Thanks, ma'am. Welcome to MM Forgings Limited 1Q FY27 post-results conference call.

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

Raghunathan, Chief Financial Officer. I will 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.

Good afternoon, everyone. Thank you all for joining us on MM Forgings' Q1 FY27 results call.

Basically, we have seen considerable improvement in the markets as far as Q1 is concerned, and we see the same optimism going through the rest of fiscal '27 and going into calendar '27 as well, with strong momentum from both domestic as well as export markets, particularly the USA. We have seen growth in the US market back, and also the CV, tractor, and pass car market in India are all running pretty hot.

As a result, here MM Forgings has posted a total net sales of ₹427 crores as against ₹369 crores for the corresponding period in the previous year. Our EBITDA stands at 82% gross and 75—₹82 crores gross, sorry, and ₹75 crores net of other income, at 18% net of other income, as against 16%, sorry, 19-odd percent considering other income as well.

Excluding other income, EBITDA stands at 18%. Revenue growth has been almost 16%.

EBITDA has grown by the same 16%, and PBT has grown by 30%. All this is excluding the sale of assets.

We have sold land in the Oragadam area of Chennai. We have sold and realized ₹60 crores as net profit, ₹58 crores net of taxes, ₹64 crores gross.

That's the profit on sale of assets, not gross, profit on sale of the assets. All that has not been factored in into these EBITDA numbers, naturally, being one-time gains.

Domestic sales stand at 63.5% and exports at 36.5%, as against 61% and 39% in the corresponding period the last year. India accounts for 63.5%, US 18%, South America 4%, Europe 14%, and others about 1% of today's sales breakup.

Commercial vehicle stands at 71%, pass car 14%, and agri and off-highway 14% of overall sales. Balance 1% is others.

67% is machined, 33% is directly forged. Our heavy forgings constitute 42% of our sales as against 43% in the previous year under reference.

Sales per ton has gone up from ₹193,000 to ₹202,000, meaning ₹2.02 lakhs versus ₹1.93 lakhs in the previous quarter. These are some of the brief numbers that we have prepared for you.

We have this as a PPT that will be mailed out to all of you by end of this meeting. With these opening remarks, I would like to throw open the floor for questions and would be happy to answer whatever I can in the best possible time.

Yeah. Thank you, sir, for the opportunity and congrats on a good set of results.

Firstly, sir, we have seen a good growth coming back in Q1 quarter. Just if you can give a view for the full year, what kind of a growth we expect in the domestic and exports market, and particularly for the US market?

Also, I think very interestingly this time, you mentioned a very good mix of machining in the quarter. What led to the notable jump in the machining mix?

Sorry. I was muted.

I had muted the phone. We did about ₹1,600 crores last year.

We can expect the same 18-odd percent growth for this year also. We should be looking at turnover in the region of around ₹1,800 to ₹1,900 crores.

With regards machining mix, a lot of money has been invested by the company in the last 3 years in machining, and that has led to a higher machining mix as a percentage of sales. Just

on the machining mix, should this current run rate of 67% continue for the rest of the year, sir?

Yeah. I think it should hover in the 65% to 68% range.

Got it. Sir, also I think this quarter, particularly gross margin has seen a notable improvement sequentially on almost more than 370 350 bps.

Is it part of the reason being a better machining mix and exports mix, sir?

Yes, we've had overall realization go up, Mumuksh, this quarter. That would definitely result in better gross margin.

Got it. Just on the employee and other expenses which had increased Q-on-Q, any reason for the increase, and how do you see the run rate for those expenses, sir?

The increase has been steep in Q1 largely because last quarter, the period under reference, we had not given an increment, and that was done only in the subsequent quarter. This quarter, effectively, at this time, we had given increment in the first quarter itself, right from 1st of April.

That is one reason why there is a significant increase in personnel cost, relatively speaking. Plus we also added some numbers.

Overall now, numbers and increment increases have stabilized. Right through the year, these kind of numbers should hold.

Got it, sir. Sir, lastly, just on the debt reduction plan with the land sale now, and how do you plan to further reduce the debt?

Just can also update us on the interest run rate expected ahead with the change on the interest rate policy which we had done earlier?

We hold that last year FY26 opening, the debt was around ₹750 crores net debt, term debt at least, gross debt, sorry, that will remain at those levels. Sorry, gross debt stood at ₹750 crores.

That will hold at those levels for this year also, approximately. We would be repaying about ₹170 crores this year, and the same would be drawn back as further loans for investments being made in this year.

Gross debt will remain at approximately the same levels.

Got it. Broadly, capex would be also ₹170-odd crores, sir?

Yes, approximately ₹150-odd crores.

Got it, sir. Thank you.

Thank you so much for the opportunity, sir. All the best.

Thank you.

Hi, sir. Thank you for the opportunity.

You mentioned that some tailwinds from the US side. Could you elaborate further on what exactly you mean by those tailwinds and is it in the commercial vehicle sector only or other sectors also?

For us, it's the commercial vehicle sector. The CV market, particularly Class 8 trucks in the US is booming quite strongly, we see huge traction there.

Got it, sir. Overall in terms of, let's say, capex, we've done a huge capex cycle already, and you're mentioning the capex cycle to further continue.

Could you explain on why are we investing so much and are we increasing our capabilities? What exactly is happening in terms of our capex building?

Of course, we are increasing our capabilities across a wide spectrum of machined products. That is where most of the capex is into machining.

Plus we are also adding a few equipment into our forging repertoire, if I can use the word. We're adding the 16,500-ton press, which will go into production by end of this fiscal in Q4.

We also have a 4,000-ton press that has gone into production in the last couple of weeks. These are the basic additions on the forging side, apart from a little bit of debottlenecking and replacement capex cycle coming in on the forgings side.

Got it, sir. Right now, in terms of machining capacity, where are we at, and with expectations, where do you want to end up in terms of capacity, let's say, in machining?

Machining is a very mixed bag. I didn't get your name.

Ramesh, sir.

Ramesh.

Yes.

Hi, Ramesh. Machining is a mixed bag.

It's very difficult to quantify the machining capacity outright in numbers. What happens is that if you look at numbers alone, a small product with huge numbers in machining would overshadow a much bigger product with much less numbers, but the bigger product would be more value-add and probably also more bottom line accretive.

It's tough to give a single number that will quantify the machining side. One good thing at this point of time from April onwards itself, I should have made that in the opening remarks.

April onwards itself, I'm happy to say that all the cells at MM Forgings, machining and forging, are running to the fullest of capability. Note the word capability, not capacity.

April and May were hampered by an availability of labor, which was prevalent right across the country. We were not alone to it.

The rest of the country was also a part of the shortage of labor, and ours was no different in April and May. June was a lot different.

We were able to bounce back with new hires, largely local and also a little bit of migrant, and ensure that we were up trumps in June. Going forward, from July onwards, we see that our capability has gone up considerably.

Now it's hardly for want of manpower. A few cells have technical issues hither and thither, not much, but a little bit.

Let us say the last 7% to 10% here and there. We are now working on harnessing those and debottlenecking.

I would say 10% to 20%, not just 7%. I would say it would hover between 15% to 20%.

There is a good growth potential further ahead, and we're pushing those numbers from July onwards.

Got it, sir. Sir, in terms of automation, I understand that we're building capacities in machining and forging.

Automation also, are we investing in and how much have we invested so far in the last 4 years?

Automation has been largely in the last couple of 3 quarters only. Overall, I would estimate that our investment in automation is about ₹7.5 to ₹10 crores.

Going forward, do we expect a lot more going towards this instead of our rest of capacities?

Absolutely. This number should triple, if not reach about ₹50 crores by ₹40 to ₹50 crores by end of this fiscal.

At least it should be in the region of ₹30 crores.

Got it, sir. You mentioned that ₹150 crores of investing this year.

When do you think we'll start seeing

Yes, sure. Thank you.

I'll answer this question, so that it'll benefit everybody else. We would expect this to result in increase in turnover in about 2 years from now, 1 to 2 years from now.

Yeah. Hi, sir.

Are we facing any pressure from the government to boost our export?

Sorry? Yeah.

Are you facing any pressure from the government to boost your export?

No, nothing specific.

Okay. Because I was asking We've always been

exporting, and our export numbers have been reasonable right across time, though in percentage terms exports has dropped. That's because domestic has grown.

All that.

Yeah. Okay.

Thank you, sir. I had that fashion only.

Thank you.

Hi, sir. My first question is, where are you currently seeing momentum or new avenues for growth in the order book?

We recently had a power backup company secure a large order from hyperscalers. Just wanted to know if we are positioned to supply crankshafts for such OEMs.

Naveen, yes. The hyperscaler business is petering out into the domestic forging market, and there is a strong demand from such companies.

You are right.

Thank you, sir. My second question is on the power and fuel cost still being elevated despite the addition of green power.

Could you please quantify what has led to this?

There has been a huge increase in fuel cost in Q1 on account of the West Asian conflict. That has been, of course, after Q1, it has reasonably stabilized.

That is the reason why power and fuel has gone up. Plus you also have to keep in mind rising EB power costs due to the policy of the Tamil Nadu government, but that does not come in in Q1 of this year.

Annual increase in TNEB costs halted.

Got it, sir. Got it.

Another small bookkeeping question on depreciation. It is gone up 20% year-on-year.

Just wanted to know which facilities or product lines are seeing bulk of these capital additions?

Largely forging and machining capex. Machining capex, I would say, mostly.

Sir. Sir.

We could see the machining share go up very nicely. My last question before I join

That is the intent.

Yeah. My last question before I join back in the queue is on Abhinava Rizel, sir.

We had customers getting added on. Just wanted to get an update on how many customers that we are billing, and the pipeline, and an overview on that, sir?

Yes, sure. Abhinava Rizel has gotten its first business, and I'm thrilled to say that we are into initial phases of SOP, start of production, and we are producing parts at a ramp-up stage, and that is real good news for us.

Thank you, sir. I'll join back the queue.

Hello, sir. Good set of numbers.

Actually, we are shareholders of company for last 30 years continuously. Been a very privileged to be a part of this company for last 30 years.

I had just two questions, sir. I remember seeing two, three conference calls back, and you also alluded to it saying that trailer tractor is reducing the front axle demand.

I just wanted to understand, is MM Forgings looking at entering the trailer axle, suspension assembly? Understand the process might be different, and the customer segment is also different.

Some of the forging companies have started doing this in order to negate that business loss. I wanted to understand if we are considering in that direction.

Not at this moment, Manas.

Okay. Any particular reason, sir?

Is it margin dilutive to our existing business? Is that one of the reasons?

One would be, yes, it's margin dilutive. Second, we have enough on our hands in terms of growth, managing debottlenecking, and ensuring that there is further this thing of improvement on EBITDA and costs.

This quarter has been struggling to just keep supplies going. We have to now organize ourselves on cost reduction.

There's a lot, lot to do in the current business.

Okay. Thank you, sir.

Second question, sir, I think I saw

Without getting stuck here, we have to ensure that we are moving along in this line of business first.

That

traction is there very clearly, and we need to carry this towards logical conclusion across the spectrum of the business itself. I'm talking with the

Okay. Second question, sir.

I remember seeing some interview of 2 months back on one of the media channels where you said subject to any QIP, you might want to do a ₹400 crores growth capex. I know it's very far-stretched, but I just wanted to understand where are we targeting?

Existing product, existing business, or we're looking at non-auto industrial, or we are also evaluating non-ferrous products such as aluminum, titanium for aerospace? I'm just trying to understand where our existing machining and engineering capabilities can be leveraged.

Where are we looking at for that ₹400 crores of growth capex?

First and primary, we would be looking at our own business.

Okay.

Mainly in the hot closed-die steel forgings.

That's

the primary zone. The second would be anything else in the metalworking space.

Okay. In the

In the metalworking space, means metal machining, machining assembly, value-added parts.

Okay. Non-auto would be industrial may be one of the applications we might be looking at?

Definitely, 100%.

Got it, sir.

Thank you.

Hello, sir. Thank you for this opportunity.

Sir, first question is, after capex of ₹150 crores, what percentage or what amount would be replacement capex and what percentage would be new capex?

Sorry, Suraj, can you repeat?

Of the ₹150 crore capex that we plan to do, what amount would be the replacement capex and what amount would be for new machineries and equipment, growth capex?

Roughly about 30 to ₹50 crores will be up to ₹50 crores will be replacement capex. Replacement

also

debottlenecking.

Sir, on the current gross block of roughly ₹2,100 crores, what is the peak revenue that we can generate?

Close to that number.

Got it. Just one last question, what was our revenue from the US market in the base quarter, like last year same quarter?

1 sec, I will give it to you. Percentage terms, 18% in this quarter versus 15% versus almost 16% in the previous year's first quarter.

Got it, sir. Thank you very much.

Hello. Am I audible?

Yes.

Yes. Sir, finally can you share like what is the in terms of volume, like what is our share what is our current, this quarter whatever we have done, and what is our expectation in terms of volume share?

Last year corresponding to last year, what kind of volume we are doing? Sir, one when a two clarifications, I I understand like I also follow your company for a long time.

Sir, we are operating at a relatively much lower capacity utilization, but still, sir, we are continuously doing our capex. In that case, sir, can you guide us like what can be the top level of like what can be the peak capex that we can do, or what what is the next 1 or 2 years in which direction we want to make the capex and why basically?

Despite having such a underutilized capacity as of now. Vis-a-vis, sir, how much debt in that case we need to additionally take or reduce or whatever, sir?

2, 3 years roadmap if you can share.

Okay. Can I get your name, please?

My name is Subrata Sarkar from Mount Intra Finance, sir. We also follow your company for a very long time, and we have enough faith on you, so that's why, sir, we are asking for some kind of roadmap.

Your first name, Subrata is it?

Subrata, yes, sir, Subrata Sarkar.

Sarkar. Okay.

Yes.

We see the capacity utilization is going up considerably, Subrata. Last year, we did about 78,000 tons of sales, and we have done about 20,000 tons in Q1.

We expect Q2 Q2 and beyond to be much better, should hover at around 24,000 tons for each quarter, 23,000 to 25,000 tons minimum in Q2 and beyond. We should, as discussed or as we have been guiding, we would expect to cross the 90,000-ton mark in this year and next year challenge the 100,000, 110,000-ton mark.

The momentum is on, and we see traction in moving our outputs to 100,000 tons plus plus. We will currently, from Q2 and onwards, we should be almost at a 100,000 ton per annum range, maybe a little bit more.

Capacity utilization is going up. I'm happy to say that.

From 80,000 tons, this year, we should be 90-plus, with a run rate definitely of 100,000 tons per annum. Maybe even end the year with much more than 100,000 tons, things hold.

We should be able to push the run rate beyond 100,000 tons. Our internal target continues to hit 27,000 and then 30,000 tons per quarter.

Sir. Sir, a small clarification.

In that case, whatever revenue growth we are expecting, almost entirely from volume growth it is, sir?

Correct. The consequence to that is the next part of your questions is where are we investing in?

We are largely investing in the machining side and this year about ₹50 crores on debottlenecking, mostly on the forging side. A little bit of that, ₹40 crores will be forging, ₹10 crores will be debottlenecking on the machining side.

This debottlenecking will result in greater utilization and more machined products going to customers. That's the plan.

Thank you, sir. Sir, most of the capex for next 2, 3 years will be from our internal accruals, sir, or we will take some addition debt?

No, we do not plan to increase debt beyond these levels. ₹750 to ₹800 crores is what our gross debt levels will stand at this point of time.

If turnover increases rapidly Yeah. Once turnover increases reasonably and EBITDA along with it, at that point alone, we could consider raising gross debt levels.

Otherwise, I would like to see it capped around these levels. Give or take ₹50 crores.

Not give or take, give ₹50. At this point, hunger for capital, we may not be able to reduce the borrowings, but we want to maintain it as we've announced for quite a few quarters.

Okay. Sir, last clarification.

Whatever fund we will be receiving because of this land sale, what will be the utilization of that, sir?

Go again, Subrata?

Yes. Sir, this quarter, we have sold our land, and we have realized some money, sir.

What we will do with this, sir?

That will be used to reduce our working capital and our capex and our capital borrowings.

Okay. Okay.

Got it. Thank you, sir.

Hello, sir.

Hello.

Sir. I have a question about the current capacity utilization.

Yes.

How do you plan to increase it, sir, do you have any plans of capacity expansion in the near future?

I just answered that now, Nishanth, when I answered Subrata. Last year, we did 78,000 tons approx of sales.

This year, in Q1, 20,200 tons.

From

Q2 onwards, we expect to strike somewhere between 23,000 and end the year at about 25-plus 1,000 tons.

Okay. One more question, sir.

Are we catering to any EV business, sir?

1 sec. That should mean a run rate of 100,000 tons a year, and that should set the tone for FY27 to reach 110,000 100,000 to 110,000 tons.

That capacity utilization thing

is behind us.

Okay. One more thing, sir.

Are we catering to the EV business, sir, two-wheeler two two-wheelers or three-wheelers?

You say from the EV sub or you are talking from the parent company?

No, sir, from the parent company, sir.

Okay. Fine.

That's an easier question to answer. Yes, we are serving products that go into electric vehicles across several platforms, but not two-wheeler, four-wheeler.

Okay.

Okay. Thank you, sir.

One line of products goes export, another line is going domestic.

Thank you, sir. That's all.

Yeah. Good evening, sir.

Thank you for the opportunity and great set of numbers. One of my question has already been answered.

I have one more clarification. Sorry if this is silly question.

We are setting up our large press of 16,500 tons, and you have already said that its revenue will creep in in next 2 years. Do we have plan to move towards hyperscaler or any other segment like defense or anything which you are looking to explore the opportunity with this kind of capacity, sir?

We are definitely moving into businesses that support hyperscalers. No doubt.

We see that right in front of us, and a lot of business is coming our way. With regards defense, it's a mixed bag.

It's a mixed bag because once we get into the business of defense, it won't stop with just serving the Indian market. We will start looking at capacity utilization.

A line may not fill up entirely with the business from Indian defense. Immediately we look at what we can do outside of the country, and that's something which at a personal level, I am not so inclined to.

Of course. He'll join back if required.

Thank you very much. Sir, can you help us understand why did other expenses increase by 35% year-on-year?

You'll give me a few minutes, I'll come back to you on that.

Sure, sir.

Okay? I don't have 1 sec, my team is throwing it up.

Hold on.

Hold on, Suraj. Yeah.

Your other expenses will be a combination of couple of things. One is fixed other, what is attributable to regular other expenses coming in the P&L, and it'll also have a component of it is export expenses relating to freight.

Freight has risen sharply. I'm hearing an echo.

Yes, sir, we can hear you.

Other expenses, what we call as the traditional other expenses, the fixed overheads of running an organization, starting from rent up to fax and paper and computer IT, blah blah, that runs at an increase of around 10%, from ₹8 crores, it has gone up to ₹9 crores. In quick nutshell, the biggest jump in other expenses of around ₹4 crores, ₹4.2 crores is increase in the published results, of that export expenses itself accounts for ₹4 crores.

Got it. Understood, sir.

That is largely due to freights going round the Strait of Hormuz, for obvious reasons.

Understood, sir. Sir, and can you help us understand why is the revenue from Europe declining for us because US has grown, domestic business has grown?

Europe has degrown volume-wise? Surprise for me.

I don't think so.

If we look at the last four quarters, in Q2 FY26, we were ₹82 crores from Europe, which became ₹89, then dropped to ₹68, and now ₹59.

Basically, Europe is a stable market, and goes reasonably up and down in tune with demand. Nothing noteworthy from Europe in terms of, no business has been lost.

That much I can say very clearly. Just customer demand that's going up or down.

I see. Because, sir, we generally hear that European forging shops are shutting down, so that should be a large opportunity for us, right, and it should reflect in the growth?

Yes, overall that trend continues.

Sir, and in terms of machining, what percentage of our gross block would be the CNC machines?

No, my question was how many CNC machines do we have and how much does that amount to of the ₹2,100 crore gross block?

Ooh, a tough question, Suraj. I don't have that number across the board.

It'll run into hundreds, that I can tell you. I'll note it down.

We'll note it down and we'll come back to you on this.

Sure, sir. Thank you.

I can tell you what it constitutes. 1 sec.

I can tell you what our investments in machine shop constitutes out of the 2,100. If you'll give me a minute, if you'll give me a this thing, I can look at that sheet for you.

That is possible.

Yes, sir. Yeah.

1 second, hold on. I'll get back to that answer, huh?

We have the data, just fishing it out.

Sure, sir. Sir, two quarters ago, you had mentioned about reaching ₹3,000 crores in revenue by FY30.

Do we still look to that number?

Yes.

All right, sir. Thank you very much, sir.

Thank you for the opportunity. Good afternoon, sir.

Trust you're well. Congratulations on a great set of numbers.

Sir, as we move How are you?

Very well, sir. Thank you.

Thank you. Sir, as we move from 20,000 ton per quarter to 25 and eventually to 27, 30,000, where do you think or believe your maximum growth could come from?

Is it the Indian markets or the European markets or the American markets or a combination of all?

Combination of all. First answer will be combination of all.

India today being 63% of our sales, naturally will carry a lot of the tailwind. We're also getting a lot of order wins on the export side, so that also augurs well, and overall, I would say numbers should go across the globe.

See, the point is, Gautam, many customers are also setting shop in India. Global customers, some amount of global business is becoming Indian business.

Right, sir. Sir, and just a small follow-up.

Sir, of the last, say, three, four cycles, do you think the combination of all three regions of yours, this is the highest growth you could see? The current cycle?

Please repeat, Gautam.

Sir, we've had multiple cycles over the last 20 years. The current combination of business being great from India, Europe, and America, do you feel the current scenario is the best in the last three or four cycles that we've seen?

I think so. We haven't this level of what shall I say, strength in demand across all customers.

At some point of time, some customer, some region or the other has been moribund. This time around, As I told a few minutes back, every cell, every machining line is running to the fullest of its capability.

We have tons to go in terms of productivity improvement, at least from my vision. We're working, and my team is working really hard on that.

We have a lot to do on the productivity side even at these levels. That's the headroom that we have.

Having said that, today every line is virtually running at its reasonable fullest. That can be pushed by another 20% easily.

In cases, it takes a lot of work, but that work is anyway It's a must. It's unavoidable, and it must be done to improve the overall asset utilization of the organization.

Wherever, during such quests, we find that we have to debottleneck or replace, we are also considering that.

Great, sir. Thank you, and we look forward to fantastic numbers in FY27 and FY28.

Congratulations once again.

Thank you.

Thank you for this opportunity again, sir. In last two, three calls, you had consistently said that we have taken some cost-saving measures in terms of saving the power and fuel cost, in terms of interest cost, as well as labor cost by putting robotics.

If I am right, in one of the institutional calls, you had said that you are also incrementally trying to use AI to become more efficient on the ancillary functions of the company. Given all this thing, sir, and with the volume going up, do you see any headroom for EBITDA margin to expand from current 18% levels, sir?

If yes, then what kind of margin we can see, sir? Thank you.

Thank you. Can I get your name, please, again?

My name is Prajesh Maroo, sir.

Oh, Prajesh. You were there a few

Yes, sir.

rounds earlier, just before Gautam, actually.

Yes.

Yes, Prajesh, there is a scope for EBITDA improvement. I would be naive to say that there's no scope or that we have reached peak EBITDA.

There is a scope, and we have to work on it to get to I would say I hold the previous this thing. Our target would remain a 20-plus goal.

We have to squeeze out another 2% to 3% from the system.

Sir. Thank you, sir.

Thank you.

1% is I have the clear visibility for, 1% to 2%, but I would say 2% to 3% that should be our goal, and that's the challenge for the team.

Thank you so much.

Hello. Am I audible?

Sir, my question on working capital side. Like in last 2 years, we see the working capital around 30% of the revenue.

In FY24, this is about 23%. In given standalone revenue and the operational contract around ₹409 crores, are we able to convert this cash in trade receivable and other in quarter 1 FY24 '27, and is there any working capital intensity still there or we can come with 23% as the past performance?

Very good question, Garvit. We are working on this increase in working capital, and it is our endeavor to bring it down.

No doubt about it, by cutting down on inventory. To answer a previous I don't know, you asked this question about AI?

No, sir. My question on working capital.

Prajesh Maroo asked it. Yeah.

I can answer that in a different case. I'm sorry.

But 1 sec, using the two together, we are using now AI tools to identify where the inventory is getting stuck. Last believe me, in the last 7 to 10 days, it's become a real it's become a revelation on stuck inventory.

Many teams are now A rapid action force has been formed to dissolve this inventory, if I can use the word, literally, push it out to customers. One, it means customer which customers want, and second is to get down our money that is stuck in goods.

Point well taken. That that is that is one of our goals for the months to come.

In answering this, I also would say that Brajesh's question on AI tools, that we are using those effective quite We started using at least to crunch the data and see the insights are amazing, really amazing. Because it's able to map down and say this is the data, these are the parts, these are the particular part numbers which are required and in stock, and we need to push this.

It's giving a lot of insights to the management team, and I hope in the next few weeks, we should see Not I hope, I expect over the next few weeks, this to start yield results. What we want to do as a result of this is to convert our WIP to a barest minimum, say a week's time, and move everything else as finished goods.

Overall, there would be a reduction in inventory numbers, but not, to insanely low levels, but at some point, I would focus on getting that inventory to a bare minimum in WIP terms, means work in process terms, and push the numbers on convert all that into what we call as RFD, or ready for dispatch.

Okay. Sir.

Good to hear, sir. That's all my question.

Hi, sir. Good evening.

Congratulations on a good set of numbers. Sir, just one basic question.

Is there any update on that enabling QIP resolution that the board had passed a few months back?

Yes, I answered it a few rounds back. The QIP is largely centered around a sharp opportunity that we might see in market, it's on the cards and we are mulling it.

At an appropriate time, we would definitely consider it.

Sure, sir. Thank you very much, and wish you all the best.

Thank you.

Hi. Hi, my question has been answered already.

Thank you.

Oh, okay.

Please go on. You could identify the next caller, please.

One of the data that was required was what is our capex in the machining side and where have we put the money in. Overall, we have invested about ₹1,100 crores in the machining side, of which in the last 5 years, we have put in ₹625 crores, and last 10 years, the number is about ₹1,000 crores.

So ₹100 crores prior to 10 years has now become ₹1,000 crores in the last 10 years, and of that 1,000, ₹625 crores has been invested in the last 5 years. I hope I am clear.

Just repeating the numbers. About ₹1,100 crores overall on the machining side, of which ₹100 crores dates back beyond 10 years, ₹1,000 crores is for the last 10 years.

I'm giving approximate numbers, okay? All rounded off last 10, 5, 10, 20 crores.

So ₹1,000 crores for the last 10 years, and of this ₹1,000 crores, ₹625 crores in the last 5 years.

Hi, sir. Thank you for the follow-up.

As you already alluded to the fact that we spent around 1,100 crores over the last 10 years, right, sir? Just trying to understand, how did the capacity develop?

10 years ago, how much was the capacity versus what is it today in machining today?

Machining capacity is is extremely difficult to pin down in terms of numbers or in terms of tons, because I can tell you there's one part that is very heavy and requires relatively less machining. There's another family of parts, very popular, today accounts for about a good portion of our sales, which is heavy and requires extensive machining.

Then there are light parts that require, less. We'll try to quantify this over a period of time.

Give us Give us a couple of months. I'll I'll Put noted it down from the first question as Mumuksh himself has asked.

Right from there, this question is is persisting. We have a number tracker, but that number tracker is of no use to you guys.

We need to quantify machining capacity. We'll We'll work on it and come back to you with a with a method of quantifying our own machining capacity.

I'm sorry that, we're answering such an important question in with such a vague manner, but that is that's where things stand. We will we'll apply our mind and try to put bring some method to that madness if if ever we can.

Understood, sir. Got it, sir.

That will be helpful. One more thing, sir, coming to the American opportunity, right now our contribution is around 10% or 15%, right?

Where do you think this contribution from US is going to expand to in the next few years because you're very bullish about it, right?

It is around 16% now, if I'm not mistaken, and US should hold these levels, 18% now. It should maybe increase by a percent or two, because the rest of the world is also growing.

This time around, it's not just one zone that is growing in regards to the others. Every zone is reasonably growing, barring a little bit of a blip from Europe.

So

Got it, sir. I'm just trying to understand one more thing, sir, trying to understand the market.

Most of our exports go to Europe, right? Just trying to understand, are forged products more used in Europe than US?

Is that the fact or is it just the fact that we have a longer relationship with European customers than US customers? Could you explain, trying to get some nuances?

Forged parts are used in any economy. In any economy, forged parts are used.

Now because without forgings, you don't have motion as we know it today. As engineering stands today, forgings are at the center of where motion is, where transportation is.

We know how both are so critical to any economy, right? What happens is that where these get consumed is the original equipment manufacturers or the Tier 1s.

Now where are they located? Therefore, where does it get sent to those geographies?

Now obviously, it'll be downright foolishness to say the rest of Asia is not at all into the transportation or the forgings market. The rest of Asia is huge, Japan, China, Korea, but these are all traditionally closed markets as India is.

That is the reason why everybody looks at forgings, castings, and all into Europe and America. This kind of metalworking is popular and strong in the Asian economies and is declining in the other economies.

Got it, sir. Basically US and Europe is where these capacities are reducing, and our opportunities also lies there.

I was just trying to understand a little bit nuance in that aspect. Also South America.

You should also

add South America to that list.

South America also capacities are declining.

Tough question to answer that. Now Brazil is fighting back.

There are a lot of indigenous forgers now coming up in Brazil. It's quick to write off and say South America is a declining market.

South America is another market where there is scope. That much I can very clearly say.

Understood, sir. That's it.

I was just trying to understand the roots of why European customer side a much bigger contribution in terms of our revenues. I was just trying to understand because usually it is other way around, US is a higher proportion compared to Europe.

They are high-cost economies, high labor-cost economies. Labor and cost pressures ensure that such businesses go out of those geographies.

Got it, sir. For us, was it Despite

the imposition of duty post by the US government in recent times, none of the forging buyers in the US have balked as a result of that. Fortunately for MM Forgings, huge fortune that none of our contracts, we bear the customs duty.

That would have been hell otherwise. Even though there is huge amount of duty imposed, customers are still buying means that they are not able to, one, setting up these capacities is difficult.

Setting up a forging capacity, getting hold of people to operate forging presses and processing the parts, not easy. It's damn difficult.

Even in India, forgings will be a sector that will be difficult to man in the next few years. Man or woman, I can use the word.

Currently, we do have a significant portion of women coming into our workforce. Ultimately the point to the matter is that these economies will find it difficult to, and also those skills get lost.

Over a generation, if for 20 years you haven't forged, then getting this back is difficult, but you can also jump to skill gain. Quick this thing in glances, India jumping the 3G the GSM bandwagon.

We didn't go through the CDMA route and struggle on the mobile phone side, connectivity side. We straightaway jumped into GSM, and we leaped forward by about 20 years.

Like that, in the forging side, it is possible to somehow gain, but that will have to come in very restricted circumstances, where there is huge level of automation and you'll have to pour in capital, which means that you need to have customers who are backing you to the hilt. All these are strategic seismic shifts in the costing landscape which will be very difficult to unravel.

Understood, sir. Just one last question.

Just trying to understand, you mentioned that because of declining capacity, we're getting orders. Probably our main competition is China.

Where do you think we're getting most of orders? Is it declining capacity or China resourcing?

We are getting new orders also because customers there are growing their business, and they want to source from BCC or LCC, best cost countries or low cost countries, for those respective parts. It's wrong to say

that

those markets are in pure decline alone. For all that the US market may be growing also in forgings, for all that you know.

I have no clue. Many orders are coming our way across the global landscape because customers want to buy from India.

See, ultimately the en route at an entrepreneur or at an organization level to service a business at 18% EBITDA will be a lot higher than servicing the same business at 5% EBITDA.

Yes, sir, fair enough.

Right? That into makes for customer satisfaction.

Got it, sir.

This is my perception over the last 15, 20 years. That will be very difficult to Sir, just one last question.

How much more expensive would it be compared to China?

That's fine. Thank you.

send your question by voice mail or something, and we'll try to answer it for you.

Thank you all for participating with your time, and as usual, with your incisive questions, which have given us a bit more of insight into our own business. Hopefully, we'll see more of this as we go on.

I expect that MM Forgings will do strong in the quarters to come, with about targeting 25,000 tons of sales at a bare minimum in the coming 2 to 3 quarters, reach that, and then look beyond to touch 27,000 and then 30,000 tons every quarter, thereby quickly galloping to a capacity utilization of around 120,000 tons, backed up by strong machining exposure. As we see, most of the orders that we are getting now are all machined, and very few are as-forged.

That in turn means that capital requirements are more. As we move forward, we see challenges on the cost side, and we also need to do some trimming internally in terms of both costs as well as working capital and inventory, which all came up over the last few months internally as well as in this meeting.

Thank you all for your wonderful participation, and looking forward to posting better numbers and much more growth in the quarters to come, with the hard work of the team, and, of course, God's grace. Thank you all.

Jai Hind.