Thanks, ma'am. Welcome to MM Forgings Limited 3Q FY26 post results conference call.

From the management side, we have with us today Mr. Vidyashankar Krishnan, Chairman and Managing Director, Mr.

Balaji Gopal, President Finance and Accounts. Having now hand over the call to Mr.

Vidyashankar Krishnan for the opening remarks, to be followed by question and answer session. Over to you, sir.

Hi. Morning, everybody.

Thank you all for being here. I would like to now give a set of opening remarks for the results of Q3 FY26.

Our company delivered a reasonably good quarter considering the volatile global environment. Sales grew by 11.3% on YoY basis with a sequential improvement in Q3 of about 7%.

Growth was primarily driven by improvement in volumes of about 3% in Q3 compared to Q3 FY25 along with positive change in average sales realization. Export markets after being weak in almost the first 8 months of the year saw a sequential improvement with contribution from USA rising a bit, a sign of things to come.

The US market seems to have given a positive outlook and customers are coming back to us after running down the inventory of our parts. Europe registered healthy improvement in its mix this year, which was the result of market share improvement and new program starts there.

The decline in gross margins reflects changes in both product mix and geographical mix. Also power cost and labor costs seem to have gone up a little bit.

We are sure that we will claw back these in the months to come. Senior management has been making all-round efforts to mitigate the impact of rising costs amid a tough and volatile trade environment.

These efforts have reasonably helped arrest the decline in margins. Looking ahead, recent government announcements on the tariff front along with recovery in Class 8 truck orders in the US augurs very well for us.

Coupled with the pickup in domestic auto sector led by the CV market, this should provide a reasonable boost to volumes in the next 12 to 18 months. We remain confident of delivering industry-leading volume growth and clawing back some of the margins lost in this year through a richer and improved product mix, cost-cutting initiatives supported by a steep reduction in interest outflow.

Over the past several years, we have focused on strategically adding capacity while improving our product and market mix. Market conditions and delay in new programs didn't help, though.

We continue to invest in the current year and expect to close the year with a planned capex of around 175 crores of which 137 crores has already been invested. We continue to maintain a cap on net debt levels now in spite of the heavy capex.

Next year too we expect capex to be in the region of around 150 to 170 crores. Every activity is being reviewed with a sharp focus on cost reduction, automation, productivity enhancement, and strengthening the company and its balance sheet, and most important of all, relentless focus on customer and delivery to customers, which is now supported by a very strong market both domestic and in exports.

I look at the next few years with optimism. Significant positive cash flows generated by the business are expected to substantially reduce leverage and enhance shareholder value.

As generally just a remark on the side, I've used the standalone results for the above comments. These are my initial remarks and if there are questions now, I'd be happy to take them.

Hi. Thanks for the opportunity.

Sir, my first question will be around the demand recovery from the US on the truck segment. As per some research reports, we have seen that the demand has now returned back and it has shown quite an uptick in I think the month of December.

Is it safe to assume that we are going to see that in our numbers in Q4? A

little bit, partially in Q4 and fully from Q1 FY27 onwards.

Understood, sir. Sir, my next question—

One set of parts have gone into production, another set of parts go into production from February. The full impact will come from March onwards.

Effectively, I would say Q1 FY27.

Understood, sir. Sir, my next question is around the production mix, sir.

For years our core investment thesis has been the shift from forged to machined components to drive the margins up. However, in our presentation the year-to-date FY26 data shows that the machined mix collapsed to around 47%, which was more in FY25, while the lower margin forged mix has been showing a good spike.

Why is this a sharp reversal in product mix?

I think machining mix continues to be at that 45 odd percent. Let me check my numbers.

Balaji Gopal, you have any this thing,

summary? [unclear]

Yeah. Hey, the as forged and machined continues to be—one second.

I got it.

As

forged and machined continues to be—

Our forging is 47% and forging is 53% and machining is 53% machining is 53% up to Q3 FY26, and with the corresponding FY25 we did 42% in forging and machining at 58%. The machining has come down by 5% and turnaround to forging at 40

40%.

From 58 it has become 53 in machining.

To some extent, Raghav, this is because—thank you, Balaji.

Yeah.

Raghav, this mix is down largely because of some reduction in machining of export products. I would expect it to bounce back in the coming months.

Understood, sir. That helps.

Sir, now the next question is on the finance cost, sir. Our finance cost, given our peak debt levels, have jumped to almost approximately 30% year-on-year in Q3.

It's kind of wiping out the benefit of the 10% revenue growth that you have seen. Since we are also capitalizing the new ton, which is coming, the interest meter is also kind of fully running.

Sir, when the press comes live in March-April, as guided by the management, what will be the break-even utilization of that press to cover it up for interest and depreciation cost?

Yeah. Let me first answer the overall question.

We have embarked on a judicious study of our interest costs and thought it fit to make some corrections. We have also been helped by the fall in interest rates in India for both term as well as working capital debt.

Backed by this, we've also shifted our term loans with synthetic swaps from rupee to euro. It's an interest rate swap with the principal portion being left open in euro itself.

Now what happens is that we expect our interest rate to come down to in the region of 55 crores for the next year or slightly lower, but our target is we're very sure that we'll bring it down to 55 crores in the next year from around a run rate of 80 crores this year, which is a substantial reduction.

That is due to IRS?

Because of the IRS and also backed by primary rupee debt rates also are coming down by about 1 1 1/4%. We've also negotiated with banks to bring down our rates.

We are doing a similar exercise on our working capital debt and effectively we expect to save on both the fronts ultimately bringing about 25 to 30 crores of savings. 25 crores we can take as a guaranteed amount almost.

Understood, sir. What about—

It will almost be about 1 1/2 1.5 points on 150 basis points on sales.

Understood, sir. What about the utilization, sir?

What is the optimum utilization for this new press coming in FY27?

We expect the 16,000-ton press to deliver about 3 300 crores of turnover, but that will take a few years to fill up. Right now, we would start with a few parts that are a struggle to produce on our 8,000.

That'll get moved to the 16,500. As we've said earlier, we expect—one

second.

Let me complete. You'll have full input after, as we have said earlier, we expect company to grow by at least 300 crores in FY27 from where we close out FY26.

That growth will be largely out of the non-16,500-ton machinery. The 16,500-ton will only ease production a little bit.

It is not going to significantly add. Further growth will come out of the 16,500 in the months to come.

Understood, sir. Sir, if you can give us some idea on what kind of revenue—

Ma'am, just 2 minutes. This information will be required by everybody.

We'll take this question and then move on the queue. I hope that's fine by you, Raghav.

Can you repeat your question?

Sure. Thank you so much, sir.

Yeah. Sir, just for a idea, if you can brief about how much revenue I know the optimum capacity will give us 300 crores from this new press.

In FY27, how much is the scope for revenue addition from this press?

Hardly anything.

Understood.

Hardly anything. We start the press, we commission it, and then we move a few parts from existing to there, get ready, then as we approach customers, we fill up the press.

Sir. Understood, sir.

This you are talking about FY27, right?

Correct. Correct.

FY26 is almost done and dusted from your point of view, of course. From an operations point of view, we have 2 busy months.

Of course, sir. Sir.

I'll join back the queue.

Thank you.

Good morning, sir. Just wanted an update on our EV subsidiary, Abhinava Rizen.

On the sales front, where are we? Are we tying up with any fleet operators or somebody of sorts, sir?

Thank you, Naveen. We are working on a few customers and we expect at least one of them to be in the bag in the next few weeks, couple of weeks.

Okay. Once they have signed up, only then we will go for full-scale manufacturing or—

We've kind of setup a line for anticipating these such customers. We'll have to do some debottlenecking based on their volumes.

There's a conference call today with a customer also. Once we have some news, we'll share it with you.

Hopefully next quarter, I should have good news.

Great, great, great. My other question is on the power costs that you alluded to in your TV interview today morning, sir.

What steps are we taking to basically not just the power cost, to kind of manage the overall operating cost to be very competitive?

Yeah. Basically, what has happened is TNEB has given a long-term industrial power policy of increasing its rate per unit by 5% every year.

That has added to costs plus also the job mix and lesser utilization of scale at some of our plants. How do we counter this?

First is improved scale. Then we also look at doing power audits, energy audits and bringing down the costs.

Third, we are also shifting over to green power. We've identified a few parties.

We've signed up with them and we expect to save about 15 crores this year. This year means FY27 on power costs by shifting over from grid power to green power.

Sir. Thank you.

I'll jump—

On the interest and the power fronts, we expect to save almost 50 crores. We're looking at something in the region of 40, 45 crores between these two, and another 4, 5 crore will come definitely out of other initiatives like moving over to PNG as against furnace oil, using LPG instead of furnace oil.

We are judiciously looking at all this plus we will also see better utilization bringing down energy costs overall.

Great, great. Thank you, sir.

I'll join back in the queue.

Yeah. Possibly I could have added this information about the power costs in the interview.

Somehow—

I reserved it. I possibly finished with you.

Good afternoon, sir. Thank you so much for the opportunities.

Sir, my first question—hi, sir. Sir, I think we are commercializing 16,500-ton press.

It is basically for diversification. Right now our CV segment's nearly 75% range.

Based on this diversification and any further plans we have to enter any other specific segments? Is there any plan to diversify to reducing the mix of CV to 60, 65% kind of range?

What specific non-CV end markets we are focusing like agriculture, construction, oil and gas, or railway? Is there any timeline and target to achieve those levels?

Okay. Over the next few months, I would expect the CV to come to around 75% and PV to be about 10% and the balance 15 odd percent to come from off-highway and others.

This would be what we would converge somewhere in FY27.

Sir. Sir, we are targeting 300 crore kind of revenue.

Orders are in place or we are in enquiry pipeline?

We are in enquiry mode. On the 16,000, we are in enquiry mode.

Sir. Sir, my second question regarding Abhinava Rizen beyond motor design capabilities and so I'm trying to understand what is the current cash burn rate, and secondly, what kind of capabilities beyond motor design, whether we are focusing on design side only or kind of six-in-one six-in-one solution providers like motor, controller, gearbox, those areas?

I'm trying to understand this subsidiary regarding cash burn rate, EBITDA break-even, and our strategic play.

Okay. I'll answer one and three.

Two, I'm not in a position to answer at this point of time. First question, cash burn rate is about 80 lakhs to 1.2 crores a month.

We can nominally take 1 crore a month.

Sir. Sir, EBITDA side?

Yes, sir.

Yes. Second question on the EBITDA side, we are not in a position to predict EBITDA at this point of time.

Let us see customer acquisition and then we can talk about it. Third, I would expect EBITDA to be for the electrical industry somewhere in the low double digits.

If we're very lucky, around 15% give or take a few. Then this is a wild guess, no commitment.

The third thing on product offerings, yes, currently we have motor design capabilities, but we realized that that is not enough. Customers are also asking us for five-in-one, six-in-one and therefore, we are looking at tie-ups to bring in six-in-one, five-in-one offerings.

Sir. Thank you.

Hi, sir. Thank you for taking my questions.

Sir, wanted to check the reason for our domestic performance as compared to other peers, because not talking about the exports, but domestic performance is still slightly weaker as compared to the other peers. Just want to understand are we losing any market share or is because this we are not present in some products which is growing in the commercial vehicle segment?

You can just help us understand this. I think that will be pretty helpful.

Secondly, the domestic commercial vehicle cycle now is in the upcycle stage. We are seeing a strong growth from both Ashok Leyland and Tata Motors CV.

Can you help us understand what is your into FY27, quarter 4 and FY27? Are you also seeing the momentum to pick up in domestic CV segments?

If yes, then how should we look at the growth rate, industry growth rate or your growth rate?

Yeah. A few customers were not very happy in the last year on our performance.

We did lose some sales up to Q1 of this year. Then we went back to them and found out why they're not happy with us, and found that largely the reason was much better deliveries were expected.

Since then, we have revamped our supply chain management and we have gone ahead very positively with customers, and we've clawed back the market share loss. I'm not at liberty to reveal customer or customers in this situation, you can take it that we've clawed back our market share.

Second is that going forward, we expect the CV market to be pretty strong in FY27. Customers are talking of about 10% growth.

If that happens, that'll be great. Being a Tier 1/Tier 2, we are not the market maker, we are a market follower.

I would expect that we would grow considerably in the coming year, and the 10% at least is very good news for us.

Okay. Also sir, you also mentioned in the previous question about the interest rate swap.

This IRS swap is with respect to Indian rupees and euro rupees? Even if the Indian rupee appreciate, then also we should get the benefit or is it only the case if INR depreciates, then there's a pressure for us?

Good question. If the euro depreciates with regard to the rupee, we will gain.

If the euro appreciates with regard to the rupee, we will lose.

Okay. Okay.

Okay.

Because we have an underlying exposure in exports, overall it will be neutral for the organization. In fact, I always say that it is better that these forex loans lose money for us over a period of time gently, not suddenly, because that means that our export business will be strong.

If the rupee were to sharply appreciate and continue a steep appreciation, for example, export business itself could be under threat. Not just for MM Forgings, but for everybody else.

Right. Okay.

Sir. Thank you, and I'll fall back to the queue.

All the best for coming quarters. Thank you.

Yeah. Thanks for the opportunity.

Sir, my first question will be on the gross margin front, sir. I think we have seen that come down considerably in this quarter in spite of exports coming back and even the domestic volumes growing.

Would like more elaborate response on where do we see these margins coming back to in FY27? Secondly, also wanted to understand what capex number will we be ending with in FY26?

For FY27, what is the plan?

First question was on gross margins, second and third?

Second was on capex and third is on debt repayment. Basically, I think you all are on an 80 crore run rate and earlier you mentioned that you all will be coming down to 55 crore in the next year.

Am I understanding it right?

Yeah. This is with regard to interest, not with regard to debt repayment.

Interest will come down from 80 crore run rate to 55 crore max run rate.

That will only be with the help of the swap, interest rate swap, is it? There'll be no debt repayment?

No additional debt repayment. Whatever we repay, we may be borrowing for capex in this year.

Okay. Okay.

How much we have repaid in '26? Have we repaid any interest in '26 debt in '26?

We've repaid about 175, 176 crores. Exact number I'm not so sure, but between 165 and 175 crores.

Balaji, can you fill in?

It is 177 crores for FY26.

Okay. Saying going forward, because we need to do capex, we won't be doing any further repayment, right?

No. What we do is we have to repay.

We can't not repay. With 750 crore of debt, you cannot not repay.

The 150, 160 crore repayment the thing is on. What we plan is we will not increase debt levels.

We will spend only as much as we can repay, and we borrow for the new spending so that gross debt remains constant or comes down.

Understood. If you could now address my questions on gross margins and the second on capex that you plan for the next year.

Yeah. Capex, I've already said to Raghav, first questioner.

We're looking at about 150 odd crores of investment next year. How much of that will actually materialize and be paid out, all that we're working with projects team and suppliers.

Between 125 and 175 crores will be our actual spending.

Sir, how much we have done till now in FY26?

I've already given that remark. One sec.

About 135 crore, 137 crores is spent. Understood.

Everything for the 16,000 ton is done, right, the capex?

No. About if I'm not mistaken, about 50 odd crore is still remaining.

Understood. Yeah.

Will our gross margins now come back to our original levels of around 58, 59% or that looks difficult considering the order that you've got?

We should get back to where we were originally. We should.

So— What was the main reason for such a sharp drop? I think it was almost a five 5% drop.

Largely people cost and power. Power we've clawed back.

People will claw back and people also there will be a this thing by way of additional growth. Okay.

Sir, I'm understanding from a gross margin perspective. I think those costs will have more of an impact on the EBITDA level, which broadly we have managed on a quarter-on-quarter basis.

We are around 17%. It is mainly the gross margin, that is if I just remove the cost of production from my revenue, that percentage is almost down by 5%.

Yeah.

Yeah. I'll come back to you.

I know. My bad.

I mistook gross margin for EBITDA. I'll get back to you within a this thing or send you an email.

If you can send us an email, we'll send out to everybody on the gross margin side.

Okay.

Largely I would say, gross margins have dropped because of export revenues.

Sir, just because now you are positive on exports reviving back, what kind of projections have we got from our customers in terms of volume ramp-up as compared to last year? On the last year base, how much increase in volume ramp-up are they promising us for this year, FY27?

We would expect a 75 crore increase in sales because of the return of exports, particularly the US market. 50 to 75 crores.

Okay?

That is purely coming from US itself, that is Class 8 related?

Class 8 related.

Understood. Sir, for the 16,000 ton, this will be my last question.

For the 16,000 ton, have we been able to finalize our orders or any POs or basically any

Many customers are interested. Many customers are interested.

We have not yet bagged any. That'll take some time.

We want to put the press into operation first and then run around for customers.

Because I believe you all already have the customers in place, right? Because since you all already export to US and other markets, the same customers you already be booking orders for on the heavier tonnage, right?

Possible. To answer your question frankly and honestly, right now no products are identified yet.

That 300 crore revenue potential we are confident of filling it up by when?

2, 3 years down the line.

FY29 will be a correct year to look at?

Yeah.

Understood. Just one if I can squeeze in one more.

'28

and '28 and beyond. Sir.

Since you all are promising a 300 crore increase from the non-16,000-ton forging, so that will mainly come out of that around 75 crore is from exports and the balance is from the volume growth that comes in the Indian market, right, or any other new projects we have won, new components we have won?

It comes from a combination of growth to current customers in the portfolio of products that we are supplying them, and also we've launched a slew of new products that are coming in for bulk production, and we are also looking at a set of new parts that have gone in for particularly the PV market in India.

Sir, if you could elaborate on that, the new parts which will soon start—

Sure. I'll just answer this question.

It's a needed one. We're getting crankshafts for a PV customer in India.

Understood. That's a top three OEM?

That

project was delayed by about three by about 1 year. Should have come last year, but now has come into production effectively from December onwards.

Volumes are reasonably.

Sir, is that a top three OEM, sir? If I may just—

I can't say that because that'll give you the name very evidently. We'll leave it at that.

Customer name—

No problem, sir. Thanks a lot.

Thanks a lot. Thank you.

Yeah. Sir, good to hear the positive commentary on demand and a cost saving, sir.

Sir, as you mentioned about 300 crore of a new orders will come up next year, it's included current volume growth. Broadly, we can say 15 to 20% could be the range of the growth for next year where assuming domestic CV also grows by 10%.

Thanks, sir.

Yes.

Got it, sir. Just on the data points, sir, if—

Can I get your name and the thing, please?

Mumuksh Mandlesha from Anand Rathi, sir.

Okay.

On the Q3, sir, just on data points, if help me what was the Q3 production number and for the 9 months if you can help me how was the sales volume tonnage in the domestic and export split, sir?

Overall sales tonnage was about 54,000 tons. Right, Balaji?

Yes, sir. Yes, sir.

Sir, up to— Q3 FY26 we did 56,756. Sir, 58,057, sir.

Sales tonnage is 58,000 57 and production is 56,756 tonnage.

Okay. Thanks.

Within this sir sales, how much would be the domestic and export, sir?

You can take the same similar ratio as the overall percentage.

Sure.

About 30% would be exports and 70% would be domestic.

Sure. On the machining mix, how do you see from a 53% this year odd, how do you see for next few years based on the orders?

I think in the past we have invested a lot on the machining area, just want to understand how that mix will change, sir.

Machining mix will go up. Almost all new orders are only for machining, almost.

Most new orders are for machining.

Got it. Got it, sir.

Sir, on the Abhinav Rizen, just want to update last time you mentioned about this 20, 30 crore order. Is that the order you expect soon to be announced and if can help us which category this order is for them?

That's the same thing that they are pursuing now. You're absolutely right.

Is it for the three-wheeler or PV segment, sir, if you can help, sir?

I can't disclose that at the moment. After we go into production, surely we will hit that.

Got it, sir. Got it.

Just finally, if you can help me what is the net debt number for this by end of December, sir?

About 550 crores long-term.

Okay. Short-term, sir, also?

All told, 550 plus another 500 crores.

500 crore. Got it, sir.

Thank you so—

1,000 1,050 crores net.

Got it. Thank you for the opportunity.

One second, hold on. Exact net debt will be 1,065.

Yes, sir. Yeah.

Thank you so much. Thank you.

Hello, sir. Am I audible?

Hello.

Of course.

Yeah. Sir, can you give some more details on the medium-term outlook for exports to US?

What I understand is that there is an emission norm change that was also about to come in start of next year, 2027. Will that also result in some kind of pre-buy and good growth for us if you can throw some light on that?

Yes. We are expecting FY27 calendar '26 to be a strong year going up to

Q1,

Q2 of '27.

Okay. The emission norm change, that has not been rolled back.

That is still about to come.

As of now not, but the US government's functioning these days, nobody knows.

Get that. Sir, just a basic question.

What I understand is that our exports to US come under Section 232. Given that, what will be the effective tariff now?

Will it be 25% or 18%?

As it is, we think that it will be between the two.

Okay. Okay.

We are also waiting—

Fine print is not yet out. To the best of our knowledge, we are talking to customers.

They're also expecting it to be between 18 to 25%. If it is 18, then we stand at an advantage to competition.

Get that.

If it is 25, we are even-steven.

Okay. Thanks for that.

Sir, this 9 months our exports to Europe seems to have grown quite significantly compared to last year. Can you give some color on that?

Specially given this Euro FTA also, will that be a big help to us or,

yeah? The Euro FTA certainly will bring if not more business, at least it puts, as I said earlier, it brings stability to the to the global economy itself at a time when geopolitical turmoil and volatility is the call of the day.

The Euro-India FTA will definitely brings in stability to the entire If you see after that itself the entire volatility and the tension in people's mind, particularly next to the US deal also going through, that has come the tension levels are the perceived volatility has come down considerably. Right?

It augurs well only. The EU now has no excuse to shun Indian exports because we are opening up our market also to them considerably.

Both ways, it has helped to add trade, similarly so with the US. I think our government has done a fabulous job on on both the fronts and it couldn't have come at a better time.

Good news for India as a whole.

Thanks. I'll get back in the queue.

Yeah. Hi.

Thanks for the follow-up question opportunity again. Sir, building up on where we left the conversation in my previous question.

Sir, you mentioned that the press is not going to add any revenue in FY27. Sir, can you tell us are the approval cycles so long for this or is it that we are just taking up buffer time or are we estimating it to be a long time?

What is it I couldn't understand.

See, we set up our 8,000-ton press in 2016. Orders started flowing in only from '18 and execution took from '19 onwards.

That kind of timeframe is required for the bigger equipment. We're not plug and play where you can sync everything and start banging from day one.

Takes time.

Understood, sir. Sir, my next question will be on the margin front.

You had clearly mentioned that our interest cost is coming down since we are at our peak debt levels. Also our depreciation cost is going to be slightly inflated because of all the capex that we have done.

Sir, what kind of EBITDA level margin as well as PAT level margin are we expecting for FY27?

I can't give absolute numbers, but I would say both should improve.

Improve from where we stand right now?

Definitely.

Understood, sir. Thank you, sir.

Those were my questions and all the best.

Thank you, Raghav.

Good afternoon, sir and your team. Sir, just one broad question.

If we look based on your guidance and everything, and looking at the next 5 years' numbers, okay, by '30, can we do 3,000-odd crores of turnover and 20% EBITDA margin assuming 150 crores of capex annually?

That would be a kind of goal.

What type of probability would you put to that?

Sorry?

What type of probability would you put to that?

Strong.

Hello?

Strong possibility.

Strong possibility, right?

Yep.

Okay. Thanks.

Thank you, sir.

Yeah. Good afternoon, sir.

I just had a question on the foreign currency thing. I think in the last concall you mentioned that you're moving towards foreign currency borrowing.

If you could quantify how much of that you have actually converted and maybe what stage we are in, and how are you planning to manage the currency risk on this exposure?

We've converted some and we are convert converting the rest. We waited for the trade deal to go through for obvious reasons to eliminate the volatility because nobody At one point of time everybody said rupee is going to tank dollar is going to tank to 80, and then suddenly the rupee went the other way around.

Because of the non-conclusion of the trade deal, and even now Not even now. Most of the doubts are addressed, but the trade deal has to be fine printed.

I'm sure that sanity prevalent across all powers that be. Given these conditions, general outlook in the in the market is that the rupee would appreciate a tad from where it is compared to the dollar and the euro.

If that happens, we would gain on the covers that we have made. As I've said earlier, long-term for MM Forgings, it's better to lose a little bit on the forex covers over a period of time with nominal depreciation so that the export business continues to be more and more profitable for the company.

Okay. No, that I understood, sir.

If you could give a number, how much is actually—

Okay. Okay.

Your question had too many parts, no recollection. One the numbers to your question is we are repaying about 160 crore a year, 160 to 175 crores a year.

That constitutes, I'd say, 30% exports on even 1,500 crores, that constitutes about 1/3 of our exports.

Right?

Nominally.

You're doing it in the tune to our export revenue?

Correct. The overall exposure will be larger than our overall exports, no doubt.

The repayment within a year will be within the export range.

If the currency depreciates, sir, then you lose out on the this thing or you pass—

Correct. Yeah.

If there is a sudden depreciation, we would stand to lose out on the repayments of that year and hopefully see sanity in the months to come. It's a very complicated thing overall.

Net-to-net, because there is an underlying exposure of exports, which is much more compared to the earnings in exports will be far greater than the loans repayment. Overall, we should only gain.

Okay. Right now the export is 40%, maybe it will be 40 to 50% range.

You expect to be somewhere there then.

Correct. If you take 40% of even, say, 2,000 crores nominally, let's be positive, we're looking at about 30, 35% of that is 700 crores, which is where our gross debt itself stands.

Okay.

Got it. Got it.

Got it, sir. Thank you so much.

Good afternoon, sir. Sir, mine is a bit longer-term question.

In the machining for us in FY16 was about 20%, and obviously that has gone up, right, to about 58% in FY25. I'm talking for the full year FY25.

However, sir, if I look at the EBITDA margin, they are in the similar band. I'm talking about over a 10-year period, right?

What could be the reason for the same?

Machining mix, sir? Can you repeat your question, please?

Sir, in FY16, our machining as a percentage of overall revenue was 20%. Now that has increased to 58% for full year FY25.

However, when we look at EBITDA margins, they have been in the similar range, because as I understand as machining goes up as a percentage, the EBITDA margins also should move up, but that has not happened in our case. What could be the reason for the same?

Very astute one and something that we should ponder over. See, what has happened between then and now is that our domestic sales has grown and the domestic market pricing is tight.

That is the reason why profitability has not grown the way one would have expected it.

Right. Along with machining as a percentage going up, our export has to go up for the EBITDA margins to improve from here on, right?

Correct.

In a sense, yes. Or we should not add less value add machining.

I would say positively, we should add more value add machining than the less value add machining in the domestic market.

Sure, sir. Okay.

The second—

Because see our machining mix, unlike some of our competitors, okay, why name anybody? Some of our competition is that whose margins are pretty high is that we have a wide product offering.

Okay? Some of those are not necessarily EBITDA spinners.

These have been legacy parts. What has happened with legacy parts is that almost in the domestic market, no prices have been increased.

Most customers who have given price increases have taken it away because some competitors have gone and offered them reductions or at least a return of the price increases. What has happened is that competition is brutal in the domestic market.

Many competitors believe that grow at all costs.

That

is not necessarily a reasonable strategy. Yes, to answer your question, export should grow.

Second, value-add machining should grow. That alone will contribute to growth of EBITDA.

Sure, sir. Sir, just a follow-up.

Just something off the this thing, I'm not fully in line with that statement. If you came across one recent book on 100-year-old companies, and one of the points that came up there was that these companies don't pump for growth.

They more focus on customers and look at profitability rather than just growth at any cost. I think if we are very, very concerned about EBITDA, and other things, we should take such a view.

You run the risk of being premiumized and then you get thrown out if you're premium, too premium. It's good to have our hands dirty across the spectrum, some value-add parts, some not so value-add parts, and therefore, you maintain the competitive edge everywhere.

A constant challenge is required. That's my learning.

Thank you.

Sure, sir.

Good afternoon, sir. Congratulations on a very first and decent set of numbers.

My question is on the debt portion, sir. Just consider a suggestion, or sir, is there any plans of raising any rights issue or preferential or a QIP to considerably reduce the debt actually?

That was my question, sir. Yeah.

We are mulling.

Okay. Sure, sir.

Good luck, sir. Thanks for your detailed explanation, sir, always.

Got to learn a lot from you, sir. Thank you.

Thank you. Your name, please?

My name is Yash from individual investor from Hyderabad, sir. Yeah.

Okay. Thanks, Yash.

Hi, sir. Thank you for allowing a follow-up.

Sir, just want to check in terms of the gross margin aspect, what will be the gross margin for and machining separately?

We wouldn't be able to give you that number. Overall there was a question on gross margins.

My finance team tells me, Balaji, can you take that? Can you answer the earlier question on gross margins?

Somebody said it went down, but actually you say that it's gone up.

It went up. In fact, the gross margin went up by 3%.

In fact, in FY26, that is I'm talking about Q3 up to Q3 FY26, it is at 56%. 56.34 as against 53.57 in the corresponding quarter, Q3 FY25.

Corresponding 9 months.

Yes,

corresponding 9 months.

Corresponding 9 months, it went up by 3%.

Okay. Thank you, Balaji.

Yeah.

Good afternoon, sir. Do we see any opportunities in the defense and aerospace sectors?

Is there any plan for us to expand in these segments?

There are opportunities in every space, no doubt. Right now, we're not pursuing much of those.

Any specific reasons, sir?

We are focusing on the capex that we have done and the capex that we have committed to customers. We're focusing on whatever we have acquired by way of customers and products.

Okay. Thanks a lot, sir.

Yeah. Thank you.

Thank you all for, as usual, very incisive set of questions. Many new faces and new questioners this time.

Welcome to all of you to MM Forgings, and hope you'll have continued interest in this talk. Basically, the revenue outlook for the next year looks pretty strong, coupled with cost control measures on interest and on power.

We also initiate something on the people's side. We should look at a stronger performance in FY27.

I'm pretty positive on both revenue as well as bottom line. The 16,500-ton press gets commissioned early next year and goes into production with some available parts, and we add new parts in the months to come.

Abhinava Rizen, we're expecting some new customer addition in the next few weeks. Hopefully, all of this augurs well for the organization.

Over the next few months and weeks, we expect things to dramatically improve, and also our performance and numbers. Thank you all.

Thank you, operator. Thank you, everyone.

Thank you.

Thank you, Jayaraj.