Hi, thank you. Good morning, everyone.

On behalf of Nuvama Institutional Equities, I welcome you all to the 2Q FY26 earnings conference call of KSH International. We thank the management for letting us host their concall.

We have with us today Mr. Rajesh Hegde, Managing Director; Mr.

Amod Joshi, Chief Financial Officer; Mr. Dhruv Chopra, Head of Investor Relations; and Mr.

Nakul Pathak, Head Secretarial. Without further ado, I'd like to hand over the call to Mr.

Rajesh Hegde for his opening remarks, post which we can have a Q&A session. Over to you, sir.

Thank you.

Thanks, Archit, and good morning and wish you all a very happy new year. I would like to welcome all current and prospective shareholders to the KSH's debut earnings call for the second quarter and the first half of fiscal 2026.

I want to once again acknowledge our board, our team, our investors, and all our advisors for their support and the pivotal role they played in getting us to this point. From here on, the onus now shifts to the company to set the strategy that will deliver long-term profitable growth and, as importantly, to execute said strategy, in turn generating long-term value for all our stakeholders.

Our second quarter and first half financial results, along with supporting information, have been submitted to the exchanges and uploaded to our website last evening. However, given that this is our first earnings call, I would like to spend a few minutes outlining who we are, how we are placed, and where we go from here.

We will then provide an update of the second quarter financial and operational highlights, as well as the recent developments before opening up the call for questions. KSH International is a 45-year-old manufacturer of magnet winding wires, which is most—which is the most critical component of coils used in large and small electric machines.

From power transformers down to the smallest compressors for AC and refrigeration, and everything in between, this is where the coils are used. We are the third largest—third largest winding wire manufacturer in India, with an installed capacity of 41,045 metric tons, annual capacity, and we are also the largest exporter of winding wires from India.

Once Phase 2 of our Supa expansion is completed in FY27, we would have an installed capacity of 59,045 metric tons in place. We are a B2B company servicing approximately 120 leading domestic and global OEM customers, and maintain long-term relationships with these customers, resulting in more than 90% of our revenue being from repeat customers.

In fact, five of our top 10 customers have been with us for more than 10 years, and the oldest for close to almost 40 years. Our track record with our customers is our biggest asset.

Additionally, our business is made-to-order, which means that we procure the copper and begin processing only after receiving a purchase order from the customer. Thus, LME copper prices and exchange rates is a direct pass-through for us, and we do not take any exposure to short- or long-term variations in the copper price.

Roughly 75% of our revenue comes from large power transformers and medium power transformers used in generation, transmission, and distribution in the—in renewables, railways, and in data centers, driven by our core product, which is continuously transposed conductors, or CTC. This product which we are the market leaders in India.

CTC is a complex, engineered wire product that goes through five or six precision technology steps and fault minimization processes to arrive at the fine—finished product, unlike standard or round wires, which is essentially a two-step process. Additionally, all of our exports is exclusively to transformer companies across 24 countries.

A few incremental points I would like to highlight about CTC specifically are that we are one of the first companies to introduce and scale CTC in India almost 20 years ago as an import substitute and has maintained our leadership in this product ever since. In addition, given our successful track record, we are approved for all classes of power transformers, including being the only Indian company approved to supply to HVDC 400 kV transformers.

CTC is what differentiates us from all our listed peers, and accounts for more than half of our specialized winding wire business. Why do we succeed?

In an ultra-precision field, our long-term mantra has been that quality has to be built into everything we produce—into everything we produce, not something that gets inspected at the end. This results in the quality and longevity of this product, most of which is still actively working out there in the field.

Coming back to the T&D sector, it is experiencing a—experiencing a structural long-term cycle driven by renewable energy, grid modernization, urbanization, and growing power demand for AI data centers. This is not just an India phenomenon, but it's a global one as well.

The primary bottleneck is the supply of power, medium, as well as distribution transformers, which is driving capacity expansion by transformer manufacturers globally. Without high-quality winding wires, the transformer is just a sophisticated box.

This is the demand environment in which we operate, and the reason why we began our capacity expansion efforts two years ago. One of the key barriers to entry in our business is approvals from OEM customers, as well as utilities, and we have approvals not only in India, but in each of the countries that we service.

From inception, we've always been a manufacturer of specialized magnet—specialized winding wires, which are used in transformers, railways, EV traction motors, wind generators, etc. It—it was only really in FY22 that we expanded into standard or round wires to focus on specific applications, such as compressors for ACs and refrigerators and EV traction motors for two-wheelers.

Our focus on power transformers benefits from the robust demand for the foreseeable future, given substantial increases in local, as well as global power generation, irrespective of whether it is traditional or renewables. This is further validated by publicly announced strong order backlogs and a capacity expansion planned by all of our core customers, be it BHEL, CG—CG Power, Hitachi Energy, GE Vernova, Bharat Bijlee, Siemens, Toshiba, or any other such transformer manufacturer.

Longer-term, our investments in the specialized magnet winding wire for EV motors and certain types of standard wires should help us create a more diversified and balanced portfolio with sustainable growth and profitability. Shifting to exports for a minute, we have historically managed export contributions between 30% to 40% of our total revenue.

In FY25, this contribution was consciously brought down closer to 30%, given our capacity constraints and certain high-value opportunities in India. Now that our larger capacity is in place, we can address both—the demand both in India as well as abroad.

In summary, our key strategies to drive sustained growth is: a) to grow volume from higher value-added segments, like T&D, EV motors, etc., and exports; then expand our international presence, including expansion with our global clients; then also to increase wallet share with existing customers; and drive operating efficiencies through scale and backward integration; and lastly, to, of course, improve our sustainability efforts. Let me now turn to execution and our second quarter and first half FY26 performance.

We are delighted to report a record second quarter in our 45-year history across all key metrics. This performance not only sustains our first quarter trajectory, but in—but, in fact, improves on it, continuing our growth and profitability leadership amongst the listed peers in our industry.

During the second quarter of FY26, our revenue from operations of ₹712 crores increased 50.7% compared to the same period last year. Specialized winding wires represented approximately 77% of our total revenue, excluding other operating revenue, during second quarter of FY26.

Revenue from exports grew 21.7% compared to Q2 of FY25 and represent—and represented 29.5% of the total revenue, excluding other operating revenue, during the period. Second quarter FY26 EBITDA of ₹46.1 crores improved 74.2% year-over-year.

EBITDA margin and Q2 of—in Q2 of FY26 increased to approximately 6.5%, up approximately 90 basis points from last year. As we have stated, reported margin can fluctuate due to the movements in copper price, given that copper is a pass-through.

It is reflected in the revenue, but also in the cost of sales. Therefore, to evaluate the underlying progress of the company's profitability, it is more important to look at the unit economics of the business, which is EBITDA per ton.

Thus, for second quarter of FY26 was our EBITDA per ton was approximately ₹65,500 per metric ton on a consolidated basis, an increase to 42.1% from roughly ₹46,000 per metric ton last year. This improvement was driven predominantly by growing volumes of CTC and within that towards high—our focus towards higher voltage transformers, higher export volumes, better utilizations, and fixed cost absorption.

During Q2 of FY26, we reported PAT of ₹29.6 crores, up 128.9% from ₹12.9 crores in Q2 of FY25, and up 30.5% from Q1 of FY26. PAT margin during the quarter was 4.1% compared to 2.7% a year ago, showing approximately a 140 basis point improvement.

Diluted EPS for the Q2 FY26 was ₹5.2 per share, growing 128.8% over the prior year. I would now like Amod Joshi, our CFO, to go over some of the details on the IPO proceeds.

Over to you, Amod.

Thank you, Rajesh. Very good morning to everybody.

I would like to wish everybody a happy new year. Coming back to the IPO proceeds, if everyone recalls, the company had raised ₹420 crores in fresh issue proceeds from the IPO, which had two primary uses, excluding the general corporate purpose.

The first was ₹226 crores towards repayment of long-term and short-term debt. I am pleased to let you know that the company has already paid ₹220—₹225.9 crores towards reducing its term debt, as well as certain working capital lines.

The benefit of this will become visible going forward. Repayment of this debt also further enhances the balance sheet and the financial position of our company, thus allowing us to focus on our growth and further establish our leadership position in key end-use industries, such as T&D and EV motors.

Now the second primary use of the fresh proceeds was ₹97 crores, which was towards capital expenditure in Supa and Chakan plants, as well as installation of the rooftop solar power plant at Supa. Now orders and advances for some of the machines have already been put in place, and we expect deliveries of this equipment to happen over the course of next 15 months.

Now given the current demand and environment in the T&D sector, our endeavor is to ramp up the CTC capacity as quickly as possible and bring some of the standard and EV wire machines over the course of FY27. Once completed, we would have more than doubled our capacity from 29,000 metric ton to 59,000 metric ton.

Now with that, I'd like to hand over the call back to the moderator to open up for questions, please.

Hi, thank you so much for giving me the opportunity to ask questions. My first question would be whether you could provide us with the breakup of specialized and standard wires in terms of volumes, and what has driven this growth in volume that you've seen YoY?

Specialized and standard winding wires?

Yeah.

Yes.

Hello?

Right, revenue is 77%.

Revenue from specialized is around 77% of the total sales in Q2 of FY26. The growth of specialized between the two quarters has been almost 20% on the specialized front, and yeah, almost 20% on the specialized front, yeah.

This mean

you mentioned that this is volumes, right? The volume growth?

Yes. Yes.

Okay.

What has driven this volume growth, and how much of the current volumes in specialized comes from power T&D? Almost,

when you look at the specialized, almost everything comes from the power T&D, wind generator, and railways is what we talk about. It's not just the power T&D, it's also the transformers that go into the railways.

That basically comprises of the specialized winding wires that we manufacture.

All right. Also, in the presentation, you mentioned that the company has exclusive licensing of HPW's PEEK wires.

Could you provide us with some details on what capacity are we looking to build here? What is the current competitive landscape within the country where PEEK wires is concerned?

Could you walk us through the rationale of licensing? As I understand, all the products that we do currently have in our portfolio are not licensed, what has led to this decision?

Overall, just giving us some understanding of what could be the revenue potential of this segment? Okay.

In India, basically, the current landscape for traction motors is up to 400 V capacity. If you see globally what's happening is the shift is happening from 400 to 800 as the vehicle sizes become larger.

Globally, what's happening is, when you shift to 800 V because of faster charging, etc., then the PEEK wires are generally used by these manufacturers of traction motors. Why we have gone with HPW is that HPW is one of the two manufacturers with patented technology for PEEK wires, and they have a global patent as well.

What we are trying to do is we are trying to indigenize this technology. We are taken up a license because this is a patent technology, and we'll use this technology and setup lines for indigenizing this product to be supplied to the local manufacturers here of traction motors.

Now, keep in mind that this is more of a future, we are investing a little bit early in our cycle, but this will not have an immediate impact, but we'll be working on programs with some of the manufacturers for EV motors, and that's where the real benefit will come maybe after FY27 is when we expect. All right.

From what you're saying, I understand that currently, PEEK wires are not really being used in India. Is that a correct inference?

Currently, India it's not available because these two manufacturers are based out of Europe. There are traction motor manufacturers who are setting up capacity to manufacture traction motors for the 800 V and above segment.

This is more, it's a work-in-progress is what I would like to tell you. We need this capacity right now because you take part in the program, and once the program matures, then that's where you'd see a meaningful volume going forward.

All

right. Thank you so much.

I'll get back in the queue for further questions.

Sure. Thanks a lot, Nidhi.

Hi. Thanks for the opportunity.

Thanks for briefly introducing in detail. Sir, my first question was around your EBITDA per ton, which seems to be significantly higher than some of the other listed peers.

Any particular reason why you see a higher EBITDA per ton? Almost everyone also manufacture CTC and most of our products are also being manufactured by those peers, but our EBITDA per ton seems to be higher.

Any particular reason for that?

If you compare us to our peers, out of the total capacity, almost 75% of our business is actually specialized winding wires, whereas if you compare some of the other peers, they would be exactly reverse or maybe focused only on the standard magnet winding wires. Although it comes within the magnet winding wire basket, but when you look at in terms of profitability, specialized winding wire is a higher profitability product as well.

The reason why we have a higher EBITDA per ton is within transformers also, we are focusing on the 765 kV and the HVDC segments, the large power transformer segments, which are more complex and of higher value addition in nature, as well as our focus is also there on exports, where almost about 30% of our production we export, where export gives you a slightly better margin as compared to the local manufacturers. When you look at the CTC for the large power transformers, especially as you keep going up towards the 765 kV segment, you have fewer manufacturers who are approved for the 765 kV or the HVDC transformer segments.

That kind of gives us a, it might look that there are many players, but there are few players right on the top, actually.

Maybe just a follow-up on that, sir. One of the large company, Transformer Rectifiers, which is a higher kV transformer manufacturer, they are actually backward integrating into CTC, which seems to be our main product in specialized winding wires.

Any risk with these large players also be getting into backward integration, and then, apart from these large players, how many other customers are there who are not backward integrating, or maybe let's say in 2 or 3 years, who will probably be a market for us?

Transformers and Rectifiers, we've heard that they are also backward integrating. You keep in mind that these are all continuous processes again, and these run 24/7.

For manufacturers to really backward integrate, they need that kind of volume also, and we've not seen this trend anywhere else, in fact anywhere else in the world that we have seen. Most of the transformer manufacturers are not doing, and there is a certain degree of complexity also that is involved in manufacturing CTC, and that's why we don't see this as a risk coming up in future.

Got it, sir. My last question was on working capital.

It seems like due to some lower payable days, our working capital is a bit higher versus some of our peers, which, for the kind of growth you are seeing, that increase in working capital is not allowing us to have a positive cash flow on the cash flow statement. Any comments around it, how should we look, let's say, 2 to 3 years from here, will we be able to generate some positive CFO in the cash flow statement?

Rightly pointed out, our working capital days are around 75 days, and compared to peers, a little more. We are actively engaging and undertaking steps to bring down the working capital days consistently in the next 1 or 2 days at all fronts, may it be receivable days, inventory days, or increasing the payable days.

We hope to achieve some sort of positive results in the next 1 or 2 years on that front.

Hi, this is Dhruv. Just to add one point on this: if you look at a 10-year history, generally, most of the years, we have generated positive operating cash flows.

It's only in the years where growth has been north of 30%, 35%. Again, going forward, our endeavor is to try and reduce those working capital days so that we can sustain cash flows even during high-growth periods.

Got it. Thank you so much for answering my question.

Thanks.

Hi, sir. Thank you so much for the opportunity.

Sir, the new facility at Supa, I think has come up on stream now. Will that add a substantial volume in the current quarter and next quarter?

The Supa facility, as is available, that 12,000 tons, which was completed in Phase 1, that capacity is actually available from 1st of October onwards, and it will be available till the end of this year, financial year, and definitely, this capacity, we intend to use it to service the market, you know. That's why, our capacity is gone up from 29,000 to 41,000 for 41,000 tons, yeah.

Has that capacity stabilized, or is still it's ramp-up phase?

Typically, see, in our industry, 85% capacity utilization is a good indicator in terms of capacity utilization. Now, any new plant that is there, it takes about, say, two 2 to 3 years to reach that 85% peak capacity utilization.

Now, having said that, this plant is already operational, and we have started utilizing this 1,000 tons per month capacity, which is available for the next 6 months of this year, and the entire 12,000 tons will be available for next year, plus whatever additional capex that we will do now from the IPO proceeds, that will also come on stream for next year in FY27.

Sir, press release also mentioned about we have received orders from BHEL for HVDC transformers. Can you slightly explain in terms of size of orders, and will these kind of orders can also come from the other OEMs in the Indian power sector?

This BHEL order is an initial order right now, which they have placed for 11 transformers, where the specialized winding wire is going to be used. If you see our past also, we have a history of supplying to HVDC transformers, as well as 765 kV transformers, but in between, there was a lull in the HVDC side.

Specialized magnet winding wires which go into the HVDC segment are the highest value addition, actually, or the most profitable orders within our family of products as well. This is a initial order of 11 transformers.

This is actually a consortium where the Bhadla-Khavda project, which is there, for Power Grid, and there are other players who have also bagged transformer manufacturers, like Hitachi Energy, and BHEL has some more transformers also, which will come in the future. We are the only ones right now in India, the Indian supplier qualified to supply for the HVDC 400.

Sir, last question from my end on terms of export. We generate substantial part of our revenue from the export side.

How those opportunities are in terms of export? Rupee has depreciated.

Will that benefit us, and any impact because of the tariff?

In terms of exports, we export to, like I said, about 24-odd countries, and almost 100% of our exports is actually to transformer companies, where the specialized magnet wires are being exported. We have some global relationships with the likes of GE, Hitachi, then Toshiba, etc., where we are supplying to some of their global locations as well.

All of these locations they're adding capacity as well, and we will definitely see some benefit of that capacity expansion that is happening to maintain our wallet share with these customers as well. Rupee depreciation, of course, from a value addition standpoint, it does help us, and we'll probably see that in the coming quarters.

Tariff.

Tariffs, okay. I'm sorry.

The last question that you had was about tariffs for the US. Today, we do supply to the US market.

We've been in this market for the last 10 years plus, and we have a diversified base of customers. Now, there is very little capacity of specialized magnet winding wires within the US, and if you look at the US demand, the demand is far greater than the supply position that is there.

If at all, the local manufacturer has to really step up in terms of capacity, it will still take them some time. Then that leaves all of the specialized magnet winding wires that are being exported to the US, whether it is from say Europe or India, they're subject to the tariff.

Today, the customers who are buying this material, they're paying this tariff and absorbing this tariff and passing it down to their end customer, yeah.

Sure. Thank you so much, sir.

Hi. Thank you for the opportunity.

My first question would be on the raw material sourcing side. How would the sourcing for KSH International would differ to any of its peers, and along with that, client concentration?

These two questions.

When it comes to raw material sourcing, we would probably have the same sources when it came to copper. There are a few sources for copper available in India, and we import, of course, to have a spread between local suppliers as well as import suppliers.

In terms of that, I think we would have similar suppliers. Only the volumes that we buy would be a lot different compared to the other manufacturers of winding wires.

In terms of concentration risk with suppliers, we don't really have a concentration risk with any particular supplier. We are quite well-spread also.

Okay.

On the client?

No, and what was your other question, you said?

On the client concentration side, sir.

Client concentration risk, top 10 customers we have is about 50-odd percent is the spread of business. Also, we are not really having a very high concentration risk with any one particular customer, I would say,

yeah. I think just, Ashutosh, to add on that, the fact of the matter is that we are a B2B company with about 120 customers, your top 10 is always going to be a meaningful component.

That doesn't necessarily introduce concentration risk, because of two reasons: one is that within the top 10, they're fairly well diversified; and secondly, they've been repeat clients of ours for years, in some cases decades. It's a fairly repetitive kind of relationship we have with them.

Okay. Sir, on the sourcing side, again, you mentioned that it is the volume that comes into play.

Going by that, does this scalability provide us if you can just give me in hindsight, some numbers to understand the quantum of volume that we place with the same set of domestic vendors and the imports that we make, any pricing benefit that we get over there in terms of sourcing, as compared to the peers, if you say?

Peers are larger with certain product categories, but if you compare the top three or top four, I think we would have similar benefits in terms of when we are purchasing. With the top five, I think we would have similar benefits, is what I would say.

The top five take

the volume sourcing.

Yeah.

Yeah.

Okay. Those are my two questions.

Thank you.

Hi, can you hear me?

Yes.

Yeah. Sir, my first question was on the supply side, again.

What are the bottlenecks for the industry that CTC supply is not able to catch up with the demand? If you can elaborate on that.

You mean to say, what are the bottlenecks for the transformer manufacturer or for us?

For you.

For us, capacity has been a bottleneck for us as of October 1st. We have addressed that bottleneck because we had started this process of setting up this new facility in Supa, and it took us about 2 years to set up this new facility.

Now, we have about 12,000 tons of fresh capacity that is available. Capacity has been the biggest bottleneck, and because of the spike in demand, especially on the specialty magnet winding wire side.

Specifically, sourcing the plant and machinery, has that been the issue, or is that people had not set up capacities and now, since the demand is there, people are now going ahead and setting up the capacities? Is it due to delay in getting machineries, is it because of that, or because of not setting up the capacities in advance that is causing this?

The capacity expansion that has happened, we were slightly early in the cycle, and that's why we are sitting with a capacity that is already there on the ground. Typically, in this business, these are all SPM's that you require, and there is a long lead time also.

It can be anything from, say, 8 months to almost a year if you really were to order new equipment. Then, again, commissioning, etc.

is another aspect of this. Then finally, you also have to go through the approval process.

Let's say, if a new company is coming in to manufacture CTC, it's not just that they make this capex investment, they also need to work up that value chain of starting from a medium power transformer, and then you supply it up to the 765 kV transformer, and this could take anything in the upwards of, say, about 5 to 7 years for them to reach that. Finally, of course, the biggest bottleneck for all these people would be to, even if you have capacity, is to get the end-utility approval, which is like Power Grid, NTPC, they all want to see a track record for your product to have been used in the field.

That also creates some issue. Even if capacity comes in, what I'm trying to say is that it's not that it's easily available for everyone to be use it.

Right.

Since these transformer players already have relation with the end-customers, will it not be easy for them to get their products approved, or they will have to follow the same process as an independent magnet winding producer will have to do?

No, no. Even a transformer manufacturer, one is of course, the complexity of the product also is there, and there are different complexities when you're manufacturing these products.

For a transformer manufacturer, he would also have to go through the same steps of getting approved by the end-utility as well. I don't think it's any different for whether a transformer manufacturer is manufacturing it or if we are manufacturing it, or any new player is manufacturing.

I think just one clarification that, ultimately, a transformer manufacturer supplying is only able to select a vendor, such as us or anyone else, if the vendor or us is already prequalified and appears on the sub-vendor list of the utility companies. They cannot go and institute any other vendor unless it's preapproved with the utility.

Right, right, right. Okay.

If they were to resort to importing, how easy is to switch to imports and for these manufacturers to cater to their demand, because they are also sitting on order books, but this shortage of CTC and bushings is what constraining them. If I were to import these and supply, how easy or difficult would it be?

We know that there is some imports happening, but that's at a much higher cost right now. That's because the capacity was not available.

We don't see this trend continuing, because now that capacities are available, we would be in a position to service all the local customers as well.

What would be the gap there?

In terms of the quantity being imported?

No, no, pricing.

Pricing, see, in this product, if you just on a like-to-like basis, there is a 10% duty element which is applicable on any import. Now, you add that 10% on the copper price as well, which is roughly, you can take ₹1,000 a kg is just the LME element of it, then it becomes a substantial gap, yeah.

Okay. Secondly, this copper prices, US is talking a lot because of duties, and elsewhere, we are facing shortages.

On for your order book for next year or 18 months, how do you see your raw material sourcing? I know pricing is a pass-through,

but

in terms of having sufficient inventory levels to execute your order book, how are you doing that?

For us, like all our copper suppliers are long-term suppliers, and we've been working with them either right from inception or at least a vintage of at least 5 to 10 years as well. If you see that all the copper rod producers also, like Hindalco, or now Adani, Kutch Copper, which is come in, or Vedanta, HCL, etc., they're all adding capacity as well.

Really, if there is any problem at their end, where they're not able to source the concentrate to make the rod, then it would be actually a India-wide problem. It's not just a industry-wide problem.

Otherwise, we don't see any challenges. Typically, the from order to supply is typically a two-day cycle, where from the time we order the raw material by the time it reaches us, it takes only about two days.

How many days of raw material inventory you are maintaining currently?

Around 15 to 20.

Around 15 to 20 days,

yeah. Okay.

Great, great. You earlier mentioned this is regarding EBITDA per ton, that is purely because of high specialized winding wires contribution rising up.

I wanted to know what was it in last year, H1 FY25, how much contribution was from specialized winding wire? Which is 78% now, I think you said earlier.

It was around 75%,

yeah. Just by 3 percentage point increase, EBITDA has increased from 40 ₹41,000 to ₹65,000?

₹46,000, ₹46,000. Not just the quantity increase, but like was pointed out, the mix of the CTC that we've sold to higher transformers has actually pushed the EBITDA per ton up.

Exports.

Exports in terms of volume has gone up. Then, if you see within the transformer segment also, we are more on the upper end of the transformers, like say, if you say, for example, 765 kV, that would obviously have a higher value addition component because of the complexity of the job as well.

It's not just that we're getting a higher price. There's a complexity aspect also.

Okay. What would be the salience of this category of orders in the order book?

What would be the?

Salience, the total contribution of these category of orders. How much would these orders contribute to total order book?

Just to let you know that we don't really work on an order book. Normally, what we have is a contract with a customer where they book our capacity for the year or maybe slightly higher than that.

Typically, these are all repeat contracts that we get. 80% to 85% of our business is normally always repeat.

The same customers will be repeated. It's gone as high as 90% also.

Generally, we keep some capacity available for any rush orders or any new customer development that we're doing. Order book as such...

Right, right, sir.

I understand that. Given that the demand-supply mismatch, it is well understood that you will be fully booked up by the OEMs for next at least I think one or two years.

Yeah.

In that, how much is this category of orders? That's what I'm trying to understand.

For the specialized?

Yes.

Normally, one what is 1/3 of the CTC, 10...

I think if you look at the large power transformers out of our CTC, today about 1/3 of our CTC volume is going to the largest class of transformers. That's up from single digits even two years ago,

yeah.

Okay. So, 1/3 is going to this category, is that

right?

Yeah,

1/3 of CTC.

Understood. Okay.

Thank you, thank you so much, sir.

Sure.

Hi, congratulations on a great numbers. My first question is, you can probably talk at the gross margin or EBITDA per ton, what would be the difference in, for your two products, that is standardized and specialized copper winding wire?

Generally, it's 3:1, the EBITDA per ton.

Okay. Second question is, obviously, our EBITDA per ton has improved from, if I look at your historical numbers, in FY23 from ₹28,000 per ton, almost it has moved to ₹65,000.

Large reason would be entire would be because of your increase in specialized product, or it will have some impact of because of the increase in copper prices as well?

No, copper prices has got no role to play in the EBITDA per ton. Once again, just to be clear, that what's contributing to the increase in EBITDA per ton is, of course, the product mix that is there, that is a higher concentration towards the larger kV segments, where the complexity of jobs are more, but also at the same time, the profitability is higher on these kind of products that we manufacture.

The third contributing factor is the exports, where as exports are generally better margins than the local market that we're servicing. Then, of course, you have your volume, which is adding to the operational efficiencies, where the fixed cost absorption is much better.

We expect that this EBITDA per ton number at least sustain in this financial year and going forward, given you have clearly a higher orders from high-voltage transformers?

Our endeavor is, of course, to maintain these kind of EBITDA per ton figures now.

Okay. My third question is on the new plant, which has commissioned.

I wanted to understand, would it also require all the approvals which have been there for your other plants? If yes, then how long does it take, generally?

We are already in that process, and some of the customer approvals we've already got. Of course, we would basically use the new plant for newer customers where there is a capacity constraint for them, but obviously, the more complex jobs that we are doing, we would continue in our existing plants.

That's how we would be utilizing the new plant capacities.

Okay. Last question is, do we face any competition from the Chinese players in any of our products, obviously for the export market?

Once upon a time, the Chinese were quite predominantly there in the US market, but as of right now, the US market is something that the Chinese vacated post-COVID. That's where we were able to really focus on and increase the volumes as well.

It's the same situation we've seen in the Europe, where having another alternate source as a supplier, and we've been beneficiaries of that in the other export pockets as well. Of course, in some geographies, where say in Southeast Asia, like Indonesia, etc., we find it difficult to compete because of certain FTAs that the Chinese manufacturers are having with these countries.

Europe, Middle East, then in Japan, we have a pretty level playing field, and we are as competitive as the Chinese on a like-to-like basis. That way, you've not seen anything in the US, etc.

Sir. Thank you, and I wish you all the best.

Thank you.

Thank you for the opportunity, and many congratulations for maiden IPO and the first successful quarterly update. Hope to see this momentum continues as the demand momentum is very strong, and now we have the capacities also available with us.

My first question would be, sir, around CTC capacity: what is the current CTC capacity, and going forward with the new addition of 12,000 tons, what would be the capacity of CTC?

We generally don't report only product capacity. We don't break it up, but if you see our specialized versus standard, I think we are giving that in the investor presentations.

I think long-term, we expect it sort of to be a 60-40 mix towards special.

Great, sir. Secondly, sir, while working capital days, if you can elaborate little bit more in terms of measures and target that we are looking for working capital days, because the major difference is mainly on the payable side vis-a-vis competition, and that's significantly different from competition.

More of investors are concerned around working capital days, and how do we like to tackle that scenario going forward, and what's our internal assessment where it can stand?

Right, correct. Rightly pointed out by you, our payable days are much higher as compared to the peers, and till now, what we were doing is we were purchasing copper basis 100% advance.

As our capacity is going up, we are initiating steps to ensure that we purchase copper more and more on credit than on advance, like is done by our peers. Now, that itself will increase our payable days and reduce our working capital days going forward.

Okay. One more question related to return ratios, sir.

While we have a best-in-class EBITDA margins or EBITDA per ton, our return ratios, especially return on capital employed, seems to be similar or a little bit lower than the competition. Any sense how are we looking to improve on this number going forward?

I'm talking purely on FY25 basis, while near-term IPO proceeds may have some impact, but ex of that, how are we looking to improve on those return ratios?

Right. If you're talking about the return on capital employed, this is somewhat linked to my earlier question that you asked.

What happens is when we purchase copper against advance, you end up using the working capital limits much higher as compared to the peers. Because peers are using the supplier line of credit, their payables are much higher, and working capital utilization is lower.

The loan outstanding tends to be lower in the short-term loan category. That's why ROCE, if you see, will be almost equivalent or a little lower than the peers.

Having said that, there's always a tradeoff where if your cost of bank finance is better as compared to the supplier, you always tend to use the bank finance more than the supplier finance. That gets reflected in the ROE.

If you see the return on equity, which is the ultimate return that goes to the investors, our returns are much better than the peers. As we go ahead and we use more supplier line of finance, our working capital utilizations are expected to stabilize in line with what the peers have, and so we expect the ROCE also to that extent get impacted because of that.

Okay. Thank you very much.

The last question related to the announcement change in the management level. If you can explain little bit on what could be the implication of that?

Rohit Hegde, who's the other Joint Managing Director, who's my brother, he is going to take up a more active role in some of the other group companies as a whole-time director. That's the only change.

He'll continue being on the board as a non-executive director, but not as an executive director. Otherwise, there's no real change.

Okay. Thank you for the clarification, and many congratulations, and wish you all the best.

Thank you.

Thank you.

Good morning, sir. Overall, very good results and very good presentation giving detailed explanation on everything.

Sir, a few questions. First is, I think on the call, you mentioned that in the longer term, the specialized winding wire capacity will be 60% of total capacity.

I wanted to understand whether the capacities are fungible?

No. To give a short answer, no, it's not fungible.

Within that specialized winding wire, it's slightly fungible because some processes are common, but if you look at standard versus specialized, you need a specific set of machinery itself, and which is quite different.

The new Supa facility will be entirely specialized, or is there a mix of standard capacity there also?

No, there's a mix of both, standard and specialized. Of the 30,000 tons of capacity that we are adding, there'll be a mix of specialized, as well as standard.

This first 12,000 ton what has been commissioned is what type of capacity? Again,

both. It's a mix of both, yeah.

Okay. Sir, in the presentation, you've very well explained that we should look on EBITDA per ton despite copper prices being so volatile.

Does the standard wire also follow a similar formula with your long-term clients, or standard wire business is more a percentage business than EBITDA per ton business?

No, so, the standard wire also follows the same when it comes to the B2B side of it, and we are in a B2B industry, where copper is a complete pass-through and there is a value addition that we agree with the customer. That value addition is independent of the copper price.

I think in the... The

entire business will follow a similar model,

and

there is no percentage. You had also mentioned that the difference between specialized and standard is 3:1 on EBITDA per ton, right?

Correct. That's right.

Because of the complexity of manufacturing processes, that's why it is there.

Since my last question, BHEL has recently placed you order for this HVDC transformer, which has the highest value added in your overall portfolio, and I think it will go on for next 12, 15 months, which means that the current EBITDA per ton would be maintained and improved going forward, because obviously, the rupee depreciation will also at some point would help in your export business. We should expect a gradual improvement in EBITDA per ton?

When it comes to this EBITDA per ton for the HVDC orders, see, even though this is an order, it doesn't really move the needle too much from an overall capacity that we have. Why it's important for us to mention is that going forward, HVDC is going to be a growing segment, and a lot more consortium members are getting orders, and that's something that we would like to highlight, that we are the only Indian supplier for this HVDC segment.

Thanks a lot.

Thank you.

I would like to thank you on behalf of KSH International for attending this call, and I hope we've given you whatever information we could. We've tried to include it in the investor presentation, and we look forward to the next quarter as well.

Thank you very much.

For those that we were unfortunately unable to reach for questions, please reach out to us, and we'd be happy to answer any questions. Thank you.