Thank you very much. We will now begin the question -and-answer session. The first question is from the line of Dipak Saha from DRChoksey Finserv Private Limited. Please go ahead.

First of all, congratulations on a good set of numbers. Just one question I have. The recent deal that you have signed with GTRE, if you can share some of the criticality and complexities on this particular thing given your entry into the propulsion system. And who all are there in terms of the incoming players in India especially, if you can give certain details as globally we are making this kind of components involving propulsion system particularly for this kind of product. That's the two only question that I have. Thank you.

Okay. On this GTRE/DRDO, this is a complete engine. Just as a layman to make you understand what this engine looks like, you have seen Tejas aircraft or any of the military aircraft, it has an engine, right? And that engine is classified with its thrust, w hat size of thrust it is. So, this is a complete engine, it can fly a missile, it can fly UAV, or it can fly a drone, it can fly many things. So, this is something that I cannot speak much about it at this call, but to just give you an idea, this is a complete engine. So, making components, integrating, assembling and get ready to fit, that's the scope of this work.

And just to add to Mr. Chopdar's point, one important thing to note is that when we received this order, we were chosen amongst the top Defense companies in India. We competed against them , and today we have been chosen as the single-source industry partner for development cum production.

Okay. And just one follow -up on that. Your current capabilities that you have are well equipped for executing this kind of a project on the propulsion system side?

Yes. So, if you look at our product portfolio, you will see that we have been making all of these critical components for various customers internally. Now, that is why, for us, getting this entire engine manufacturing was easier because Azad is obviously manufacturing most of these critical components for other players.

And when the technical assessment happened by DRDO and GTRE, and they could see all these parts and capabilities already existing in Azad, and that's where we could compete everyone in the line and we could win this, because the capability is all set. It's not something new we have to learn in this, it's just assembly and all. We have to take guidance from GTRE, DRDO. Thus component manufacturing, we are very well -versed with. So, we are very, very confident on making this a success. We wish and hope that in 2026, we see this engine fly.

Thank you. The next question is from the line of Bala Murali Krishna from Oman Investment Advisors. Please go ahead. Hello, please go ahead. As the line of the Bala Murali Krishna is not audible, we will move to the next question. The next question is from the line of Pranav Shrimal from PINC Wealth Advisory. Please go ahead.

I had just a couple of questions. One, so we have seen a significant increase in our revenue from Aerospace and Defense. If you could just give some background as to which sector are we seeing the growth in? Is it the Defense sector, is it the Aerospace sector?

So, for us we are doing both in terms of commercial as well as Defense. So, you are seeing growth in the Aerospace sector because, like we had emphasized on a previous call, that we are in the process of qualifications, and we anticipate that once the qualifications are completed, Aerospace will continue to grow at a much, much faster rate than the other verticals. So, this is a reason because of that. And we are focusing on a mix of both, Defense and commercial.

So, is there a way, if you could just give me a break-up from Aerospace and Defense or is that not possible?

No. So, see, today we look at business broadly in three sectoral terms, Energy, Aerospace and Defense and Oil & Gas. We intend to separate this into separate verticals only after we cross the threshold of about Rs. 75 crores to about Rs. 80 crores in every sector. Until then, we look at it at a blended level because it does not make sense to look at a vertical at a lower number and then call it a separate vertical. So, as of now, we look at it blended only.

And just one last question. Do we have any plans to open up subsidiaries in Europe or a manufacturing hub in Europe? Would that be feasible in the long -term for us considering it will be a longer transportation time, better cost?

Yes. So, see, we are in the process, so we get a lot of opportunities that come to us, right? So, as of now, all our manufacturing units are based out of India and Hyderabad. And two recent acquisitions have happened in Vizag, in Chennai. So, as of now, we do not have an active plan, we are not. But we are hopeful, any assets that come and that are interesting, we might be -- we are open to --

Yes. What I can add to Vishnu is, like as our customer base is spread across the global area , so what happens sometimes, as you know that we are in the critical components, right, and the entry barriers are very, very high. And it takes a lot of time to qualify both from our side as well as the customer side. So, what happens is, if one qualification is done with one supplier, it's not easy to switch to someone else. So, they would not continue that long. However, there are some opportunities which keep on coming to us from our customers. Like one of the OEM will tell us, hey, are you interested to buy this company, he's our qualified supplier in Europe or maybe South Africa or maybe America? They keep telling us, can you take over this company so that we do not have to redo the qualification. So, these opportunities keep on coming to us, right? This comes from our customers.

But it's not feasible at the moment? Or is it not something which will--

No, we keep on exploring. We are open to it and we are keen to explore that. It's an ongoing thing.

So, we evaluate it like we evaluate any other opportunity that comes to us, like the ones that we did in India. So, we are in the process of evaluating assets that come to us. And then whenever we strike the right opportunity, I think location should not be a barrier for us.

Yes, that does not matter for us.

Thank you. The next question is from the line of Kamlesh Jain from Lotus Asset Managers. Please go ahead.

And congrats on very strong set of numbers. So, just one question on the part of your comments, which you have made in the presentation, where you highlighted that our other expenses have increased primarily because of the higher freight rates because of the Red Sea disruption. So, I believe our metal is majorly sold on the basis of ex-plant. So, does really the freight part come into play because our business model is primarily on the ex-plant basis?

Yes. Hi. This is on the account of , we have a job work which are a special process for which we have to send our part. And in aero, there are a lot of processes for which we have to send for the coating and all those things. Therefore, the logistics cost has increased. On the account of that, we have acquired a company, VTC, where we started qualifying for those particular process es. And going forward, we see that this cost will normalize again.

And secondly, on our new facility, like what particular like construction rate we have reached at that particular location? What is the schedule for commissioning of that particular facility?

So, we are on track. Mr. Chopdar also mentioned during his minutes that we are on track there and you would see that the revenue in FY '26 will also be contributed through the new facility. We are on target and at least we will be ahead by a couple of months in terms of what our target date was. So, we are at point there. In FY '26, you will see incremental revenue of that financial year coming out of the new facility.

And for FY '25, we continue to maintain that we will grow at 25% odd?

Yes, we are maintaining our guidance, and we are very confident about a 25% to 30% range.

And lastly, like it's more of a bookkeeping. On the margin side, like since our listing, the margins have come off from a level of 37% odd to 33.5%. So, where do we see our margins going forward?

So, our range of EBITDA margins has been always consistent in the range of 33% to 35%, right? Now, because of the product mix that changes sometimes at a quarterly level based on customer priorities, etc., you will see that it moved up by 100 basis points to 150 basis points and that's why we talked about the range. And this is sustainable because for us, this is a part of a long -term contract and the prices, and everything has been secured and agreed. So, EBITDA margins for us will be sustained at this level for a longer period of time.

And just to add to this particular point, in this quarter, we had a FOREX loss of Rs. 50 lakhs because we had 80% export sales, and we have to restate our receivables and net debt. So, that is on account of that.

Thank you. The next question is from the line of Jatin from Sahasrar Capital. Please go ahead.

Hi. Sir,so my first question is on the lines, a large OEM delayed the delivery of their engines to one of the system integrators in India. Will this affect us in any way?

Sorry, you are not very audible. Can you speak again, please?

So, one of the large OEMs delayed the delivery of their engines to the system integrators in India for jet fighters. Will this affect us in any way?

No. I mean, is this question related to the order what we have got from GTRE or DRDO?

Not exactly, sir, not pertaining to that.

No, nothing to do with us.

Okay. And the second question was on the lines of capabilities. The kind of engine we are supposed to make with the DRDO, are they in line or at comparable the ones which will be used in, let us say, Tejas or AMCA or TEDBF in the future?

No, they all are different segments. Every engine has thrust, and the design of these engines are basis what application is. So, it could be confidential for both GTRE/DRDO and us to name the programs, because we do not want to name the programs. We need the data to run the programs, right? So, this is what we do. This will be used in various platforms.

No.

Thank you. The next question is from the line of Aman Soni from Nvest Analytics Advisory LLP. Please go ahead.

Congrats for the good set of numbers. My question is, is there any update on delivery timeline for the first batch of fully integrated ATGG engines? This was initially scheduled to commence in early calendar year 2026. And what is the size of the opportunity in this?

So, in terms of the timeline, we are looking at FY '26 for delivering the first set of engines, right? So, that is correct. So, we cannot share when exactly we will be doing it, but yes, it is towards the first half of FY '26 is what we are looking at, right? And beyond that, we would not be able to share a lot of information. And the other thing to look at it is, you should think of it as an opportunity for us to move into a complete end-to-end engine manufacturing from, say, component manufacturing. So, you should be able to assess the opportunity size when it comes to propulsion industry, etc. So, this is our first step, and we are obviously very excited about it. The opportunity is massive. I would not be able to comment on the size of the same contract for confidentiality purposes. But then logically, you would understand that this is a large, massive opportunity for us.

My second question is, given that the company previously imported 50% to 55% of its raw material and has aimed to reduce this to 40% in Financial Year ‘24, could you provide any update on the current status of the company's import content?

Sorry, can you repeat that question again, please?

The company previously imported 50% to 55% of its raw material. What is the current status of the raw material imported?

Okay. So, you are asking about the import of raw material?

Yes, sir.

Yes. So, import of raw material. So, this was as a part of our efforts towards optimizing our working capital numbers. So, we wanted to work on our cash -to-cash conversion cycle and to improve our set of operations. We were looking at indigenizing some of the raw material grades to India. We have been able to successfully indigenize two or three raw material grades with two companies. One of them is Sunflag and the other one is Star Wire. So, you will see that gradually our import percentage of raw materials will come down. This will not just have impacts on this, but we will have better control over our supply chain. We will be able to optimize our working capital cycle also because of the sailing time, the payment terms, etc., also become much more in control with us than they are today.

Thank you. The next question is from the line of Bala Murali Krishna from Oman Investment Advisors. Please go ahead.

Yes. Regarding the recent order wins from the Rolls -Royce to Siemens Energy and GTRE, so I think GTRE, you told about the supply of engines timeline, but what about the remaining orders when already we started supplying the components to the customer or when we can expect the supply of the components to the customer? Any timeline on these orders?

Yes. So, these are all rolling orders. When we sign a contract, that is effective from the day we sign, right? If parts, which we have already qualified, there are two ways of signing a contract. Either you get qualified and sign a contract or you take a contract and qualify the parts. So, few in the aviation and Defense contract being Rolls -Royce being very prestigious, right? And the components are very, very critical, right? So, those qualifications will be done by calendar year '25 and the revenue you can see from FY '26 for these components. And on the Energy part, these are 50% to 60% already qualified. And new families keep on getting added as we increase the capacity. So, it's a mix, it's always a mix of qualified and non -qualified parts and thing. So, the day you sign a contract, it is effective from the same date. I need to define a long list of items if I want to answer all your questions in detail, it's a very long answer for this.

And regarding the component manufacturing to the entire jet engine assembly, could you please elaborate a little bit on this? So, earlier what was the bill of material of the jet engine? And what would the bill of material from our side now for the complete jet engine assembly?

We will be the first engine company to do this. I do not think so, as far as my knowledge is there, I am not confirming what I am saying at the moment, is what I feel is that we will be the first in the country to do this, complete assembly of the jet engine. I do not think any private players have done it before. I am not sure on what I am saying just now, but this is what I feel. So, this is very exciting, as I mentioned in my call, in my statement. This is very, very exciting for us. We are very super excited to make this engine.

And one more thing regarding this commercial aircraft in your opening remarks, is that something that we are also initiating some engine assembly for that commercial aircraft also?

No, no, sorry, sorry. For except DRDO, GTRE, we are not making any complete engine. We are making a lot of rotating components. And if you see an engine, what you feel is rotating components as you can see, which arise when you enter the aircraft what rotates. So, these components are very critical. So, we make a lot of components for the civil aircraft engines and the Defense military aircraft engines.

Yes. Rakesh ji, just one particular thing, like over the years we have grown at a massive pace, but if we just want to compare with like, say, one of the best, which is Howmet. So, how identical we are in terms of a business model with Howmet? How differently things we are doing as compared to this particular BO? So, just wanted to understand business model because in case of Howmet, so they are like say across the value chain right from the forging part and in terms of like conceptualizing the design thing, the OEM as well. So, how are we placed in terms of the value chain as compared to the Howmet?

Kamlesh Ji, Howmet's revenue you are aware how much revenue they do. And Howmet is one company working similar to Azad, I mean, that's one company. But one day Howmet was also in the same position where Azad is today, I am sure. And the vision what we have , and as Vishnu mentioned, we compete the world, not India. We compete China, we compete Europe, Korea, America. So, we have started the journey, and you can imagine, Howmet also was one day where Azad is today. And definitely there's a huge, massive scope for Azad to reach that height.

What capabilities we are building in like , say, what investments or what efforts are we putting in right from the like say, forging or like workflow, shop floor , people, and all the designing part? So, if you can throw some light on that particular aspect.

Every aspect has to grow. And when you see Kamlesh ji, how much revenues, it's all in billions I think so, right?

Yes.

Right. So, definitely there is massive capacity to be in the billions game, let it be forging, let it be manpower, let it be machines, let it be flooring, right? So, this has all been accounted and that's the reason we are first moving to 10x size, right? So, we have this in mind how massive growth we are sitting on the part. The best part is, we are in the same league. We are too small before our competitors who are ages, ages, decades, decades old companies . And everyone passed through where Azad is today, right? So, the massive scope is there and that's why the confidence what we are taking and moving ahead is this is all of what we are talking now.

And we are also reporting the business similarly. And while we are optically able to only see increase in capacity, you will see that we are also building organizational function, hiring across the organization at key levels to sort of manage or address th e growth that we are seeing in the coming years. So, we are very well-positioned. We are looking at it from all aspects. We gave a glimpse of it in our speeches as well.

And lastly, like how much CAPEX we are looking over next three, five years in total?

So, I will take you back to our discussion of last quarter where we had charted out a plan for FY '27. And for FY '27 we had raised a primary of Rs. 240 crores and this was to be deployed towards infrastructure and capacity. And now, we are planning how do we go beyond FY '27 ? And given the increase in contracts, given in the customer wins, given in our capability expansion, we are now doing the math of how you go from FY '27 and beyond, and what is the necessary CAPEX that is required.

So, I think Kamlesh ji, as you are mentioning Howmet, so they are in billions and we are in millions. So, definitely there is a story from million to billion.

But if you can pinpoint some CAPEX as well, that would be very helpful. So, that would be visible in your CAPEX as well. So, that was the whole purpose behind that.

Sure. And if you have any more specific questions, you can always write to us via ICICI Securities and we will be more than happy to sort of address that question in case you want more information on it.

Thank you. The next question is from the line of Amit Dixit from ICICI Securities. Please go ahead.

Yes. Hi. Thanks for taking my question. Just a couple of them. One is related to us foraying into now complete engine. Now, in India, we are all aware that the engine ecosystem particularly is developing pretty fast. And particularly in different space there are various tie -ups on the anvil , and they include some of the OEMs with which we already have contracts , we are already supplying to them. So, if you could just highlight some of the opportunities that we see in Indian Defense space in particular, that would be very helpful.

Good question, Amit ji. See, actually, if you notice these engines now, it is under development stage within India, right? But India is still using these engines , so that means India is importing these engines as finished and setting up using it in various platforms. Now, once these engines get proven, and first thing is import gets stopped, right? And this becomes an imposed substitute that these engines will no more be imported, and it will be made in India and used in India. However, for Azad, that's one plus point. But if you notice, Azad is a global player. Azad plays in a global platform. These engine requirements, capabilities once built, I am definitely sure with our existing customers, like all these giants, all these OEMs, Azad is already a prominent player in this field. We just go and need to , one day we just need to inform them, hey, guys, we already have this engine capability also being added to the portfolio of Azad. That opens a different ballgame, right? It's not just for India , this capability is going to serve for the global market. Maybe where India is importing at the moment from that OEM, we may go and supply back to those OEMs. That really makes a very different story, right? Just like if you can see the Nuclear boom which is going to come, we are the only company EDF approved. EDF is a French Government organization which controls the major Nuclear plants. And all this big boom is coming up in Nuclear. So, we are in a good position in almost all these niche areas.

And I would say, Amit ji, I think it's important to look at Azad as not a player that is only focusing on the Defense play. We are an organization that is very well-positioned across all sectors, whether you look at power, Nuclear, Aerospace, Defense, Oil & Gas . Today, we have opportunities in every sector. And particularly, each of these sectors, we are looking at massive opportunities. You look at how our order book has been increasing quarter -on-quarter. This is based on the opportunities that we are looking at. And we are also currently working on some nation pride contracts, which we will not be able to share a lot of information on. But then, I would say it's exciting to be at this point for Azad.

Moreover, I would like to add one more thing, Amit ji, it's like, Azad plays not only just in Defense, not only just in aviation, not only just in Energy, not only just in Oil & Gas , we are there everywhere, wherever there is niche. Now all these four sectors in the niche areas, Azad is dominant and building capabilities to just increase the wallet share now. So, it's a beautiful story from all the core segments. I hope we answered your questions.

No, great to hear that. One more question that I have is, and that is on essentially Oil & Gas. Now, while Energy, as we understand it, power sector and Aerospace have been discultivated quite a bit. But your recent wins, if I look at it, they have been on Oil & Gas, at least the recent five, six orders. So, just if you could give a little bit of more color on this that where do we see this particular segment evolving? Because it has just started for us, and given the TAM, it can have significan t opportunities. So, just if you could highlight where we are focused here, which area we are looking at, because that can be a very interesting opportunity.

Definitely. I think, as Vishnu mentioned, just adding a CNC machine, we regard as a precision manufacturing. That's fine, precision is there everywhere. But when you look at the parts, it's like how beautifully you utilize the technology available and produce a part consistently at a cost, maintaining your margins, maintaining your deliveries with the setup, with the investments, what we do. It's very important to make a match and mix of these kind of things. And sustaining is a big question. Everybody asks, is it sustainable? So, this is where Azad specializes in, in sustaining things. Now, if you look at the Oil & Gas sector, there are many, many areas in Oil & Gas sector. But where Azad plays is also very important in Class A. When I say Class A, these parts go and operate 32,000 feet below the ground, right? And we can imagine these parts being so critically drilling, going deep in the well, and something goes wro ng in those parts. So, a lot of engineering and processes are required to make these parts right every time, consistently. Similarly, talk about 32,000 feet above the ground on the aviation, 32,000 feet below the ground, in Oil & Gas, and of course in Nuclear. So, we can just see that where Azad is a key player , it's not only a component supplier, Azad is a solution provider.

And Amit ji, just to add to what Mr. Chopdar said, these parts are extremely niche part s. The contracts that we signed on, our customers were making this in -house, and we will be the most critical player supplying them. As a part of our realization, you will see that this year we would start contributing revenue from Oil & Gas as well. Last financial year, we contributed roughly about Rs. 3.5 crores. This financial year, you should be able to see that some of these parts that we have qualified, we would be moving that into production very, very quickly.

Thank you. That's a very comprehensive answer. Thank you, and all the best.

Thank you. That was the last question. I would now like to hand the conference over to Mr. Amit for the closing remarks.

Yes. Hi. Thanks, everyone, for attending this call . And thanks to the management for the fruitful discussion that we had today. I would now like to hand over the call to Mr. Chopdar for any closing remarks. Over to you, sir.

That's all. Thank you so much, Amit, for hosting this, and thanks a lot SGA team and thanks to all of everyone who has joined this call and took time to talk to us, listen to us. We are very happy and delighted and we will keep on here and be excited. So, I hope that we continue this good work. Thank you so much.

And please, remember, I think, Azad is just getting started.

Yes, it just started.

Thank you.

On behalf of ICICI Securities, that concludes this conference. Thank you for joining us . And you may now disconnect your lines. Thank you.