths and our own niche markets, which we are now pursuing them, and we are confident that we will be able to grow in them because we see that this niche area has got great potential.

All in all, we believe that we will be able to grow at a high rate in the near future. Our export offices are trying extremely hard, because, initially, not being very well known in this business abroad, especially, it was taking time to establish our references and our reputation, which, over the years, slowly and gradually we are able to do so.

We are expecting great improvements in our total inflow of orders coming in from abroad in the near future.

Thank you, sir. Keep up the good work, sir.

Thank you.

We would like to thank the management of Elecon Engineering for giving us this opportunity to host the call. I would like to thank all the analysts and investors for joining for this call.

Any closing remarks, sir, that you want to share with investors and analysts?

Sure. Thank you for joining us today and for your continued trust and engagement.

To conclude, our first-half performance was in line with expectations and demonstrates Elecon's ability to deliver growth in a demanding environment. We enter the second half with clear priorities: accelerated execution, protect margins, and strengthen the contribution from international markets.

Our experience, engineering depth, and diversified business model gives us confidence in our ability to deliver against these priorities. We will remain disciplined in how we pursue growth.

Our objective is to translate the opportunities before us into sustainable performance, stronger competitive position, and enduring value for us shareholders. We thank our investors and analysts for your continued confidence in Elecon Engineering.

For any further questions, please contact our CFO, Mr. Chintan Shah.

Thank you all.